Mega Dams Cost Soars to Rs3.5 Trillion
The mega dams cost in Pakistan has risen to Rs3.5 trillion, after the Economic Coordination Committee (ECC) approved Rs275 billion in supplementary grants for six priority water projects on Wednesday. The three dams at the centre of the package have seen their combined cost rise by Rs2.3 trillion, or 176 per cent, from an earlier estimate of Rs1.28 trillion.
Finance Minister Muhammad Aurangzeb chaired the ECC meeting in Islamabad. The finance ministry said the Rs275 billion grant for water projects under the Ministry of Water Resources will support key water infrastructure and help advance work already under way.
Which projects the money covers
The grant covers construction work on the Diamer-Bhasha dam, the Dasu dam, the Mohmand dam, the Chashma Right Bank Canal, the Greater Karachi Bulk Water Supply scheme and the Kachhi Canal project. The original demand for this fiscal year was nearly Rs450 billion, so the approved sum covers only part of what the water ministry sought.
That shortfall matters because the funding model now leans heavily on the provinces. The federal government has asked the provinces to provide Rs1.035 trillion in cash grants from their total shares of Rs8.8 trillion. Delivery of that money depends on the Federal Board of Revenue collecting Rs15.264 trillion, and a finance ministry official warned that any shortfall would cut the provincial contribution at once. A gap of Rs95 billion had already appeared in the first four months of the fiscal year, and officials described a further shortfall as highly likely.
How each dam’s cost moved
The Diamer-Bhasha Dam accounts for a large share of the rise. Its cost increased by Rs642 billion to Rs1.12 trillion, a rise of 134 per cent. The water ministry linked the increase to changes in foreign exchange rates and said a revised Planning Commission proforma has been sent for approval by the Executive Committee of the National Economic Council.
The Dasu Hydropower Project rose even faster. Its estimated cost climbed from Rs486 billion to Rs1.740 trillion, an increase of Rs1.254 trillion, or around 260 per cent.
The Mohmand dam was reassessed by the Water and Power Development Authority at Rs666 billion. The government had approved the project in 2018 at Rs310 billion, with work due to finish by September 2025. The new figure is Rs356 billion higher, a rise of 115 per cent.
The government also pointed to sharp rises in petroleum product prices and construction material prices, which added to the burden on infrastructure projects across the board.
Why the mega dams cost rise matters for households
Dams are long projects, and cost overruns do not stay on a spreadsheet. When a dam costs more, the bill is met from public funds, from provincial grants, or from higher charges on power and water over time. The ECC package shows that pressure clearly: the centre approved Rs275 billion, asked the provinces for far more, and still left a gap against the water ministry’s original demand.
The same meeting approved Rs84.2 billion in three supplementary grants for armed forces projects, including 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. A finance ministry official said disbursement of the water grant would depend on revenue receipts, with remaining cash grants used for armed forces initiatives.
Other decisions at the meeting included Rs3.71 million for helicopter maintenance for Frontier Corps Balochistan (North), a transfer of Rs15.625 billion in savings from austerity and fuel conservation to the Prime Minister’s Austerity Fund 2026, restrictions on imports of camera-enabled smart glasses, and continued gas supply to the FatimaFert and Agritech fertiliser plants until December 31, subject to availability. The committee also relaxed Exploration and Production Rules for the renewal of 89 petroleum rights and approved a Rs1 billion grant to bring gas to villages within five kilometres of gas production fields in 2026-27.
What happens next
The revised Diamer-Bhasha cost now goes to the Executive Committee of the National Economic Council for approval. For the other dams, the test will be simpler: whether the cash grants promised by the provinces arrive in full, and whether the Rs275 billion approved on Wednesday is released on time for construction work.
Frequently asked questions
How much do the three mega dams now cost?
The three dams together now cost Rs3.5 trillion, up from Rs1.28 trillion. The rise is Rs2.3 trillion, or 176 per cent.
Which dams are included?
Diamer-Bhasha, Dasu and Mohmand. Diamer-Bhasha now costs Rs1.12 trillion, Dasu costs Rs1.740 trillion and Mohmand has been reassessed at Rs666 billion.
Why did the costs rise?
The water ministry cited changes in foreign exchange rates for Diamer-Bhasha, and the government also pointed to higher petroleum and construction material prices. Revised cost estimates have been submitted for approval in the case of Diamer-Bhasha.
Where will the money come from?
The ECC approved Rs275 billion from the centre. The federal government has also asked the provinces for Rs1.035 trillion in cash grants, but that payment depends on federal revenue collection meeting its target.
