China Will Fund $12 Billion Mega-Dam Opposed By India, Says Pakistan

Islamabad: Pakistan expects China to fund a long-delayed Indus river mega dam project in Gilgit-Baltistan, part of Pakistan-Occupied Kashmir, with work beginning next year, its Planning Minister Ahsan Iqbal said in an interview to news agency Reuters.

Pakistan has been keen for years to build a cascade of mega dams along the Indus flowing down from the Himalayas, but has struggled to raise money from international institutions amid opposition from India.

Those ambitions have been revived by China's Belt and Road infrastructure plans for Pakistan, a key cog in Beijing's creation of a modern-day Silk Road network of trade routes connecting Asia with Europe and Africa.

The $12-$14 billion Diamer-Bhasha dam should generate 4,500 megawatts (MW) of electricity, and a vast new reservoir would regulate the flow of water to farmland that is vulnerable to increasingly erratic weather patterns.

Iqbal, the Islamabad lead on the China-Pakistan Economic Corridor (CPEC), said a Chinese company from a Beijing-picked shortlist and a local partner would build the dam over a 10-year period, and work should begin in the "next financial year", which begins in July.

India has previously opposed any construction in the Indus Basin, and has criticised CPEC as a challenge to its sovereignty because the $57 billion corridor runs through Pakistan-Occupied Kashmir.

India this year fast-tracked $15 billion worth of dam projects on its side of Kashmir, with Islamabad claiming that the power stations will disrupt vital Indus water flows into Pakistan.

China and Pakistan signed a memorandum of understanding in December for Beijing to help fund and develop Pakistan's Indus Basin dams, though no timelines have been released. Pakistan estimates there is 40,000 MW of hydro potential.

India's foreign ministry and ministry for water resources did not respond to requests for comment, said news agency Reuters.

Iqbal, a close ally of Prime Minister Nawaz Sharif, said India needs to "stop its myopic thinking towards CPEC" and accept the Chinese-funded project is going ahead. Better still would be for India to become part of Beijing's Belt and Road plans, he said.

Future CPEC plans are increasingly focused on how Beijing can help build up Pakistan's ailing industries, creating special economic zones and opening up sectors from mining to agriculture to Chinese firms.

But Iqbal said infrastructure construction won't stop, with contracts set to be signed for roads and for mass rail transport systems in Quetta, Peshawar and Karachi.

He said about $10 billion in new deals should be signed in the next year on top of Chinese pledges topping $50 billion, and that was likely to double by 2020.

"I would say conservatively $20 billion plus (in new investment by 2020)," Iqbal said, adding this would also include private investment.

With inputs from Reuters