ISLAMABAD: The Auditor General of Pakistan (AGP) has declared the Rs507 billion Neelum-Jhelum Hydropower Project a failure in terms of objectives, planning, and execution, saying it neither secured Pakistan’s water rights nor delivered the promised power output. Multiple tunnel collapses and structural flaws have cast serious doubt on the quality of work on this project of national importance.
In its performance audit report for 2022-23, submitted to the president and parliament, the AGP noted that even the major headrace tunnel collapse last year—which has kept the project shut for months—was not included in the findings, as the report was finalised earlier on the basis of Wapda’s responses.
Originally approved in 1989 at Rs15 billion, the project was delayed by nearly a decade and ballooned to Rs507 billion by its fourth revised PC-I in 2018. Despite commissioning its first unit in 2018, contractors failed to complete punch list items, supply essential spare parts, or resolve structural issues. The collapse of the tailrace tunnel soon after completion further undermined its reliability.
The audit highlighted that the project failed to achieve its key objectives: generation of the planned 5,150GWh annually, securing water rights over the Neelum River, earning carbon credits, and mitigating environmental impacts. Pakistan also lost the Kishenganga case in the International Court of Arbitration, further weakening its position on water rights.
Key findings include a nine-year delay, a cost overrun of nearly Rs339bn, revenue losses of Rs70bn due to non-approval of tariffs, Rs20bn in generation losses from the tunnel collapse, and non-realisation of $50m in carbon credit revenue. The AGP also cited poor planning, weak contract management, unjustified payments to contractors, and the non-recovery of insurance claims worth Rs42bn.
Concluding, the report termed Neelum-Jhelum a project that fell short on “nearly every planned objective,” leaving behind massive financial losses, unresolved disputes, and critical structural flaws.
