World Bank KP hydropower visits were called off over travel curbs. $147m of a power loan still has no approved new project.

World Bank KP hydropower plans have hit a practical obstacle: its staff could not reach the sites. A World Bank implementation support mission was unable to make planned field visits to the Gabral-Kalam Hydropower Project in Swat, or to proposed alternative investment sites in Khyber Pakhtunkhwa, because of travel restrictions linked to the province’s security situation, according to a Bank letter dated 14 October reported by Business Recorder. The delay leaves about $147.3m of an existing power loan without approved new projects.

The short version

• Field visits planned for the 14-17 September mission did not happen because of security-related travel restrictions in KP.
• Due diligence on the province’s proposed new investments, which would use about $147.3m freed in June, is incomplete.
• The main electromechanical contract for Gabral-Kalam is stalled because the top-ranked bidder has not met award conditions.
• The Bank warned of possible project delays and said site security could carry significant costs.

What happened

The letter was addressed to the Secretary of the Economic Affairs Division and KP’s additional chief secretary for planning and development. It covers the KP Hydropower and Renewable Energy Development Project, which the World Bank backed with a $450m loan approved in September 2020, Profit has reported.

In June the Bank approved a restructuring, at the government’s request, that removed the 215MW Madyan hydropower project. Profit reported in August that Madyan faced a $452.5m funding gap: $267.5m from cost escalation and $185m of commercial financing that was no longer available. The restructuring made about $147.3m available for new investments and contingencies. The Pakhtunkhwa Energy Development Organization (PEDO) has proposed the Munda hydropower project and a transmission line corridor in the Swat Valley, but the Bank says it must visit and assess them first.

Madyan’s funding gap was larger than the whole World Bank loan

KP Hydropower and Renewable Energy project, US$ million

Madyan funding gap (total)

$452.5m

World Bank loan approved in 2020

$450m

Gap from cost escalation

$267.5m

Gap from lost commercial financing

$185m

Freed for new investments after Madyan was dropped

$147.3m

Why it matters

The World Bank KP hydropower programme is a large foreign-funded power build in the province, and the Bank itself warned that the stalled contract could delay it. The mission dates, 14-17 September, came before the federal government imposed an emergency and governor’s rule in KP on 11 October, so the letter does not tie the curbs to that decision. But the Peshawar High Court is now hearing petitions from PTI chairman Barrister Gohar Khan and Advocate Salman Khan challenging those measures, and has issued notices to the federal government, Business Recorder reported. The petitioners argue the steps are unconstitutional; the government has defended them as security measures. For lenders, the issue is access: projects cannot be appraised if staff cannot reach them. Our earlier story on governor’s rule in KP and business sets out the wider effects.

The knock-on effects

First order: World Bank KP hydropower money waits

The $147.3m cannot be committed until the Bank finishes its assessment of Munda and the Swat transmission corridor. The Bank has also asked for faster approval of a revised project plan (PC-I) through the provincial and central development working parties, which is needed to amend the financing agreements.

Second order: contractors and costs

Civil works, the project colony and land acquisition at Gabral-Kalam have progressed significantly, the Bank said, but the electromechanical contract is not signed. Site security arrangements still need to be finalised and could have significant cost implications, adding to a programme already squeezed by escalation.

Third order: investor confidence in KP

A separate $200m World Bank loan to lift KP’s own tax revenue is due for board approval on 29 October, as Knock-On has reported. Lenders and private investors will weigh whether staff and contractors can work in the province when they price new commitments.

Who could benefit

• Swat Valley power users if the transmission corridor is approved and funded from the freed money.
• Security and engineering contractors, as the project needs firmer site security and stronger supervision.

Who may face pressure

• PEDO and the KP planning department, which must resolve the stalled contract and paperwork.
• Local suppliers and workers at Gabral-Kalam if the main contract stays unsigned.
• Power consumers waiting for lower-cost hydropower to reach the grid.

What to watch

• 29 October: World Bank board consideration of the $200m KP revenue loan.
• 10 November: next Peshawar High Court hearing on governor’s rule, as previously scheduled.
• Rescheduled World Bank field visits once travel conditions allow.
• Signing of the Gabral-Kalam electromechanical contract and approval of the revised PC-I.

Sources

• Business Recorder, WB mission’s visits put off due to travel curbs in KP, 21 Oct 2026
• Business Recorder, Governor’s rule, emergency: PHC seeks response of federal govt, 21 Oct 2026
• Profit by Pakistan Today, KP drops 215MW Madyan Hydropower from World Bank plan, 6 Aug 2026

This is analysis, not investment advice. Figures are as of 21 Oct 2026. Knock-On is not affiliated with any political party.