World Bank Pours $1 Billion into Pakistan’s Hydropower Project

World Bank Pours $1 Billion into Pakistan’s Hydropower Project

To bolster Pakistan’s energy sector, the Executive Directors of the World Bank on Tuesday approved an additional $1 billion financing for the Dasu Hydropower Stage I (DHP I) Project.

This second round of funding aims to enhance hydropower electricity supply, improve socio-economic services for local communities, and strengthen the Water and Power Development Authority’s (WAPDA) capacity for future hydropower projects.

“Pakistan’s energy sector suffers from multiple challenges to achieving affordable, reliable, and sustainable energy,” stated Najy Benhassine, World Bank Country Director for Pakistan. “The Dasu Hydropower Project site is one of the best hydropower sites in the world and is a game-changer for the Pakistan energy sector. With a very small footprint, the DHP will contribute to ‘greening’ the energy sector and lowering the cost of electricity.”

The Dasu Hydropower Project (DHP) is a run-of-river project situated on the Indus River, approximately 8 km from Dasu Town in the Upper Kohistan District of Khyber Pakhtunkhwa Province. Upon completion, it will have an installed capacity ranging from 4,320 to 5,400 MW. The project is being constructed in stages, with DHP-I boasting a capacity of 2,160 MW and projected to generate 12,225 gigawatt-hours (GWh) per year of low-cost renewable energy. The subsequent DHP-II phase is expected to add between 9,260 and 11,400 GWh annually from the same dam.

“DHP-I is an essential project in Pakistan’s efforts to reduce its dependence on fossil fuels and achieve 60 percent renewable energy by 2031,” said Rikard Liden, Task Team Leader for the Project. “The second additional financing will facilitate the expansion of electricity supply and potentially save Pakistan an estimated $1.8 billion annually by replacing imported fuels, while offsetting around 5 million tons of carbon dioxide. The annual economic return of DHP-I is estimated to be around 28 percent.”

Beyond energy production, the additional financing will support ongoing socio-economic initiatives in Upper Kohistan. These initiatives include improvements in education, health, employment, and transportation. Since the project’s inception, adult literacy has increased by an estimated 30 percent, boys’ schooling by 16 percent, and girls’ schooling by 70 percent. The project will continue community development activities focusing on infrastructure such as roads, irrigation schemes, schools, medical facilities, mosques, bridges, solar energy systems, science laboratories, and libraries. Notably, there is a particular emphasis on women beneficiaries, with initiatives including free healthcare clinics staffed by women doctors and nurses, training for female health workers, and programs on livelihoods, literacy, health, and hygiene.

The World Bank in Pakistan

Pakistan has been a member of the World Bank since 1950. Over the decades, the World Bank has provided over $46 billion in assistance to the country. The current portfolio includes 55 projects with a total commitment of $14.7 billion. The approval of additional financing for the Dasu Hydropower Project underscores the World Bank’s continued support for Pakistan’s development goals, particularly in achieving sustainable energy solutions and enhancing socio-economic conditions for local communities.