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US Offers Funding for Diamer Bhasha Dam, Pakistan Also Talking to Russia and China


The United States could provide funding for Pakistan's $13 billion USD Diamer Bhasha Dam project, which has stalled over funding issues and objections from neighboring India.

“Diamer Bhasha Dam needs massive financing and we can extend partial assistance for the project,” Jock Conly, country director for the US Agency for International Development (USAID) told Pakistan's Express Tribune yesterday (September 12).

Accepting US funding could mean Pakistan would have to shelve a $7.5 billion USD gas pipeline project, with Iran, which Washington strongly opposes.

Water and Power Development Authority (WAPDA) Acting Chairman Raghib Abbas Shah told reporters in Islamabad on September 12 that the government was considering proposals from several other countries, including Russia and China, to fund construction of the dam.

"The government is also looking at other financing options, including a surcharge for power consumption, to hedge its bets “in case no country promises money for the dam.”

Russia is asking for a direct no-bid contract award for the Diamer Bhasha project. A deal could be reached during Russian President Vladimir Putin’s trip to Pakistan next month, although the Express Tribune quotes government sources as saying Moscow has not made a firm commitment to the dam.

China is offering skilled labor to build the dam, in the form of 17,000 workers who constructed the massive Three Gorges Dam on the Yangtze River. Pakistan Prime Minister Raja Pervez Ashraf was also expected to ask for funding during meetings with Chinese officials this week.

Multilateral donors have been leary of the project, and are asking Pakistan to get a no-objection certificate from India before they will finance the dam.

The World Bank has offered to fund another another hydropower project, the Dasu Dam, instead. The Asian Development Bank has suggested it will not provide any financing if Pakistan compromises on environmental safeguards or competitive bidding processes. The bank was specifically concerned about Chinese financing, saying that while it would welcome China as a funding partner provided there was no compromise on quality and transparency.

The 4,500-megawatt Diamer Bhasha Dam has been in the works for three decades. The government broke ground on the dam in November 2011, even though it had not finalized funding for the project.

The dam is to be built on the Indus River about 40 kilometers from Chilas in Gilgit-Baltistan, a seismic zone. It is the first large dam to be built in Pakistan since the early 1970s.

The dam would hold enough water to help prevent the kind of devastating flooding seen when the Indus River burst its banks in 2010.