China’s $45 billion push into Pakistan is skirting one of the Indian
subcontinent’s most dangerous flashpoints. The proposed 4,500-megawatt
Diamer Bhasha hydropower plant would eliminate about half of Pakistan’s
power shortfall and irrigate millions of acres of parched farmland.
While both the U.S. and China have promised to help Pakistan court
private investors for the dam, they’ve resisted putting up the cash
themselves.
The proposed 4,500-megawatt Diamer Bhasha hydropower
plant would eliminate about half of Pakistan’s power shortfall and
irrigate millions of acres of parched farmland. While both the U.S. and
China have promised to help Pakistan court private investors for the
dam, they’ve resisted putting up the cash themselves.
China’s reluctance shows that its push to finance
infrastructure across Asia hardly amounts to a blank check. It also
keeps Beijing’s leaders away from a project in a disputed area that has
triggered three wars between Pakistan and India, where tensions over
shared waters are rising.
“China is doing a smart thing by putting money up for
smaller projects with better returns,” said Priyanka Singh, an associate
fellow at the New Delhi-based Institute for Defence Studies and
Analyses, who has published papers on the Diamer Bhasha project. “China
has made its calculations and concluded that it doesn’t directly serve
its interests.”
On a visit to Islamabad this week, Chinese President
Xi Jinping picked a $1.65 billion, 720-megawatt hydropower plant in
Karot, Pakistan, as the first project for his $40 billion Silk Road fund
to build infrastructure in Asia. He made no mention of the Diamer
Bhasha project, whose cost has risen to more than $12 billion since it
was first proposed in 2001.
China Wary
China is unlikely to fund Diamer Bhasha because it
doesn’t want to get involved in a water dispute between India and
Pakistan, said a senior Chinese water resources official, who declined
to be identified because the information isn’t public. Funding for the
smaller project would show sufficient Chinese commitment to Pakistan’s
power sector, the official said.
Electricity projects account for about half of a
proposed $45 billion economic corridor between the countries that would
provide another route for China to export goods to Europe and import oil
from the Middle East. While some road and rail links run through
disputed territory, the dam is opposed by India.
India and Pakistan have fought for almost seven
decades for control of Kashmir, a region nestled in the foothills of the
Himalayas, the source of water for a quarter of the world’s population.
Melting glaciers and poor water management are stoking a crisis that
threatens to intensify tensions between the nuclear-armed neighbors.
‘Drastic Measures’
“Water is front and center to the Kashmir conflict,”
said Michael Kugelman, a South Asia expert at the Washington-based
Woodrow Wilson International Center for Scholars. “As the stakes go up
and water scarcity intensifies in both countries, both sides will be
more willing to take drastic measures to safeguard what they feel are
their strategic interests, which includes having some modicum of water
security.”
In 2010, Pakistan suffered its deadliest floods on
record, leading to almost $10 billion in damage. Last September, India’s
Jammu and Kashmir saw its worst flooding in more than half a century
after the state received more rainfall in three days than it typically
gets in a month.
The 1960 Indus Water Treaty intended to defuse
tensions by clearly delineating how India and Pakistan would share the
resource. It gave rights to the Sutlej, Ravi and Beas rivers to India
and the Jhelum, Chenab and Indus -- where the Diamer Bhasha dam is
planned -- to Pakistan. It also prohibits India from storing water or
diverting flows to deprive Pakistan.
Militant Groups
If water pressures become extreme, India may violate
the treaty to store water, Kugelman said. In a worst-case scenario,
anti-India groups in Pakistan could use water as a pretext for launching
a terror strike on India, prompting limited, retaliatory military
strikes by India inside Pakistan.
“If that happens, the state of affairs on the subcontinent could get very ugly, very fast,” he said. It’s not a far-fetched scenario. Hafiz Saeed, founder
of the Pakistan-based Lashkar-e-Taiba militant group, accused Indian
Prime Minister Narendra Modi’s government of triggering the September
floods by discharging dam waters without warning into Kashmir. He
previously threatened to wage war with India over water in a 2010
television interview.
Pakistan is one of the world’s most water-stressed
nations, mostly due to mismanagement. The country loses about two-thirds
of its available water due to the lack of transmission capacity or poor
irrigation techniques, according to a study by Pakistan’s Nuclear
Institute of Agriculture.
The country typically gets half its annual rainfall in
July and August. Yet it doesn’t have the capacity to store more than a
30-day supply compared to the 1,000 days recommended for countries with a
similar climate, according to the Asian Development Bank.
‘Life and Death’
“We need water for our future food security, and we
need power for our future growth,” Ahsan Iqbal, Pakistan’s minister for
planning, development and reforms, said in an interview in Islamabad on
March 30. “It’s a matter of life and death for the future of Pakistan’s
economy.” Pakistan sees the Diamer Bhasha project as an answer
to many of its problems. If built, the hydroelectric plant would
singlehandedly boost the energy-starved nation’s power capacity by 20
percent, enough for 41 million people. It could also store 8.1 million
acre-feet of water and provide irrigation for 4 million acres.
First proposed in 2001, successive governments have
struggled to raise funds from multilateral lenders or private- sector
companies. Pakistan Finance Secretary Waqar Masood said in a phone
interview last month that China Three Gorges Corp., which is building
the Karot dam, was looking into Diamer Bhasha. He didn’t respond to a
call on Wednesday.
U.S. Involvement
Beijing-based China Three Gorges doesn’t have a
comment, according to a man who answered the phone at the company’s
media department and declined to identify himself. Calls to a general
line at China’s water resources ministry weren’t picked up, and its
website didn’t list a media contact.
The U.S. Agency for International Development, one of
the biggest funders of energy projects in Pakistan, is helping the
nation conduct due diligence for Diamer Bhasha, including environmental
studies. The dam would provide electricity, create jobs, help irrigation
and reduce flooding, it said in an e-mail.
The Asian Development Bank will continue to support
the project, it said in an e-mailed response to questions. The bank is
required to seek “no objections” from member countries for projects in
disputed territories, it said.
‘Foolish Enough’
India planned to lodge a protest through diplomatic
channels after USAID organized an October event in Washington to promote
the project, India’s Economic Times reported, citing sources it didn’t
identify. India’s Ministry of External Affairs didn’t respond to an
e-mail and phone call seeking comment.
Beyond the territorial concerns, the size of the dam
means that Pakistan would need to pool money from different institutions
to make it a reality, according to Nadeemul Haque, former deputy
chairman Pakistan’s Planning Commission and an International Monetary
Fund economist.
“It’s a very big project, and the world isn’t foolish
enough to invest in it,” Haque said by phone from Washington D.C. “China
will invest in those projects which will guarantee quick money and they
could execute themselves.”
Copyright 2015 Bloomberg
http://www.renewableenergyworld.com/rea/news/article/2015/04/even-china-wont-finance-4-5-gw-pakistan-hydropower-plant-as-water-fight-looms
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