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COOPERATE FINANCE

Final project report on

KALABAGH DAM IS FEASIBLE OR NOT

Submitted to: - SIR MATEEN MAZA

Submitted by:-MUHAMMAD SIDDIQUE HAFIZ

NEWPORT INSTITUTE OF COMMUNICATION

& ECNOMICS


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Background

shortage of electricity supply generated locally: the water and power development authority

(wapda) and Karachi electric supply corporation (KESC) are the main producers involved in

power generation, transmission and distribution of electricity. Wapda has not been able to cope

with the demand that is growing at an average rate of about 7 percent annually, resorting to load

shedding due to energy shortages.

Construction of Kalabagh dam will add more electricity generation capacity: Kalabagh dam

located Punjab province on the Indus river -- a multi-purpose hydroelectricity cum- irrigation

project that could have added 2,400 mw generation capacity to the wapda has long been

identified as a technically feasible project. So far, over one billion rupees have already been

spent on the feasibility and design of this project, but consensus on the construction of this dam

by the provincial governments is not forthcoming despite efforts by the federal government.

Adverse impacts of Kalabagh dam: the dam reservoir will inundate fertile plains of the upstream

province of North West frontier province (NWFP) and flood over existing infrastructure.

Likewise, the two other provinces (Sindh and Baluchistan) down-stream have expressed their

reservations about the reduced amount and flow of water in the river which will affect

availability of water after construction of dam for irrigation and other needs of the provinces.

Consensus to build the dam could not be reached: some of the adverse impacts associated with

the dam could be reduced by lowering the height of the dam, but even this option is not

acceptable to the provincial government of NWFP. Unsuccessful resolution of these conflicts has

also held prospects of tapping other locations for dam on the Indus with sizeable hydroelectric

potential.


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Innovative approaches to reconcile the needs and concerns of the participating provinces with

due consideration to environmental assessment are badly needed to break this impasse.


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Introduction

Irrigated agricultural is the backbone of Pakistans economy. At the same time with words

fastest growing population estimated to touch 150 million marks by the turn of the century, there

is a dire need to increase agricultural production. If nothing is done, there would e approximately

25% shortfall in food grain requirements by the year 2000, judging from current (1997) two

million tones import of wheat, by that time, Pakistan could be one of the major food deficit

countries in the world.

Due to complete stoppage of any sizeable surface water resources development after full

commissioning of tarbala dam during, 1976, even sustainability of existing irrigated agriculture

is in serious jeopardy.

With a large arable land, Pakistan still has the potential of bringing several million acres of

virgin land under irrigation. An important impediment in the way of this development is

insufficient control over flood water of the rivers. With virtually no limit on availability of land,

it is unfortunate to willingly let large quantities of water into the sea. In post-tarbala 20 years, an

annual average of over 38 million acres feet (MAF) escaped below kotri; after adjustment of

future abstraction out-side Indus basin, this could still be around 32MAF.

Out of this, an average

of over 26 MAF per year could be effectively controlled and efficiently utilized to bring about

prosperity to millions, particularly, in backward areas of Pakistan through national water

resources development approach.

Besides recurring irrigation water shortage, the country passes through periodic calamity caused

by the phenomenon of floods (1992 followed by 1994 very large floods should act as eye-

openers) monsoon rains result in swollen rivers which spill over their banks, bringing in the


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wake loss on a colossal scale. Floods are detrimental, not only in financial terms, but also in the

form of sever undermining of productive system, which should logically be free from

uncertainties and frequent dislocations. In the context of Peshawar alley above nowshera,

frequent flooding takes place due to entrance of Kabul River into confined channel below this

point.

Similarly, national demand of electricity gas been and would keep in growing rapidly. From the

present 10500mw, peak power requirement of the country is estimated to cross 13000 mw by the

year 2000. Recently, federal government has entered in to a number of agreements with

international private sector to install over 3,000 mw of thermal power over next 3-4 years.

Though it may help in overcoming the load-shedding, the power cost is increasing substantially.

Therefore, a large scale injection of cheap hydropower through multi-purpose storages is the

only answer if the cost of electric supply is to be kept within affordability of the consumers.

If the present inaction towards development of national surface water resources continues,

Pakistan would be faced with innumerable socio-economic problems at the dawn of 21st century.

It is, therefore, imperative to launch urgently a national water resources development programme

including major multi-purposes storage, remodeling of some existing projects and construction

of new irrigation schemes, particularly in backward areas of all provinces.

River Indus and its tributaries, un-questionably, are the largest national resources. Besides

sizeable surplus water still going out to sea, Indus system has over 30,000 mw of economically

developers hydropower potential. For effective harnessing of these renewable resources, most of

which is run-of-river type, it would be necessary to build multi-purpose storage. These would

generate sizeable blocks of cheap electricity and thus check the excessive tariff increases due to

anticipated large scale induction of costly thermal power. In particular, these would provide


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means for; substituting the continuous capacity loss of on line storages to sustain the existing

irrigation; development of new irrigation projects, and effective flood control.

Taking into account all the above factors, a 25-year (2000-2025) national water resources

development programm (NWRDP) has been formulated including multi-purpose projects. It is a

package, including Kalabagh dam project, based on the concept of unified approach to tackle the

threatening water shortages and anticipated large increase in power tariff due to predominance of

thermal power.

project

kalabagh dam project would be located on river Indus 100 miles south-west of Pakistans capital

Islamabad.

This multi-purpose project would have a live storage capacity of 6.1 million acre feet

(MAF).ides making up for the capacity loss in reservoirs, it would make substantial contribution

to firming up the irrigation supplies not only for new projects but additional allocation agreed by

the provinces under water apportionment accord (WAA) of 1991. Further, it would add a large

amount of cheap hydropower to the national grid through its 2400 mw (ultimate 3600 mw)

installed power.


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CASE FOR BUILDING THE KALABAGH DAM:

LAHORE: The Lahore High Court recently told the federal government to initiate the necessary

process for the construction of the Kalabagh Dam in accordance with a decision of the Council

of Common Interests (CCI) taken a few years back. A number of newspaper articles and

editorials have analyzed the issues in a superficial manner and reached the conclusion that is

quite off the mark and was obviously meant to please political elements in Sindh and Khyber-

Pakhtunkhwa (K-P).

The resolutions passed by the provincial assemblies in this regard may have political significance

but carry no legal force. The CCI, which is competent to take a decision in such matters under

the Constitution, had decided in favour of construction of the dam. The LHCs decision is,

therefore, fine on legal grounds.

The CCI can possibly reverse its decision but before that is done, there is a need to

dispassionately consider the advantages of the project for the national economy and the real

apprehensions of Sindh and K-P. The project is considered by experts to be very beneficial,

especially from the point of view of augmenting the countrys hydroelectric generation capacity.

In fact, even before independence, the site was identified as a suitable one for harnessing the

potential of the Indus. Expensive feasibility studies were undertaken by Wapda and millions of

dollars were spent on international experts analysing the projects feasibility. Having been found

technically sound and been approved by the World Bank for financing, the project started facing

political opposition from some provincial interests that gained strength because of dilly-dallying

by various regimes.


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In the face of perennial power cuts, which is hampering our industrial growth, the Kalabagh Dam

can prove to be a blessing for the entire nation. In fact, one expert who has consistently

supported the project is Shamsul Mulk, who belongs to K-P and was chairman of Wapda. He is

on record having said that if constructed, the dam would be beneficial for both K-P and Sindh.

With revised specifications, the project is not expected to submerge Nowshera even in the worst-

case scenario. It is not possible to correctly estimate the number of people that would be

displaced in K-P by the project but the highest estimate is about 30,000 which is not a small

number. Keeping in view the existing plight of those who were displaced by the Mangla and

Tarbela dams, this is an important matter but here, too, if the will is shown to provide people

with compensation and rehabilitation, the project could be initiated.

As far as Sindhs apprehension that the water availability for it would be reduced after the dams

construction, it may be argued that the dam would, in fact, prevent millions of acre-feet of water

from going to waste during the rainy season.

The real apprehension has to do with issues of trust and Sindh may not feel comfortable with the

flow of the Indus in Punjabs hands. This fear is understandable. Even in India, there are such

disputes between provinces sharing rivers. The solution to the problem of any future possibility

of Punjab being able to interfere with Sindhs share of water could be to declare the project land

as federal territory and vesting the operation of the dam with IRSA. The royalty on power

generation that is thus collected can be collected and distributed in accordance with the most

recent National Finance Commission award

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