ISLAMABAD: Dasu hydropower, Diamer Bhasha Dam and Neelum Jhelum Hydropower projects will cost the national exchequer an astronomical Rs3.9 trillion due to their long-term planning failures, reflects the Auditor General of Pakistan’s report for 2025-26.
The AGP’s latest disclosures reveal that these critical energy initiatives have combined to saddle the state with an immediate fiscal hemorrhage exceeding Rs358 billion in direct losses, revenue shortfalls, and unapproved budget overruns during FY2024-25 alone.
This long-term fiscal crisis is driven heavily by severe budget escalations at the Dasu Hydropower Project and Diamer Bhasha Dam Project. At Dasu, the audit reveals a colossal 257% cost overrun, where Stage-I estimates plummeted into a capital crisis, skyrocketing from an original Rs486 billion to an approved Rs1,737 billion. Simultaneously, Diamer Bhasha has locked down significant state capital; its main dam construction costs sit at an original PC-I of Rs479 billion, with an additional Rs151 billion already burnt on land acquisition and resettlement against a revised Rs149 billion budget- while the unawarded PC-I for its future power generation facilities demands a massive Rs1,424 billion.
Compounding these infrastructural overruns are the severe immediate operational losses bleeding out of the Neelum Jhelum Hydropower Project. The audit flags a direct annual net loss of Rs29 billion alongside a staggering business interruption loss of Rs99 billion at the crippled plant. This is exacerbated by a severe regulatory revenue shortfall of Rs77.346 billion due to unapproved tariffs, leaving Neelum Jhelum in a critical liquidity default where its current liabilities outstrip its current assets by an alarming Rs307.894 billion.
Dasu Project: The Dasu Hydropower Project (DHPP) stands flagged for extreme implementation inefficiencies, registering a massive 257% cost overrun. The audit notes that the project has achieved only 26.08% physical progress despite utilizing 84.82% of its original financial allocation, pushing the completion timeline out by nine cumulative years from the initial 2019 baseline to November 2028.
Financially, Stage-I expenditures reached Rs412,289.27 million up to June 2025 against a progressive budget allocation of Rs695,066.48 million. The funding utilized so far includes Rs168,750 million from Wapda Equity (including interest during construction), Rs113,563 million from a local commercial loan led by HBL, Rs79,273 million via World Bank IDA-1 credit, and Rs50,703 million from Credit Suisse.
Operationally, the project has failed to secure 100% of its required land after 11 years. While the requirement was rationalized down to 5,685 acres, about 654 acres in District Diamer remain unacquired due to local compensation disputes and disruptive terrorist activities that halted work.
Administratively, under five sequential project directors leading up to current chief Amir Shafiq-Ur-Rehman, the AGP uncovered severe procedural violations, including the direct contracting of a safe city consultancy violating the PPRA rules, a failure to recover profit earned by officials on land funds, and the irregular granting of inadmissible allowances to provincial employees without Finance Division clearance.
Diamer Bhasha: The Diamer Bhasha Dam Project (DBDP) reveals stark inefficiencies, with actual physical progress standing at just 19.95% compared to a 39.67% financial progress benchmark, falling drastically behind the planned 57.78% target for 2024-25.
The project has failed to acquire 100% of required land despite a lapse of 17 years, leaving 3,134 acres unacquired out of a rationalized 35,924 acres. Resettlement efforts for approximately 30,350 affected persons (4,102 households) are severely hit by local resistance, with only one model village at Harpan Das under construction.
Cumulative expenditure on the Dam Part reached Rs190,304.88 million up to June 2025 against an awarded contract price of Rs442,402.79 million to M/s Power China-FWO Joint Venture.
Furthermore, the AGP flagged serious procedural violations, including massive unauthorized cash transfers to private bank accounts of Land Acquisition Collectors, irregular allowances, and repeated post-award design revisions that continue to delay the project past its June 2027 Dam Part timeline.
Neelum Jhelum: The Neelum Jhelum Hydropower Project (NJHP) faces severe operational and structural distress following successive collapses of its Tailrace Tunnel (TRT) in July 2022 and Headrace Tunnel (HRT) in May 2024, which triggered a complete powerhouse shutdown and the multi-billion-rupee business interruption loss.
The project completely failed to achieve its 5,150 GWh annual generation target and recovered just Rs180.170 billion against an approved project cost of Rs418.885 billion.
The project’s liquidity crisis is exacerbated by debt repayment defaults, leaving current liabilities far ahead of current assets. Management was heavily criticized for failing to restore powerhouse operations or fix institutional responsibility for the tunnel collapses.
The audit brought extensive internal oversights to light, noting that an insurance claim of Rs41,964.645 million for the TRT collapse remains un-indemnified, while a separate Rs415,800 million insurance policy expired in 2023 without renewal, leaving approximately Rs267,000 million in project assets totally uninsured.
Additionally, 69% of receivables are overdue beyond 120 days, alongside systemic issues involving repetitive design changes, weak cost controls, and unauthorized employee allowances.
