China to provide $4b for Diamer Bhasha dam project

China has assured Pakistan that it will be providing financial assistance up to $4 billion for 4500 MW Diamer Bhasha Dam project to be built on Indus River in Diamer district in Gilgit-Baltistan. An official source said assistance from China will be in the form of project financing for various components of the $11.2 billion project. He said assurance from China has helped expedite the project which will have gross capacity storage of 8.1 million acre feet (MAF) of water.
He said construction activities of main project will commence from next fiscal year and will take nine years for completion. Government has allocated Rs18 billion for land acquisition during current fiscal year. Government has also allowed the executing agency, Water and Power Development Authority (WAPDA) to raise funds of Rs20 billion under the government guarantee from market through TFCs or Sukuks. It will be repaid by WAPDA from its own resources. Asian Development Bank (ADB) had also committed to finance the project and was working on standard procedures to provide funding for the project. Similarly, he said, Islamic Development Bank (IDB) has also agreed to partially finance the project. US officials have already said that financial matter for the project will be decided by US Congress. However, he said World Bank was non committal on providing any assistance for the project.
WAPDA, he said was discussing financing of the project with Saudi Fund for Development and Japan Bank of International Cooperation (JBIC). Project will help save $2.85 billion in foreign exchange for production of equivalent electricity on imported oil. Live storage of 6.4 MAF of water of the project will help in supplementing irrigation supplies. It will help to mitigate downstream flood losses. Avoidance of flood damages cost would be much more than Rs2.3 billion per annum. The reservoir will act as silt trap, which will have direct effects on existing and proposed reservoirs on Indus downstream of Diamer Basha Dam Project. It is expected to enhance potential life of Tarbela reservoir by 35 years.