Second tranche under $100 million commitment to support Pakistan’s key water and energy initiative
Pakistan has signed a $25 million concessional loan agreement with the Kuwait Fund for Arab Economic Development (KFAED) to finance the Mohmand Dam Hydropower Project, giving another major boost to the country’s strategic water and energy infrastructure.
The agreement, valued at approximately Rs. 7 billion, was formalised at the Ministry of Economic Affairs in Islamabad, according to Business Recorder.
This marks the second tranche of funding under a broader $100 million financial commitment from Kuwait aimed at supporting the project’s development and implementation.
Project significance
The Mohmand Dam Hydropower Project, located on the Swat River in Khyber Pakhtunkhwa, is one of Pakistan’s most critical multi-purpose water infrastructure projects.
Once completed, the dam will:
- Generate 800 MW of clean electricity,
- Store 1.3 million acre-feet of water,
- Provide irrigation to 15,000 acres of land, and
- Help mitigate flood risks in downstream areas.
Officials said the project will also strengthen Pakistan’s long-term water security and contribute to low-carbon energy generation.
Strengthening Pakistan–Kuwait cooperation
The latest agreement underscores the growing economic cooperation between Pakistan and Kuwait, particularly in sustainable infrastructure and energy sectors.
Senior representatives from both sides expressed confidence that this collaboration would pave the way for further development financing initiatives under the Kuwait Fund’s ongoing partnership with Pakistan.
The first financing tranche was signed earlier this year, with disbursements already underway.
Background: part of Pakistan’s energy transition
The Mohmand Dam is part of Pakistan’s broader energy diversification strategy, focused on expanding hydropower capacity and reducing dependence on imported fossil fuels.
The project, led by the Water and Power Development Authority (WAPDA), is expected to be completed by 2027, contributing significantly to the national grid and regional development in Khyber Pakhtunkhwa.