MUZAFFARABAD: Several hundred metres underground, thousands of labourers grind away day and night on a mammoth hydroelectric project in contested Kashmir, where India and Pakistan are racing to tap the subcontinent's diminishing freshwater supplies.

The arch rivals have been building duelling power plants along the banks of the turquoise Neelum River for years.

The two projects, located on opposite sides of the Line of Control -- the de facto border in Kashmir -- are now close to completion, fuelling tensions between the neighbours with Pakistan particularly worried their downstream project will be deprived of much-needed water by India.

The Himalayan region of Kashmir is at the heart of a 70-year conflict between the foes, with both sides laying claim to the conflict-driven territory.

The rivalry on the Neelum is underlined by both countries' unquenchable need for freshwater, as their surging populations and developing economies continue to stress already diminished waters tables.

This situation represents a serious challenge to Pakistan's food security and long-term growth, its central bank recently warned in a report.

The geography of the wider region only exacerbates the problem.

The Indus River -- into which the waters of the Neelum ultimately flow -- is one of the longest on the continent, cutting through ultra-sensitive borders in the region.

It rises in Tibet, crosses Kashmir and waters 65 percent of Pakistan's territory, including the vast, fertile plains of Punjab province -- the country's bread basket -- before flowing into the Indian Ocean.

The Indus Water Treaty, painfully ratified in 1960 under the auspices of the World Bank, theoretically regulates water allocation between the countries and is considered a rare diplomatic success story amid a bitter history.

It provides India with access to three eastern rivers (the Beas, Ravi and Sutlej) and Pakistan with three in the west (the Indus, Chenab and Jhelum), while setting the conditions for water usage.

Underground cathedral

As a tributary of the Jhelum River, the Neelum theoretically falls into Pakistan's sphere, which launched the Neelum-Jhelum power plant project a quarter of a century ago to counter the legal, but competing Kishanganga project in Indian Kashmir.

At the confluence of the Neelum and Jhelum, the gigantic underground cathedral of concrete and steel is near completion -- the four generators are in place, waiting for the transformers and the network to be connected.

More than 6,000 Pakistani and Chinese workers busy themselves in the 28 kilometres (17 miles) of underground tunnels or in the power station itself, buried under 400 metres of rock in the heart of the Himalayas.

After completion, the dam is expected to churn out 969 MW of electricity by mid-2018.

"It is a fantastic feeling to see the outcome of such a historic project," enthused Arif Shah, an engineer working on the site for eight years.

"We hope to finish our hydroelectric plant before the Indians," he smiles, while acknowledging that the real pressure comes from Islamabad, which has promised to end the debilitating power cuts nationwide ahead of the the 2018 elections.

On the Indian side, the Kishanganga power station is also in its final phase, but has delayed its late 2017 completion date, according to an official, in part because of ongoing unrest in the Kashmir valley.