Pakistan allocates 35% of first domestic Green Sukuk proceeds to dams, hydropower projects

Pakistan has allocated around Rs11.256 billion, or 35% of the Rs32 billion proceeds raised through its first domestic Green Sukuk, to water storage and renewable energy projects, according to the Ministry of Finance’s “Domestic Green Sukuk Allocation & Impact Report FY2025-26”.

The proceeds were raised through the three-year Variable Rental Rate Government of Pakistan Ijarah Green Sukuk issued under Pakistan’s Sustainable Investment Sukuk Framework. 

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

The report stated that the remaining Rs20.744 billion would be allocated within 24 months of issuance and could continue supporting ongoing climate-linked infrastructure projects.

According to the report, the projects are aimed at improving water security, strengthening climate resilience and increasing clean energy generation capacity.

Among the projects, the Garuk Storage Dam in Kharan district recorded the highest utilisation of Sukuk-backed expenditure.

The report stated that the project was 81.68% complete, with plugging work currently under way.

The dam is expected to irrigate 5,059 hectares of land and benefit more than 216,000 people in water-stressed areas of Balochistan.

It will have a storage capacity of 65.41 million cubic metres and contribute to annual groundwater recharge of 9.14 million cubic metres.

The Naigaj Dam project in Sindh remains the most delayed scheme, with FY2025-26 disbursement still pending due to preparation of a revised PC-1. Physical progress on the project currently stands at 48.3%.

The integrated project includes 4.2MW hydropower generation capacity, annual clean energy output of 17.67GWh and sustainable water management over nearly 23,000 hectares.

Officials said completion could extend beyond June 2028 depending on approval of revised cost estimates and availability of funding.

Meanwhile, the 26MW Shagarthang Hydropower Project in Skardu is under active construction with physical progress reaching 32.11%.

Upon completion, the project is expected to generate 160.39GWh of electricity annually and help avoid nearly 82,000 tonnes of carbon emissions each year.

The hydropower project is also expected to supply electricity to around 40,000 households and create nearly 300 jobs during the implementation phase.