Pakistan has requested $3.5 billion in financing from the Kingdom of Saudi Arabia (KSA) for the Diamer-Bhasha Dam during a recent visit by a high-level delegation from KSA on April 15-16.
A senior government official informed The News that KSA authorities would consider Pakistan’s request after consulting their financial adviser regarding the Diamer-Bhasha Dam project. The appointed financial adviser from KSA will conduct a thorough assessment of the project and its business model as presented by Pakistani authorities.
Furthermore, both parties will appoint financial advisers to facilitate discussions. The formal request from KSA is expected within the next 1.5-2 months.
The total cost of the Diamer-Bhasha Dam project is estimated at $8 billion, with the foreign component standing at $4 billion. Pakistan’s Water and Power Development Authority (Wapda) has already secured $500 million through its Euro Bond issuance.
Of the $3.5 billion sought from KSA, Wapda has proposed $2.3 billion as a concessional loan at an interest rate of 2.25% for 25 years, with a grace period of six years. Additionally, it has requested $1.2 billion as equity in the project, with an interest rate matching that of the US 10-year Treasury Bond at 4.45%.
Previously, the Saudi Fund provided a concessional loan of $240 million at 2.25% interest for 25 years. The financing structure of the Diamer-Basha Dam project comprises 30% equity and 70% debt.
Construction work on the dam has already commenced, and upon completion, it is expected to generate approximately 18 billion GWh of electricity annually. The dam will have a gross storage capacity of 8.10 million acre-feet (MAF) of water, with a live storage capacity of 6.4 million MAF, making it the largest dam in Pakistan and the tallest Roller Compacted Concrete (RCC) dam in the world.
