Islamabad was increasingly finding it difficult to get financing from other international bodies for the Diamer-Bhasha dam in Pakistan-occupied Kashmir (PoK) because of its location in the disputed territory. In this context, Pakistan’s move could be diversionary tactic as the critics of OBOR, including India, have questioned the nature of Chinese funding for the mega connectivity initiative. India’s other key objection to OBOR is based on the fact that part of it--CPEC--passes through PoK. In fact, New Delhi had lodged protests with both China and Pakistan over the Diamer Bhasha dam and other Chinese-funded projects in PoK, even before those projects were brought under OBOR.
Given the nature of Sino-Pak relations, Pakistan would not risk snubbing Beijing. In the recent past, Pakistan has accepted Chinese funds for several other dam-related projects. Moreover, any move to side line China from the Diamer-Bhasha project could also impact CPEC, and Islamabad cannot risk that, according to analysts who follow Sino-Pak ties.
CPEC has often been billed as the flagship project under OBOR to help Beijing find an alternative route for critical supplies in case sea routes in SE Asia are chocked by the US, and China will keep no stone unturned to put OBOR in place.
Pakistan has cited tough conditions by Chinese companies as reason for rejecting the offer of help in the dam project. Incidentally, international lenders had also linked serious conditions with the provision of funding, and the project cost had reached $14 billion against the original estimate of $5 billion. The Asian Development Bank had refused to finance the project because it was in a disputed territory, and so had the World Bank. Pakistan then decided to build a reservoir instead, but that too has run into delays.
Last May, the then Pakistani prime minister, Nawaz Sharif, had attended a presentation made by China's National Energy Administration on the construction of the Bhasha Dam, a project which he said is of critical importance for the future of Pakistan. Pakistani media reported that Chinese companies had "conducted survey and studies" on the North Indus Cascade project. The report said China's interest in providing $50 billion for the project could generate 40,000 MW of hydroelectricity which the country desperately needs due to its depleting water resources.
China is Pakistan’s staunch supporter among all major powers and middle powers, even shielding it from tough UN Security Council actions for harbouring terrorists, besides defending it at various forums. China has also batted for Pakistan’s entry into the Nuclear Supplier’s Group, and earlier successfully in the Shanghai Cooperation Organisation.
Pakistan has moved closer to China following US pressure and it is unlikely that Islamabad will rock that boat. Besides, China’s support is critical for Pakistan’s economic health which is under severe strain. China and Pakistan have signed six pacts to boost cooperation on the China-Pakistan Economic Corridor, including one on building an airport at the strategic Gwadar port city. The Chinese funding for CPEC is aimed at boosting Pakistan’s economy, but even critics within Pakistan argue that this might push Pakistan towards a debt trap like Sri Lanka, Cambodia and some African nations that borrowed heavily from China