Govt proposes Rs. 147.8 Billion for 42 major water projects in PSDP 2025-26 to accelerate dam building 

ISLAMABAD: In a significant push towards securing Pakistan’s water future and boosting hydropower generation, the federal government has proposed an allocation of Rs. 147.8 billion under the Public Sector Development Programme (PSDP) for the fiscal year 2025-26, targeting 42 ongoing water sector projects.

According to copies of the official documents, these projects encompass a mix of large dam construction, rehabilitation of aging hydropower infrastructure, flood protection schemes, irrigation systems modernisation, and detailed engineering studies.

The throw-forward liability of these projects as of July 1, 2025, stands at over Rs. 1.27 trillion, reflecting the long-term and capital-intensive nature of water sector initiatives. In government finance, "throw-forward liability" refers to the outstanding, unspent portion of a budget allocation that is carried over to the next financial year. It represents a commitment or obligation from a previous year that the government must still honor.

The proposed allocation for the next fiscal year includes Rs. 51.78 billion in rupee cover and Rs. 96.03 billion in local financing. These funds aim to maintain momentum on strategic infrastructure schemes that are essential for water storage, agricultural irrigation, power generation, and disaster resilience.

The allocation comes at a time when major crops in the country saw a decrease in production of more than 13% which has directly had a negative impact on the country’s growth rate. On top of this, increasing tensions with India after their declaration that they would abrogate the Indus Water Treaty have made this a particularly pertinent issue. 

What are the projects being proposed? 

A number of new and old projects have been slated under this allocation, but there are serious questions about what the throw  forward cost will mean and whether or not the government will be able to get any of these projects off the ground. 

Among the flagship projects receiving the largest allocations is the Dasu Hydropower Project (Stage-1), located in Kohistan, Khyber Pakhtunkhwa, which has been earmarked Rs. 20 billion. This project is supported by IDA credit and additional financing from the World Bank, with total project cost estimated at over Rs. 510 billion …