Pak: Ministry seeks Rs 60 bn for dam projects

Islamabad: The Water and Power Ministry has sought an allocation of Rs 60 billion in the 2008-09 budget to expedite work on four big dam projects Diamer, Basha, Akori and Kuram Tungi and for Munda Dam land compensation.

A senior official of the Water and Power Ministry said that the allocation sought by the ministry was around five times higher than the amount allocated for big dams during the current fiscal year’s budget.

The official said the government had allocated Rs 12.6 billion for five big dams, including Kalabagh, for the current fiscal year Rs 2.6 billion of which was allocated in the Public Sector Development Programme (PSDP) 2007-08.

Land acquisition: He said that government would spend the major portion of the allocated amount to acquire land for four big dams, excluding Kalabagh Dam. Sindh had opposed the allocation of funds in the forthcoming budget for the Kalabagh project and the federal government had buried the project, saying it was too controversial.

The Water and Power Ministry had sought the Rs 60 billion allocation for the Basha, Akori, Kurum Tungi and Munda dam projects, and the federal government would pay the bulk of this amount to the North West Frontier Province (NWFP) for land compensation.

According to initial estimates, the government has been informed that it would need $22 billion to construct five big dams. International financers have proposed that the government involve the private sector in constructing the dams.

The cost of the Basha dam project has been estimated at $8.5 billion – $2 billion higher than the cost projected in 2005 ($6.5 billion). The project would generate 4,500MW electricity. The Munda Dam would generate 600MW of power, the Kuram Tungi Dam 83MW and Akori Dam 600MW.

Two major banks, the China Development Bank and the Asian Development Bank (ADB), have agreed to provide financing for the Basha Dam project.

The official said the Basha Dam project was the biggest of the four projects and the government would pay special attention to it. He said the allocation of Rs 2.6 billion in the current year’s PSDP, which had lapsed, would be acquired for the project from commercial banks. The government would pay this amount to the NWFP government for land compensation. The Lehmar Company is in the final stages of issuing the final detailed engineering design, he added.

The official said the federal government had already asked the Water and Power Development Authority (WAPDA) to generate Rs 35 billion from various sources, including the private sector, for the big dam projects. He said this amount would be in addition to the upcoming budget allocation.

He said that work on linking the Karakoram Highway to the Basha Dam was underway and the federal government had released Rs 2 billion for it during the current year. The link would be upgraded at a cost of Rs 11.578 billion, he added.

The official said the government also planned to announce a formal tax holiday package in the upcoming budget to involve the private sector in materialising the dam projects.

The incentives package would be offered for setting up power houses at the four dams, which would be exempted from income tax and duties on imports related to setting up the power houses, he said.