The World Bank (WB) is preparing to provide a new $1 billion loan for the initial phase of the Dasu hydropower project, following the approval of a revised PC-1, which includes updated timelines for completion.
According to a senior official from the Economic Affairs Division (EAD), the estimated cost for the project’s first phase has surged by 190.1%, rising from Rs586 billion to Rs1,700 billion. This significant increase is mainly due to delays in land acquisition, security concerns, and a 178% appreciation of the US dollar.
Stage I of the project is expected to generate 2,160 MW of electricity. Once Stage II is completed, the total power output will reach 4,320 MW. The Dasu Hydropower Project is a run-of-river initiative on the Indus River, located seven kilometers upstream from Dasu Town in Kohistan (Upper), Khyber Pakhtunkhwa. It is positioned 74 km downstream of the proposed Diamer Bhasha Dam site and 345 km from Islamabad. The project aims to produce 4,320 MW of hydroelectric power across 12 units (each with a 360 MW capacity) and an annual energy output of 21,445 GWh. It will be executed in two phases, with Stage I contributing 2,160 MW (six units of 360 MW each) and generating 12,222 GWh annually, with an estimated completion period of five years. The WB has previously extended a $588 million loan and also facilitated the raising of $460 million from international markets.
The new funding structure includes $800 million from the International Development Association (IDA) and $200 million from the International Bank for Reconstruction and Development (IBRD). Of the IDA loan, Pakistan will secure $435 million at zero interest, while $365 million will be subject to a 5.83% interest rate. The IBRD funding will carry an interest rate of 6.13%.
The Ministry of Water Resources confirmed that the revised PC-1, estimated at Rs1,700 billion, will be submitted to the Planning Commission for approval within days. Once approved, the Water and Power Development Authority (WAPDA) and the WB will finalize the $1 billion loan agreement.
Originally, land acquisition for the project was expected to be completed by 2014, but the process extended until 2021-22. Another major factor contributing to the rising cost is the sharp increase in the US dollar’s value from Rs100 to Rs278, a 178% appreciation. The project, initially set for completion by 2023-24, is now expected to be finalized by 2027-28. The Economic Affairs Division played a crucial role in redirecting an existing $1 billion WB loan, which was initially allocated for other projects but remained unutilized. With the WB executive board’s approval, this amount has been reallocated to the Dasu Dam.
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