Asian Development Bank refuses to fund Pakistan dam that India says is in 'disputed area'

Feb 16, 2009
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Asian Development Bank refuses to fund Pakistan dam that India says is in 'disputed area'

ISLAMABAD: Pakistan has had no luck with the World Bank funding its 4500 megawatt Diamer-Bhasha dam, a project that India opposes, because it's located in a disputed area in Gilgit-Baltisan. And yesterday, the Asian Development Bank (ADB) too declined to fund the $14 billion dam over the Indus river, Pakistani media reported.

Two years ago, the World Bank refused to come on board as a lender for Diamer-Bhasha, because Pakistan didn't want to seek a no-objection certificate from India for the project. The dam is planned in the Gilgit-Baltistan region, which India claims is a part of the former princely state of Jammu and Kashmir.

Yesterday, ADB said the project was too big to be funded solely by them.

Delhi has long protested moves to support the Diamer-Bhasha dam and other infrastructure ventures in or bordering Pakistan-occupied-Kashmir. A little over a year ago, the US was making noises about supporting the project and India didn't shy away from showing it was peeved.

Now, especially after the brazen terror attack in Uri in Jammu and Kashmir, India can expect to get, and is getting, tacit and overt support from around the world in slamming Pakistan for cross-border terror. In this scenario, the Diamer-Bhasha dam may not go much further.
The refusal from and reluctance of international financial institutions such as the ADB and World Bank to fund the project, allegedly at India's insistence, have somewhat constrained Pakistan's geo-economic designs in the region," wrote Priyanka Singh, associate fellow at the Institute for Defence Studies and Analyses, New Delhi, in January.
We haven't decided [whether to fund] this project yet because it needs big money," ADB president Takehiko Nakao said yesterday in Islamabad.

Nakao said the United States Agency for International Development (USAID) was conducting a feasibility study on the dam. He added that while it was a very important project for Pakistan's energy and irrigation requirements - Bloomberg News said last year the dam could wipe out half of Pakistan's energy shortfall - it called for the formation of more partnerships that could provide funding for the project.

The ADB earlier advised Islamabad to restructure the Diamer-Bhasha dam project by separating its power generation, land acquisition and main dam structures and their modes of financing.

That's when Pakistan engaged USAID for a feasibility study. Islamabad is also seeking investment from US investors to develop Diamer-Bhasha as an independent power project.

Bloomberg News reported in April last year, that even China is skirting the Diamer-Bhasha project, despite its $51 billion pus in Pakistan through the China Pakistan Economic Corridor (CPEC), because it doesn't want to get involved in an Indo-Pak water war.

Priyanka Singh of the Institute for Defense Studies wrote that reports indicated that Pakistan had formally requested China to allocate funds out of its CPEC budget for Diamer-Bhasha project, and that China has neither confirmed nor denied such a request.
It's a very big project, and the world isn't foolish enough to invest in it," said Nadeemul Haque, former deputy chairman Pakistan's Planning Commission and an International Monetary Fund economist, to Bloomberg last year.

It appears not much has changed.

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