Pakistan’s Indicative Generation Capacity Expansion Plan (IGCEP) 2025–2035 envisages a substantial expansion of hydropower capacity as part of the government’s policy to reduce dependence on fossil fuels, particularly imported fuels, and increase the share of indigenous renewable resources in the national energy mix. The plan envisages around 21,400 MW of additional hydropower capacity by 2035.
DIAMER BASHA DAM & HYDROPOWER PROJECT
Pakistan’s Indicative Generation Capacity Expansion Plan (IGCEP) 2025–2035 envisages a substantial expansion of hydropower capacity as part of the government’s policy to reduce dependence on fossil fuels, particularly imported fuels, and increase the share of indigenous renewable resources in the national energy mix. The plan envisages around 21,400 MW of additional hydropower capacity by 2035.
The Water and Power Development Authority (Wapda) is currently implementing several major hydropower and water-storage projects, including Diamer Basha, Dasu, Mohmand, Tarbela 5th Extension and Keyal Khwar. These projects are intended to increase electricity generation while, for major storage dams, also improving water regulation and irrigation supplies. At the same time, WAPDA is rehabilitating and upgrading existing facilities such as Mangla and Warsak power stations to restore or enhance their generation capacity.
Among the projects under construction, Diamer Basha, Dasu and Mohmand are of exceptional importance because of their combined contribution to electricity generation, water storage and national food security. Their implementation, however, has been affected by financing constraints, rising costs, land acquisition and resettlement issues, difficult terrain, procurement challenges and delays in construction. These difficulties have recently attracted parliamentary scrutiny, with a subcommittee of the Senate Standing Committee on Economic Affairs examining delays and cost escalation in major hydropower dam projects.
Among these projects, the Diamer Basha Dam and Hydropower Project is arguably the most strategically significant. It is being constructed on the Indus River in the mountainous region near Chilas, at the boundary of Gilgit-Baltistan and Khyber Pakhtunkhwa. It is one of the largest and most technically challenging infrastructure projects ever undertaken in Pakistan.
The project comprises a 272-metre-high roller-compacted concrete (RCC) gravity dam, which Wapda describes as the highest RCC dam in the world. Its reservoir will have a gross storage capacity of approximately 8.10 million acre-feet (MAF), including 6.40 MAF of live storage. The project also includes an underground powerhouse with a combined installed capacity of 4,500MW, comprising 12 generating units of 375MW each. Wapda estimates annual electricity generation at approximately 18,097 GWh. The importance of Diamer Basha therefore extends well beyond power generation. Its principal strategic benefits are expected to include additional water storage, improved irrigation supplies, sediment management and the generation of large quantities of indigenous renewable, cost-effective electricity.
The project was conceived more than two decades ago, but implementation was delayed by financing difficulties and other institutional and technical factors. The dam component was approved by the Executive Committee of the National Economic Council (ECNEC) in April 2018 at a cost of Rs474 billion. This figure, however, does not reflect the current cost of the complete project, since subsequent approvals, escalation, financing arrangements and the separate power-generation component have substantially altered the project’s overall financial requirement.
Construction of the main dam and associated works commenced in 2020 under a joint venture of PowerChina (Power Construction Corporation of China) and Pakistan’s Frontier Works Organisation (FWO). PowerChina, a leading global engineering and construction company, was one of the main contractors for the 22,500MW Three Gorges hydropower station in China. The Diamer Basha Consultants Group, a consortium of 12 engineering companies including Pakistan’s NESPAK and international firms such as Stantec/MWH, AFRY/POYRY, Mott MacDonald, Nippon Koei, and Dolsar, is undertaking design and construction supervision of the project. An international Panel of Experts has also been engaged to provide high-level technical oversight during the engineering and construction phases. The panel comprises specialists in geology, rock mechanics, dam engineering, and civil & structural engineering from Germany, Australia, the United States, and Colombia.
Major international donors, including the World Bank and the Asian Development Bank, did not finance the project because of concerns relating to the disputed status of the territory. Subsequently, the government’s efforts to include the project in the China-Pakistan Economic Corridor (CPEC) portfolio also did not materialise. The project is now being financed through a combination of government allocations, WAPDA resources and borrowing arrangements. The financing structure is particularly important because a substantial part of the equipment and specialised procurement is exposed to foreign currencies, while much of the project expenditure is incurred in Pakistani rupees.
The most important justification for Diamer Basha is its contribution to Pakistan’s water security. The project will add approximately 6.4 MAF of live storage to the Indus Basin system. This additional storage will help regulate seasonal flows and provide greater flexibility in supplying irrigation water
Construction is progressing simultaneously at several major work sites. The river-diversion system has been completed, allowing the river to be diverted away from the main dam construction area. Foundation works and construction of the main RCC dam are progressing, alongside excavation and development of associated structures. The scale of the construction operation is massive, as the mountainous terrain presents difficult geological and logistical conditions, and the project requires extensive excavation, concrete production and placement, heavy lifting and transportation facilities, river management, and the development of supporting infrastructure.
The project also involves reconstructing or relocating infrastructure affected by the reservoir. Of particular significance is the Karakoram Highway, portions of which will be submerged by the future reservoir. Relocating approximately 280km of the highway is itself a major undertaking and will be coordinated with reservoir development. WAPDA’s current project information places the completion target for Diamer Basha at October 2030. This represents a significant change from earlier schedules and reflects the project’s complexity and delays.
The hydropower component will consist of two underground powerhouses located on opposite sides of the Indus River. Together they will accommodate 12 turbine-generator units, each rated at 375MW. Installing the generating machinery will be a major undertaking in itself. Large turbines, generators and associated electromechanical equipment must be transported to a remote mountainous site and installed in underground enclosures. The successful completion of the dam therefore represents only one part of the challenge.
The cost of power generation facilities is estimated at Rs751 billion, as per the original PC-1, which now awaits ECNEC approval. Wapda is finalising the order for the electromechanical equipment for the powerhouses in line with the physical progress and anticipated completion of the dam. Financing for this component is expected to come from WAPDA’s own resources, commercial loans, and foreign suppliers’ credit.
The power-evacuation framework is also being finalised now. Establishing grid connectivity through 765-kV extra-high-voltage (EHV) transmission lines will be a major physical and financial undertaking. The transmission network is expected to extend over approximately 400 km to connect the project with major load centres in the downstream areas. The government is exploring the possibility of securing foreign financing from various international sources for the grid-connectivity component. This means that the benefits of Diamer Basha cannot be measured solely by the date on which the dam structure is completed. Full utilisation of its generating capacity will depend upon the timely completion of the powerhouses, electromechanical equipment and transmission network.
The cost of Diamer Basha has increased substantially from the amount originally approved for the dam component. Several factors have contributed to this escalation, including the long gestation period, construction delays, inflation, exchange-rate depreciation and increases in the cost of imported machinery and other specialised equipment.
However, it is important to distinguish among the various cost figures quoted for the project. The Rs474 billion ECNEC approval of 2018 relates to the dam component, whereas the complete project also includes power-generation facilities, land acquisition, resettlement, infrastructure relocation, roads and other associated works.
Cost escalation and delays are not peculiar to Diamer Basha. A widely cited 2014 study by Atif Ansar, Bent Flyvbjerg, Alexander Budzier and Daniel Lunn examined 245 large dams in 65 countries and found an average real cost overrun of about 96 per cent and an average time overrun of about 44 per cent. The study, published in the Energy Policy journal (volume 69, June 2014), provides useful historical context. Pakistan has its own experience of large-dam cost escalation. The Tarbela Dam, for example, reportedly cost about four times its original estimate on completion. This experience underlines the need for realistic costing, adequate contingencies, rigorous project management, and timely financing for projects of this scale.
The most important justification for Diamer Basha is its contribution to Pakistan’s water security. The project will add approximately 6.4 MAF of live storage to the Indus Basin system. This additional storage will help regulate seasonal flows and provide greater flexibility in supplying irrigation water during periods of low river flows. Wapda estimates that the project will provide irrigation benefits covering approximately 1.2 million acres.
The reservoir will also have an important sediment-management function. The Indus River carries a large sediment load from the mountainous upper basin, much of which ultimately reaches Tarbela. By intercepting a substantial quantity of this sediment upstream, Diamer Basha is expected to reduce sediment deposition in Tarbela Reservoir and extend its useful operating life. Wapda estimates that the sediment-trapping benefit could extend Tarbela’s operational life by about 35 years. This is strategically significant because Tarbela remains a cornerstone of Pakistan’s irrigation and electricity systems.
With 4,500MW of installed capacity and estimated annual generation of about 18 billion units, Diamer Basha will become one of Pakistan’s largest sources of renewable electricity once fully operational. The project also provides an opportunity to diversify Pakistan’s electricity mix. However, its full economic benefit will depend on efficient operation of the reservoir, completion of the associated transmission system and integration of its output into the national grid.
Diamer Basha is unquestionably a project of national strategic importance, but its successful completion will require sustained attention to financing, construction management, infrastructure relocation, power-generation equipment and transmission. The latest target of October 2030 should therefore be treated as a demanding implementation milestone rather than an assurance that every component will be fully operational on that date. The dam, powerhouses, electromechanical equipment and transmission system must progress in a coordinated manner if the country is to realise the project’s full benefits.
The challenges are formidable, but so are the potential gains. Diamer Basha is designed to address three of Pakistan’s most persistent strategic vulnerabilities simultaneously: water insecurity, energy insecurity and food security. Its 6.4 MAF of live storage will strengthen the country’s water-management capacity; its 4,500MW of installed generation will add a major source of indigenous renewable electricity; and its sediment-control function will help protect the operational life of the downstream Tarbela system.
The overriding priority should therefore be to complete the project with the least possible further delay and cost escalation, while maintaining the engineering, environmental and social standards required for a project of such magnitude. For Pakistan, Diamer Basha is not simply another hydropower & dam project. It is a long-term investment in the country’s water, food and energy security.
The writer is a retired chairman of the State Engineering Corporation.
