Pakistan's Diamer-Bhasha Dam is at the centre of a deepening dispute over whether its power-generation component will be cancelled, with the latest figures on physical progress, costs, and delays pointing to challenges that extend well beyond a single government decision, according to a new report. The controversy has cast fresh doubt on the future of one of the country's most strategically significant infrastructure projects.

Where Construction Actually Stands

According to the Auditor General's report, physical progress on the dam stood at just 19.95% against a fiscal year 2024-25 target of 57.78% — even as financial progress reached 39.67%. The gap between money spent and work completed signals serious implementation dysfunction. The original approved cost of the main dam construction was Rs 479 billion (Pakistani rupees), with Rs 151 billion already spent on land acquisition and resettlement against a revised budget of Rs 149 billion.

The power-generation facilities, for which a contract has not yet been awarded, require an estimated further investment of Rs 1.424 trillion, according to the same report.

The Cancellation Dispute

Reports emerged that the Pakistani government had decided to scrap the power-generation component of Diamer-Bhasha, retaining the project purely as a water-storage facility. However, Pakistan's Power Division rejected those reports outright, describing them as 'fake news.' Official plans continue to include provisions for electricity generation at the dam site, creating a contradictory picture on the ground.

Analysts note that retaining the project in long-term plans does not necessarily rule out the effective cancellation of its power component — it may instead reflect uncertainty over implementation, 'with the project retained on paper while funding for generation and transmission facilities is deferred,' according to reports.

Technical Risks of Delay

An internal memorandum cited in reports warns that postponing the installation of water intakes, isolation gates, tunnel stubs, and other waterway structures until after the reservoir fills 'could make their completion exceptionally risky and expensive.' This technical constraint means the window for integrating power-generation infrastructure is narrowing with every passing construction phase, regardless of the political decision ultimately taken.

Pakistan's Broader Hydropower Debt

Diamer-Bhasha's troubles are not an isolated case. The combined financial exposure associated with the Dasu Hydropower Project, Diamer-Bhasha Dam, and the Neelum Jhelum Hydropower Project has reached Rs 3.9 trillion (Pakistani rupees), according to available data — a figure that reflects 'delays, land acquisition problems, design revisions, and operational failures' across Pakistan's hydropower portfolio. Hydropower and water-storage schemes in Pakistan face persistent delays, rising costs, and financing and implementation challenges, as the sector's collective track record demonstrates.

What Comes Next

With no contract yet awarded for the power facilities and technical risks mounting as construction proceeds, the coming months will test whether Islamabad can clarify its position and unlock financing. The dam's fate has broader implications for Pakistan's water security and energy ambitions, both of which are under severe strain amid ongoing fiscal pressures.