The cost of the Diamer-Bhasha Dam project has escalated by 119.21% from Rs479 billion to Rs1.05 trillion due to a range of internal and external factors according to Minister for Water Resources Musadik Malik.
In a written reply, the minister attributed the significant cost increase to revised designs, enhanced security measures, and fluctuating exchange rates. The redesign of the main dam, prompted by updated seismic parameters set by the International Commission on Large Dams (ICOLD), was a key factor. Additional geological investigations also necessitated modifications, including the redesign of the diversion scheme, flushing tunnel, and hydro-mechanical works. These adjustments were made to address revised seismic parameters, updated Safety Check Flood (SCF), and Probable Maximum Floods (PMF).
The minister highlighted security-related challenges as another major cost driver. Incidents involving Chinese contractors and expatriates working on the project required strengthened security measures. Consequently, the movement of foreign staff from Islamabad to the construction site is now restricted to air travel only, necessitating the procurement of a helicopter at a cost of Rs9 billion. Additionally, Rs17 billion has been allocated for additional security deployment, while Rs. 7 billion has been spent on a Safe City Project for enhanced safety.
Economic factors also played a critical role in the cost hike. The minister revealed that the depreciation of the rupee plunging from Rs105.3 to Rs278.3 per US dollar between 2018 and 2024 accounted for a 31.34% (Rs178 billion) increase in the project’s cost. Meanwhile, design changes contributed an additional 14.95% (Rs85 billion).
Interest accrued during the construction phase for the foreign component amounted to Rs82 billion, adding a further 7.5% to the total cost.
Discussing the progress of the project, Malik said contract MW-I has achieved 16.09% completion. He emphasized that time overruns have been a major factor in the cost escalation. To address delays and ensure efficient project execution, the Diamer-Bhasha Dam Company has implemented international best practices for monitoring progress and taking corrective actions.
The Diamer-Bhasha Dam, a critical infrastructure project for Pakistan, aims to enhance water storage and hydroelectric power capacity. However, the significant cost overruns have raised concerns about project management and financial sustainability.
