The Indian government is planning to take a loan of ₹3,119 crore to speed up work on the Kwar Dam, a key hydroelectric project on the Chenab River in Jammu and Kashmir’s Kishtwar district. The dam is part of a greenfield storage initiative that aims to increase power generation in the region, CNN-News18 reported.

Loan Plan and Project Funding

The Kwar project is being developed by Chenab Valley Power Projects Limited (CVPPL) — a joint venture of NHPC Limited and the Jammu & Kashmir State Power Development Corporation Limited. To fund the project, CVPPL is approaching banks and financial institutions to secure a loan with the lowest possible interest. The ₹3,119 crore loan will partly cover the total estimated cost of ₹4,526 crore.

Why the Project Matters Now

India’s move to fast-track this dam follows its decision to suspend the Indus Waters Treaty, a long-standing agreement between India and Pakistan. This decision came after a deadly terrorist attack in Pahalgam, Jammu and Kashmir, in April.

In that attack, gunmen believed to be backed by Pakistan ambushed tourists, killing 26 people, most of them Hindu pilgrims. Reports said the terrorists selected victims based on their religious identity. The incident happened shortly after Pakistan Army chief Asim Munir delivered a provocative speech, stating that “Hindus and Muslims were two nations which could not live peacefully together.”

This hate-filled remark was seen as a possible trigger for the attack, especially since Hindus make up more than two percent of Pakistan's population and are often targeted by extremist groups.

Rising Tensions and Military Clashes

The already strained relationship between India and Pakistan worsened after the Pahalgam incident. In May, a four-day military clash broke out between the two nations.

Indian forces reportedly targeted 9 to 12 terrorist camps in Pakistan-occupied Kashmir (PoK) and Pakistan. In response, Pakistan launched attacks on Indian border areas and military bases. India retaliated strongly, damaging Pakistan’s air defence systems and military facilities. Eventually, Islamabad requested a ceasefire due to the heavy damage.

Notably, the Indus Waters Treaty, signed in the early 1960s and considered a rare example of cooperation between the two countries—even surviving the wars of 1965, 1971, and 1999—was suspended by India following these events.

Progress on the Kwar Dam

The Kwar hydroelectric project is progressing steadily. In January 2024, a major achievement was recorded when the Chenab River was successfully diverted. This important step allowed construction on the main dam to begin.

Additionally, work has started on a 609-metre-long main access tunnel, marking visible progress on multiple fronts. Once completed, the project will feature a 109-metre-high concrete gravity dam.

Located about 28 kilometres from Kishtwar town, the dam is expected to produce 1,975 million units (MU) of electricity every year. This will significantly improve energy supply and help boost industrial development in Jammu and Kashmir.

Government’s Vision and Timeline

Prime Minister Narendra Modi laid the foundation stone for the project in April 2022. Since then, the government has pushed hard to ensure the timely completion of major tasks. Officials are aiming to finish the project by 2027.

The successful launch of the Kwar Dam is expected to enhance the region’s power infrastructure and contribute to the overall economic development of Jammu and Kashmir.