NWFP-Gilgit-Baltistan tug of war over Diamer Bhasha dam persists

ZAFAR BHUTTA

ISLAMABAD (April 17 2010): The tug of war between North-West Frontier Province (NWFP) and Gilgit-
Baltistan on launch of multi-billion dollars Diamer Basha dam project persists, which may hamper financing
from donors while the federal government has thrown a spanner in the works by granting 100 percent royalty
rights to Gilgit-Baltistan in an 'out of court' agreement, Business Recorder has learnt.

The Pakistan government is currently seeking loan $12 billion from a consortium of United States (US),
Islamic Development Bank (IDB) and Asian Development Bank (ADB) for Diamer Basha dam, with
estimated 4500 mw power generation capacity. "Any controversy between NWFP and Gilgat-Baltistan on
the royalty issue would make fund raising difficult," sources said.

ADB has already conveyed to the government of Pakistan to develop complete consensus among all
stakeholders on the project as any controversy on the dam would endanger the investment. ADB has sought
firm commitment from the government about ownership of the Basha Dam by passing a resolution from
National Assembly.

A Ministerial Committee, constituted by the Prime Minister on Diamer Basha dam project, signed an 'out of
court' agreement with affectees of Damier Basha dam in which the federal government pledged to grant 100
percent royalty rights to Gilgit-Baltistan province, denying NWFP any right, which may lead to a controversy.

Sources said that the issue of boundary between Northern Areas and NWFP is still to be resolved. "The
royalty issue is to be determined by the boundary of province where the project is to take off," sources said,
adding that in the agreement, the ministerial committee had decided to seek help from Supreme Court of
Pakistan to form judicial commission for resolving the issue of the boundary.

The compensation cost for Basha dam affectees has also raised the question which was over and above the
market rate. Earlier, Ecnec had accorded approval of Rs 26 billion for land compensation. Against Ecnec
decision, some authorities had raised cost of land by 100 percent, to Rs 58 billion, which was reduced to Rs
40 billion by the ministerial committee.

As many as 30,000 families, living in 31 villages, will be affected due to the construction of the dam and the
government will build nine model villages for the affectees in the vicinity of the reservoir, according to the
agreement. The amount will be disbursed to them in three years. "Under the agreement, 37000 acres of land
will be utilised for the dam and the government will provide compensation for 18000 acres land, whereas
18896 acres will be free of cost. Survey for land acquisition has been completed.

ADB has asked Pakistan to provide assurances about the commitments made by other donors to finance
the dam as ADB assistance would be in the range of $2 3 billion, sources said, adding that now US might be
extending one billion dollars for the project that would be a step to provide level playing field for funding from
ADB and other donors.

Copyright Business Recorder, 2010