Due to Pakistan’s junk credit rating, the government is exploring alternative funding options for the Diamer Bhasha dam, including selling a stake in another power project and seeking inclusion in the China-Pakistan Economic Corridor (CPEC).
According to a news report, the Water and Power Development Authority (Wapda) has urged Islamabad to present the dam project as a key item during Prime Minister Shehbaz Sharif’s visit to Beijing.Â
Wapda’s recommendation includes selling a stake in the 1,450-megawatt Ghazi Barotha hydropower project to Kuwait and persuading Beijing to include the Diamer Bhasha project in CPEC.
Pakistan needs $4 billion for the dam’s power generation component but has secured only $500 million, leaving a $3.5 billion gap.Â
International credit rating agencies have assigned Pakistan a junk rating, making new foreign loans and sovereign bonds difficult to obtain.
In November, Pakistan signed an MoU with Kuwait to sell its equity in the Ghazi Barotha project. The government plans to expedite the sale process due to limited financing options.
Despite limited responses from multilateral creditors, Pakistan began constructing the dam using its own resources, aiming to raise commercial financing for the 4,500MW powerhouse. The federal government approved the project’s power generation component at a cost of Rs1.42 trillion two years ago.
Efforts to secure funding from various international financial institutions have been unsuccessful. The government also proposed an investment-debt arrangement with Saudi Arabia, seeking $1.2 billion in equity and $2.3 billion in debt over 10 years, but has yet to receive a formal response.
The Diamer Basha project, with a 30% equity and 70% debt ratio, is expected to generate 18 billion units of electricity annually.Â
PM Shehbaz has directed the Ministry of Planning to include the project in CPEC, marking the second attempt in seven years.
