Pakistan’s total hydropower potential is estimated at 59,796MW gross, with about 41,045MW considered both technically and economically viable. However, despite this significant potential, only a fraction has been developed, with the current hydropower generation capacity at 10,635MW connected to the national grid. This includes 9,389MW managed by Wapda in the public sector, and 1,246 MW developed by Independent Power Producers (IPPs) in the private sector.
POWER SECTOR
Pakistan’s total hydropower potential is estimated at 59,796MW gross, with about 41,045MW considered both technically and economically viable. However, despite this significant potential, only a fraction has been developed, with the current hydropower generation capacity at 10,635MW connected to the national grid. This includes 9,389MW managed by Wapda in the public sector, and 1,246 MW developed by Independent Power Producers (IPPs) in the private sector. Hydropower thus contributes approximately 24 per cent of Pakistan’s total installed power generation capacity of 43,835MW, representing a crucial yet underutilised resource within the country’s energy portfolio.
The private sector holds significant potential for hydropower development, though various risks and challenges remain. In May 1995, the Pakistani government introduced a policy framework and incentives to attract private-sector investment in hydropower. However, this policy, as well as the subsequent Power Policy in 1998, failed to secure the required investment. Both policies overlooked a global trend: hydropower projects are typically undertaken by the public sector or large utility companies because of the substantial capital needed and the projects’ long-term stability requirements. In Pakistan, infrastructure and logistical hurdles further add to investor costs and risks, underscoring the need for fiscal and regulatory support.
In 2002, the government introduced a new Power Generation Policy, which renewed interest in hydropower among domestic and international investors, though only a limited number of projects materialized. In 2015, a further policy update allowed public-private partnerships in hydropower projects, opening new investment avenues and paving the way for key developments. The New Bong Escape hydroelectric complex, an 84MW plant located downstream of Mangla Dam, became the first successful privately-owned hydropower project under this model. Operated by Laraib Energy, a subsidiary of HUBCO, this project has been operational since March 2013 and set the stage for additional IPP-driven hydropower initiatives.
Following New Bong Escape, Pakistan commissioned several other IPP hydropower projects, including the 147MW Patrind plant on the Kunhar River in Azad Jammu & Kashmir (AJK) in 2017, the 102MW Gulpur station on the Poonch River in 2020, and the 720MW Karot project on the Jhelum River in 2022, the latter being the first hydropower project completed under the China Pakistan Economic Corridor (CPEC). More recently, in September this year, the 870MW Suki Kinari plant on the Kunhar River in Khyber Pakhtunkhwa became operational, also under CPEC.
Globally, hydropower stands as the largest renewable energy source, accounting for about 60 per cent of total renewable electricity. Its appeal lies in its reliability, sustainability, and cost-effectiveness, along with its ability to support other critical functions, such as irrigation, water supply, flood control, and drought mitigation. In countries like Norway and several African nations, hydropower makes up to 90 per cent of national power generation, while in Venezuela and Brazil, it contributes 76 per cent and 67 per cent of electricity, respectively. Pakistan, with less than a one per cent share in global hydropower, remains an outlier despite its substantial untapped potential.
As of 2023, global hydropower capacity is approximately 1,416GW, with an annual growth target of 26GW through 2030 to meet international greenhouse gas reduction goals. Hydropower technology is mature and proven, achieving efficiency rates of up to 90 per cent and boasting lifespans ranging from 40 to 90 years, depending on plant configuration and local conditions. With more than 11,000 major hydropower plants operating in over 150 countries, hydropower collectively generates about 22 per cent of global electricity. Despite Pakistan’s significant natural resources, the country’s contribution to this global output remains limited.
Hydropower is essential to Pakistan’s energy security, supporting power generation as well as broader socio-economic development. These projects stimulate job creation, rural development, and improved water resource management. To fully harness these benefits, the government must ensure the timely completion of projects across both public and private sectors
While hydropower offers numerous benefits, its development projects face formidable technical and economic challenges. Hydropower sites are often located in remote, high-altitude areas lacking adequate infrastructure and connectivity to national transmission networks. Conducting comprehensive studies on topography, hydrology, and geology is essential to minimise risk, leading to high initial costs and extended gestation periods.
In Pakistan, projects also contend with extreme weather, labour shortages, and limited access to housing and essential resources. Compliance with environmental regulations and resettlement requirements further complicates the process, adding layers of both cost and complexity.
Privately operated hydropower projects in Pakistan typically use run-of-river technology -- projects that do not involve irrigation, flood control, or seasonal storage -- under a Build, Own, Operate, and Transfer (BOOT) model, with a 30-year concession period. These projects face unique challenges, including provincial water-use charges, high financing needs, and complex land acquisition laws. Although these projects require significant upfront capital, they offer low operational costs over time. Nonetheless, Pakistan’s security situation introduces an element of unpredictability for investors, further complicating investment decisions.
In the private sector, a growing number of hydropower projects are advancing. The Kotli hydropower project, with an installed capacity of 100MW on the Poonch River in AJK, is slated for commissioning in 2026. Other projects include Turlonas-Uzghar (82 MW, planned for 2029), Ashkot (300MW, expected by 2031), and Rajdhani (132MW, targeted for 2031), all progressing in AJK. The 640MW Mahl project on the Jhelum River in AJK/Punjab is scheduled for completion in 2032.
The 700MW Azad Pattan hydropower project in AJK, which started in 2020, is nearing financial closure despite a budget increase from $1.35 billion to $1.6 billion. The Kohala hydropower project (1,124MW), also on the Jhelum River, is being revived with completion anticipated by 2034. Originally budgeted at $2 billion, the cost of this CPEC project has now risen to $2.4 billion due to delays and inflation.
In its early phases, Pakistan’s CPEC energy projects were intended to prioritise hydropower, given its advantages over other energy sources. However, China’s focus initially leaned towards thermal power plants fueled by imported and local coal, along with wind and solar projects.
To date, twelve CPEC thermal power plants, operational across the country, contribute a combined capacity of 7,900MW to the national grid. In contrast, CPEC’s hydropower projects remain limited to just two, totaling 1,590MW.
Hydropower is essential to Pakistan’s energy security, supporting power generation as well as broader socio-economic development. These projects stimulate job creation, rural development, and improved water resource management. To fully harness these benefits, the government must ensure the timely completion of projects across both public and private sectors. Implementing the long-term Indicative Generation Capacity Expansion Plan (IGCEP 2022-31), which outlines energy development priorities, is critical for keeping these projects on track and within budget.
Moving forward, Pakistan must address the challenges facing private investors in hydropower. Streamlined land acquisition, robust financing mechanisms, and tailored incentives to mitigate hydropower’s unique risks could significantly enhance investor interest. With the right policies and support in place, Pakistan has the potential to substantially increase its reliance on hydropower, align with global trends, and advance toward a cleaner, more sustainable energy future.
The writer is a retired chairman of the State Engineering Corporation and former member (PT) of the Pakistan Nuclear Regulatory Authority.
