Two of Pakistan’s biggest hydropower projects have become far more expensive, with their combined estimated cost rising by almost Rs1.9 trillion, according to figures placed before the National Assembly by the Ministry of Water Resources. The increase shows how sharply a weaker rupee, dearer fuel and pricier building materials can reshape infrastructure that takes years to build, and it raises fresh questions about how the country will pay for projects it has long called essential.
The ministry told lawmakers that the fall in the value of the Pakistani rupee against the United States dollar was the central reason for the escalation. Large dams are unusually exposed to currency movements because so much of what they need, from machinery and turbines to imported equipment, is priced in foreign currency. When the rupee loses ground, every dollar-denominated bill grows larger in rupee terms, even if nothing about the design has changed.
The Diamer-Bhasha Dam accounts for a large share of the increase. Its estimated cost has climbed by Rs642 billion, from Rs479 billion to Rs1.121 trillion. The ministry said a revised PC-I, the formal document setting out a project’s cost, scope and justification for approval, had been submitted. Diamer-Bhasha is being built across the Indus River, about 40 kilometres downstream of Chilas, and is among the federal government’s priority projects for water, food and energy security. On completion it is designed to store 8.1 million acre-feet of water and generate 4,500 megawatts of electricity. Only days ago, the Water and Power Development Authority signed a Rs133.18 billion contract for hydro-mechanical works on the dam, covering gates and steel structures that control water flows.
The Dasu Hydropower Project has seen an even steeper jump in percentage terms. Its estimated cost has risen from Rs486 billion to Rs1.740 trillion, an increase of Rs1.254 trillion, or roughly 260 per cent. Dasu is a run-of-the-river scheme on the Indus in Upper Kohistan district of Khyber Pakhtunkhwa, planned to generate 4,320 megawatts in two stages of 2,160 megawatts each. Once both stages are running, it is meant to become one of the country’s biggest producers of clean power, and its revised figure shows how a project built over many years in difficult mountain terrain can be transformed by the same pressures affecting Diamer-Bhasha.
Beyond the exchange rate, the government acknowledged that everyday construction costs have surged as well. The price of a bag of cement has risen by 204 per cent, from Rs530 to Rs1,610, while high-speed diesel has become 472 per cent more expensive, climbing from Rs72 to Rs414 per litre. Steel and iron bars have risen by 268 per cent, from Rs72,000 to Rs265,000 per metric ton. Cement, diesel and steel go into almost every stage of dam building, from pouring concrete and running heavy machinery to reinforcing structures that must hold back a river for decades, so budgets drawn up in a cheaper era quickly stop matching reality.
Both projects sit at the heart of Pakistan’s effort to secure more water storage and cheaper electricity. Existing large dams have lost storage capacity as silt builds up behind them, while demand for power keeps growing. New storage helps regulate river flows for irrigation, softens floods and shortages, and gives the power system electricity that does not depend on imported fuel. That is why successive governments have pressed ahead with both projects even when financing has been difficult. The revised costs do not change that logic, but they sharpen the debate about funding and oversight.
There is also a wider lesson here for how Pakistan plans major infrastructure. A project approved at one exchange rate and one set of material prices can look very different a few years later. Supporters will argue that continued reliance on expensive imported fuel and vulnerability to water shortages would cost far more over the projects’ lifetimes. Critics will ask whether earlier estimates were too optimistic and whether stronger cost controls and faster execution could have limited the damage.
For households and businesses, the immediate effect is indirect but real. Dams do not appear on a monthly electricity bill the day their costs are revised, yet such projects’ financing eventually feeds into the broader cost of the power system, and delays can postpone the cheaper electricity they are meant to deliver. Farmers, too, have a stake, since storage capacity shapes how reliably irrigation water reaches fields in the dry season. The challenge now is to keep both projects moving and to show that the extra spending buys durable assets rather than simply absorbing inflation.
What happens next will be watched closely in parliament, in the host provinces, and in nearby communities. Lawmakers will want to know how the revised costs will be financed and what safeguards exist to prevent another escalation of the same size. Engineers will be judged on delivery, on whether concrete is poured, tunnels finished and turbines installed on schedule. And the public, which ultimately bears the cost through taxes and tariffs, will judge the projects not by their original promises but by the water they store and the power they generate when they are finally complete.
