Brief Overview Diamir Bhasha Dam and Mohmand Dam

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1 REP-300 Brief Overview Diamir Bhasha Dam and Mohmand Dam 05-Jul-2018 Analyst: Tahir Abbas Best Domestic Equity House Best Equity House Corporate Finance House of the Year Top 25 Listed Companies

2 Supreme Court Deems Construction of Dams Vital for Pakistan The Honorable Supreme Court of Pakistan (CJP) has issued directives for immediate construction of Diamir Bhasha and Mohmand dams. While Chief Justice Mr. Saqib Nisar has announced a donation of PKR 1mn for the cause, he also formed a committee under the chairmanship of Water and Power Development Authority (WAPDA) Chief to monitor the progress of work as well as an account to collect funds for the project. The committee is set to present a report on the subject within 3 weeks. 2

3 Diamir Bhasha Dam Location: The project is located on Indus River, about 315 km upstream of Tarbela Dam, 165 km downstream of the Northern Areas Capital Gilgit and 40 km downstream of Chilas. 3

4 Diamir Bhasha Dam Location Cont.. 4

5 Diamir Bhasha Dam Salient Features This will be a Roller Compacted Concrete (RCC) Dam Height of the Dam will be 272m Gross storage capacity is expected to be 8.1 MAF (Million Acre Feet) Live storage capacity will be around 6.1 MAF Gross power generation capacity is estimated at 4,500MW Expected completion time is 14 years Estimated cost of the project is USD 15bn Diamir Bhasha Dam Snapshot Dam Type Height of Dam Gross Storage Capacity Live Storage Capacity Power Generation Execution by Expected Completion Estimated Cost (USD) Source: WAPDA and AHL Research Roller Compacted Concrete (RCC) 272 m 8.1 MAF 6.4 MAF 4,500 MW WAPDA 14 years 15bn 5

6 Diamir Bhasha Dam Status Land acquisition in progress (initial stages) Funding Government has previously negotiated the funding of Diamir Basha Dam with World Bank World Bank has two funds to finance development projects including: 1. International Development Agency (IDA) 2. International Bank for Reconstruction and Development (IBRD) The share of Pakistan in IDA fund is around USD 500mn While the funding from IBRD requires a certain criteria of federal foreign exchange reserves To recall, Pakistan had obtained USD 500mn each from IDA and IBRD for Tarbela 4 th extension project Pakistan faces challenges with respect to obtaining financing for Diamir Basha Dam amid its location in Gilgit Baltistan along with depleting foreign exchange reserves Government has allocated PKR 24bn during FY18-19 for the acquisition of land Whereas the Government of Pakistan is also negotiating with China regarding the financing of the project 6

7 Diamir Bhasha Dam Key Challenges Area of the dam would form part of both KPK (Kohistan) and Gilgit Baltistan which would lead towards differences between the province and administrative territory with land ownership being a major hurdle In particular, it would not be an easy task to move heavy machinery in an area like Gilgit Baltistan Financing of the project from World Bank / Asia Development Bank and other donors is difficult amid location Impact on the Economy and Sectors The project would create cement demand of ~5.0mn tons (over a span of 10 years) or 0.5mn tons per annum, which is around 2% of the annual North demand Likewise, the steel consumption is expected at 1.4mn over 10 years or (0.14mn per annum) which is 4% of annual rebar demand This will also create thousands of jobs for both skilled and un-skilled workers over the duration of the project It is expected to add 4,500MW (15% of current capacity) of clean and cheap electricity to the national grid 7

8 Mohmand Dam Overview Location: Construction of this project is proposed at the Swat River about 5 km upstream Munda Head Works in Mohmand Agency FATA, Khyber Pakhtunkhwa 8

9 Mohmand Dam Salient Features Mohmand Dam was previously referred to as Munda Dam Height of the Dam will be 213m Gross storage capacity is expected to be 1.2 MAF Live storage capacity is around 0.6 MAF Gross power generation capacity will be 800MW Expected completion time is 6 years Estimated cost of the project is USD 2.6bn Mohmand Dam Snapshot Dam Type Height of Dam Storage Capacity Live Storage Capacity CCA Power Generation Execution by Expected Completion Estimated Cost (USD) Source: WAPDA and AHL Research Concrete Faced Rock fill 213 m MAF MAF 16,737 Acres 800 MW WAPDA 6 years 2.6bn 9

10 Mohmand Dam Status Land acquisition in progress (initial stages) Funding Negotiation with International and local donors along with WAPDA s internal cash flow generation Allocation of PKR 2bn during FY18-19 for the acquisition of land Key Challenges The area of Mohmand Agency FATA requires major upgradation of road network and setting up of base camp Difficult to mobilize heavy machinery Financing of the project 10

11 Mohmand Dam Impact on the Economy and Sector The project would create cement demand of ~1.5mn tons over span of 6 years or 0.25mn tons per annum, which is around 1% of North region annual demand Likewise, the consumption of steel is expected at 0.34mn over 6 years or 0.05mn tons per annum, which is 1% of annual rebar demand Employment opportunities in FATA region It is expected to add 800MW (3% of current capacity) of clean and cheap electricity to the national grid 11

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