Pakistan has formally requested $3.5 billion in financing for the Diamer-Bhasha Dam during the visit of a high-powered delegation from the Kingdom of Saudi Arabia (KSA) on April 15-16.
A senior government official stated, “KSA authorities will respond to Pakistan’s request after consulting with their financial adviser on the Diamer-Bhasha Dam project. The appointed financial adviser from KSA will conduct a thorough assessment of the project’s viability and Pakistan’s proposed business model.”
Additionally, the Water and Power Development Authority (Wapda) will appoint its own financial adviser to coordinate with KSA’s adviser. It is anticipated that the formal request from KSA will be made within 1.5-2 months.
The total cost of the Diamer-Bhasha Dam project is estimated at $8 billion, with a foreign component of $4 billion. Wapda has already secured $500 million through a Euro Bond issuance.
Of the requested $3.5 billion from KSA, Wapda is seeking a concessional loan of $2.3 billion with a 2.25% interest rate over 25 years, with a grace period of six years. An additional $1.2 billion is requested as equity at a 4.45% interest rate, aligned with the cost of US 10-year Treasury Bonds.
KSA has previously provided $240 million as a concessional loan at a 2.25% interest rate for 25 years. The Diamer-Basha Dam project follows a financing structure of 30% equity and 70% debt.
The project, recognized as Pakistan’s largest dam and the tallest RCC (Roller Compacted Concrete) dam globally, has already commenced construction. Upon completion, it is expected to generate approximately 18 billion GWh annually, with a capacity to produce 4,500 megawatts of electricity and store 8.10 million acre-feet (MAF) of water, with a live storage capacity of 6.4 million MAF.
