By Ijaz Kakakhel

The cost of the Dasu Hydropower Project has surged by Rs1.252 trillion to Rs1.738 trillion—more than three-and-a-half times its earlier estimate—as prolonged delays, foreign-exchange losses, security challenges and design changes pushed up the project bill, according to a project document available with Wealth Pakistan.

The document shows that the project cost increased 258% from Rs486.093 billion to Rs1.738 trillion. The cost overrun has been attributed mainly to the sharp depreciation of the rupee, price adjustments, changes in the project’s scope, higher land acquisition and resettlement expenses, increased security costs and interest during construction.

According to the document, the foreign-exchange impact was particularly significant as the exchange rate moved from Rs100 to Rs280 against the US dollar. The rise in costs was also linked to price escalation, social safeguard requirements, enhanced security arrangements and financing expenses accumulated during construction.

The project authorities classified 90% of the cost increase as arising from “uncontrollable factors”, including foreign-exchange losses, cost escalation, social safeguards and enhanced security and delays in land acquisition. The remaining 10% of the increase was attributed to a controllable factor involving design and scope changes.

Land acquisition delays between 2015 and 2019 were listed among the major causes of the project slowdown. Construction was subsequently affected by the COVID-19 pandemic during 2020-21, security incidents in 2021 and 2024, and flash floods in 2022 and 2024.

Resettlement and possession issues related to the Environmental and Social Monitoring Report (ESMR) package, along with design and scope changes, also contributed to the delays.

Despite the setbacks, the project has recorded progress on several major components. Land acquisition has been completed, river diversion works have been finished, and excavation of the dam abutments on both the right and left banks has been completed.

Excavation of the dam pit has reached 85%, while overall physical progress stood at 31.09% as of June 30, 2026. The completion date has been set for November 30, 2028, under the approved second revised PC-I.

The project carries a total World Bank financing commitment of $1.517 billion, including $517 million under the original IDA financing and $1 billion in additional IDA and IBRD financing.

IDA (International Development Association) and IBRD (International Bank for Reconstruction and Development) are the World Bank's two main lending arms.

By June 30, 2026, total disbursement had reached $516.10 million, comprising $477.25 million from the original financing and $38.85 million from additional financing.

The document further shows that Rs51.311 billion had been paid as interest on World Bank loans by the end of June 2026, while no commitment charges were paid. An escalation cost of Rs68.272 billion was also recorded following project delays.

Credit: INP-WealthPk