ISLAMABAD - The World Bank has approved two projects for Pakistan – 4,500 MW Dasu Hydropower Project (US $ 600 million) and Sindh Water Irrigation Project (US $ 100 million).
According to a press statement issued by the Finance Ministry, on May 1st, 2014 the World Bank had approved US$1 billion for budgetary support to Pakistan.
The Finance Minister said that the Dasu Hydropower Project is located on main Indus River in district Kohistan, KPK and the other project will help Sindh government to improve its irrigation system. He added that for Diamer Bhasha Dam, the Finance Ministry was working with the USAID to organise an international investors’ conference in September this year in Washington DC. He said, “We will fulfill the promises made with the nation to make Pakistan self-sufficient in energy and water resources”.
The World Bank loans are purely concessionary and cheap in nature with repayment schedule spanning over a period of 25 years including five years grace period, with no interest and a nominal administrative charges of 2 percent per annum.
On receipt of US $ 700 million, an equivalent amount of Pakistan rupees will be reduced from the domestic debt which is much more expensive at 12.5 percent per annum. Government of Pakistan will be saving net 10.5 percent in payment of interest. Resultantly, there will be no net increase in overall public debt.
The World Bank’s board of directors’ support and commitment with Pakistan reflects their confidence in the leadership and vision of Prime Minister Nawaz Sharif and his team led by Finance Minister Senator Ishaq Dar.
Earlier, the Finance Minister talked to Mr Jacob Lew, US Secretary of Treasury, to seek US support to Dasu project which is vital for Pakistan’s energy needs, as US had abstained from voting in case of ADBs assistance for Jamshoro Coal Power Project. The US had conveyed that it will abstain from voting on Dasu Project in the World Bank Board meeting. Finance Minister urged Secretary Lew to vote positively in the Board meeting on Dasu Hydropower Project, to which he agreed.
Our special Special Correspondent from Washington adds: The World Bank approved the Dasu Hydroelectric Power project at a pre-scheduled meeting of its Executive Directors.
The meeting, chaired by Sri Mulyani Indrawati, the Managing Director and the Chief Operating Officer of the World Bank, endorsed the Dasu Project with an overwhelming support with all the members including the United States voting in favour of the project, a press release of the Pakistan embassy said.
Dasu Hydroelectric Power or Dasu Dam is a critical project to meet Pakistan’s energy needs with a potential to generate 4200 MWs of cheap electricity. Upon completion, it will substantially increase the generation capacity of the country, reduce subsidies, change the fuel mix and bring down the cost of electricity generation.
“Today’s decision by the World Bank to support the project is a reflection of the international financial institutions’ confidence on Pakistan’s economic revival and its clear vision to overcome the energy requirements of the country,” the Pakistani embassy said.
“It will also open the sector of hydel power generation to the private participation.”
The US support for the project is in line with the commitment made by the leadership of the two countries to enhance cooperation in the energy sector as envisioned by President Obama and Prime Minister Muhammad Nawaz Sharif in the Joint Statement of October 2013, the embassy statement said.