Neelum-Jhelum Hydropower Project Incurred Rs. 128 Billion Losses: AGP

The Auditor General of Pakistan (AGP) has found that the Neelum Jhelum Hydropower Project suffered losses exceeding Rs. 128 billion during fiscal year 2024-25, citing prolonged shutdowns, tunnel collapses, mounting debt, and operational failures that have severely undermined the project’s financial viability.

According to the audit report, the 969 megawatt hydropower project recorded net losses of Rs. 29.41 billion during the fiscal year, while business interruption losses reached Rs. 99.18 billion after the powerhouse remained shut following the collapse of the tailrace tunnel in 2022 and the headrace tunnel in May 2024.

The audit found that inquiries into both tunnel collapses remain incomplete, while the project’s management failed to address technical defects, renew critical insurance coverage, or secure compensation for losses arising from the structural failures. Assets worth Rs. 267 billion also remained uninsured during the review period.

The report said the project has failed to meet its annual electricity generation target of 5,150 gigawatt hours in any year since commissioning, including periods when the plant was fully operational. It also noted that the absence of a reference tariff approved by the National Electric Power Regulatory Authority (NEPRA) resulted in an estimated Rs. 77.35 billion regulatory revenue shortfall.

According to the audit, the project’s financial position has deteriorated sharply. Current liabilities exceeded current assets by Rs. 307.89 billion as of June 30, 2025, mainly because of debt repayment defaults and the reclassification of long term loans as current liabilities.

The AGP further found that the project has failed to recover its investment within the planned payback period. By the end of FY2024-25, it had recovered only Rs. 180.17 billion against an approved project cost of Rs. 418.89 billion. Around 69 percent of receivables were overdue by more than 120 days, reflecting weak financial management and cash flow challenges.

The audit concluded that persistent underperformance in power generation, prolonged outages, delayed tariff approvals, rising debt, and inadequate risk management have prevented the Neelum Jhelum Hydropower Project from achieving its financial and operational objectives.