Industry Trend Analysis - Hydropower Cancellations Highlight Belt & Road Project Risks - JAN 2018
BMI View: The recent cancellations of China-backed hydroelectric dams in Nepal and Pakistan reflect the formidable risks present in frontier markets , which will continue to challenge Belt and Road associated projects . Even if projects are financially viable, many remain subject to substantial political shifts.
The coincidental cancellations of two China-backed hydroelectric dams in Nepal and Pakistan in November reflects our longstanding belief that Belt and Road projects will face sizable political, financing and operational risks to implementation. On November 13, Nepal announced that it was scrapping the USD2.5bn 1,200MW Budhi Gandaki hydroelectric power plant, which was previously awarded to China's Gezhouba Group and would have been one of the largest hydropower plants in the country. Three days later, the government of Pakistan announced the cancellation of the USD14bn 4,500MW Daimer-Basha hydroelectric dam which would have been located in the disputed region of Kashmir. Although the specific circumstances surrounding the two cancellations remain unknown, they represent the most recent high-profile setbacks to projects that are part of Beijing's Belt and Road initiative.
Pakistan: Political Risks Prevalent
|Ruling Illustrates Risks In Market|
|Pakistan and Asia-Pacific Infrastructure Risk/Reward Index|
|Scores out of 100. Higher score = more attractive market. Source: BMI Infrastructure Risk/Reward Index|