Pakistan seeks $300 million more from World Bank for Tarbela fifth hydropower project

Pakistan has requested a further $300 million in financing from the World Bank to meet cost overruns in the Tarbela Fifth Extension Hydropower Project (T5HP), according to official documents.

The proposed funding would be the second additional financing under the Tarbela Fourth Extension Hydropower Project (T4HP), the parent project through which the World Bank is processing support for the 1,530-megawatt hydropower expansion.

T5HP is at an advanced stage of construction and is progressing satisfactorily, with commissioning of the generating units targeted for July 2027.

The project is currently financed through a $390 million World Bank loan and a parallel $300 million loan from the Asian Infrastructure Investment Bank, in addition to equity contributed by the Water and Power Development Authority.

The additional funding has been sought after increases in civil works costs caused by unusually high inflation, higher-than-estimated construction quantities, replacement and rehabilitation of Tunnel 5 gates, and interest accumulated during construction.

Officials said the proposed loan would be the final tranche of World Bank financing required to complete the project and deliver the intended outcomes.

T5HP includes the construction of a 1,530MW powerhouse and a raised intake structure on Tunnel 5 of the Tarbela Reservoir.

The broader financing package also covers a 500-kilovolt double-circuit transmission line connecting the project switchyard to the Islamabad West Substation, along with interconnections with other generating facilities at the Tarbela complex.

WAPDA is implementing the hydropower component, while the transmission infrastructure is being executed by the National Grid Company.

Project documents state that completion of T5HP is critical to the safe operation of Tunnel 5 and the Tarbela Reservoir, Pakistan’s largest strategic asset for irrigation and electricity generation.

The World Bank approved the original $390 million additional financing for T5HP in September 2016, while AIIB approved its $300 million co-financing shortly afterward.

The World Bank loan closing date has been extended to September 30, 2027, and the AIIB loan will remain effective until June 30, 2028.

The T4HP parent project, which added 1,410MW of generation capacity through modifications to Tunnels 3 and 4, was completed in 2018 and has been fully operational since then.