This financing marks a major boost for Pakistan’s clean energy ambitions, as the country continues to grapple with energy shortages, rising fuel import bills, and the effects of climate change.
The Project: Dasu Hydropower – A Game Changer
The funding is specifically designated for Stage I of the Dasu Hydropower Project, a mega initiative located on the Indus River near Dasu in the Kohistan District. Stage I of the project will generate 2,160 megawatts (MW) of electricity and is expected to produce over 12,000 gigawatt hours (GWh) of clean, renewable energy annually.
The long-term vision includes a Stage II expansion, which could double the capacity to between 4,320 and 5,400 MW, making it one of the largest hydropower projects in South Asia.
Najy Benhassine, the World Bank Country Director for Pakistan, described the site as “one of the best hydropower locations in the world” and emphasized its potential to transform the country’s energy sector.
“This project is a game changer. It will not only help provide low-cost electricity but will also contribute to greening the energy mix and reducing Pakistan’s carbon footprint,” he said.
Loan Breakdown and Structure
The $1 billion package is a combination of different financial instruments:
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$435 million – IDA Shorter Maturity Loan
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$365 million – Regular IDA Scale-Up Window Credit
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$200 million – IBRD Loan
The funding will also support infrastructure development, local community services, and the strengthening of the Water and Power Development Authority’s (WAPDA) institutional capacity for future hydropower projects.
Economic and Environmental Impact
Pakistan’s energy sector has long struggled with inefficiency, frequent power outages, and a heavy reliance on imported fossil fuels. The Dasu Hydropower Project is expected to save the country an estimated $1.8 billion per year in fuel imports and offset nearly 5 million tons of carbon emissions annually.
In addition to environmental benefits, the project boasts a strong economic case, with an estimated economic return rate of 28%.
The project is already under construction, with Stage I scheduled for completion in 2027. It is also expected to create thousands of jobs, improve regional infrastructure, and provide socio-economic benefits to communities in the surrounding areas.
Global Support for Sustainable Development
This approval comes at a time when international financial institutions are ramping up support for clean energy projects in developing nations. The World Bank has repeatedly emphasized its commitment to helping countries transition to low-carbon energy sources and build climate resilience.
For Pakistan, which faces rising energy demands from a growing population and economy, the Dasu project could be a cornerstone of its sustainable development strategy.
Looking Ahead
As Pakistan moves forward with this ambitious hydropower project, all eyes will be on the effective implementation of the loan and the on-time completion of construction milestones. If successful, the Dasu Hydropower Project could serve as a model for future green energy initiatives in the region.
The World Bank’s financial backing reaffirms global confidence in Pakistan’s renewable energy potential and could pave the way for further investments in sustainable infrastructure.