Govt focus on reservoirs minimal despite water woes

Business Recorder

2 days ago

ISLAMABAD: Despite the devastating impact of climate change on Pakistan's infrastructure, massive water losses worth billions of dollars and ongoing inter-provincial disputes over water distribution, the government's focus on developing water reservoirs remains minimal.
'The government is working on water reservoirs, but not with the urgency this task demands. We have neither built major reservoirs in the past 40 years nor improved our water usage methods,' said a government official, speaking on condition of anonymity.
Pakistan consistently ranked among the top 10 most vulnerable countries to climate change - largely due to the strain on the Indus River system which has been exacerbated by the unilateral withdrawal from the Indus Water Treaty by India in the aftermath of the Pahalgam terror attack and India's insistence that Pakistan is responsible without providing any proof.
Water flow in rivers increasing
Over 80% of the country's arable land is irrigated by Indus waters. Rising temperatures and recurring heatwaves are expected to intensify water scarcity and worsen drought conditions.
According to the Public Sector Development Programme (PSDP) for 2025–26, the government allocated Rs 20 billion for the Dasu Hydropower Project (Stage-I), Rs 3.4 billion for the 1,410 MW Tarbela 5th Extension Hydropower Project, and Rs 500 million for the 54 MW Attabad Lake Hydropower Project.
Additionally, funds have been set aside for the refurbishment and upgradation of Mangla Power Station to enhance its capacity from 1,000 MW to 1,310 MW.
Rupees 25 billion has been earmarked for the Diamer-Bhasha Dam (including the Tangir Hydropower Project), while Rs 7.78 billion is allocated for land acquisition and resettlement (2nd revised) under the same project. The Mohmand Dam Project (800 MW) has received a substantial allocation of Rs 35.72 billion.
The federal government is currently exploring financing options for the $10 billion Diamer-Bhasha Hydropower Project—$8 billion for the dam and $2 billion for the transmission line. Development partners have shown reluctance to commit the required funds. The project, which has an installed capacity of 4,500 MW and a gross storage of 8.1 MAF, is expected to generate 18.1 billion units of electricity annually, plus an additional 2.5 billion units for downstream projects. It is seen as crucial for enhancing energy security, reducing carbon emissions, and addressing water shortages.
Last month, Prime Minister Shehbaz Sharif chaired a high-level meeting where he directed authorities to remove all obstacles hindering the timely completion of the $15 billion Diamer-Bhasha Dam, calling it vital for Pakistan's energy and agricultural security.
Officials involved in water infrastructure stress the need for diverting additional financial resources toward reservoir development beyond current commitments. The Water and Power Development Authority (WAPDA), responsible for building and managing dams, estimates that new projects could make an additional 10 million acre-feet (MAF) of water available within 4–5 years.
'With new dams, water availability could rise from the current 13 MAF to 23 MAF per annum,' the former Wapda chairman told a parliamentary panel in January.
However, the main challenge remains financing, especially for key reservoirs like Diamer-Bhasha. Pakistan currently has access to 135 MAF of surface water, of which 102 MAF is used for agriculture. Nearly 94% of this water goes to agriculture alone.
Experts argue this percentage must be reduced—China, for example, brought it down from over 90% to 60%. Efficient irrigation methods, largely under provincial jurisdiction, have yet to be implemented. While the World Bank has funded efforts such as concrete canal delivery systems, actual progress on the ground remains limited. Command area development activities are underway but remain unsatisfactory.
Currently, around 450 million acres of land are irrigated with canal water, which typically faces a 25% supply shortfall. To close this gap, Pakistan needs 15–16 MAF of new storage capacity. However, the Diamer-Bhasha Dam, with a 6.4 MAF capacity, will not be operational until 2029 or 2030—by which time demand could increase to 14–15 MAF. Even then, the DBD would only reduce the shortage from a projected 35% to around 25%.
Pakistan is now bearing the consequences of its prolonged inaction on water storage infrastructure.
To address financing gaps, the government has approached the Arab Consortium—including the Saudi Fund, Kuwait Fund, OPEC Fund, and the Islamic Development Bank (IsDB)—for support. These institutions previously supported the Mohmand Dam, and securitization of existing assets like the Ghazi Barotha Dam is now being explored to fund DBD.
'IsDB, SFD, and the ADB have been approached to help bridge the $3.5 billion funding gap for DBDP. However, no multilateral development bank has yet stepped up as an anchor financier,' said an official source.
'If Wapda is to secure funding, there are two main options: either the government provides a sovereign guarantee — which is unlikely — or Wapda issues a bond based on its balance sheet. But that's not feasible either, given its Rs 214 billion in receivables from the power sector,' said the source. This receivable is part of the broader issue of circular debt, which undermines Wapda's creditworthiness.
Lenders are expected to scrutinize Wapda's repayment capacity before committing funds. The government is also exploring loans secured against operational projects or offering attractive returns to entice investors.
Nine out of Pakistan's ten largest cities lie within 50 kilometers of the Indus River. The continued degradation of the Indus Basin presents a looming economic, social, ecological, and demographic threat to the country's development and stability.
Copyright Business Recorder, 2025