ISLAMABAD, Nov 11: The Executive Committee of the National Economic Council (Ecnec) on Tuesday gave the go-ahead to the Diamer-Bhasha Dam project.

Work on the dam would begin in September next year and the total cost of the project has been estimated at $12.6 billion. The deadline for completion is 2016.

The Ecnec meeting, presided over by the Adviser to the Prime Minister on Finance, Shaukat Tarin, also sanctioned Rs60 billion for land acquisition for the dam.

Pre-qualification of bids for the 272-metre-high dam, with a capacity to generate 4,500MW of electricity per day, will start by the end of the month.

After completion of pre-qualification, civil work will begin on the main dam, diversion of tunnels and an underground power house.

Ecnec also approved upgradation of the Karakoram Highway to facilitate the dam’s construction.

The Minister for Water and Power, Raja Pervez Ashraf, told a press conference that about 28,000 people, or 4,250 families, would be affected by the project in the NWFP and Northern Areas.

The minister said that leading companies from China and Middle East were ready to invest in the dam.

He said Chinese companies were willing to form a consortium and invest in the project on build-operate-transfer basis. Arab companies were also ready to proceed on the same lines.

Mr Ashraf said that European companies, however, wanted to operate on the basis of ‘supplier’s credit’.

“We can easily generate an investment of $1.5 billion per year required for the dam.”

When asked as to how the government would resolve a possible tussle over royalty between the NWFP and N. Areas, the minister said royalty would go to the area in which the main dam would be built.

The project would pay off its cost within seven years of commissioning, because it would generate electricity worth $1.5 billion and supply irrigation water worth $600 million per year.

An investment of $30 billion was needed by 2015 to raise electricity generation capacity from 18,000MW to 33,000MW, the minister said.

In reply to a question, he said that the government would announce relief in the power tariff in a few days.

Wapda Chairman Shakeel Durrani said that the process for land acquisition and payment of compensation would be completed in a few months.