ISLAMABAD: The US is considering financial support for a $12 bln Diamer Basha Dam in an attempt to improve its battered image in the country, reports Guardian.

According the newspaper report, the Daimer Bhasha dam would provide enough electricity to end crippling shortages in he country.

“It is said its reservoir would hold so much water it could have averted last year's devastating floods”, the Guardian report said.

It added that Washington has not yet made a final decision on  the dam, but US money would be crucial in securing other international finance, especially from the Asian Development Bank. “Getting involved in a long-term project like this is very compelling for us, “ said a senior US official.

“This is the project we're spending our time assessing”, the report remarked.

“This would demonstrate that Pakistan is the kind of country where you can do large, complex infrastructure projects. It's not all flood relief and sacks of flour.”

The report added that at the end of last week, President Asif Ali Zardari met a team from the Asian Development Bank “to start the process of financing Daimer Bhasha dam as the project has been approved at all internal fora of the country according to a statement from his office. It added that the dam, which harks back to similar projects supported by Washington in the 1960s and 1970s, could help reset relations between the two countries.

The report further said that the dam, on the Indus river, would provide 4,500MW of cheap, green energy, making up for a shortfall causing up to 12 hours of power cuts a day across Pakistan. The reservoir would be 50 miles long.

Shakil Durrani, Chairman of the Water and Power Development Authority, said Islamabad had approved the dam project and he was confident of US backing.  “If we had a reservoir the size of Daimer Bhasha the floods last summer would not have occurred,” he said. "This would be the largest project ever undertaken in Pakistan. It is our top priority.”

Analyst Mosharraf Zaidi agreed the dam could boost relations. “Daimer Bhasha would be tremendously good for Pakistan and would show that the US is invested in a long-term relationship with Pakistan.”, the report said.

It added that the US aid to Pakistan increased to $1.5 billion a year under the Obama administration, but has been widely dismissed in the country as going mostly to consultants and lacking focus. It remains unclear how much of this cash has actually arrived in Pakistan since the new aid programme began in 2009.

“US aid is neither visible nor tangible,” said Tariq Fatemi, a former Pakistani ambassador. “Unless the people of Pakistan can identify large, visible projects that make a difference to people 's lives, the US is not going to get the kind of appreciation that it believes it deserves.”, the report added.

The Guardian report said that the US official said Washington had spent $2bn on civilian assistance since October 2009, including $550m on flood relief last year, though that came from a separate fund.

Daimer Bhasha would take around eight years to build. Pakistani authorities plan to shortlist contractors later this year, the report added.