Pakistan Announces New Chenab Dam Project to Tackle Water Crisis

Pakistan has announced plans to build a new dam on the Chenab River, aiming to secure the country’s water supply for agriculture, drinking, and power generation. This initiative comes in response to worsening water scarcity and ongoing disputes with India under the Indus Waters Treaty (IWT).

Combined Cost to Exceed Rs800 Billion

The Chenab Dam, along with the revised Diamer Bhasha Dam, is expected to cost over Rs800 billion. To fund these megaprojects, the federal government proposed keeping all revenue from a new water storage cess instead of sharing it with provinces, a move aimed at preventing delays in construction due to financial shortfalls.

Funding Setback as IMF Rejects Cess Proposal

Pakistan had planned to introduce a 1% water storage cess on goods, but the International Monetary Fund (IMF) rejected the idea. The IMF instead recommended raising the general sales tax (GST) to generate additional revenue, adding financial pressure on the government, which is already grappling with economic instability.

Strategic Need Amid India Pakistan Water Tensions

The Chenab Dam is seen as vital not only for Pakistan’s water security but also as a strategic move in light of India’s increasing control over upstream rivers. Experts warn that Pakistan’s water stress is reaching critical levels, making such infrastructure essential for national sustainability.

Public Hopes High, But Funding Remains a Challenge

While the public supports the dam projects as a long-term solution to water insecurity, the search for sustainable financing remains a key hurdle. Government officials are now exploring alternative funding models to keep these crucial projects on track.