The water challenge faced by Pakistan today is bigger than that of the power sector and it is getting worse with each passing day. Pakistan desperately needs to increase its water storage capacity. This was stated in a fact sheet issued Tuesday by the Institute for Policy Reforms. The Institute recommends that government must start building the Diamer Bhasha dam forthwith. The scale and complexity of the project requires the involvement of top level government officials. This will speed up the project work in Pakistan and highlight its priority to international donors. Pakistan must request Chinese assistance for the project.
Pakistan’s agriculture production fell in fiscal year 2015-16. A number of issues constrain agriculture in the country. These include cost of inputs and price volatility of output. Farmers do not get quality and virus resistant seeds. Water availability and its use are equally important issues.
Pakistan is among the most water stressed countries in the world. With silting of dams and a growing population, this will only become worse. Available water was 138.6 MAF in 2014-15. It fell to 133 MAF in 2015-16. Actual flows to canals is 114 MAF. It is reducing each year. Area irrigated by canals has been in long-term decline since the 1990s. We have not built a single large dam since Tarbela. Kalabagh has been in a terminal debate, Diamer Bhasha has been a permanent work in progress and during this time, net water storage has come down by 30%.
The Fact Sheet recommends urgent execution of the Diamer Bhasha dam. It is a critical project that will increase water and power supply in the country. Bhasha will add 6.4 MAF to our gross storage. This is 35% to 40% of the total existing capacity. The project will add 4,500 MW of hydro power generation capacity. Bhasha’s Internal Rate of Return (IRR) makes it a feasible project though its real benefit lies in enhanced national security. The reservoir, additionally, will increase power generation capacity of Dasu by about 25% and of Tarbela by an estimated 10 to 15%. It will also reduce silting of Tarbela. Experience from Tarbela and Mangla dams show that actual benefits far exceed original estimates. Global experience shows also that such projects especially benefit the poor.
At Rs 834.2 billion or $11 billion equivalent (at 2009 rate for USD), the project cost is high and perhaps a deterrent to immediate execution. Land acquisition is another Rs. 101.3 Billion. And then Government of Pakistan (GoP) has a separate project for transmission of power. Substantial project completion period is eight years although the total period is eleven years. ECNEC approved the project in 2009. It could have been near its completion by now.
The fact sheet advises GoP to implement power generation as an Independent Power Producer (IPP). Total amount needed for the dam is $2,934 million or Rs 310 billion. Add 50% of this cost for interest during construction and other items and the total grows to $4.6 billion or Rs 486 billion. This amount is needed over a period of eleven years.
Phasing financial needs by physical activity ensures that it does not exceed Rs 56 billion in any one year. However, because of its scale and large foreign component, Bhasha needs external assistance.
The government must urgently ask the Peoples’ Republic of China to sponsor the project. Physically, the project lies on the KKH along the China Pakistan Economic Corridor. It also falls within the sectors selected for bilateral cooperation.
IPR states that so far GoP has not addressed the water challenge in earnest. It must launch Diamer Bhasha immediately. Government must hold top level meeting with the Government of the Peoples’ Republic of China to obtain their assistance. They may also hold top level discussions with neighbouring countries to assuage their concerns. GoP must commit and provide enough PSDP funds for project implementation.