While chairing a meeting of Executive Committee of National Economic Council (ECNEC) on Thursday, Advisor on Finance Dr. Abdul Hafeez Sheikh expressed serious reservation over the three times increase in the land acquisition and resettlement of displaced people cost. He asked the Planning Ministry to reexamine the revised PC-1 of Rs.175 billion worked out by the Ministry of Water Resources for this purpose. However, the meeting gave approval in principle of the upward revision in cost estimates.
Abnormal delays in the implementation of this mega hydropower project because of skewed priorities of ruling political elite; their lust for under-the-table shady bargains in mega projects, and territorial dispute on the land for the site of dam between Khber Pukhtunkhwa and Gilgit Baltistan governments resulted in 185 percent increase in land and settlement cost. Initially, an approval of Rs.60 billion had been accorded by the last PPP government in 2008. But Basha dam project went to the backburner in the succeeding PML-N government. In 2015, land compensation and resettlement expenditure was pushed up to Rs.101 billion. Now the Ministry of Water Resources has sought for an increase from Rs.26 billion to Rs.54 billion for payments of land purchase; increase from Rs.9.3 billion to 67.7 billion for resettlement of people to be displaced by the construction of the dam, and surprisingly allocation of Rs.5.7 billion under the head pay and allowances. In 2008, an allocation of Rs.721 million had approved under this head, now showing an increase of 683 percent.
Delays in the execution of mega projects often results in cost escalations, but three times increase in expenditure on land acquisition and resettlement of likely to be affected people is unprecedented in the history of big dams projects, if compared with Tarbella dam. Likewise, it seems difficult to justify the proposed allocation for pay and allowances. The estimated cost of Basha dam was $12.5 billion in 2008, which was revised to $14 billion in 2013. Commencement of construction work was expected in November 2019 which did not materialise. Hence, further increase in cost estimate cannot be ruled out. Multilateral donor agencies, including the World Bank and Asian Development Bank had lost interest in providing finances for this project. It was included in the CPEC framework for acquiring foreign exchange component of the project cost but had to be withdrawn from this umbrella because of very tough conditions of financing. Now greater reliance is on arranging funding from national resources and reduced dependence on loans from bilateral sources. Negotiation had been started with Asian Infrastructure Investment Bank and Swiss Bank for soft loan of $2 billion in 2018, but later nothing was heard about it.
Pakistan has become water stressed country. The per capita water availability has reduced from 5000 cubic meters to 100 cubic meters over the past four decades. Silting has reduced storage capacity of Tarbella dam reservoir from 13.681 million acre feet to 9.36 million acre feet. Likewise, the storage capacity of Mangla dam reservoir has gone down from 7.2 million acre feet to 4.5 million acre feet. The country has the water storage capacity in the reservoirs of big dams hardly for 36 days. Other countries of the world have built up water storage capacity for 120 days. Judicious utilisation of financial resources raised from domestic and foreign sources is inevitable by avoiding working out inflated cost estimates for big storage dams.
The myopic vision demonstrated by the Sindhi leadership of a mainstream political party and Pukhtun leadership of a regional political party made politically controversial the most feasible big hydropower project of Kalabagh dam in 1980s at the cost of national interest. Multilateral donor agencies were eager to finance the project by providing loans and technical expertise on concessional terms. It takes almost 15 years to complete construction work of big storage dams. It seems worthwhile to focus on the construction of such water projects, which can be completed within 3-6 years, while prioritizing projects of big dams.
