Islamabad: The Economic Coordination Committee (ECC) of the cabinet approved a package of funding decisions worth about Rs 380 billion on Wednesday, allocating Rs 275 billion to water infrastructure and Rs 84.23 billion to defence requirements.

The meeting, chaired by Finance Minister Muhammad Aurangzeb in Islamabad, considered 11 agenda items covering development financing, security expenditure, fertiliser production, petroleum exploration and import restrictions. The largest allocation was directed towards water projects facing funding shortages, including the Diamer Bhasha Dam, Mohmand Dam, Greater Karachi Water Supply Project (K IV), Chashma Right Bank Canal and Kacchi Canal.

The Water and Power Development Authority (Wapda) will receive the funds in stages according to its project implementation requirements.

Water projects receive additional funding

The supplementary allocation follows concerns raised by Wapda over the availability of funds for projects already under construction. The federal government had allocated approximately Rs 103 billion to the five schemes in the 2026 to 27 budget, an amount Wapda considered insufficient to maintain construction schedules.

Wapda Chairman Muhammad Saeed had previously informed a parliamentary committee that funding shortages were affecting implementation and that requests for additional resources had received approval from the prime minister and the Finance Ministry. The projects serve different purposes, including water storage, irrigation, hydropower generation and urban water supply.

Their completion is linked to Pakistan's efforts to address water shortages, improve agricultural productivity and meet growing demand for electricity and drinking water. The funding decision also follows an arrangement reached in June under which the four provinces agreed to contribute approximately Rs 1.035 trillion towards national requirements outside the National Finance Commission framework.

Defence allocations total Rs84.23 billion

The ECC approved three supplementary grants submitted by the Defence Division. Of the Rs 54 billion allocated to Defence Services projects, more than Rs31 billion will support the Special Security Divisions North and South, Rs11.88 billion will go towards Pakistan Navy projects, and Rs10 billion will cover internal security duties and allowances.

The committee separately approved Rs 29.139 billion for Project Istaqlal and Rs 1.094 billion to induct a Lineage L 1000 aircraft into the army fleet. The Finance Division said the allocations were intended to meet operational and security requirements. An additional Rs 3.71 million was approved for helicopter maintenance requirements of Frontier Corps Balochistan (North).

Gas supply, import restrictions and petroleum decisions

The ECC allowed gas supplies to continue to Fatima Fertiliser and Agritech plants in Punjab until December 31, subject to availability.

The decision is intended to support fertiliser production, which remains dependent on gas supplies and affects agricultural input availability. The committee also approved restrictions on the import of smart glasses equipped with cameras and recommended that provincial governments and Islamabad authorities introduce workplace regulations governing their use.

In the petroleum sector, the ECC allowed the extension and renewal of 89 exploration and production rights, subject to regulatory conditions. The committee also approved a further Rs 1 billion to extend gas connections to villages within five kilometres of gas production fields during the current financial year.

The committee also endorsed revisions to the Prime Minister's Youth Business and Agriculture Loan Scheme and approved the transfer of Rs 15.625 billion in savings from austerity and fuel conservation measures to the Prime Minister's Austerity Fund 2026.

Funding and implementation

The decisions come as the government attempts to finance infrastructure and security requirements while managing pressure on public expenditure. Although the ECC has authorised the allocations, approval does not mean that all funds have been released. Water project disbursements will take place in stages, subject to financing and implementation requirements.

The government has not provided a project wise breakdown of the additional water funding or a revised completion timetable for each scheme. The financial impact will therefore depend on the release of funds, construction progress and the government's ability to meet its spending commitments during the remainder of FY2026 to 27.