Salma Dam was originally constructed in 1976 on the Hari river basin, but was damaged early during the Civil war in Afghanistan. The reconstruction of the dam was first initiated by an Indian company (WAPCOS Ltd.) in 1988, but the project was left incomplete for a significant period of time due to the ongoing instability caused by the civil war. In 2006, India committed to funding the completion of the Salma Dam. The dam was scheduled to reopen in September 2011.
Tehran has been accused of attempting to stop work on the project which would reduce the flow of river water into Iran.

“The expenditure on the projects will be met from the Non-Plan head of Aid to Afghanistan budget of the Ministry of External Affairs,” the statement said, adding the cabinet had approved the proposal in June 2010 for the revised cost estimates of Rs.854.86 crore up to December 2010.

In July last year, India’s acting Consul-General Rajesh Lal told Pajhwok Afghan News New Delhi remained committed to continuing work on the dam, one of the mega friendship projects India is implementing in Herat. When completed, the multi-million dollar Salma Dam project – being executed by M/S WAPCOS Ltd. in Herat province – will meet energy and irrigation requirement of western Afghanistan. The contractor, WAPCOS Limited, is a Public Sector Undertaking under the Ministry of Water Resources, providing services in Water, Power and Infrastructure Development and Management. It was established in 1969 as an export window of the Government of India with a view to sharing the Indian expertise and experience with the other developing nations.

On July 14, 2012, The Hindu newspaper reported that the project, which was originally scheduled to be completed by 2010, had been in trouble due to procrastination on the part of New Delhi to approve the revised cost. With the timeline pushed back by two years, the area around the site had begun witnessing frequent clashes between the project security detail and Afghan insurgents, The Hindu said.

In mid-2012, a security meeting was informed that construction activity was on the verge of stoppage because Afghan contractors had lost faith in the revival of the dam. As a result, subcontractors are reportedly refusing to supply material on credit for the dam, which will irrigate 75,000 hectares of land and generate 42 MW of power.

For his part, Lal said the project had been faced with lack of funds due to the escalating cost. However, he believed, it was a routine matter.

The project cost has escalated from $75 mln to over $200 mln. Climatic conditions, logistic and security problems were another principal reason for the delay, Lal explained.

Afghanistan loses about ⅔ of its water to Iran, Pakistan, Turkmenistan, and other neighbours because doesn’t harness its rivers.