Govt approves funding for Diamer-Bhasha dam

By Shahbaz Rana in The Express Tribune, March 3rd, 2015.
ISLAMABAD: After months of foot-dragging and delays, the federal government on Monday finally approved Rs101 billion for land acquisition for the construction of Diamer-Bhasha dam as well as the rehabilitation of people who would be displaced, clearing one of the biggest hurdles to completing the $14 billion, 4,500-megawatt hydroelectric power plant, the largest infrastructure project in Pakistan since the construction of the Tarbela dam in 1974.
Headed by Finance Minister Ishaq Dar, the Executive Committee of the National Economic Council (ECNEC) – the country’s highest authority for development spending approval – cleared the Water and Power Ministry’s funding request for the project, despite having termed this level of cost to be “exorbitant” in its October meeting.
The funding approval for the project will likely address the concerns of the local population. A total of 32 villages with a collective population of 25,000 people will be affected due to the construction of the dam. Many among the local population were demanding high rates of compensation in order to move from their land, to which the government agreed, clearing the way for 4,500 megawatt hydroelectric power generation project to proceed.
Of the Rs101 billion, Rs49.8 billion has been sanctioned for land acquisition and compensation. Another Rs24 billion will be spent on the construction of three model villages, and Rs8.7 billion on social safeguards for the affected people, and Rs634 million for environmental protection.
The government’s dithering and poor management on the project have caused the costs for the dam to skyrocket. The land purchase and rehabilitation component of the project was originally approved by ECNEC on November 6, 2008, at a projected cost of Rs60 billion. However, the government had not secured the consent of the local population at the prices then offered, leading to delays that raised the overall cost of this phase of the project by 67%.
The government has recently reassessed the construction cost of Diamer Basha dam at $14 billion. It is seeking $5 billion from international lenders for the construction of the dam over a period of eight years. Pakistan has been seeking to construct the Diamer Basha dam for a long time but has continued to face reticence from international lenders in financing the project.
The approval of the project will help address the concerns of the Asian Development Bank – the country’s single largest foreign lender. The ADB had initially indicated giving over $4 billion for the project but later on backtracked from its commitment. The World Bank has already declined to invest in the project, saying it was located in a disputed territory.
Neelum-Jhelum hydropower project
ECNEC also approved Rs21.6 billion in funding for the transmission of power from the Neelum-Jhelum hydropower project. A 270-kilometre 500-kilovolt transmission line has been proposed up to Gujranwala, which will be constructed in two phases. The first phase, a 145-kilometre line from Neelum-Jhelum to Domeli near Rawat will be completed by December 2015, where it will be connected with the existing 500kV Rawat-Gujranwala transmission line as a temporary arrangement. The remaining 130-kilometre transmission line from Domeli to Gujranwala will be completed by December 2016.
ECNEC also approved funding for another two 500kV, 5-kilometre double-circuit transmission lines being set up to connect the 720-megawatt Karot and 650MW Azad Pattan hydroelectric power projects to the Neelum Jhelum-Gujranwala transmission line. The 969MW Neelum Jhelum hydropower project is expected to be completed by 2017.http://tribune.com.pk/story/846820/ecnec-meeting-govt-approves-funding-for-diamer-bhasha-dam/