ISLAMABAD: Pakistan’s flagship hydropower projects have witnessed significant cost escalations, with the Ministry of Water Resources attributing the increases to persistent inflation, steep currency depreciation, project delays, and a range of technical, administrative, and security-related challenges.
According to the ministry, the Diamer Basha Dam, Mohmand Dam, Dasu Hydropower Project (Stage-I), and Tarbela 5th Extension have all experienced substantial revisions in their project costs due to rising construction material prices, exchange rate volatility, Interest During Construction (IDC), enhanced security measures, land acquisition issues, social safeguards, design modifications, and extended implementation schedules.
The Diamer Basha Dam (dam component) has recorded a 134 percent increase in cost, rising from the originally approved Rs479.686 billion to Rs1.122 trillion (currently under approval). The ministry said the revised estimate reflects the use of an outdated December 2016 price index in the original PC-I, depreciation of the rupee from Rs105.3 to Rs280 per US dollar, revised contract prices for MW-1 and consultancy services, compliance with updated ICOLD design guidelines, and additional expenditures on the Thor project colony, external security, helicopter services, and the Chilas Safe City Project. The project completion timeline has also been extended from February 2029 to December 2030.
The Mohmand Dam Project has also seen its cost rise by 115 percent, increasing from Rs309.558 billion to Rs665.743 billion. The ministry cited exchange rate depreciation, unprecedented inflation, higher security expenditures, design revisions, increased contractor bid prices, and revised consultancy costs as the primary reasons behind the escalation.
Among the major schemes, the Dasu Hydropower Project (Stage-I) has recorded the highest increase in absolute terms, with its estimated cost soaring by 260 percent from Rs486.093 billion to Rs1.738 trillion. The ministry stated that nearly 90 percent of the increase resulted from factors beyond the project’s control, including foreign exchange losses, inflation, enhanced security requirements, higher social safeguard costs, and Interest During Construction.
Similarly, the Tarbela 5th Extension Project has witnessed a 285 percent increase in cost, climbing from Rs82.360 billion to Rs316.410 billion. The ministry noted that the original PC-I was prepared using 2014 price indices, while the rupee has depreciated from Rs102.543 to approximately Rs281 per US dollar. Additional factors include revised civil, electro-mechanical (E&M), and transmission contracts, design enhancements, and project delays.
The Greater Karachi Bulk Water Supply Scheme (K-IV) Phase-I has also experienced a 36 percent increase in cost. According to the ministry, inflation, implementation delays, and additional security requirements have significantly impacted the project, which depends heavily on imported equipment such as pumps, motors, HR coils, valves, mechanical systems, and instrumentation. The rupee’s depreciation from Rs178 to Rs282 per US dollar has further amplified project costs.
Meanwhile, the Auditor General of Pakistan (AGP), in its Audit Report 2024–25, has highlighted financial irregularities involving billions of rupees in WAPDA’s hydropower projects, raising fresh concerns over governance, financial oversight, and cost management within the country’s water and power sector.
Story by Mushtaq Ghumman
