Pakistan Eyes 2018 for China-Funded Mega Dam Opposed By India

China and Pakistan signed an MoU in December for Beijing to help fund and develop Pakistan’s Indus Basin dams.

India has previously opposed any construction in the Indus Basin it claims as its own, and has criticised CPEC because the $57 billion corridor runs across disputed territory. (Photo: Lijumol Joseph/The Quint)

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

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 its nuclear-armed neighbour 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.

Electricity and Food Security for Pak

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.

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.

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.

"This water reservoir is most critical for food security in Pakistan, so is a very high priority project for Pakistan," Iqbal told Reuters late on Monday at his ministerial home in Islamabad.

'India Needs to Stop Its Myopic Thinking'

India needs to stop its myopic thinking towards China-Pakistan Economic Corridor 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.

Planning Minister Ahsan Iqbal.

The Diamer-Bhasha dam and reservoir would displace more than 4,200 families in nearby areas and submerge a large section of the Karakoram Highway to China, Pakistan's Water and Power Development Authority estimates.

India's foreign ministry and ministry for water resources did not respond to requests for comment.

India has previously opposed any construction in the Indus Basin it claims as its own, and has criticised CPEC because the $57 billion corridor runs across disputed territory.

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

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.

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