Pakistan secures US$1bn loan for hydropower project

The World Bank – an international financial institution that awards loans and grants for capital projects to low- and middle-income countries – will lend Pakistan US$1 billion to construct the country’s largest hydropower plant near Dasu in the northern region of Khyber Pakhtunkhwa Province.

Dasu Dam site (Image: Tractebel) A pipeline runs through the Dasu Dam and hydropower plant site in Pakistan. (Image: Tractebel)

Located at the Dasu Dam, which is fed by the Indus River, the Dasu Hydropower Plant is projected to generate 21 TWh (terawatt hours) annually with an installed capacity of 4,320 MW (megawatts).

The dam itself is a gravity design made of roller-compacted concrete, which can reservoir up to 1.4 billionm3 (370 billion gallons) of water.

The loan is in addition to the original $588 million the World Bank lent the project for preparatory work and also on top of another $700 million loan delivered in 2020 for transmission line work.

Altogether, the World Bank has financed about $2.3 billion of the $4.3-billion project. Additional financing came from a consortium of local banks and foreign commercial financing from Credit Suisse Bank. The country’s Water & Power Development Authority is also committed to financing 15% of the project’s base cost.

Decades of development for Dasu Dam

It’s been a long road for the advancement of the dam and hydropower project, which was originally proposed in 2001, with a feasibility study completed in 2009.

It’s being constructed in two phases, with each completed stage allowing a capacity of more than 2,000MW of power generation. Once both phases are complete, it’s estimated the first phase will contribute more than 12 billion units of electricity annually while the second will be capable of providing another nine million units.

Although it’s been more than 20 years, Pakistan is still on track to complete the project on time next year, which was its stated goal at the onset. It still hopes power generation can commence at the plant as early as the second half of 2024.

Initial groundwork took place in 2014, and contracts for preparatory work were awarded in 2015, with construction starting in 2017.

China Gezhouba Group Company Limited is serving as the main works and civil works contractor and started construction in 2018.

A joint venture of GE Hydro China and Power China Zhongnan Engineering Corporation signed onto the build in 2020, providing design, supply, and installation of six Francis turbines, generators, main transformers, generator, and station service switchgear along with related equipment.

Dasu hydropower project fraught with conflict

Even though the project has more than two decades of international cooperation, with Pakistan and China firms working collaboratively on the build, at least two high-profile incidents have taken place at the construction site since 2021.

In July of 2021, 13 Chinese and Pakistani labourers for the project were killed when a bus transporting those workers was attacked by an explosive detonation. The bus fell into a ravine after the explosion. An additional 28 people were injured. Members of the Pakistani Taliban were blamed for the attack and arrested. They were sentenced to death in 2022.

In March of this year, another bus transporting five Chinese engineers plus a Pakistani driver was attacked by a suicide bomber, with all seven persons involved killed as a result. No group has yet taken responsibility for the attack.

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