The cost of Pakistan’s under-construction Mohmand Dam hydropower project has surged by 115 percent over the past eight years, reaching Rs666 billion, according to officials.
Officials attribute the rise largely to the rupee’s depreciation against the dollar, along with design changes, the 2022 floods, and security issues, all of which affected both cost and the completion timeline.
The Water and Power Development Authority (WAPDA) has proposed setting the revised project cost at Rs666 billion. The matter was presented to the Central Development Working Party (CDWP) this week, but no decision was taken due to time constraints.
The CDWP is the initial forum for approving mega projects, after which the matter is referred to the Executive Committee of the National Economic Council (ECNEC) for final approval. The dam’s cost was approved at Rs310 billion in April 2018, with a completion target of September 2025, but the project now proposes an additional Rs356 billion.
Project management told the Planning Commission that currency depreciation, design changes, floods and security-related difficulties were the main reasons for the cost escalation and delays.
WAPDA said about 51 percent of the overall cost increase was caused by the rupee’s depreciation against the dollar. Since the project involves both local and foreign currency expenditures, exchange rate fluctuations raised the rupee value of foreign costs.
The Planning Commission has asked WAPDA for details of payments under dollar-denominated contracts and the impact of exchange rate changes on the project cost, noting that merely converting foreign currency contracts at the current rate is insufficient and that contract terms and payment obligations must be reviewed.
According to documents, the revised estimate proposes a construction cost of Rs267 billion, up by Rs153 billion or 134 percent over the initial estimate. The power generation component has risen to Rs399 billion, an increase of Rs204 billion or 105 percent.
Documents show that Rs275 billion had been spent on the project as of last month, while construction work was about 57 percent complete. The dam is being built by China’s Gezhouba Group Company Limited in a joint venture with 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.
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