Diamer Basha Dam Costs Balloon 134% to Rs. 1.12 Trillion on Rupee Depreciation, Delays

The Ministry of Water Resources has disclosed that the costs of Pakistan’s major hydropower projects have risen sharply because of inflation, the depreciation of the rupee, construction delays, and higher security and financing expenses.

According to the ministry, the Diamer Basha Dam, Mohmand Dam, Dasu Hydropower Project Stage I, and Tarbela Fifth Extension have all recorded significant cost increases. Officials attributed the overruns to higher construction material prices, exchange rate volatility, interest during construction, land acquisition issues, security requirements, design changes, and delays in project completion.

The Diamer Basha Dam’s dam component is now estimated to cost Rs. 1.122 trillion, up 134 percent from the originally approved Rs. 479.7 billion.

The ministry said the increase reflects outdated pricing assumptions in the original project plan, the rupee’s depreciation from Rs. 105.3 to around Rs. 280 against the US dollar, revised contract costs, updated 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.

The Mohmand Dam has seen its cost rise 115 percent to Rs. 665.7 billion, compared with the approved Rs. 309.6 billion. Meanwhile, the Dasu Hydropower Project Stage I recorded the steepest increase, with costs jumping 260 percent from Rs. 486.1 billion to Rs. 1.738 trillion.

The ministry said nearly 90 percent of Dasu’s cost increase resulted from factors beyond the project’s control, including currency losses, inflation, higher security costs, social safeguard measures, and financing expenses.

The Tarbela Fifth Extension has also experienced a 285 percent increase in cost, climbing from Rs. 82.4 billion to Rs. 316.4 billion. Officials said the original estimates were based on 2014 prices, while the rupee has since weakened from Rs. 102.5 to around Rs. 281 against the US dollar. T

he project has also been affected by revised civil works, electro mechanical and transmission contracts, design modifications, and implementation delays.

The ministry added that the Greater Karachi Bulk Water Supply Scheme K IV Phase I has become 36 percent more expensive because of inflation, project delays, additional security requirements, and the higher cost of imported equipment caused by the rupee’s depreciation.