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Monday May 27, 2024

Pakistan seeks $3.5bn financing from KSA for Diamer-Bhasha dam

Wapda has asked Saudi Arabia to provide concessional loan of $2.3 billion at 2.25pc interest rate for 25 years with grace period of six years

By Khalid Mustafa
April 24, 2024
A view of Diamer Basha Dam. — Radio Pakistan/File
A view of Diamer Basha Dam. — Radio Pakistan/File

ISLAMABAD: Pakistan has sought $3.5 billion financing from the Kingdom of Saudi Arabia (KSA) for Diamer-Bhasha Dam during the visit of a high-powered delegation from KSA on April 15-16.

“The authorities in KSA would respond to Pakistan after the input of the financial adviser on Diamer-Bhasha Dam. The financial adviser to be appointed by KSA would carry out due diligence of the project and business model which Pakistan authorities pitched before the Saudi delegation,” a senior government official told The News.

“Wapda would also appoint a financial adviser (FA), which will deal with the FA on the project appointed by KSA.” The formal request is likely to come from KSA in 1.5-2 months.

The cost of Diamer-Bhasha Dam stands at $8 billion out of which foreign component stands at $4 billion. Wapda has arranged $500 million through its Euro Bond.

Out of $3.5 billion, Wapda asked the KSA authorities to provide concessional loan of $2.3 billion at 2.25pc interest rate for 25 years with grace period of six years. It sought $1.2 billion as its equity in the project at 4.45pc at par with the interest cost of US 10-year Treasury Bond.

The Saudi Fund has already provided $240 million as concessional loan at 2.25pc for 25 years. The Diamer-Basha Dam project is being constructed on a 30pc equity and 70pc debt ratio. This is the biggest dam in Pakistan and tallest RCC (Roller Compacted Concrete) in the world.

Work has already begun on the dam part of the project. The dam will have capacity to generate around 18 billion GWh annually. 4,500 megawatts of electricity will be generated with gross storage capacity of 8.10 MAF (million acres feet) of water, while live storage capacity will be 6.4 million MAF.