Key Takeaways
- The cost of Pakistan’s Mohmand Dam project has increased by 115 percent to Rs666 billion.
- The rise is attributed to rupee depreciation, design changes, 2022 floods, and security issues.
- The project is 57 percent complete, with Rs275 billion spent so far.
The cost of Pakistan’s Mohmand Dam hydropower project has surged to Rs666 billion, a 115 percent increase over the past eight years, according to officials. The Water and Power Development Authority (WAPDA) has proposed setting the revised project cost at this amount.
Officials attribute the significant rise in cost to various factors, including the rupee’s depreciation against the dollar, design changes, the 2022 floods, and security issues, which affected both the cost and the completion timeline.
The Planning Commission has asked WAPDA for details on payments under dollar-denominated contracts and the impact of exchange rate changes on the project cost. The commission noted that merely converting foreign currency contracts at the current rate is insufficient and that contract terms and payment obligations must be reviewed.
The project, which was initially approved at Rs310 billion in April 2018 with a completion target of September 2025, now proposes an additional Rs356 billion. The construction cost has risen to Rs267 billion, an increase of Rs153 billion or 134 percent over the initial estimate. The power generation component has increased to Rs399 billion, an increase of Rs204 billion or 105 percent.
About 51 percent of the overall cost increase is attributed to the rupee’s depreciation against the dollar. Since the project involves both local and foreign currency expenditures, exchange rate fluctuations have raised the rupee value of foreign costs.
The dam is being built by a joint venture between China’s Gezhouba Group Company Limited and Pakistan’s Descon Engineering Limited. The 2022 floods in the Swat River damaged the tunnels built for water diversion, disrupting construction for a prolonged period.
The Planning Commission has termed the delays and cost overruns concerning and recommended a third-party audit of financial and physical progress. The commission has also recommended preparing a revised financial plan.
Once completed, the Mohmand Dam is expected to add 1.29 million acre-feet to Pakistan’s total water storage capacity. The project is currently 57 percent complete, with Rs275 billion spent on it as of last month.
