Govt urges World Bank to restructure KWSSIP
Official documents revealed that this restructuring for KWSSIP involves: (i) change in client name, (ii) closing date extension and subsequent change in disbursement and implementation schedule, (iii) reallocation between expenditure categories, and (iv) change in results framework.
The $40 million International Bank for Reconstruction and Development loan for KWSSIP was approved on June 27, 2019. The project is co-financed with a loan of $40 million from the Asian Infrastructure Investment Bank (AIIB). The Project Development Objective (PDO) is to improve access to safe water services in Karachi and to increase the Karachi Water and Sewerage Board (KWSB)'s financial and operational performance.
World Bank approves $240m for Karachi's water & sanitation project
The current project closing date is June 30, 2025. The project comprises three components: Component 1—Operational and Enabling Environment Reform; Component 2—Infrastructure Investments; and Component 3—Project Management and Studies. This is the first restructuring of the project. The implementation arrangements of the projects will remain the same.
Government has requested a twelve-month project closing date extension for both the World Bank and the AIIB's loans until June 30, 2026. This extension is required to complete activities that suffered from the implementation delay due to the COVID-19 Pandemic, the 2022 floods and delays in procurement of critical activities (bulk meters and customer meters).
Activities include the establishment of pilot District Metering Areas (DMAs), works to reduce energy consumption, development of an asset management program, completion of the water and sewerage masterplan and commissioning of the chlorination dosing stations will be completed within the 12 months closing date extension and hence, achieving the PDOs.
Due to higher-than-expected costs in component 1 for building customer service centers and of the Institutional Reform Studies, some funding is reallocated from components 2 and 3 to component 1. Relative to the original investment plan at preparation, this will result in a reduced scope of energy efficiency investments in component 2 and of studies conducted in component 3. It is proposed to change the target date of all unachieved indicators to match the closing date extension as all indicators are expected to be achieved by then.
Progress toward achieving the PDO and Implementation Progress are rated Moderately Satisfactory as of the last Implementation Status and Results Report (ISR) in November 2024. The performance ratings for components, financial management, project management, procurement, monitoring and evaluation (M&E), and safeguards are also moderately satisfactory.
As of May 6, 2025, disbursement from the IBRD allocation reached $30.62 million out of the allocated budget of $40 million (76.55 per cent) in addition to $33.248mn (83.12 per cent) from the AIIB co-financing loan.
More than 90 percent of the project proceeds are committed in signed contracts and the remaining balance are planned to be fully committed by June 30, 2025, through variation orders to some ongoing works contracts and awarding of the remaining studies envisioned under the project such as the updating of the Geographical Information System (GIS) and the development of asset management system.
Implementation progress, financial utilisation, and reforms momentum have improved recently (though the latter is still slow). The Project is expected to utilize around $2.0 million by June 30, 2025. The overall risk rating under SORT was changed in the last ISR from High to Substantial recognising improvements in handling risk mitigation measures.
Copyright Business Recorder, 2025
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