Dams’ funding

Federal government is facing extreme difficulties to arrange finances for $10 billion worth two dams, Diyamer Basha and Mohmand dams. Bids were invited for the construction of the later dam and a Chinese company Gezhouba was awarded contract on single bid basis in violation of PPRA rules of transparent and competitive bidding. Decon Engineering of Prime Minister’s Advisor on commerce and textiles are the co-builder in Mohmand dam project which has a total cost of Rs.309 billion.

The economic coordination committee ECC) of cabinet has deliberated the other day on various financing options for these dams. Provinces may be asked to share the cost and a certain portion of financial burden may be shifted to consumers of electricity in the shape of power tariff increase and levying a special surcharge in the electricity bills. Last year Chairman WAPDA had hinted on the levy of such surcharges to raise Rs.190 billion for these two dams. But any surcharge on account of raising revenue for under construction dam is not withdrawn even after the completion and operationalisation of the dam and power house. A decision about the withdrawal of Neelum Jehlum Surcharge from the commencement of current fiscal was taken by the previous government but the surcharge is still part and parcel of electricity bills. The electricity tariff and huge burden of multiple surcharges is unaffordable for domestic, commercial and industrial consumers who honestly and regularly pay their monthly electricity bills.

On the contrary, federal and provincial governments are the biggest defaulters of the electricity bills. Azad Kashmir alone owes Rs.114 billion to Peshawar Electric Supply Company. Power sector receivables from federal government departments stand at Rs.11.13 billion and the outstanding arrears against the four provinces have piled up over Rs. 31.32 billion. The total amount of receivables stands at Rs.150 billion which can be realised through at source deduction by the federal government. The influential political and business elite defaulters owe Rs.870 billion to power distribution companies.

From the very outset multilateral donor agencies were not willing to give nod for funding of Diyamer Basha dam. The World Bank asked for obtaining No Objection Certificate in view of the India’s contention that the site lies in the disputed territory. But the bank agreed to finance the construction of Dasu dam. China imposed the conditions of handing over two operational dams and corporatizing the one to be constructed if Pakistan wants to finance it under CPEC framework. Consequently, the last PML-N government had to take decision to construct the two big dams by generating financial resources from domestic sources restricting the construction work to the dams’ structures and water reservoirs, leaving the installation of power station to future planning. At present the total construction cost of Diyamer Basha dam is Rs.480 billion including foreign currency component of $ 1.4 billion. The dam reservoir will have live water storage capacity of 6.4 million acre feet and installed power generation capacity of 4500 megawatts.

Talking to media after the meeting of the Implementation Committee of Diyamer Basha and Mohmand dams in July last year, Chairman WAPDA told that Pakistan is seeking up to $ 2 billion loans from Asian Infrastructure Development Bank and Swiss Bank. Perhaps efforts in this regard have not materialized. That is why finance minister Asad Umer had to direct WAPDA to come up with firm and clear answers to sources of financing in the next meeting.

In the past governments never faced difficulties in acquiring finances from the external sources for the construction dams like Tarbella and Mangla. The multilateral donor agencies were and will be willing again to finance Kalabagh dam project if the leadership of political parties including PPP and ANP come out of their cocoon of myopia, think about national interest and arrive at consensus for early launching of this dam.

Posted in