Islamabad, Dec 5 (IANS): Pakistan Prime Minister Nawaz Sharif on Monday approved, in principle, the financing plan for Diamer Basha dam, a gravity dam on the Indus river, in Gilgit-Baltistan's Diamer district.

Sharif directed the water and power, planning and finance secretaries to expedite work on the financial proposal and start related preparations to ensure the physical work on the dam's construction kicks off before the end of 2017, Dawn reported.

The project has faced several setbacks because major sponsors, including the World Bank and Asian Development Bank, refused to finance the project. According to them the dam's location is in a disputed territory, and they asked Pakistan to get a no-objection certificate from neighbouring India.

The dam portion of the project will be constructed through Public Sector Development Programme (PSDP) allocations and Water and Power Development Authority (Wapda) generated resources.

The remaining financing for the power-generation portion will be arranged on commercial basis by the ministry either through Wapda or through leasing its existing projects.

The dam was approved for construction by the Council of Common Interests (CCI) in 2009. Efforts to finance it through multilateral donors had been prolonged.

The Diamer Basha dam will provide 8.1 million acre feet (MAF) of gross storage. Of this, 6.4 MAF will be live storage and a capacity to produce 4500 MWs of cheap and clean energy. The premier also appreciated the fact that the land acquisition for the dam has been completed.

The construction of Diamer-Basha dam was originally scheduled to be completed in 2016, and then in 2019 after the military regime of Gen Pervez Musharraf decided on its construction. But work on the project did not progress at all during his rule.