Three climate-resilient uplift projects: Govt allocates 35pc of proceeds from Green Sukuk so far

ISLAMABAD: Pakistan has allocated around 35 percent of the proceeds raised through its inaugural domestic Green Sukuk, with the bulk of the funds directed toward water and renewable energy projects amid growing climate financing needs.

According to the Ministry of Finance’s “Domestic Green Sukuk Allocation & Impact Report fiscal year 2025-26,” the government has so far utilised Rs 11.256 billion out of the Rs 32 billion raised through the three-year Variable Rental Rate (VRR) GOP Ijarah Green Sukuk launched under Pakistan’s Sustainable Investment Sukuk Framework.

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The report said the remaining Rs 20.744 billion would be allocated within 24 months of issuance and may continue supporting ongoing climate-linked infrastructure schemes.

The proceeds from the Green Sukuk have been earmarked for three major projects, including the Garuk Storage Dam in Balochistan, the Naigaj Dam in Sindh, and the 26 MW Shagarthang Hydropower Project in Gilgit-Baltistan.

The move is aimed at improving water security, generating clean energy, and enhancing climate resilience.

“The projects are aligned with Pakistan’s National Climate Change Policy, National Adaptation Plan, and National Climate Finance Strategy,” the report noted.

Among the three projects, Garuk Storage Dam recorded the highest utilisation of Sukuk-backed expenditure. The dam, located in Kharan district, is currently 81.68 percent complete, with plugging work underway. The project is expected to support irrigation across 5,059 hectares and benefit more than 216,000 people in water-stressed regions of Balochistan.

The report said the Garuk Dam would have a storage capacity of 65.41 million cubic metres and contribute to an annual groundwater recharge of 9.14 million cubic metres, thereby strengthening drought resilience in the province.

Naigaj Dam Project in Sindh has emerged as the most delayed initiative, with disbursement for FY2025-26 still pending due to the preparation of a revised PC-1. Physical progress on the project stands at 48.3 percent.

The integrated project includes 4.2 MW hydropower generation capacity, annual clean energy production of 17.67 GWh, and sustainable water management over nearly 23,000 hectares. Officials said the revised implementation timeline could push completion beyond June 2028, depending on approval of updated cost estimates and availability of funds.

The third project, the 26 MW Shagarthang Hydropower Project in Skardu, is currently under active construction, with physical progress reaching 32.11 percent so far. Upon completion, the project is expected to generate 160.39 GWh of electricity annually and help avoid approximately 82,000 tonnes of carbon emissions each year.

The hydropower project is also projected to provide electricity to around 40,000 households and create nearly 300 jobs during implementation.