Pakistan inaugurates huge dam project, hoping U.S. will help with funds

McClatchy NewspapersOctober 18, 2011 

ISLAMABAD — Pakistan on Tuesday inaugurated construction of a giant dam that would help plug its crippling electricity shortfall, but without a hoped-for infusion of cash for the project from the United States and other international funders.

The Diamer Basha dam, in the far northeast of the country, would cost about $12 billion to build, money that the near-bankrupt government of Pakistan doesn't have. It would be the first big dam to be built in Pakistan since the early 1970s, when the U.S. helped construct the Tarbela dam.

Washington is seriously considering helping to fund the program, which would be the biggest U.S. civilian aid project in Pakistan for years. But while U.S. officials here believe the project would help repair damaged U.S.-Pakistani relations, the decision on whether to provide support comes as tension is at record levels between the two countries, with American officials accusing Pakistan's military and spy agency of directly backing the insurgents in Afghanistan.

This week, Secretary of State Hillary Clinton is expected in Islamabad with a high-powered visiting team of U.S. civilian and military officials.

Pakistan went ahead with the official launch of the dam, which provided a positive news story for the ruling Pakistan Peoples Party, seemingly confident that the U.S., the Asian Development Bank and other international funders will come through. It's believed that Washington has decided in principle to provide cash for the dam.

"We are committed to working with the government of Pakistan and the multilateral development banks to see how we can support the Diamer Basha multipurpose dam project," said a U.S. official, speaking on condition of anonymity because Washington hasn't announced its support. "Funding decisions will be made in the future."

The official said that the Asian Development Bank was leading the financing for the project and that the U.S. decision would be tied to the outcome of the bank's due diligence work.

While the U.S. contribution would only cover a small portion of the costs, with plans for an initial $200 million, that money would be a straight grant, not a loan, and would be available early on in the project, enabling Pakistan to proceed with work quickly.

"I think this (dam) will be a lifeline for Pakistan," Prime Minister Yousuf Raza Gilani said at a ceremony at the Diamer Basha site. "Our biggest problem today is electricity."

The dam would generate 4,500 megawatts of electricity, enough to fill the entire current shortfall, which causes electricity to be cut to homes and businesses for hours each day. That power, however, wouldn't be available until the dam is completed, something likely to take eight years or more. This month, popular anger over the blackouts caused violent protests in several towns across the country.

The dam's water reservoir, which will form a 50-mile-long lake, would hold so much water that it could help prevent the kind of devastating flooding seen in 2010 when the Indus River burst its banks.

The dam's construction is a concern for India because it's located Kashmir, which is also claimed by India.

(Shah is a McClatchy special correspondent.)

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