World Bank to extend $1bn loan for Dasu project

ISLAMABAD: The World Bank will formally extend a new loan of $1 billion for Dasu hydropower project’s stage-1 after the approval of revised PC-1 having new timelines. The cost of the project’s phase-1 has shot up by 190.1 percent to Rs1,700 billion from Rs586 billion, a senior official of the Economic Affairs Division (EAD) told The News.

The increase in the cost is attributed mainly to a delay in land acquisition, security concerns and increase of US dollar value by 178 percent.

“The project of stage 1 would generate 2,160 MWs. However, after erecting the stage-II of the project, it would generate 4,320 MWs. Dasu Hydropower Project is a run of river project on the Indus River located 7 kms upstream of Dasu Town, District Kohistan (Upper), Khyber Pakhtunkhwa.

“The site is 74-km downstream of proposed Diamer Bhasha Dam site and 345 kms from Islamabad. Project will generate 4,320 MWs (12 Units @ 360 MW each) hydroelectric power with annual energy of 21,445 GWh and will be developed in two stages (Stage-I&II).

“Stage-I will generate 2,160 MW (06 Units @ 360MW each) with annual energy of 12,222 GWh. Stage-I will be completed in five years. The World Bank has already given the loan of $588 million and also extended the guarantee leverage for generating $460 million from the international market.”

However, under the new financing for the project, out of $1 billion, $800 million loan is of IDA and $200 million will be extended under IBRD. Out of the IDA loan, Pakistan will attain $435 million at zero interest rate, $365 million at 5.83 percent interest rate, and get $200 million under IBRD at 6.13 percent interest rate.

“We have prepared the revised PC-1 of the project at the cost of Rs1,700 billion and will send it within a couple of days to the Planning Commission for its approval. After that, WAPDA and WB will formally sign the $1 billion (loan),” the Ministry of Water Resources confirmed.

The land acquisition for the dam project was to be completed by 2014, but the process finished in 2021-22. Another reason for the escalating cost is the appreciation of US dollar by 178 percent to Rs278 from Rs100.

“The project was earlier scheduled to get completed by 2023-24 which would now be completed by 2027-28. Economic Affairs Division has played a pivotal role in diverting the bank’s loan to the project of paramount importance. The WB has already extended $1 billion loan to Pakistan in other heads, but it was not being spent. This is why the loan has been re-purposed and diverted to the Dasu Dam with the approval of executive board of the bank.”