Mega dams' price tag soars to Rs3.5tr

ECC okays Rs275b for six water projects, Rs84b for three armed forces projects

ISLAMABAD:

The government on Wednesday approved Rs275 billion in supplementary grants to fund six priority water projects, including three mega dams whose cumulative cost has escalated 176% and which are now being funded by cash grants taken from the provinces.

The Economic Coordination Committee of the Cabinet (ECC), which took the decisions, also approved Rs84.2 billion in three supplementary grants to finance armed forces projects, including the Istaqlal project and the induction of an aircraft, the finance ministry announced on Wednesday.

The major allocations for the armed forces include Rs31.32 billion for Special Security Division North and South, Rs11.9 billion for Pakistan Navy facilities, Rs10 billion for internal security duty allowances and border fence maintenance, Rs29.1 billion for the Istaqlal project and Rs1.1 billion for the induction of a Lineage L-1000 aircraft.

The ECC approved a supplementary grant of Rs275 billion for water sector projects under the Ministry of Water Resources, the ministry said, adding that the allocation will support the development of key water infrastructure and help advance implementation of ongoing projects.

Against the original demand of nearly Rs450 billion for this fiscal year, the ECC approved Rs275 billion for construction work on the Diamer-Bhasha dam, Dasu dam, Mohmand dam, Chashma Right Bank Canal, Greater Karachi Bulk Water Supply scheme and the Kachhi Canal project.

For the current fiscal year the federal government has asked the provinces to provide Rs1.035 trillion in grants out of their total shares of Rs8.8 trillion, but the cash delivery is contingent on the Federal Board of Revenue's ability to collect Rs15.264 trillion. Any shortfall, considered highly likely given a gap of Rs95 billion during the first four months, would automatically reduce the provincial contribution.

A finance ministry official said the Rs275 billion had been approved but disbursement would be contingent on revenue receipts, and that the remaining cash grants would be used for armed forces initiatives.

The cumulative cost of the three mega dams has escalated from Rs1.28 trillion to Rs3.5 trillion, a surge of Rs2.3 trillion or 176%. According to details presented by the Ministry of Water Resources, the cost of the Diamer-Bhasha Dam increased by Rs642 billion to Rs1.12 trillion, an increase of 134%. The water ministry attributed the rise to changes in foreign exchange rates and said a revised Planning Commission proforma had been submitted for approval of the Executive Committee of the National Economic Council.

The estimated cost of the Dasu Hydropower Project also surged from Rs486 billion to Rs1.740 trillion, an increase of Rs1.254 trillion or around 260%.

The government also acknowledged a sharp increase in the prices of petroleum products and construction materials, further adding to the financial burden of infrastructure projects.

The Water and Power Development Authority has also reassessed the cost of the Mohmand dam at Rs666 billion. In 2018, the then government had approved the project at a cost of Rs310 billion with a deadline to finish work by September 2025, and the cost has since been estimated to escalate by Rs356 billion or 115%, according to the authorities.

Finance Minister Muhammad Aurangzeb chaired the ECC meeting.

In a summary submitted by the Interior and Narcotics Control Division, the committee also approved Rs3.71 million to meet the helicopter maintenance requirements of the Frontier Corps Balochistan (North).

The committee approved the transfer of Rs15.625 billion in savings generated through austerity and fuel conservation measures to the Prime Minister's Austerity Fund 2026, which the ministry described as reinforcing the government's commitment to fiscal discipline and prudent management of public resources.

On a summary submitted by the Commerce Division, the committee approved restrictions on the import of camera-enabled smart glasses and recommended that provincial governments and the Islamabad Capital Territory develop workplace regulations to govern the use of such devices.

The ECC approved the continuation of gas supply to FatimaFert and Agritech, the two Sui Northern Gas Pipelines Limited-based urea manufacturing plants, up to December 31, 2026, subject to availability of the required energy supply, according to the finance ministry.

The committee also approved a relaxation in the applicable Exploration and Production Rules for the extension and renewal of 89 petroleum rights, subject to fulfilment of the prescribed conditions.

The ECC further approved a Rs1 billion grant for the gasification of villages falling within a five-kilometre radius of gas production fields during FY 2026-27, a move it said will facilitate gas infrastructure development and improve access to natural gas in communities near producing fields.