ISLAMABAD, Aug 10: The World Bank has reportedly offered funding to induce Pakistan to take up the Dasu power project in Khyber Pakhtunkhwa and delay for 10 years the strategically more important Diamer-Bhasha dam in Gilgit-Baltistan.

That appeared to be the crux of the proceedings of Senate Standing Committee on Water and Power here on Friday, even though top bureaucrats tried to satisfy the committee that Pakistan’s sovereign decision on the matter maintained focus on the multipurpose Diamer-Bhasha project.

The World Bank has so far been reluctant to commit funds for the $12 billion Diamer-Bhasha project apparently because of behind-the-scenes opposition from India. The project promises 4,500MW of cheap electricity and 8.5 million acre feet (MAF) of water.

Senator Zahid Khan of Awami National Party who presided over the meeting provided the information about the WB offer and seemed inclined to support it apparently because it promised royalty on power generation and water use charges for Khyber Pakhtunkhwa unlike Diamer-Bhasha which required sharing revenues with Gilgit-Baltistan.

He said the World Bank had offered funding for 4,320MW run-of-the-river Dasu hydropower project instead of Diamer-Bhasha which would be delayed for 10 years. He said that according to his information “the bank is ready to extend funding for the Dasu project instead of Diamer Bhasha dam”.

“Government’s priority is Bhasha dam, and not Dasu project, and the World Bank is not responsible for making policies in Pakistan. We have made it clear to all donors that Pakistan will not give preference to Dasu over Bhasha,” retorted Wapda chairman Shakil Durrani who also belongs to Khyber Pakhtunkhwa and is close to the Khans of Charsadda.

The site of the Dasu hydropower project is 7km upstream of Dasu village on the Indus and 74km downstream of Diamer-Basha dam. It is located in Kohistan district of Khyber Pakhtunkhwa.

Senator Zahid, who had specially invited officials of the economic affairs division for a briefing on the funding issue, asked if Bhasha was getting delayed why the government was not starting work on Dasu which was equally important.

The Wapda chairman said that Dasu was a run-of-the-river project while Bhasha dam would offer water storage which was a bigger challenge for the country.

He said Tarbela dam’s storage capacity was diminishing with 5,000 tons of silt filling its reservoir daily. “If Wapda starts work on the Dasu project, Diamer-Bhasha dam will be delayed for 10 years as we can construct one dam at any given time,” he said.

In the ensuing heated debate, Water and Power Secretary Zafar Mahmood tried to pacify both sides by saying that with adequate funding there should be no problem in undertaking both projects.

The committee decided to get a briefing on the prospects of funding from the economic affairs division at the next meeting.

The meeting was informed that the cost of 969MW Neelum-Jhelum hydroelectric project had increased from Rs130 billion in 2007 to Rs275 billion in 2012. The project was estimated to provide a guaranteed annual revenue of Rs45 billion to the government after its completion in 2016, project director Lt-Gen (retd) Mohammad Zubair said. At present prices, he added, the generation cost would be less than two rupees per unit after paying back interest.

He said a refusal by Norconsult of Norway to work in Pakistan had led to mobilisation of new consultant NJC – a joint venture led by MWH of the United States – on Aug 1, 2008. It completed review of earlier basic design made by Norconsult in 1998 which was not developed in detail.

Lt-Gen Zubair said review and modification of the project’s design after the 2005 earthquake had led to the increase in cost. In case of an earthquake of 7.6 magnitude one part of the project would remain safe, he said, adding that Rs24.843 billion had been spent on the project up to June 30 this year.

Answering a question, he said Wapda faced Rs90 billion funding shortfall which was now being bridged through a surcharge of 10 paisa per unit, Sukuk bonds and other measures.

Lt-Gen Zubair said redesigning of the project after the 2005 earthquake, two to three years delay in arranging land by the AJK government and six to eight months delay due to 2010 floods were key reasons for late start of the project.

He informed the committee that Exim Bank of China would soon approve $448 million for the Neelum-Jhelum project and in case of a delay Wapda would face funding problems. Abu Dhabi had promised $100 million for the project but it was not interested anymore, he said, adding that he would not disclose the reasons because these were beyond his purview.

Shakil Durrani said Norconsult had not conducted a detailed geological survey, adding that no international consultant was ready to work on the Neelum-Jhelum project because of its close proximity with the Line of Control.

He said Wapda had changed construction methodology from drill and blast to tunnel boring machine (TBM) because progress was slow and behind schedule. He said TBM had faster excavation rate of up to 16 metres a day, implying that the tunnels would be completed in 30 months which would lead to completion of the project in 2016 instead of 2018.

Responding to a question about excessive use of Chinese machinery despite its inferior quality, the Wapda chairman said it was not possible for the authority to buy equipment from other countries with funding from China. “How can we set our conditions when we are borrowing money from other countries? If China gives funding we are bound to buy Chinese equipment,” he added.