China to build dams in Pakistan

• China to fund, build five dams in North Indus River Cascade costing US$ 50 billion; the Cascade is capable of generating 40,000MW of hydel power
• Diamer-Bhasha Dam would be completed in nine years costing around US$12 billion

In a major leapfrog in cementing the Belt and Road initiative, China and Pakistan Saturday signed a historic memorandum of understanding (MoU) to fund and develop Pakistan’s five big water reservoirs with an estimated cost of US$ 50 billion. The projects will be completed in the Indus River Cascade which has a potential of producing 40,000MW of power.

Pakistan has an identified potential of 60,000MW from hydropower projects.

The Indus River Cascade begins from Skardu in Gilgit-Baltistan and runs through Khyber Pakhtunkhwa.

The MoU signed was for around 22,320MW (Diamer-Bhasha 4,500; Patan 2,400; Thakot 4,000; Bunji 7,100; Dasu 4,320).

Prime Minister Nawaz Sharif witnessed the signing of an MoU regarding the roadmap for power projects under CPEC that was signed by Water and Power Secretary Yousuf Naseem Khokhar and Chinese Ambassador in Pakistan Sun Weidong.

Under the MoU, China’s National Energy Administration (NEA) would oversee building and funding of five dams, including Diamer-Bhasha, Pattan, Thacoat, Bunji and Dasau dams. This would be China’s biggest-ever investment in Pakistan besides already committed projects worth US$ 57 billion under the CPEC.

This is for the first time that Pakistan has adopted a policy shift in the building of its hydroelectric reservoirs by inviting Foreign Direct Investment (FDI), as China’s private sector would be investing around $50 billion for several hydel power projects with regards to the North Indus River cascade which also includes Diamer-Bhasha Dam.

On the occasion, China’s NEA hosted Diamer-Bhasha Project Conference at Beijing where the heads and representatives of power sector companies in China gave presentations on their study of the Bhasha Dam project and called for a deeper study on the project, owing to its crucial nature for Pakistan. In this regard, Water and Power secretary Yousuf Naseem also gave a briefing to the Pakistani and Chinese delegations at Beijing on Saturday soon after the MoU was signed.

Diamer-Bhasha Dam would cost around US$12 billion and would be completed in nine years.

Chinese experts in their feasibility survey have identified the potential of producing up to 60,000MW of hydroelectric power mostly in Pakistan’s Gilgit-Baltistan province. Around 45,000MW of this potential power has been identified—the Indus River Cascade, which begins from Skardu in Gilgit-Baltistan and runs through Khyber Pakhtunkhwa.

China’s NEA has been working on the roadmap of several hydel projects in order to help Pakistan meet its growing energy demands.

The prime minister on the occasion hailed the contribution of the NEA in handling Pakistan’s energy projects being built under the CPEC. He said Pakistan not only required support in the energy sector for its economic development and long-term prosperity, but also needed mega initiatives to improve its water storage capacity.

“Therefore, development of the North Indus Cascade is a major focus of my government, and the construction of the Bhasha Dam is the single most important initiative in this behalf,” the premier said. He said water and food security was of paramount importance for Pakistan keeping in view the challenges posed by climate change.

According to exclusive documents available with Pakistan Today, Pakistan is eyeing around 44,000MW generation only through Diamer-Bhasha Dam. Other than power generation, this dam would also provide eight billion million-acre feet water for agriculture sector, which would largely help the country grow foodstuff under its food security plan.

A well-placed source in the ministry of water and power told Pakistan Today that the experts of NEA had visited the sites of all the dams involved and they had conducted survey and study on the North Indus Cascade in February 2017.

“We have been going from pillar to post for the past several years to attract funding for Diamer Bhasha Dam. However, the donors did not support the idea due to the influential Indian directors at those institutions. Rather, each time Pakistan was advised to focus on small dams, which, according to the donors, were feasible and risk-free. While India kept on building big dams, the donors did not assist Pakistan to build mega-dams to keep Pakistan starving. Neither the World Bank provided funding to Pakistan nor did the Asian Development Bank,” the source added.

The source said that Pakistan believed that now Asian Infrastructure Investment Bank (AIIB) would be funding its ambitious North Indus River Cascade.

The source said that following the MoU signing, China will now conduct a detailed study spanning over a period of three months for development of a roadmap for financing, leading to initiation and completion of these mega projects.

The source added this will be Pakistan’s first-ever private sector investment in mega projects in hydel resources—as only WAPDA used to lead such projects in the past. The most important development could be the Chinese undertaking of these projects as it has a vast experience in building such huge dams.

In 2015, the owner of the world’s largest hydroelectric dam, China Three Gorges (CTG) Corporation, had expressed willingness to participate in a financing consortium to fund up to $50 billion of hydroelectric power projects in Pakistan.