Delays and security concerns risk $1bn WB funding for Dasu project

The pending approvals of the revised PC-1 for the 2,160 MW Dasu Hydropower Stage-1 Project and unresolved security concerns are delaying the signing of $1 billion in additional financing agreements with the World Bank.

Business Recorder reported, citing sources, that the Ministry of Economic Affairs (MoEA) has urged the Ministry of Water Resources (MoWR) to expedite the submission and approval of the revised PC-1 for the 2,160 megawatt Dasu Hydropower Stage-1 Project. The move is crucial to finalise and activate the negotiated loan and financing agreements with the World Bank. 

In a letter to the MoWR, the MoEA highlighted that during negotiations held on April 29, 2024, the World Bank agreed in principle to extend the project’s closing date to December 31, 2028. 

However, the approval of the revised PC-1 remains pending, delaying the signing of agreements for additional financing that includes an extended timeline.

The World Bank’s Board of Executive Directors approved $1 billion in second additional financing for the project on June 10, 2024. A World Bank mission, which visited Pakistan from September 2-13, 2024, expressed concerns over the slow progress of the project, attributing delays to restrictions on the ground transportation of international workers and experts to Dasu and the shortage of armored vehicles for their movement in project areas. 

It also noted delays in the concreting of the integrated cofferdam, a key milestone now expected to commence during the low-flow season in August-September 2025.

The mission urged the government to enhance security measures to ensure the safe movement of project personnel and to address the logistical challenges impeding progress. 

Progress has also been hampered by delays in the construction of a 132 kV transmission line, critical for supplying power to the crushing and batching plants for the coffer dam. 

The Dasu Hydropower Stage-1 Project’s current closing date is June 30, 2025. The MoEA emphasized that any further delay in securing approval for the revised PC-1 could jeopardize the availability of additional financing required for project implementation.