Dasu Hydropower Project: AGP uncovers inefficiencies, massive cost overruns

ISLAMABAD: The Auditor General of Pakistan (AGP) has uncovered serious inefficiencies, delays and massive cost overruns in the multi-billion rupee Dasu Hydropower Project (DHPP), raising concerns over governance, planning and financial management of one of the country’s largest energy projects.

The construction cost of the Dasu Hydropower Project has surged to Rs 1.737 trillion (approximately USD6.2 billion), following approval by the National Economic Council in December 2025. This is a 240 percent increase from the original 2014 estimate of Rs 486 billion

According to the audit report for FY2025-26, the project has witnessed a staggering cost escalation of over 257 percent, primarily attributed to inadequate planning, frequent design changes and weak cost control mechanisms.

The Dasu Dam on the Indus River in Khyber Pakhtunkhwa has an ultimate installed power generation capacity of 4,320 MW (and up to 5,400 MW upon full completion), with an estimated annual energy generation of over 21,000 GWh. Its reservoir has a gross water storage capacity of 1,140,000 acre-feet (1.41 billion cubic metres).

The audit findings revealed a significant mismatch between financial and physical progress, highlighting inefficiency in project execution. While financial progress stood at over 84 percent under the original PC-I, physical progress remained limited to just 26.08 percent as of June 2025—far below expectations.

Originally approved by the Executive Committee of the National Economic Council (ECNEC) in March 2014 at a cost of Rs486 billion, the project’s estimated cost has ballooned to Rs1.73 trillion following revisions, reflecting a sharp increase in financial burden on the national exchequer.

The report notes that the project has already suffered a time overrun of more than five years, as its initial completion target of December 2019 has now been extended to November 2028.

One of the key reasons behind delays identified by the audit is the failure to acquire 100 percent of the required land even after more than a decade. Incomplete land acquisition has slowed down critical construction activities, including ancillary and support infrastructure required for the main works.

The AGP also pointed to weak contract administration, citing non-adherence to contractual provisions and poor oversight. Frequent variation orders due to incomplete designs at the time of contract award further contributed to delays and inflated costs.

Serious irregularities were also observed in financial management, including unauthorized handling of funds allocated for land acquisition. The audit stressed the need for strict compliance with prescribed procedures by relevant authorities, including Deputy Commissioners and Land Acquisition Collectors.

Human resource management within the project also came under scrutiny, with the audit highlighting deficiencies in staffing practices and lack of effective management controls.

The Dasu Hydropower Project, being executed by the Water and Power Development Authority (WAPDA), is a critical component of Pakistan’s long-term energy strategy. Located on the Indus River in Kohistan, the project is designed to generate 4,320 megawatts of clean and low-cost electricity, helping to reduce reliance on imported fuels and improve the country’s energy mix.

Despite its strategic importance, the audit report warns that continued delays and mismanagement could undermine the project’s objectives and escalate costs further.

The AGP has recommended urgent corrective measures, including accelerating project execution through improved monitoring, ensuring completion of land acquisition, strengthening contract management and finalizing designs before awarding contracts to avoid costly revisions.

The report also called for improved financial discipline and stronger internal controls to ensure transparency and accountability in the utilization of public funds. The audit findings are expected to be taken up by the Public Accounts Committee (PAC), where officials from WAPDA and the Ministry of Water Resources may be asked to explain the causes of delays, cost overruns

and governance lapses.

Copyright Business Recorder, 2026