Pakistan's Two Big Dams Now Cost Nearly Rs1.9 Trillion More as Rupee Weakens

Two of Pakistan's most important hydropower projects have become dramatically more expensive, and the falling value of the rupee is a major reason why. The Ministry of Water Resources has told the National Assembly that the combined cost of the Diamer-Bhasha and Dasu dams has risen by nearly Rs1.9 trillion, a figure that underlines how currency weakness feeds directly into the price of national infrastructure.

Diamer-Bhasha's revised estimate now stands above Rs1.1 trillion. Dasu's cost has climbed to Rs1.74 trillion. Together, the two projects represent some of the largest single investments Pakistan has ever made in water storage and electricity generation, and their rising price tags will be felt in public finances for years to come.

Why has the bill grown so much? A weaker rupee makes everything priced in dollars more expensive in local currency terms, from imported machinery and turbines to construction equipment and specialist services. On top of that, the prices of basic building materials have risen. Cement, diesel and steel — three inputs that every large dam consumes in huge quantities — have all become dearer, adding further pressure to budgets that were set years ago.

The timing matters. Pakistan faces chronic electricity shortages, high power tariffs and a growing need for water storage as climate patterns shift. Dams like Diamer-Bhasha and Dasu are designed to help on all three fronts: generating cleaner hydropower, storing water for agriculture and drinking, and reducing dependence on expensive imported fuels for electricity. Delays or funding shortfalls therefore carry a cost of their own, in the form of continued load-shedding pressure, higher import bills and lost agricultural output.

For ordinary households, the link may seem distant, but it is real. When large energy projects cost more, governments must find the money somewhere — through borrowing, revised tariffs, or slower spending elsewhere. Stable, affordable electricity, by contrast, lowers the cost of running factories, farms and small businesses, and helps keep prices steadier for consumers.

International readers may wonder why currency movements matter so much to a domestic construction project. The answer is that very few countries build mega-dams using only local materials and expertise. Turbines, generators, tunnelling equipment and engineering consultancy are typically bought on world markets and priced in dollars or euros. When the rupee loses value against those currencies, the same equipment suddenly costs far more rupees, even if its dollar price has not changed at all.

The government now faces a difficult balancing act. Completing both dams remains strategically important for energy security and water management, but doing so at sharply higher costs requires careful financing and sequencing. Transparent reporting to parliament, as in this case, is an important part of that process: it allows the public to see how estimates have changed and why, rather than learning about overruns only after the money is spent.

For Pakistan's economy, the lesson is broader. Large infrastructure works best when currency stability, realistic budgeting and steady progress move together. Without them, even well-chosen projects can become far more expensive than planned, and the benefits they promise — cheaper power, more water, stronger growth — arrive later and at a higher price.

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