Pakistan has revised the estimated cost of the under-construction Mohmand Dam to Rs666 billion, marking a 115% increase from the original Rs310 billion budget approved in 2018. The revised estimate adds Rs356 billion to the project’s initial cost, with officials citing currency depreciation, rising construction expenses, design changes, flood damage and security challenges.
The revised proposal was presented at a meeting of the Central Development Working Party (CDWP), but the forum could not reach a decision due to time constraints. The proposal requires further consideration before it can receive final approval from the Executive Committee of the National Economic Council (ECNEC).
The Water and Power Development Authority (Wapda), which is overseeing construction, has prepared the updated cost assessment. The project was initially scheduled for completion by September 2025, but various challenges have delayed progress beyond the original deadline.
According to project officials, exchange-rate fluctuations account for a substantial share of the cost escalation. Wapda informed the Planning Commission that approximately 51% of the additional expenditure was linked to changes in the dollar exchange rate. Since the project involves both local and foreign currency payments, rupee depreciation has increased the cost of foreign-funded components.
The Planning Commission has sought details of dollar-denominated contractual payments and the provisions governing exchange-rate adjustments. Officials have stressed that foreign currency costs must be assessed according to contractual obligations and applicable exchange-rate rules.
Other factors contributing to the increase include changes in project design, higher construction costs, security concerns and damage caused by the devastating floods of 2022. Floodwaters in the Swat River damaged diversion tunnels, forcing construction activities to stop for an extended period.
The dam is being constructed by a joint venture comprising China’s Gezhouba Group Company Limited and Pakistan’s Descon Engineering Limited. Project documents indicate that approximately 57% of physical work had been completed by September, while expenditure had reached Rs275 billion.
Under the revised assessment, the cost of dam construction has increased to Rs267 billion, rising by Rs153 billion, or 134%, from the earlier estimate. The power generation component has increased to Rs399 billion, reflecting a rise of Rs204 billion, or 105%.
Once completed, Mohmand Dam is expected to add 1.29 million acre-feet to Pakistan’s water storage capacity, generate approximately 2.9 billion units of electricity annually and supply 300 million gallons of drinking water to Peshawar each year.
The Planning Commission has also raised concerns about delays and cost overruns in major Wapda projects. It has recommended an independent third-party assessment covering physical and financial progress, resource utilisation, changes in project scope, variation orders, escalation costs, completion timelines and financing arrangements.
