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CWA # 1332, 30 May 2024
Pakistan Reader
Ten Years of CPEC-1 (Dasu Hydropower Project: A Profile)

  Dhriti Mukherjee

The Dasu hydropower project is a hydroelectric project constructed on the Indus River by the Water and Power Development Authority (WAPDA) under the Ministry of Water and Power. Located in the Upper Kohistan district of Khyber Pakhtunkhwa (KP), it is a part of the China-Pakistan Economic Corridor (CPEC) and is also included in WAPDA’s hydropower development projects in the Vision 2025 Programme. In 2009, a feasibility study was completed, and then in 2015, preparatory construction work began. The project is said to be a “high-risk-high reward operation aimed at providing low-cost non-carbon renewable energy.” Through the installation of a 2,160 MW hydropower plant on the Indus River, the expansion of the electrical supply of hydro-power in Pakistan will be facilitated.
 
With the China Gezhouba Group Company (CGGC) serving as the project’s contractor, the construction will be done in two phases. The first phase of the project is expected to need an investment of USD 4.6 billion, for which the World Bank will assist with an International Development Association credit of USD 588.4 million and an IDA Partial Credit Guarantee (PCG) of USD 460 million. The Habib Bank Limited (HBL), a Pakistani commercial bank, led a group of local banks to extend an investment of USD 144 billion, while the World Bank gave an additional loan of USD 700 million in 2020. Further, on 14 April 2024, The Express Tribune cited sources who said that the World Bank would approve a USD one billion loan package in June. As per the bank’s latest estimates, the project will finish seven years late by 2028, with an estimated cost of USD 4.9 billion, an increase of 13 per cent from previous estimates.
 
Apart from the Dasu project, there are other hydropower projects in the Kohistan district. For instance, the Ranolia Hydropower Project located on a tributary of Dubair Khwar was functioning till August 2022, when unprecedented floods caused major damages. The Keyal Khawar hydropower project is still being constructed on the Indus River in Kohistan and is expected to begin commercial operations in 2025. Additionally, the Patan hydropower project is also planned on the Indus River and will enter commercial operation in 2028 following a single phase of construction.
 
Dasu Hydropower Project: Objectives
First, a two-phased construction approach. A two-phased approach was proposed with regard to the construction of the 4320 MW project. The first involves the construction of a hydraulic structure, roller-compacted concrete (RCC) gravity dam, an underground powerhouse, six turbo generators, and a double-circuit 500kV transmission line. The second involves the construction of a second underground powerhouse with ancillary structures, installation of the remaining turbo units, and a double-circuit 500kV transmission line. A reservoir will be created by the RCC dam, which will be 74km long, 365m wide, and with a storage capacity of 1,410 million cubic metres. To prepare for the first phase, 62km of the Karakorum highway would be relocated to a higher elevation, tunnel inlets would be diverted, and a transmission line would be constructed from the Dubair Khwar hydropower plant to Dasu.
 
Second, reducing reliance on fossil fuels. After its completion, the Dasu hydropower project is expected to become one of the country’s top generators of low-cost and clean electricity to people. Pakistan is in need of cheaper energy sources to combat its dependence on expensive imported fuel-based power generation, which has in part led to higher electricity bills. According to the World Bank, the country’s energy situation has worsened due to the introduction of large coal and imported gas power plants which have increased capacity payments by 50 per cent, exposing Pakistan to international fossil fuel price volatility. The bank had stated that the first phase of the project would help Pakistan save roughly USD 1.8 billion annually by replacing imported fuels and offsetting five million tonnes of carbon dioxide. It is also set to help the country achieve 60 per cent renewable energy by 2030. The World Bank Country Director for Pakistan, Illango Patchamuthu, pointed out that the “Dasu Hydropower Project will result in fewer imports of fossil fuels, alleviating the stress on the country’s current account balance.” Further, the Task Team Leader for the project, Rikard Liden, pointed out that the project “has a low environmental footprint and is considered to be one of the best hydropower projects in the world.”
 
Third, stimulating economic growth for the region. A key objective of the project is also boosting the regional economy, which is dependent on farming and growing livestock. According to Deputy Commissioner Syed Mohammad Shah, “it is high time that people of Kohistan also show more flexibility to attract investors to their district, which is far behind in development as compared with other districts of the province.” This is set to be done in a few ways. The first is the expected lower cost of electricity generation, which will help energy users use electricity at a lower price. The second is the creation of jobs, estimated to be around 3300 at least. In the construction phase alone, jobs were approved for roughly 1808 locals. On 18 June 2021, former Prime Minister Imran Khan stated: “Our economy has rapidly been improving and the acquisition of cheap electricity will meet the industrial and domestic needs and the latter will develop and put the country on the way to prosperity.” He added that the project sought to bring down price hikes and inflation triggered by expensive electricity. The project’s director, Mohammad Farooq, assured locals in Kohistan that the project would result in the construction of roads, technical colleges, schools, and housing colleges. In the long run, cheaper energy will attract more investment.
 
Fourth, energy security for Pakistan. The strategic importance of the Dasu Hydropower Project also lies in its potential to enhance Pakistan’s energy security. The project is expected to produce 12 billion kilowatt-hours (kWh) annually during Stage I and 21 billion kWh after the completion of Stage II. This substantial increase in power generation is crucial for a country facing frequent power outages and energy shortages, which hinder industrial growth and everyday life.
 
Dasu Hydropower Project: Current Status
As of 2024, the Dasu Hydropower Project is progressing through its first phase of development. This phase involves constructing a 242-meter-high roller-compacted concrete dam and installing six turbine-generator units, each with a capacity of 360 MW. The project has achieved several significant milestones, including the completion of major excavation works, the construction of diversion tunnels to reroute the Indus River, and the commencement of dam construction activities.
 
Despite the challenges, the construction of the dam and power generation units is making steady progress. The project management team has implemented advanced engineering techniques and safety measures to ensure the timely and efficient completion of construction activities. The procurement of major equipment, including turbines and generators, is also on track, with several components already delivered to the site.
 
 The table below provides an insight into what parts of the project have been completed, and what is in progress. 
 

Done In Progress
Major excavation works for the dam foundation           Construction of the 242-meter-high roller-compacted concrete dam
Construction of two diversion tunnels (1,170 meters and 1,240 meters in length)         Installation of six turbine-generator units (each 360 MW)
Completion of the access roads and bridges to the project site Completion of the main dam structure
Land acquisition for the main dam and powerhouse  Finalizing the remaining land acquisition and resettlement programs
Construction of two diversion tunnels to reroute the Indus River   Full installation and commissioning of electrical and mechanical systems
Initial cofferdam construction to facilitate dry working conditions       Finalizing remaining concrete works for the dam and auxiliary structures

 
Dasu Hydropower Project: Major Issues/Challenges
First, land acquisition and resettlement. The construction of the dam requires substantial land, leading to the displacement of local populations. Critics argue that the compensation and resettlement programs have been inadequate and slow, causing delays and social unrest. Earlier in September 2016, the tribespeople of Kohistan expressed concerns over the level of compensation they were set to be given in exchange for their land, which would be flooded to make way for the project. In protest, they stopped all survey work on the project, with a member of the Dasu Dam Action Committee arguing that the government must give “enough compensation” so they can “settle in new areas.” There were also demands asking the government to buy them “the same amount of land in the nearest cities such as Abbottabad, Masehra or Batgram.” Further, the project was stalled when the Khyber Pakhtunkhwa government demanded WAPDA pay a 2.5 per cent service charge for land acquisition.
 
Later in 2018, Dawn quoted a senior official who said that during meetings between a Hazara division commissioner-led committee and landowners, “most of the participants were unanimous that there were some lacunas in the process initiated in the past to acquire land for the project.” Teams noted the demands, which were then fulfilled. However, in 2019, the pace of progress to acquire land was not only taking more time than anticipated but had increased in cost by 95 per cent from PKR 19 billion to PKR 37 billion. The World Bank had also expressed displeasure over the increasing delays and costs, that were driving up the overall project cost.
 
Second, economic viability. The financial aspects of the project also invite scrutiny. The project has a high capital cost, funded through a mix of loans and government contributions. Critics warn about the risks of cost overruns and delays, which could strain the project’s budget and affect its economic viability. There are also concerns about the long-term financial sustainability of the project, especially in the context of Pakistan’s existing debt levels and economic challenges. The estimated cost of the project has long been surpassed, and continued increases could force Pakistan to take more loans, continuing a vicious debt cycle.
 
Third, security threats. Security concerns in the region have also been a major challenge. Most recently, on 26 March 2024, five Chinese nationals working on the project were killed after a suicide bomber rammed into the bus carrying the staff in Bisham. As per Bisham’s Sub Divisional Police Officer Juma Rehman, it was a “suicide attack on the Chinese convoy and an explosive-laden vehicle approaching from Kohistan hit the bus,” for which a “huge amount of explosives were used.” Later on 26 May, Interior Minister Mohsin Naqvi claimed that the attack was “completely operated” from Afghanistan by the leadership of the banned Tehreek-i-Taliban Pakistan (TTP) and hostile foreign intelligence agencies. A probe, supported by Beijing, is currently ongoing.
 
In a similar attack on 14 July 2021, at least 12 personnel, including nine Chinese engineers, were killed in a bus attack near the Dasu hydropower plant, an incident which the Chinese foreign ministry spokesperson condemned as a “bombing.” With the number of attacks on Chinese nationals working in Pakistan and projects funded by China increasing, the government needs to ramp up efforts to improve security in these areas. Failure to do so could potentially result in a withdrawal of funding.
 
References
“Dasu Hydropower Project,” Power Technology, 24 May 2024;
Shahbaz Rana, “World Bank to give Dasu project $1b,” The Express Tribune, 14 April 2024;
Umar Bacha & Baqir Sajjad Syed, “China seeks answers after engineers killed in Bisham,” Dawn, 27 March 2024;
“Dasu hydropower project: Course of Indus River diverted,” Business Recorder, 20 February 2023;
“Dasu Dam Project to Bring Socio-Economic Development to the Country,” Imarat Institute of Policy Studies, 20 June 2022;
Sirajuddin & Umar Bacha, “9 Chinese engineers among 12 killed in 'attack' near Dasu hydropower plant,” Dawn, 14 July 2021;
Nisar Ahmad Khan, “PM says cheap electricity is key to prosperity,” Dawn, 19 June 2021;
“World Bank approves additional $700 million for the Dasu project, Pakistan,” International Water Power and Dam Construction, 1 April 2020;
Khaleeq Kiani, “Rs52bn contract for Dasu power project signed,” Dawn, 26 November 2019;
“Land acquisition cost for Dasu project doubles to Rs37bn,” Dawn, 22 November 2019;
Amin Ahmed & Khalid Hasnain, “Most owners agree to surrender lands for Dasu power project,” Dawn, 26 November 2018;
Mohammad Zubair Khan, “Tribal protests halt work on Pakistan’s Dasu dam,” Dialogue Earth, 26 September 2016;
“Kohistanis to help authorities in early construction of Dasu dam,” Dawn, 8 April 2014;
“Pakhtunkhwa Energy Development Organization”
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