Audit finds US-funded programme in KP a ‘complete failure’

ISLAMABAD: Declaring Khyber-Pakhtunkhwa’s municipal service programme worth $102 million as complete failure, the US Office of Inspector General (OIG) in Pakistan says they have recommended to USAID to make a written justification for continuation of programme or cancel grant amount to put the remaining $79 million to better use.
In a detailed audit report, the OIG of USA states that for helping to improve municipal services in KPK, in February 2011 USAID/Pakistan signed a 5-year agreement with Khyber-Pakhtunkhwa’s Planning and Development Department (the grantee) to carry out the Khyber-Pakhtunkhwa Municipal Services Programme.
USAID agreed to provide the grantee with up to $84.75 million in direct government-to-government (G2G) assistance. The mission budgeted an additional $5.25 million to fund direct agreements between USAID and outside contractors (for design, planning, monitoring and evaluation oversight) as well as account for USAID direct expense costs. In addition, the grantee agreed to contribute a total of $12.71 million over the life of the programme. Therefore, the total budget is $102.71 million. USAID/Pakistan and the grantee agreed that the programme would focus activities in three Divisions of the Khyber-Pakhtunkhwa Province: Dera Ismail Khan, Malakand, and Peshawar. As of March 31, 2014, USAID/Pakistan had obligated $63.7 million and disbursed $8.7 million under the programme for G2G assistance and other expenses incurred by outside contractors as well as USAID.
USAID’s Office of Inspector General (OIG) in Pakistan conducted this audit to determine whether the Khyber-Pakhtunkhwa municipal services programme was achieving its goal of improving selected municipal infrastructure.
The audit report illustrates weaknesses in the KPK programme by stating that it has not achieved significant results. The USAID mission agreed to contribute $84.75 million to the grantee to fund municipal infrastructure projects focusing on essential services such as sanitation, safe water and solid waste collection and disposal.
These infrastructure projects were for Dera Ismail Khan, Malakand and Peshawar. Three years after signing the agreement, the project has not achieved any significant results. Only a few small projects in the city of Peshawar have been completed.
Furthermore, only $4.9 million (or 5.8 percent) of the grant agreement had been disbursed. This was caused because the mission did not actively engage and work closely with the grantee, which lacks significant capacity. No activities were planned for two of the three provincial divisions.
The initial and amended activity agreements state the geographic focus of the programme will be in the Khyber-Pakhtunkhwa Divisions of Dera Ismail Khan, Malakand and Peshawar. However, no activities have been started or planned in either Malakand or Dera Ismail Khan division. Mission officials stated that then-secretary of state Hillary Clinton directed USAID/Pakistan to focus activities in the city of Peshawar.
However, no supporting documentation was provided to support this statement. The mission did not have an agreement with the government of Khyber-Pakhtunkhwa for earmarked funds.
USAID/Pakistan received $65 million in congressionally earmarked funds, designated for drinking water projects. The mission subsequently decided to use $50 million of those earmarked funds exclusively for the city of Peshawar.
However, the mission sub-obligated these funds along with municipal services programme funds, leading to confusion among mission personnel as to the geographic focus of the programme.
Furthermore, the mission does not have an agreement that details the original earmarked purpose. The mission did not conduct an environmental examination promptly.
While the mission was operating under an approved umbrella ‘Initial Environmental Examination’, the project identified the need to rehabilitate two wastewater treatment plants in Peshawar. However, the required environmental examination was not completed for this specific activity for over a year, at which time it was determined that a more extensive environmental assessment had to be conducted. This was because the mission relied on the umbrella examination and was not actively engaged in the project. As a result, work on the wastewater treatment plants stopped. The Urban Policy Unit was not functioning as planned.
As part of the programme’s activities, USAID/Pakistan agreed to fund the establishment of the Urban Policy Unit, whose purpose is to improve urban governance and development. However, 6 months past the completion date, the unit is still not fully staffed or functioning. The mission did not have a gender analysis process in place.
A key component of gender analysis is the examination of whether females and males have access to the same public services. The mission approved the construction of public toilets at two separate locations in Peshawar. At each location, this will include 6 toilets for women, 24 (or four times as many) for men, and one toilet for the disabled. The mission could not provide any supporting analysis in determining how this construction allocation decision was reached. To address these issues, we recommend that USAID/Pakistan to make a written justification on whether to continue the programme or put the remaining $79 million to better use.