Pakistan’s largest hydropower projects have witnessed massive cost overruns, with the Ministry of Water Resources attributing the increase to inflation, the depreciation of the Pakistani rupee, construction delays, higher financing costs and enhanced security requirements.
According to the ministry, key projects including the Diamer Basha Dam, Mohmand Dam, Dasu Hydropower Project Stage-I, and the Tarbela Fifth Extension have all experienced significant revisions in their estimated costs.
Officials said the higher project costs are primarily driven by rising prices of construction materials, exchange rate fluctuations, increased interest during construction, land acquisition challenges, revised engineering designs, stricter security arrangements and delays in project completion.
Diamer Basha Dam Cost Surges 134%
The dam component of the Diamer Basha Dam is now estimated to cost Rs1.122 trillion, representing a 134% increase from its originally approved cost of Rs479.7 billion.
The ministry explained that the revised estimate reflects outdated assumptions in the original project plan, the depreciation of the rupee from Rs105.3 to nearly Rs280 per US dollar, updated contract values, revised engineering standards and additional spending on security and supporting infrastructure.
The project’s completion deadline has also been extended from February 2029 to December 2030.
Mohmand and Dasu Projects Also Record Massive Cost Increases
The estimated cost of the Mohmand Dam has risen to Rs665.7 billion, up 115% from the originally approved Rs309.6 billion.
Meanwhile, the Dasu Hydropower Project Stage-I has recorded the sharpest increase among the major schemes. Its cost has climbed by 260%, rising from Rs486.1 billion to approximately Rs1.738 trillion.
According to the ministry, nearly 90% of Dasu’s cost escalation resulted from factors beyond the project’s control, including currency depreciation, inflation, increased security expenditures, social safeguard measures and higher financing costs.
Tarbela Fifth Extension Cost Nearly Quadruples
The Tarbela Fifth Extension Project has also become significantly more expensive, with its estimated cost increasing from Rs82.4 billion to Rs316.4 billion—a rise of approximately 285%.
Officials said the original estimates were prepared using 2014 prices, while the rupee has since weakened from around Rs102.5 to nearly Rs281 against the US dollar. Additional cost increases have resulted from revised civil works, electromechanical and transmission contracts, design modifications and implementation delays.
Karachi Water Supply Project Also Affected
The ministry further revealed that the Greater Karachi Bulk Water Supply Scheme (K-IV Phase-I) has become 36% more expensive.
The increase has been attributed to inflation, construction delays, additional security arrangements and the rising cost of imported equipment following the depreciation of the Pakistani rupee.
The ministry maintained that these factors have significantly impacted the financial requirements of Pakistan’s critical water and hydropower infrastructure projects, leading to substantial revisions in their overall development costs.
