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Government to raise Rs144 bn through banks for Dasu hydropower project

By Mehtab Haider
February 11, 2016

ISLAMABAD: The government is all set to raise Rs144 billion through consortium of banks within next couple of weeks for kick-starting construction of Dasu hydropower project for generating 4,320 megawatt electricity in phases.

“The government is in the process of establishing a special purpose vehicle (SPV) for generating domestic funding to finance this important hydropower project,” top official sources told The News here Wednesday.

Minister for Finance Ishaq Dar told The News last week that the government was exploring innovative ideas to finance its hydropower projects. “Yes, the government will issue Sukuk to generate Rs144 billion in order to meet domestic obligations for Dasu project,” he said.

When contacted, Chairman WAPDA Zafar Mehmood told The News that arranging of Rs144 billion through domestic avenues was part of overall financing strategy of Dasu project. “The funding arrangement is on cards after which the contract for main dam will be awarded,” he added.

He said that Dasu projects would be financed through three major avenues including loan from the World Bank, foreign currency loans partially being guaranteed by the WB and third through generating finances through banks.

The WB had approved IDA credit of $588.4 million and an IDA partial credit guarantee (PCG) of $460 million to help mobilise commercial financing for Dasu project. DHP-I would have 2,160 megawatts hydropower plant on the main Indus River, which can be expanded to 4,320MW in future with low additional cost.

DHP-I is a run-of-river project located on the Indus River about 240km upstream from Tarbela dam, close to Dasu town, in Kohistan district. The DHP-I cost is estimated at about $4.2 billion and the financing plan consists of IDA credits, IDA partial credit guarantees and contributions from Wapda and the NTDC.

According to the World Bank findings, the objective of the Dasu Hydropower Stage I Project (DHP-1) for Pakistan is to facilitate the expansion of electricity supply of hydropower in Pakistan. The project will also improve access to socio-economic services for local communities in the project area and build Wapda’s capacity to prepare future hydropower projects. 

This will be achieved by installing a 2,160MW hydropower plant on the main Indus River, which can be expanded to 4,320MW in future at very low cost. The project is a "high-risk-high reward" operation aimed at providing low cost non-carbon renewable energy.

This project comprises seven components. The first component, construction of the main hydraulic structure on the Indus River, will primarily consist of the civil works required for main dam structure on the river to raise the water level and thus create energy for running the power generating turbines and generators.

The second component, power generation facilities, allows for the construction of power generating facilities, two head race tunnels, two tail race tunnels, powerhouse for housing the turbines and generators and ancillary works. The third component, Preparatory Works, includes access roads, Karakoram Highway (KKH) relocation, construction of 132-KV transmission line from Dubair to Dasu, offices, onsite housing, and possibly access tunnel to the power house. The fourth component, transmission line, will provide transmission of power, a double circuit 500-KV line will be installed from Dasu to Islamabad (via Mansehra) that can serve two phases i.e. an installed capacity of 2,160MW.

The component will also include preparation and implementation of social and environment management plans and supervision. The fifth component will be comprised of implementation of social and environmental management plans, and glacial and sediment river monitoring.