Pakistan’s nearly $5 billion Neelum-Jhelum Hydropower Project will remain out of service until at least March 2028, extending its shutdown to almost four years and keeping one of the country’s cheapest electricity sources off the national grid.
The disclosure came during a meeting of the Senate Standing Committee on Water Resources. Wapda Chairman Lt Gen (retd) Muhammad Saeed told lawmakers that repair work on the 969-megawatt project was progressing and expressed confidence that electricity generation would resume by March 2028.
The project stopped operating in May 2024 after a severe rock burst damaged its headrace tunnel. Since then, consumers have continued paying the Neelum-Jhelum surcharge through electricity bills despite receiving no power from the plant.
Saeed said geological studies carried out before construction had already identified the project area as a seismic zone. He added that authorities were still investigating the tunnel failure to determine its exact cause.
The prolonged closure has deprived the national grid of low-cost hydropower. It has also increased dependence on more expensive thermal power generation, adding further pressure on Pakistan’s growing circular debt.
Commissioned in August 2018 after nearly a decade of construction, the project cost around Rs500 billion, or about $4.7 billion at the exchange rate prevailing at the time. It was originally awarded in July 2007 and was designed to generate 969MW of electricity from the Neelum River in Azad Jammu and Kashmir.
Senators seek accountability over tunnel collapse
The committee meeting, chaired by Senator Jam Saifullah Khan, saw lawmakers demand a transparent investigation into the failure of one of Pakistan’s most expensive public infrastructure projects.
Senators questioned whether geological conditions alone caused the tunnel collapse. They also asked investigators to examine possible design flaws, construction defects or operational failures.
Lawmakers insisted that authorities should identify any negligence and hold those responsible accountable.
The committee also reviewed Pakistan’s broader water security challenges. Saeed warned that the country urgently needs to expand its water storage capacity. Members noted that Pakistan has not constructed a major dam since Tarbela and Mangla, while India has built around 5,000 dams over the same period.
Lawmakers also criticised a presentation by Suparco on satellite monitoring of river encroachments. They said the briefing lacked clarity and failed to answer the committee’s questions.
Dam safety law advances as Nai Gaj project remains stalled
The committee also received an update on efforts to strengthen dam safety across Pakistan.
Officials informed lawmakers that a draft Dam Safety Council Bill, prepared with technical assistance from the Asian Development Bank, has now been finalised. The proposed law aims to establish a comprehensive legal framework for monitoring and regulating dam safety nationwide.
Wapda also briefed the committee on the stalled Nai Gaj Dam project in Sindh. Officials said litigation continues after the original contractor allegedly submitted a fake bank guarantee, causing estimated losses of about Rs23 billion.
Once completed, the Nai Gaj Dam will help protect Dadu and Sehwan from flooding and irrigate nearly 28,000 acres of farmland.
Officials further told the committee that Wapda currently supplies electricity to the national grid at an average cost of Rs3.83 per unit. The authority also generates around 32 billion units of electricity every year.
