World Bank approves $1B for key power project in Pakistan

KARACHI, Pakistan

The World Bank on Tuesday approved $1 billion for a key hydropower project in Pakistan.

“World Bank’s Board of Executive Directors today approved $1 billion in a second round of additional financing for the DASU Hydropower Stage I (DHP I) Project," said a statement from the global financial institution.

Located in Dasu town in the Kohistan district of the northwestern Khyber Pakhtunkhwa province, the run-of-river project on the Indus River will have an installed capacity of 4,320-5,400 MW when completed.

The WB financing will help to increase hydropower electricity supply, improve access to socioeconomic services for local communities, and strengthen the Water and Power Development Authority's (Wapda) capacity to prepare future hydropower projects, the statement said.

“Pakistan’s energy sector suffers from multiple challenges to achieving affordable, reliable, and sustainable energy,” the statement quoted World Bank Country Director for Pakistan Najy Benhassine as saying.

“The DASU Hydropower Project site is one of the best hydropower sites in the world and is a game changer for the Pakistan energy sector. With a very small footprint, the DHP will contribute to ‘greening’ the energy sector and lowering the cost of electricity,” the statement added.

The project is being developed in stages. DHP-I has a capacity of 2,160 MW and will generate 12,225 gigawatt hours (GWh) per year of low-cost renewable energy. DHP-II will generate 9,260-11,400 GWh per year from the same dam.

“DHP-I is an essential project in Pakistan’s efforts to reverse its dependence on fossil fuels and reach 60 percent renewable energy by 2031,” said Rikard Liden, the project's task team leader.

“The second additional financing will facilitate the expansion of electricity supply and potentially save Pakistan an estimated $1.8 billion annually by replacing imported fuels, and offset around 5 million tons of carbon dioxide. The annual economic return of DHP-I is estimated to be around 28 percent.”

Project under attack

Stage I of the Dasu hydropower project will begin electricity generation in 2026, contributing 12 billion units per year to the national grid. Stage-II will also add 9 billion units to the system every year.

The World Bank is already providing $588 million in financial support and a partial credit guarantee of $460 million for the construction of Dasu hydropower project, according to a separate statement from Wapda.

Pakistan has been a member of the World Bank since 1950. Since then, the World Bank has provided over $46 billion in assistance. The current portfolio has 55 projects and a total commitment of $14.7 billion.

However, militants have several times targeted the Dasu project, where Chinese engineers and staff are also employed.

The most recent incident occurred in late March when five Chinese nationals and their Pakistani driver were killed in a suicide bombing in the Shangla district while traveling from Islamabad to Dasu.

In 2021, a bus carrying Dasu employees was bombed, killing 13 people, including nine Chinese engineers and staffers.

Pakistan accuses the terror group Tehreek-e-Taliban Pakistan of the attacks.

Islamabad claimed the suspects were trained in Afghanistan, a charge Kabul denied.