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September 9, 2018

Tough for overseas Pakistanis to provide $1,000 each for dams

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September 9, 2018

ISLAMABAD: The Pakistanis living abroad are estimated to possess potential income of $50 billion out of which $20 billion are sent back as annual remittances, and it will be hard for all the nine million overseas workers to provide $1000 as donation for the construction of dams besides simultaneously investing in the upcoming Pakistani Diaspora bond.

Pakistan requires over $14.6 billion for the construction of Diamer Basha Dam which cannot be built through donations alone. There is need to un-bundle this project whereby the construction of the water reservoir should be done with the domestic resources and a consortium of multilateral and bilateral creditors be established to manage the financing, while installation of power generation should be done in the second phase through investment from potential domestic and international investors by competitive bidding process and it should be built on the BOT basis (built-operate and transfer).

It will not be advisable to ask the overseas Pakistanis for too much so the PTI led government should prioritise the required support on an immediate basis to lure the fan club of Imran Khan having disposable income and who genuinely want to help Pakistan to overcome its economic morass as well. “We need to exploit the situation very carefully because when we ask for too much it will become harder for them to fulfill the requirements in accordance with our desire,” said the official.

Prime Minister Imran Khan has sought donations from the overseas Pakistanis, so an effort was made to get hard cash in dollars as it will help Islamabad meet its requirements of dollar inflows and also help in generating the funding for dams. “The maximum, this campaign may fetch is up to $1 billion but it is hard to guess at this point,” said an official who added the fiasco of Atif Mian's unceremonial removal from the Economic Advisory Council would cause a negative impact among the Pakistani diaspora who are both educated and pro PTI.

There are no exact estimates available on the potential of total remittances of the overseas Pakistanis. The IMF in its report in 2008 had termed it a paradox because there are other parts of income like the export proceeds and corruption channeled through remittances to make it part of the legal channel. However, rough estimates suggest the overseas Pakistanis have the annual potential of earning $49-$50 billion, out of which $20 billion are sent back through legal and official channels.

The PTI supporters argue that there is difference between donations sought for the construction of dams and investment in the upcoming bond as the Finance Ministry is working to firm up such a proposal which would attract the interest of the overseas Pakistanis who would prefer to invest their savings in Pakistan instead of keeping in foreign banks without any attractive profits.

Earlier, on the directives of the Supreme Court of Pakistan, the Implementation Committee on Diamer-Basha and Mohammad Dam (ICDBMD) had asked for uninterrupted funding for the mega projects and in case of any shortfall it may be recovered from the federal divisible pool under the NFC Award through which the resources are distributed among the Center and provinces. The ICDBMD needs an appropriate legislation for adequate water pricing mechanism to meet the development needs of water infrastructure.

In another important recommendation, the ICDBMD has asked for allowing National Electric Power Regulatory Authority (Nepra) to recover cost attributable to power generation in both the projects from the electricity consumers.

To meet the foreign exchange requirements of the projects, Wapda may explore international financial and capital markets in Far East, Europe and USA to tap commercial loans (syndicated or asset backed) and bond avenues.

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