Neelum-Jhelum Hydropower Project a Costly Failure

The Auditor General of Pakistan (AGP) has raised serious concerns about the Neelum-Jhelum Hydropower Project, declaring it a failure in planning, execution, and achieving its core objectives.

According to the AGP’s performance audit report for 2022–23, submitted to the President and Parliament, the Rs 507 billion project failed to deliver on key promises, including generating 5,150 GWh of electricity, securing Pakistan’s water rights over the Neelum River, and earning revenue through carbon credits under the Clean Development Mechanism.

The audit revealed multiple construction faults, including collapses in the tailrace and headrace tunnels, which kept the project non-operational for long periods. Despite using tunnel boring machines (TBMs), delays occurred due to frequent design changes. Contractors also failed to meet obligations, such as supplying critical spare parts.

Originally approved at Rs 15 billion in 1989, costs skyrocketed to over Rs 506 billion by 2018, with an almost eight-year delay causing massive financial overruns. The collapse of tunnels further deepened losses, worsening electricity shortages across the country.

The AGP report highlighted poor planning, weak execution, environmental damage, and non-realization of $50 million in expected revenues. It concluded that the project represents a major missed opportunity in Pakistan’s energy sector.