Pak drops dam project in PoK after China imposes strict conditions

A bid to include the 14 billion dollar Diamer-Bhasha Dam in PoK in the CPEC framework was withdrawn by Pakistan after China placed strict conditions.

Pakistan has been struggling to raise money from international institutions like the World Bank in the face of Indian opposition to the project on the Indus River in Pakistan-occupied Kashmir (PoK).

The China-Pakistan Economic Corridor (CPEC), a part of Chinese President Xi Jinping's Belt and Road Initiative (BRI), runs through PoK and India has raised objection to the project.

Neither the World Bank and Asian Development Bank (ADB) nor China would finance the dam, therefore, the government decided to construct the reservoir from its own resources, the Express Tribune today quoted Water Resources Secretary Shumail Khawaja as saying.

Pakistan decided to take the dam project off the table just days before the 7th Joint Cooperation Committee (JCC) meeting with China, which is scheduled for November 21 in Islamabad, it said.

The JCC is the highest decision-making body of the CPEC.

"Chinese conditions for financing the Diamer-Bhasha Dam were not doable and against our interests," Water and Power Development Authority (Wapda) Chairman Muzammil Hussain said yesterday while briefing the Public Accounts Committee (PAC) on the status of the mega water and power project.

He said the Chinese conditions were about taking ownership of the project, operation and maintenance cost and securitisation of the Diamer-Bhasha project by pledging another operational dam.

These conditions were unacceptable, therefore, Prime Minister Shahid Khaqan Abbasi approved a report to finance the dam from the country's own resources, he said.

A flagship project under the Belt and Road Initiative, the CPEC is a trade network of highways, railways, pipelines and optical cables which are currently under construction throughout Pakistan.

India skipped the Belt and Road Forum (BRF) in May this year due to its sovereignty concerns over the CPEC.

Issue of excluding the Diamer-Bhasha Dam from the CPEC framework also featured in the Cabinet Committee on CPEC which met last week, the paper said.

The Wapda chairman and the water resources secretary informed the premier that the only way out was to fund the much-delayed project from domestic resources, it said.

There were hopes that Pakistan may finally complete the project after including it in the CPEC framework, the report said.

Interestingly, ground-breaking of the Diamer-Bhasha Dam has been performed five times in the past 15 years, it said.

The Wapda chairman blamed the ADB for the delay, saying the bank first destroyed the project and later declined to provide loan. The ADB was of the view that the project was located in a disputed territory, Hussain said.

The project will have the capacity to generate 4,500MW of electricity in addition to the storage capacity for six million acre feet of water, which the country desperately needs due to shrinking storages.

The Wapda chairman said the project cost would hover around USD 14 billion and the prime minister had agreed to split the scheme into dam storage and power generation.

According to the new financing plan, he said, the federal government would provide Rs 30 billion per annum over the next nine years from the Public Sector Development Programme, taking total federal contribution to Rs 270 billion.

Hussain said Wapda would generate 20 per cent of equity from its own resources whereas financing for constructing power plants would be arranged from commercial sources.

Construction work on the dam site would begin next year and the government would complete it in nine years, he said. Work on the power generation site will begin two and a half years after the start of work on the dam.

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