Pakistan has reassessed the Mohmand Dam cost at Rs666 billion, a jump of 115 per cent over the Rs310 billion approved in 2018. The Water and Power Development Authority blames the rupee’s slide against the dollar for more than half of the increase.
The revised estimate came before the Central Development Working Party this week. The CDWP, which clears mega projects before they go to the Executive Committee of the National Economic Council, deferred the matter because of a shortage of time, officials said.
Mohmand Dam cost: where the Rs356bn increase comes from
Wapda, the agency building the dam, assessed the new cost at Rs666 billion, up Rs356 billion from the 2018 approval. The project was to be finished by September 2025. It missed that deadline.
Project managers told the Planning Commission that several factors pushed the cost up. The rupee’s exchange parity with the dollar was the main one. Design changes, the 2022 floods and security problems added to the delay and the bill.
Planning Commission officials said Wapda had informed them that 51 per cent of the total increase came from dollar parity alone. The project has both local and foreign currency components. When the rupee falls, the rupee value of the foreign component rises sharply.
The rupee-dollar parity is back in focus after the World Bank said this week that Pakistan’s currency was not responding freely to market developments. It put the gap between the market price and the daily price at 10 per cent as of June, above the central bank’s own 8 per cent estimate under its Real Effective Exchange Rate measure.
The Planning Commission asked Wapda for details of dollar-denominated contract payments. It said a foreign component could not simply be converted at the latest exchange rate. Officials said the actual contracts and their exchange-rate clauses had to be examined first.
Work so far and what the dam will deliver
About 57 per cent of physical work is complete, with Rs275 billion spent so far. A joint venture of China Gezhouba Group Company and Pakistan’s Descon Engineering is building the dam.
The cost break-up shows the dam itself at Rs267 billion, up Rs153 billion or 134 per cent from old estimates. Power generation facilities account for Rs399 billion, a rise of Rs204 billion or 105 per cent.
On completion, the project will add 1.29 million acre-feet to Pakistan’s water storage. It will feed 2.9 billion units of electricity into the national grid each year. It will also supply 300 million gallons of drinking water a day to Peshawar.
The 2022 floods dealt the project a heavy blow. Heavy flooding in the Swat river damaged diversion tunnels and halted work for a long stretch, project managers told the Planning Commission.
Why it matters for water security
Mohmand is one of three large reservoirs Pakistan is building to counter Indian water aggression. Its importance has grown since India placed the Indus Waters Treaty in abeyance, a move Pakistan has strongly opposed. Read more in India keeps Indus Waters Treaty in abeyance, Tarar warns of response.
New storage is the core of Pakistan’s answer. The country can store only a few weeks of its river flows, far below the levels held by comparable economies. Every major dam, therefore, carries weight beyond its megawatts.
The Planning Commission, however, is not satisfied with the numbers alone. It called the project a classic case of the delays and cost problems seen across Wapda’s flagship schemes. It wants third-party validation of financial and physical progress, variation orders, escalation costs and the revised financial plan.
That plan must spell out the federal share through the Public Sector Development Programme, any provincial contribution and loans from foreign lenders.
The cost pressure also lands on consumers. Power projects feed into tariffs decided after hearings such as Nepra’s hearing on the Punjab power firm’s tariff hike. The power purchase price for 2027 and delays in coal procurement by independent power producers show how generation costs travel to household bills.
Frequently asked questions
What is the new Mohmand Dam cost?
Wapda has assessed the cost at Rs666 billion, up 115 per cent from the Rs310 billion approved by ECNEC in April 2018.
