Tuesday, June 7, 2011

China proposes $15bn Indus dam scheme

China proposes $15bn Indus dam scheme
By William MacNamara in London
Financial Times, June 7 2011 23:20

China's Three Gorges Project Corporation has proposed a $15bn hydropower
scheme to Pakistan to dam the Indus river valley at several points, in a
project aimed at controlling floods and tackling electricity shortages,
Pakistan's natural resources minister said on Tuesday.

The deal, pitched by the builders of the Yangtze River dam, the world's
largest, is the latest example of Chinese interest in Pakistan, as the
latter tries to develop natural gas, oil, coal and hydropower resources
to boost its flagging economy.

Asim Hussain, Pakistan's minister for petroleum and natural resources,
told the Financial Times that Three Gorges had met with the government
and proposed a $15bn hydroelectric master plan for the Indus, and to
fund a $50m survey to lay the groundwork.

Devastating floods last year highlighted the benefits of dams on the
Indus. The country's electricity shortage and need for irrigation are
also behind Pakistan's focus on hydroelectric power, which the
opposition party also supports.

Last year Pakistan and China agreed to an investment deal to build the
Bunji dam. The $15bn proposal would cover Bunji and other sites on the
upper and lower Indus including Kohala and Dashu, a government
representative confirmed.

Mr Hussain was meeting in London with potential investors in Pakistan's
oil and gas sector, ahead of new round of oil block auctions. Recent
growth in estimates of its natural gas reserves – composed mostly of
unconventional shale and tight gas – has led Pakistan to seek investment
from partners such as BP and Shell. "We did not know where our coffers
were, but now we do," he said, referring to oil and gas.

Chinese companies have taken a lead on natural resources investment. In
December 2010 BP sold its Pakistan oil and gas assets to United Energy
Group, a Hong Kong-based investor, for $775m. Metallurgical Corporation
of China is mining copper, zinc and lead in remote Baluchistan province.
But a copper-mining joint venture between Canada's Barrick Gold and
Chile's Antofagasta has struggled to gain official approval in Baluchistan.

A Pakistan government representative said "both sides are working on the
details and priorities" of the $15bn hydropower deal for Pakistan. Three
Gorges was not available for comment.

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