ISLAMABAD: The Ministry of Water Resources informed the National Assembly on Monday that the cost of the Diamer-Bhasha Dam has escalated by Rs570 billion, pushing the total expenditure to Rs1,049 billion compared to the previously approved cost of Rs479 billion in 2018.
The details were presented during the question hour in response to a query raised by Agha Rafiullah.
Reasons for Cost Escalation
The ministry outlined several reasons for the sharp increase in project costs:
- Dollar Exchange Rate Impact:
- In 2018, the exchange rate stood at Rs105.3 per dollar, which has now surged to Rs278.3.
- This devaluation has had a significant financial impact of Rs178 billion.
- Contractual Adjustments:
- A difference in the cost for the MW-1 Contract compared to the initial PC-I plan added Rs133 billion.
- Design Changes for Seismic Safety:
- Enhancements to comply with ICOLD 2018 guidelines and revisions due to climate change-induced Glacial Lake Outburst Floods (GLOF) added Rs85 billion.
- Interest During Construction (IDC):
- The original PC-I did not account for IDC, but due to anticipated foreign loans, IDC is now estimated at Rs82 billion (7.5% per annum).
- Additional Security Measures:
- Heightened security requirements have added Rs17 billion to the total cost.
- Procurement of Helicopter:
- Ensuring safe transportation for foreign staff necessitated an additional Rs9 billion.
- Safe City Project:
- Owing to the security situation, a new scope of work related to a Safe City project has added Rs7 billion.
Delay in Project Timeline
The House was informed that the project, initially scheduled for completion in February 2029, has been delayed by 22 months. The new estimated completion date is now December 2030, with additional contractual obligations extending until December 2032.
Key Factors for Delays:
- Relocation of Karakoram Highway:
- The National Highway Authority (NHA) completed this task in April 2022, 20 months later than its planned completion of August 2020. This delay obstructed critical dam construction activities, including abutment works and diversion tunnels.
- Security Challenges:
- The absence of adequate night-time security arrangements from August 2020 to October 2022 slowed mobilization of the workforce, resulting in a 26-month delay.
- Design Revision:
- Contractor revisions to the river diversion scheme, based on input from the International Panel of Experts, caused a 12-month delay.
- Other Contributing Factors:
- Covid-19 pandemic.
- Deferred financing due to fiscal constraints in the PSDP.
- Restrictions on foreign exchange releases.
- Logistical disruptions caused by nationwide floods.
Outlook
The government emphasized that delays were caused by multiple factors operating in tandem, making it difficult to isolate individual causes. Despite these challenges, the project remains a national priority, with steps being taken to address financial, logistical, and security hurdles to ensure eventual completion.
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