The Khyber Pakhtunkhwa (KP) government has decided to drop the 215MW Madyan Hydropower Project (MHPP) from the World Bank-funded Khyber Pakhtunkhwa Hydropower and Renewable Energy Development Project due to a financing gap that rendered the project financially unviable.
According to World Bank documents, the program faced a financing shortfall of $452.5 million, including cost overruns and expected commercial financing that is unlikely to materialize.
The World Bank has agreed in principle to restructure the project by cancelling MHPP, extending the completion deadline from November 2027 to November 2030, and revising the financing framework.
Under the revised plan, the 88MW Gabral-Kalam Hydropower Project, solar energy investments, and technical assistance programmes will continue. The overall project size will be reduced from $727 million to about $480.6 million, with the World Bank financing nearly 94 percent of the remaining costs.
The Bank noted that project implementation had been delayed by procurement challenges and the redesign of the Madyan project following the 2022 floods.
Despite the downsizing, the restructured program remains aligned with Pakistan’s clean energy objectives and is expected to support renewable energy generation and institutional capacity building.-ERMD
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