The government has launched a fund to build the Diamer-Bhasha Dam which when completed is expected to cost an estimated $20 billion. The dam will be built on the River Indus in Gilgit-Baltistan and, upon completion, would (i) produce 4,500 megawatts of electricity through environmentally clean hydropower generation; (ii) store an extra 8,500,000 acre feet (10.5 km3) of water that would be used for irrigation and drinking; (iii) extend the life of Tarbela Dam located downstream by 35 years; and (iv) control flood damage by the River Indus downstream during high floods.
There are two reasons why the chief justice of Pakistan had to take the initiative on his own, inviting the nation to join in. First, the country as of today is running so short of resources that it has become increasingly difficult for it make the two ends meet just for feeding, clothing and housing its citizens, what to talk of mobilizing billions for building dams. Secondly, Pakistan is said to be running out of water by 2025, and droughts of unprecedented proportions are going to hit the country within five to seven years.
Perhaps, conscious of the fact that under the obtaining resource constraints Pakistan would hardly be able to mobilise enough resources from its budgetary sources to be able to finance in time the construction of the much needed dam – a dam which seems to have become a matter of life and death for Pakistan – the CJ has chosen a highly innovative financing plan for building the dam. A novel idea, indeed. And it should be taken as such, instead of rushing to look into the horse’s mouth.
There has been a great deal of criticism of the dam fund. There is no criticism regarding intent and character. The criticism pertains to the economics and public policy of it. First of all, the size of financing required to build Diamer-Basha and Mohmand dams has to be kept in mind. The former has an estimated cost of about $14 billion or about Rs1,680 billion; the latter costs, according to 2010 estimate, about $1.4 billion or Rs168 billion at current currency conversion rates. That’s nearly Rs1,900 billion combined. To put this in context, total direct tax collection in FY18 was Rs1,563 billion, whereas total federal PSDP was Rs750 billion.
The pace of collections has increased to an average daily collection of Rs108 million in the last few months. However, the advocacy for a dam fund is not going to last forever; there is something called donation fatigue. The current CJ is scheduled to leave office at the start of the third quarter FY19, whereas the PM and his finance team will have far more on their plate, leaving them with less time for advocacy for the dam fund. Even if one assumes an average daily collection of Rs108 million for the rest of the fiscal year, total amount collected in FY19 would be no more than Rs33-34 billion, which would still be peanuts given the scale of requirement. Granted that infrastructure projects like these may have multiple financing sources: local versus foreign; debt versus equity; with total financing raised over a period of 2-3 years and even longer. But even after three years, total financing raised through these funds may be about Rs100 billion. By that time, the estimated cost of completion of the project would have moved north anyway.
That our water security problems are gigantic has never been an issue requiring a debate. Dams, big and small, can greatly improve our water security situation. But building dams is a capital intensive exercise and it is also a time consuming one. Our experience of building Tarbela and Mangla dams is too recent for us to forget. The experience of Neelum-Jhelum – a dam under construction for over a decade, too, is highly instructive. We know it is simply impossible to control cost over-runs in building a dam which more often than not would run into billions and it is also impossible to strictly adhere to construction schedules which without fail often get upset by decades.
Most dams, even the biggest ones, are known to have lost their reservoir capacity to a great extent within a matter of three to four decades, mostly because of silting requiring additional constructions costing more billions. Tarbela and Mangla dams have suffered greatly from silting and in order not to lose the reservoirs completely to the menace we have been spending billions to maintain the reservoirs’ capacity. However, all this still does not mean that we should stop building new dams for storing irrigation waters, to guard against floods and to generate electricity – cost wise it is cheaper to produce power from hydel units compared to the fossil fuel-driven power stations.
Experts, however, advise poor countries like Pakistan to focus more on building smaller dams on natural waterfalls which not only cost less but also get completed in far shorter time. And as opposed to the big dams, such small dams do not cause environmental upheavals, drastic climate changes; and nor do they cause the forcible uprooting of a population from its permanent abode.
In fact, in the early 1990s, a German team of experts sent by the country’s ministry of overseas development aid had visited KPK and identified scores of waterfalls on which dams could be built to produce as much as 40,000MW of electricity and at the same time bring under cultivation vast tracts of arable land that is lying barren in KPK and the adjacent territories of Punjab province and Afghanistan. Meanwhile, Pakistan has been advised by experts to shift its focus to managing water demand and producing more from each drop of water. The problems in irrigation are more to do with inefficient and unfair distribution of water, and low productivity in terms of the yield and value of crops per unit of water used.