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Pakistan Seeks Massive Saudi Financing for Diamer-Bhasha Dam Project

In a bid to secure funding for its ambitious Diamer-Bhasha Dam project, Pakistan has formally requested a staggering $3.5 billion in financial assistance from Saudi Arabia, officials confirmed on Wednesday.

According to sources familiar with the matter, Saudi officials will evaluate the request in consultation with their financial advisors before rendering a decision. Pakistan’s financial team will work closely with their counterparts in Riyadh to ensure a mutual understanding of the project’s financial requirements and the proposed funding mechanisms.

The process is expected to take approximately 1.5 to 2 months before a definitive answer is received from the Kingdom of Saudi Arabia.

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During the challenging nine-month period of 2024, Pakistan has already secured $6.9 billion in loans from various international sources. The Diamer-Bhasha Dam project, a critical endeavor for the nation’s water and energy security, is estimated to cost a total of $8 billion, with Pakistan actively seeking $4 billion from foreign sources.

Of the $3.5 billion requested from Saudi Arabia, Pakistan has proposed a $2.3 billion concessional loan with favorable terms, including a 2.25 percent interest rate and a repayment period of 25 years, with a grace period of six years before repayments commence.

Additionally, Pakistan has requested a $1.2 billion equity investment in the project, with a return based on the prevailing 10-year U.S. Treasury yield, currently standing at 4.45 percent.

The Diamer-Bhasha Dam project is being funded through a combination of 30 percent equity investment and 70 percent loan financing. Widely regarded as Pakistan’s largest and most significant dam project, its successful completion is considered critical for the nation’s water and energy security.

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