World Bank rates progress on KP hydropower project ‘moderately unsatisfactory’

The World Bank has rated progress towards the development objectives of Khyber Pakhtunkhwa’s Hydropower and Renewable Energy Development Project as “moderately unsatisfactory” warning that the $727 million financing package faces substantial risks.

The World Bank has rated progress towards the development objectives of Khyber Pakhtunkhwa’s Hydropower and Renewable Energy Development Project as “moderately unsatisfactory” warning that the $727 million financing package faces substantial risks.

In a project update released on Wednesday October 28, 2026 the international lender said that although implementation had gained momentum in some areas concerns remained over institutional capacity financial management and environmental and social safeguards.

The project was approved in 2020 with completion scheduled for November 30, 2027. It aims to strengthen provincial institutions expand renewable energy generation and help Khyber Pakhtunkhwa utilise its considerable hydropower potential.

Despite its assessment of the project’s development objectives the World Bank rated overall implementation progress as “moderately satisfactory”. It classified the overall risk level as “substantial” citing concerns related to macroeconomic conditions institutional capacity, financial accountability, governance and environmental and social requirements.

The bank also disclosed that it had restructured the project at the government’s request to bring its scope and financing in line with implementation priorities.

Progress has been reported on the 88-megawatt Gabral-Kalam Hydropower Project including the start of civil works advances in land acquisition and progress in procuring electromechanical equipment. The facility is designed to generate approximately 339 gigawatt-hours of electricity annually.

However, disbursement of financing remains limited. Of a $200 million market-based loan only $3.95 million had been released representing less than 2% of the total. A separate concessional development loan of $240 million had disbursed $34 million or around 14% of its value.

The original financing package included allocations for hydropower development environmental and social management institutional strengthening and project implementation support alongside financing charges.

The programme also envisages developing the 157MW Madyan hydropower project and other facilities across the Swat River and additional river basins. The Swat River Basin alone is estimated to have more than 2,000MW of hydropower potential.

Solar photovoltaic systems installed on land or floating on water were also included in the broader plan to expand renewable energy generation.

The World Bank said future implementation would focus on meeting deadlines improving contract management and complying with environmental and social requirements.