Laying the Groundwork for the Urban Infrastructure Improvement Project in Pakistan
August 26, 2019
“The CDIA study became the backbone of our ensuing project.” This was how Kiyoshi Nakamitsu of the Asian Development Bank (ADB) described the value of CDIA’s work on the Khyber Pakhtunkhwa Cities Improvement Program (KPCIP).
Supported by ADB, the KPCIP aims to enhance the urban conditions in Pakistan’s Khyber Pakhtunkhwa (KP) Province. CDIA was involved in the early part of the project preparation by developing the investment packages for three of the five cities being considered for the program.
The urban population in the KP province is increasing rapidly at 4.2% per annum. This has led to uncoordinated, unplanned and unregulated growth and poor quality of basic services. Water supply for example, is available for only 42% of the urban population and typically for 6 hours a day.
To enhance access to reliable and resilient urban services, the KPCIP was proposed for Abbottabad, Mardan, Peshawar, Kohat and Mingora.
The program aims to benefit at least 3.5 million residents with better access to 24 x 7 water supply and wastewater treatment, improved collection of garbage, and enhanced green urban spaces, among others. CDIA laid the groundwork towards the realization of these objectives.
It facilitated the completion of 10- to 15-year investment plans for the cities of Mardan, Peshawar and Abbottabad; identified infrastructure sub-projects drawn from various stakeholder engagements; and carried out pre-feasibility studies for the prioritized projects.
It also proposed institutional strengthening measures for the strategic operation and management of the proposed investments, and increasing the capacities of personnel driving the necessary reforms.
The outputs of the urban resilience assessment conducted by the Urban Climate Change Resilience Trust Fund (UCCRTF), the contributions of the Urban Policy Unit of KP province, and the subsequent consultation processes have shaped CDIA’s analyses and recommendations.
“It was through CDIA that we started our engagement with the cities; and on the basis of their findings, we are now preparing the engineering design. We never had such an arrangement that is why I consider it very unique and innovative,” described Mr. Nakamitsu, ADB’s Principal Urban Development Specialist and Project Officer of KPCIP.
After the conclusion of the study, ADB and the Government of Pakistan (GOP) took the recommendations forward in the detailed engineering design (DED) and due diligence documents they are now preparing under ADB’s Project Readiness Financing (PRF).
The PRF is a new loan modality that supports the completion of DED ahead of the ensuing project or the principal loan. It will ensure high project readiness, thereby facilitating the timely and cost-effective achievement of the project outcomes.
When an urban project is approved based only on preliminary design, significant time is required to complete the DED, prepare bidding documents and address environmental and social safeguards issues. The PRF will result in a procurement-ready project, enabling contract awards and disbursements immediately after loan effectiveness.
“The PRF is a good modality for Pakistan. From its 19 urban sector projects since 1977, ADB has learned the importance of high project readiness prior to loan approval to mitigate risks in project implementation, and to lock-in the investment,” Mr. Nakamitsu explained.
The PRF will cover the following activities: 1) completion of due diligence to confirm the viability of ensuing projects; 2) completion of detailed engineering and procurement support; 3) strengthening of service delivery standards, social inclusion, and financial sustainability of municipal bodies; and 4) improvement of capacity of executing and implementation agencies for PRF implementation.
The GOP has requested a regular loan of $7 million to help finance the PRF. In parallel, the UCCRTF will provide grant financing of $2 million to integrate climate resilience measures into the DED.
The PRF is expected to be completed by February 2020, after which the implementation of the ensuing project is estimated to begin in April 2020.
“It all started with CDIA giving us preliminary feasibility assessments in both the civil work infrastructure investments and institutional arrangements. Phase 2 and 3 couldn’t be done without the Phase 1 activities financed by CDIA,” concluded Mr. Nakamitsu.
Some urban development issues in the KP Province:
CDIA Project site visits
ADB’s Kiyoshi Nakamitsu in one of the investment priority consultations in KPK Province