The Auditor General of Pakistan has identified significant planning gaps and irregularities in the award of contracts for the Diamer Bhasha Dam Project, recommending an investigation at the highest level. The audit report for the financial year 2024-25, covering work up to June 2025, highlights non-compliance with the Public Procurement Regulatory Authority (PPRA) Rules, WAPDA's Procurement Manual, bid evaluation criteria, and PC-I provisions. The irregularities extend to the hiring of vehicles by the DC/LAC and consultants.
Project Delays and Cost Overruns
The project, initially scheduled for completion by June 2027, has faced a two-year delay in awarding the main civil works contract (MW-1), pushing the expected completion date to February 5, 2029. However, the audit notes that even this revised timeline appears unlikely. By June 2025, physical progress stood at only 19.95 percent against a planned 57.78 percent, while financial progress reached 39.67 percent. The dam was started without complete designs and awarded without full competition, contributing to the slow progress.
Irregular Award of MW-1 Civil Works Contract
The audit's primary concern is the award of the MW-1 contract for the main dam construction to the PowerChina-FWO Joint Venture on May 13, 2020, for Rs442.40 billion. This amount is 31.47 percent above the PC-I cost of Rs336.5 billion. The bidding rules required each local partner to have executed at least one water project worth Rs3 billion within the last 20 years. According to the audit, FWO qualified based on its role in the Gomal Zam Dam Project, but FWO only handled security at Rs15 million per month, while the dam and hydropower work were subcontracted to Sinohydro Corporation and irrigation to AREAA Construction. FWO was marked non-responsive on the same issue in the Mohmand Dam project. Additionally, M/s Sinohydro Group Ltd. (now PowerChina) had a Rs14.54 billion Keyal Khwar contract terminated by WAPDA for default, but this was not considered during bid evaluation.
Violations of Procurement Rules
The audit states that the award violated PPRA Rule 36(b)(v) and WAPDA's Procurement Manual, and did not meet Clause 1.5(iv) requiring international advertisements, as only local media was used. Despite the single qualified bidder not fulfilling the requirements, the contract was awarded at a price 31.47 percent higher than the PC-I cost. The audit holds that neither due diligence was carried out in technical evaluation nor fair competition ensured, amounting to undue favor to the joint venture partners. The management's reply argued that FWO's experience in Gomal Zam Dam was considered based on official certificates and that no restrictions were imposed on PowerChina for participating in bidding. Audit rejected this, citing the lack of international publicity and the unqualified bidder leading to uncompetitive rates.
Irregularities in Consultancy Contract
The audit also flagged irregularities in the award of the Bhasha Dam consultancy contract worth Rs27.182 billion. The Departmental Accounts Committee requested justification within a month, but no update was provided before the report was finalized. The audit recommends an apex-level investigation to fix responsibility for the award of contracts in violation of bid evaluation criteria and PPRA rules, and at non-competitive prices without accurate publicity.
Geological and Design Issues
Auditors blame incomplete geology and seismic studies, post-award design changes, and the omission of resettlement from the main schedule. Early work on diversion tunnels and the coffer dam was executed through Rs5.4 billion in variation orders before detailed engineering was completed. Delays in critical enabling works have compounded execution risk. The 21MW Tangir hydropower facility for construction power is not ready, contractor camps are incomplete, and although the PC-I for Power Generation Facilities was approved in April 2023, no powerhouse contract has been awarded.
