Daily Times

Industry analysts do not foresee any major construction activity on the Diamer Bhasha project site over the next 12 months citing lack of existing funds, land issues, unavailability of international financing and current project status.

Recently, Water and Power Development Authority (WAPDA) has claimed to commence construction work on Mohmand and Diamer Bhasha dams from February-2019 and May-2019, respectively.

“However, given the water stressed situation, we do expect construction of 6 large scale dams to commence over the next 5 years which would create an additional annual demand of 1.7-2.6 million tons of cement per year”, said Farheen Irfan, an analyst at Elixir Research Department.

This is not the first time the government officials have claimed to be commencing the construction of the project. In fact, ground breaking ceremony for the dam has already happened five times in the past, with the first one being conducted by the then President Pervez Musharraf in 2006.

“Based on our assessment of project status, discussions with General Electric (one of the E&M equipment manufacturers of Hydropower Plants) and study of project timelines/milestones for Dasu Hydropower Project; we believe that civil works related to Diamer Bhasha Dam and attached hydropower plant would not begin in 2019″, said Ms Irfan.

The biggest challenges are lack of availability of funds, expected delays in private land acquisition (out of 18.3000 acres of private land, 10.2000 acres still needs to be acquired) and absence of final award for E&M equipment and civil works, she added.”We believe that the displacement of people, construction of project colony and development of model village at Harpan Das, Thak Das and Sagachal Das would be the prime project activities during 2019 – which will however not result in any meaningful impact on cement offtakes”.

Due to recent devaluation in Pakistani Rupee, the revised cost for dam estimated at Rs 530 billion (local/foreign: Rs 320bn/210bn).

Donations raised so far sum to a paltry Rs 8.5 billion (3% of the local cost component) while even after FY19 PSDP allocation, the funds set aside make up to just 10% of the local cost.

With government already facing unprecedented strains on its fiscal accounts, it appears unlikely that we will see any meaningful increase in allocations from development expenditure towards the dam over FY19-20, Ms Farheen opined.

Raising funds/debt for foreign cost component ($1.5bn) would be an even bigger challenge – part of which can be achieved via a likely issuance of Diaspora Bonds over the next 3-6 months, she concluded.

Published in Daily Times, December 13^th 2018.