‘Sindh decides to ask Centre to reconsider revised proposal for KWSIP’s Phase-1’

The Sindh government has decided to approach the federal government to reconsider a revised proposal for the Karachi Water and Sewerage Improvement Project’s Phase-1, which has been deferred by the latter after spending some of the funds on rain emergency works.

The Ministry of Planning, Development and Special Initiatives, Planning Commission, Government of Pakistan, by terming the spending of Rs3.36 billion ($12 million) in contradiction of rules, had deferred the Karachi Water and Sewerage Improvement Project’s (KWSSIP) Phase-1 revised scheme.

The Sindh government defended its position by saying that some priority works were carried out in 2022 on the recommendations of the World Bank in response to the emergency caused by the unprecedented rains at that time, which did not affect the original project but actually were part of the project.

The KWSSIP is a World Bank-funded project with an estimated cost of $1.6 billion for a twelve-year period in four phases under an investment project by the World Bank’s International Bank for Reconstruction and Development (IBRD) and other donor partners with a 20% counterpart funding by the Sindh government.

The main object of the project is to improve access to safe water and sanitation services in the metropolitan city and to increase the Karachi Water and Sewerage Board’s (KWSB) financial and operational performance and reforms in the board.

As per details of the Planning Commission Form-1 (PC-1) of the KWSSIP Phase-1, it was approved by the Executive Committee of the National Economic Council (Ecnec) on August 29, 2018, amounting to $105 million (Rs16.708 billion) at the dollar exchange rate of that time, with a completion period of four and half years.

As per the official documents, the work on Phase-1, started in 2019 as per the Sindh government’s papers, is mainly focused on activities to improve water and sewerage services, including professional reforms in the KWSB, and also on extending services to the neglected communities of slum areas.

Regarding the revision of the KWSSIP Phasse-1, the project director said that due to unprecedented rainfall in 2022, on the recommendation of the World Bank, some priority works were carried out on an emergency basis to address the prevailing situation; and the revised PC-1 provides the technical details, including emergency works and cost for activities being undertaken in Phase-1.

The Sindh government claimed that as per the World Bank directions, about $39 million were redirected to respond to the 2022 floods, and this repurposing did not affect the project directive as the activities contributed to required outcomes, and the Provincial Development Working Party (PDWP) approved the revised scheme (PC-1).

On the other hand, the Ministery of Planning, Development and Special Initiatives, Government of Pakistan, in a meeting of the CDWP, was of the view that funds incurred in different activities were not included in the original scope of the scheme as works have been executed which were not part of initially approved PC-1 of $12 million.

The forum also opined that activities carried out were not approved by the competent forum, i.e. Ecnec, and the Sindh government must have presented a comprehensive plan with a robust justification for the proposed loan restructuring, as the original loan was not intended for flood emergency works. Thus, any repurposing of the loan must be thoroughly justified; besides, the forum also expressed concerns about the slow progress of the project.

After the detailed deliberations that since the Sindh government executed unapproved works without prior authorization from the competent forum, the project now appeared to be seeking ex-post facto approval which is against Section 3.54 (v) of the Manual for Development Project 2021; therefore, the forum deferred the revised scheme (PC-1).

On the other hand, the project director of the KWSSIP submitted a detailed note for the Sindh Planning and Development Department through the Sindh Local Government Department to move a reference to the Planning Commission, Government of Pakistan, to reconsider the revised scheme (PC-1) of the KWSSIP in the light of facts raised by the provincial government.

The Sindh Planning and Development Department following the note of the PD of the KWSSIP decided to move a reference to the federal government for reconsideration.