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Crowd funding the dams in Pakistan: Gimmicks soon to fizzle out
  • Pakistan's PM Imran Khan
    Pakistan's PM Imran Khan
In the annals of hare-brained economic ideas in modern times, Pakistan’s crowd funding of the Diamer Bhasha and Mohmand dams will figure in the top. The idea to crowd fund the construction of these dams was the brain child of the Chief Justice of Pakistan (CJP), Mian Saqib Nisar. On June 4, 2018, CJP Nisar, took a suo motu notice of the water situation in Pakistan while hearing a petition regarding the Kalabagh Dam, where it was discussed that no new dam has been built in the country since the last 48 years. In July 2018, the CJP stated that keeping the water crisis in mind, Diamer-Bhasha and Mohmand dams should be constructed immediately and began a Supreme Court Dam Fund. He appealed to the general public, and the Non-Resident Pakistanis (NRPs), to donate generously for this fund.

The CJP’s move got a further boost, when the newly elected Prime Minister of Pakistan, Imran Khan in an address to the nation on September 7, stressed upon the need for the dam to be built as soon as possible and requested the NRPs to contribute US $1,000 each to the fund.

The government hopes to raise a sizable amount for the fund from the Pakistani-American community, which is considered the most affluent among the NRPs. Understandably, the initial enthusiasm means the donations are being received but not as the government would have expected. For instance, the Associations of Pakistan-Americans donated US$ 16,000 to the fund, to mark Pakistan’s Independence Day- a far cry from Prime Minister Khan’s appeal. The Pakistani expatriate community in Russia also donated US$ 5000 for the fund.

As of September 25, the fund has received around Pakistani Rs. (PKR) 3.84 billion – Rs. 1 billion out of it is from the Pakistan Army itself. It is pertinent to note that the cost of the Diamer Bhasha dam has been estimated by the government to be PKR 1.45 trillion or US$ 14 billion. So, at this rate it will take roughly 140 months or more or less 12 years to collect the project cost amount. Reports note that it has been decided that the once the government has raised PKR 30 to 40 billion through donations, it will start the work in 2019. But that appears to be a long shot as the momentum created by PM Khan’s appeal will not last long.

This is not how traditional infrastructure financing is done in any part of the world, even if it appears to be an attractive option. In fact, studies throughout the world would show that large dams suffer from schedule and cost overruns. This particularly makes crowd-sourcing funds a big problem.

As per estimates, mega dam projects on an average end up costing double the initial amount projected. So, in all probability, the dam will probably end up costing US$ 28 billion. Pakistan’s total official GDP in 2016 was US$ 284 billion. This means that with Diamer-Bhasha dam, the country will be roughly committing to a project equivalent to 10% of its total GDP.

Moreover, even though both the CJP Nisar and PM Khan have stressed that the contributions to the fund will be voluntary, exactly how ‘voluntary’ these will be remains suspect. Already some commentaries appearing in Pakistani media have stated that tacit pressure has come to apply on banks to raise funds from their employees.

And all of this is happening at a time when any criticism of the project is not tolerated, with the CJP repeatedly asserting that all those who speak against the Diamer Bhasha dam and the Fund are doing so at the behest of some hostile foreign agenda. So certainly, this appears to be a hare-brained idea. But Pakistan has a history of implementing ideas like these.

After the 2005 earthquake, then President Pervez Musharraf had launched a similar fund called the President’s Relief Fund. Once launched, similar tacit pressure tactics were used to make people pay up, and companies lined up saying ‘we are pleased to contribute’, until the interest dried up and everyone moved on. Similarly in 1997, then PM Nawaz Sharif had launched a scheme to get donations to help pay off Pakistan’s external debt. That too ended without making any substantial impact. So, Pakistan needs to circumspect about its water problem, rather than engaging in such gimmicks.

There is little doubt about the fact that it will soon become a water-scarce country, as per its own official assessment. So it needs to address the problems of water management, storage and wastage. The government also needs to look at how water is distributed across provinces — a matter of constant contestation, and also devise policies regarding water pricing.

Moreover, it needs to pay heed to the sceptics of the Diamer Bhasha dam. The project is not technically feasible, because it poses seismic risk. No external financing options are forthcoming, not because of any foreign conspiracy but because it is known that the dam is a high risk proposition, and simply not worth it. Apart from that there are a host of ecological and environmental challenges and not to mention that it is located in a disputed territory.

With Pakistan mere seven years away from reaching critical water levels, hopefully the Diamer Bhasha dam funding opens up a new debate in the country about its mismanaged priorities. And the stark reality is that being a lower riparian country, Pakistan has always to maintain a cordial relationship with India, whom its establishment -civil and military- always accuses of initiating a ‘Water War’ to starve its neighbour. That would be the real challenge for Pakistan’s foreign policy if it really wants to address its perennial water problem.
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