Chinese investments in water projects

By Shahid Javed Burki
Published: June 13, 2011

There is news in the western press that the Chinese may be getting ready to make large investments in developing Pakistan’s water resources. These investments will be made to increase the amount of water available for irrigation and using water to generate electricity. According to an item in a recent issue of the Financial Times, the contemplated amount of investment is of the order of $15 billion. This amount has been proposed by the Three Gorges Project Corporation, the entity that built and operates the largest water control project in the world.

The Chinese company would like to write a new master plan for using the available flows in the Indus River. A total of $50 million would be spent on the plan and would draw upon the studies carried out several decades ago by the World Bank and the United Nations Development Programme. The earlier plans had also identified a number of potential sites for the development of the enormous hydroelectricity potential of the rivers of the Indus basin.

But the plans remained just that, plans. No action was taken either for political reasons or for the reason that the various administrations that held the reins of power at various times did not pay attention to the development of the sources of energy supply. Now as energy shortages are taking heavy economic and social tolls, Islamabad has begun to look around for help. China is one direction in which it is heading.

In 2010, China and Pakistan agreed on an investment deal to build the Bunji dam on the Indus. In additions to this investment, the new plan that China is offering to develop will include large projects at sites such as Kohala and Dashu. If these investments materialise, China will bring to Pakistan its expertise in building large water projects. It is ironic that some of the knowledge China will bring to Pakistan was learnt initially from Pakistan itself. In the 1970s, Pakistan was recognised as the leader in the developing world on the management of large river projects. China then looked to Pakistan to learn what it needed to know when it turned its attention to harness its many rivers.

The dam on the Yangtze at Three Gorges has provided China unparalleled experience in managing large projects. The country has replaced Canada, Italy, Germany and the United States in terms of hands-on experience with water investments. When Pakistan built the lndus Water Replacement Works in the 1960s, it engaged several western companies to design, build and supervise the construction of the projects on the three western rivers in the Indus system. The Indus, the Jhelum and the Chenab had come to Pakistan’s share after the signing of the Indus Water Treaty with India in 1960. China was then absent from the scene. Now no other country has the kind of experience with large water projects that China has accumulated in three decades.

It is interesting to note how China developed this expertise. My own involvement with the Three Gorges project exposed me to the way China does large water investments. In 1987, I was appointed to head the department responsible for the Bank’s operations in China. One of my early responsibilities in the new job was to chair the three-man Three Gorges Committee. The other two members were from China and Canada. The staff work for the committee was done by the Yangtze Valley Authority and the World Bank. At our very first meeting, the Chinese made it clear that their interest in turning to the Bank was not to obtain financial support from the institution. They were much more interested in getting the Bank to use its knowledge of large water projects to help them with the design of the Three Gorges development program. By that time the Bank had acquired worldwide reputation in the area of water management. Much of this rested on the Bank’s work in Pakistan and some of the engineers who worked on the various Bank-funded and supervised projects were from Pakistan.

The Bank’s technical staff – many of them from Pakistan – told me to press the Chinese on three issues: To satisfy the global community that the project would not be an environmental disaster, that the large number of people it would displace would be properly settled and that water shortages would not result downstream of the project. At the first meeting of the committee under my chairmanship, I made it clear that the feasibility report would not be approved unless the committee was satisfied on these three counts. The effect of this was to postpone the decision on the project by several months. I had expected that the Chinese would be unhappy at this decision since they were keen to proceed with implementation. That did not turn out to be the case. In fact, they were pleased that I was able to bring to the table some of the knowledge the Bank had accumulated in the area. It was the Canadians who were unhappy with the delay. They were anxious to have the project go forward. They hoped to pick up a number of contracts once Beijing started to build the massive dam.

We hired a number of consultants to look at the three aspects of the project with the result that a great deal of additional work got done on environmental and settlement issues. A year later, the committee approved the project and once that was done the Chinese told me that they would not ask the Bank for financial support nor would they engage foreign consulting companies for implementing the project. Given this experience, what would be my recommendation to Islamabad for managing the Chinese involvement in water management in Pakistan? I recommend bringing in the World Bank and the Asian Development Bank as advisers, once the Chinese have done the spade work.

Islamabad may also consider establishing a new authority committed entirely to the implementation of the Chinese plan. And, special emphasis should be given to addressing the types of issues we examined when the feasibility report of the Three Gorges Project was being looked at.

Chinese investments in water projects – The Express Tribune