ENERGY
The mega Diamer-Basha Dam project on the Indus River is again in the news. Sadly, groundbreaking ceremony of the multi-purpose project has been held twice, in April 2006 and again in October 2011, but the project could not take-off as yet primarily due to lack of political will on the part of successive governments that has also resulted in improper planning, mismanagement and non-availability of necessary funds for the project. After having stalled for a decade, the project is being revived and, interestingly, another groundbreaking ceremony is now planned sometime before the end of this year.
Ironically, the project has also been approved more than once by the Executive Committee of the National Economic Council (ECNEC); on January 7, 2004 at $6.4 billion project cost, on March 7, 2007 at revised cost $8.5 billion, and again on November 6, 2008 at $12.6 billion including the cost of compensation and resettlement of the affected local population. The PC-1 of the project was finally approved by the ECNEC on August 20, 2009 at total cost of over Rs894 billion ($12.6 billion at that time) including foreign exchange component of Rs313 billion, with the directive to implement the project on fast track. The huge cost over-run of the project over the years, without achieving any physical progress, is reflected in the revised cost estimate that has swelled already to $13.96 billion.
Due to resource constraints, Pakistan had to raise about $10 billion through external sources to support the project. There were indications that the World Bank would partially finance the project, whereas the Asian Development Bank (ADB) and Islamic Development Bank (IDB) would join the group since it was not possible for a single institution to finance the mega project. In 2009, the ADB had assured technical and financial assistance for the project, initially having offered $4 billion to be released in the year 2012 onward, whereas it’s pre-condition for national consensus was also met as the Council of Common Interests approved the project on July 18, 2010. Later, however, the World Bank declined to finance the project, reportedly on the Indian pressure as the project is located in the area that is so-called ‘disputed territory’.
ADB followed the suit and back-tracked its commitment. Meanwhile, the government also explored the possibilities of seeking finances from the US, Japan, China, Kuwait and other friendly countries, but without positive results. China Three Gorges Corporation, which is currently involved in developing 720-MW Karot and 1,124-MW Kohala hydropower projects under the China-Pakistan Economic Corridor (CPEC) program, was also invited in August 2008 to invest in Diamer-Basha project. The main issues are long-gestation period for the project, poor record of completing mega projects in given time-schedule, and the government's inability to arrange counterpart funds in local currency. Having failed to arrange financing from any of these sources, the government resorted to financing the project from its own resources.
It was decided to arrange a total of Rs420 billion locally during a period of seven years or so. For this purpose, the ECNEC allowed WAPDA in January 2011 to raise Rs20 billion from the market through term finance certificates and Islamic Sukuk bonds. Earlier, in 2006-07, WAPDA had raised Rs16 billion for the project’s pre-construction activities. However, the project was put on back-burner. Now the government plans to adopt the project financing plan on similar lines. Last month, Prime Minister Nawaz Sharif has approved, in principle, the plan for financing the project from its own resources, and has directed to expedite financing process and subsequently the commencement of construction work on dam project. Pakistan had also requested in October 2015 the Asian Infrastructure Investment Bank (AIIB) to finance the project, without success. Likewise, in December 2015, China was asked to include the Diamer-Basha in CPEC projects’ list, and, in a recent development, Pakistan has renewed the request after one year, in December 2016.
Reportedly, the government has now come up with a novel idea of constructing the dam in the first phase and, powerhouse to be constructed later only when additional funds could be arranged. This would set a record for Pakistan in global hydropower engineering, if implemented, since it would not be economically viable, if at all practical, as project cost would increase enormously and there would be significant loss of power generation every year. Diamer-Basha project is already termed as one of the largest and most costly dam in the world planned today. In any case, electrical and mechanical machinery of powerhouse is to be procured and installed after three or four years of commencement of dam construction for a project of this magnitude.
According to project cost estimates, powerhouse machinery would only be 18% of total cost, but long delays could jeopardize the whole project as the civil works for the planned two underground powerhouses would depend on the design parameters of turbo-generators to be installed. Project's detailed engineering having completed in March 2008, tender documents are ready since long for issuance to prequalified bidders for obtaining technical and commercial proposals, separately for five different lots of tender for the works and supplies of equipment. The whole project will need to be reviewed if only the dam is to be constructed in the first phase, entailing considerable additional time and money.
In fact, there are numerous challenges in executing the project that has complex and critical characteristics. Construction of dam would inundate 32 villages consisting of about 4,100 houses affecting a population of some 35,000, besides submerging 1,500-acres of fertile agricultural land. Another 25,000-acres land would be impounded under the dam reservoir. The project would cover an area of over 200 square kilometers, according to design. These serious impacts are to be adequately addressed to and mitigated by the government, at an additional cost of Rs60 billion, before commencing construction on dam project itself. Total 37,419-acres land has to be acquired for the project, out of which 28,247-acres, mostly government land, has already been acquired.
The project would extend 140-km upstream of dam site up to Raikot Bridge on the Karakoram Highway (KKH). This will also require re-gradation of 323-km of the KKH, including construction of a new bridge at Thakot, District Battagram that has recently been completed, besides building of numerous approach roads. Furthermore, road-network from Havelian to the site will also be upgraded, which is essential for transportation of heavy machinery required to be mobilized by the contractors at site. These reconstruction works are currently being undertaken under the CPEC program at an estimated cost of Rs80 billion. There are many engineering challenges for the project to be located in a mountainous, high seismic risk area. The two underground powerhouses will be built, each power-house to have six generating units of 375-MW each, with a total capacity of 2,250-MW, aggregating to 4,500 MW power generation capacity. Construction of high-voltage transmission lines from the site to national grid would also pose a serious challenge, which has not yet been planned, besides its additional huge cost.
Diamer-Basha Dam project is of strategic nature as it will be the first large dam to be constructed in four decades, after completion and commissioning of Tarbela Dam project in 1976. The project is considered vital for food security, with its reservoir live storage capacity of 6.4 (MAF) for supply of irrigation water during low-flow periods annually, and for resolving the power crisis in long-term, with its capacity to generate average 19,208 GWh of electricity annually, on completion. Pakistan is already among the extremely high water-stressed countries, and its per capita dam capacity has dropped from 329.60 cubic meter (CU M) in 1980 to 156.80 CU M in 2010; total dam capacity being static at about 27.7 cubic kilometer (CU KM) since 1980s. It is also important to mention that completion of Diamer-Basha project, which is to be located about 315-km upstream of Tarbela Dam, would control sedimentation in the Indus River, besides contributing to mitigate floods, and thus result in additional power generation of cumulative 2,433 GWh annually at the existing Tarbela, Ghazi Barotha and Chashma hydropower stations.
Furthermore, Diamer-Basha dam would extend useful life of Tarbela reservoir by another 35 years. The project envisages major infrastructure building in the region that would lead to overall socio-economic uplift. The government’s negligence to timely develop the project is therefore apathetic. It is ironic that the World Bank financed 5,400-MW Dasu hydropower project, which is 74-km downstream of the proposed Diamer-Basha Dam, is in advanced stage of implementation without taking into consideration the impacts of upstream Diamer Basha Dam in the Indus River, according to Dasu project documents, as Diamer-Basha dam is projected for completion in 2037. Given the conditions, one earnestly wishes that it may not remain a pipe-dream like Kalabagh Dam, and, also, may not meet the fate of Neelum-Jhelum hydropower project that has been delayed by about eight years with over three hundred percent cost escalation, and is still not commissioned.
The writer is ex-chairman of the State Engineering Corporation
