Sindh second-tier cities uplift projects: ADB to provide $1.5 billion loan

[Naveed Yaseen]

ZAFAR BHUTTA
ISLAMABAD (February 07 2009): The Asian Development Bank (ADB) will provide $1.5 billion loan to Pakistan for undertaking development projects in different sectors during the current calendar year. ADB country director Rune Stroem stated this at the signing ceremony of $300 million loan agreement for 'Sindh Cities Improvement Investment Programme' (SCIP).

The governments of Pakistan and Sindh and Asian Development Bank (ADB) signed a deal of $300 million loan, a multi-tranche financing facility (MFF). The agreement was signed by Rune Stroem, ADB's Country Director for Pakistan, and Farrakh Qayyum, Secretary of Economic Affairs Division.

The first tranche of $38 million was also signed here. Over the next 10 years, the multi-tranche financing facility will finance improved basic urban services for nearly 4 million people across about 20 towns in Sindh. Rune said that ADB had approved $1.5 billion loan for Pakistan for current calendar year programme but the disbursement would be performance-based.

He said that ADB disbursed $1.87 billion during last calendar year, 2008, that included $1.3 billion for new projects. "The investment will help the provincial government of Sindh cope with mounting challenges in providing basic urban services to an estimated 4 million residents of Sindh secondary cities over the next several years," he said.

"ADB's support to secondary cities will improve the quality of life of urban citizens and help these urban centers unleash their full economic potential. We believe that revitalising Sindh's small and medium-size towns are important to foster balanced urban and rural development," he added.

The first tranche of $38 million (2009-2012) of ADB's multi-tranche financing facility (MFF) for the Sindh Cities Improvement Investment Program will focus on institutional change and priority infrastructure for the northern Sindh cities of Sukkur, New Sukkur, Rohri, Khairpur, Shikarpur and Larkana. The MFF is ADB's first comprehensive support for Sindh's secondary cities and demonstrates a strategic, long-term commitment to Sindh's urban development, ADB director added.

As Pakistan's second most populous province, Sindh faces rising population growth, a severe deficit of basic urban infrastructure and services, and growing urban poverty. The core challenge that Sindh cities face is inadequate basic urban services delivery in water supply, wastewater and solid waste management. Limited access to and poor quality of water supply, together with poor sanitation, is causing spread of diseases and chronic illness such as diarrhea, especially among children.

"The Program aims at ensuring quality, continuity, reliability and coverage of basic urban services through improved utility management coupled with carefully targeted infrastructure investments, including funding for systems operations and maintenance," he said.

He noted that an estimated 570,000 households in participating cities would directly benefit from the investment program. The MFF will finance physical investment in water supply, wastewater, and solid waste management infrastructure. A $2.5 million technical assistance grant will support increased efficiency and accountability of the first urban service corporation and the Program will also support Sindh to establish a provincial focal point for championing urban sector management reforms, he added.

Farrakh Qayyum said that the government was working to revisit re-lending policy in consultation with the provinces regarding the interest rates on loans. He said that new re-lending policy would be finalised soon to remove anomalies on the interest rates between centre and provinces. He said that the loan is on behalf of the government of Pakistan and the said project would be run on public-private partnership to ensure the accountability and transparency in the system.

He said that the said project would help improve the services in urban areas and share the development in Sindh province. He said that the ability of munciple administrations would be enhanced to improve the services and water supply system. He added that waste management system would be improved by the project.

Additional Secretary, Sindh, Nazar Mahr, said that the people of Sindh did not have clean drinking water that was adding poverty. He said that best services would be ensured by enhancing the capacity of TMAs to deliver the services to people. He said that mechanism was in place and public private partnership strategy would be ensures to bring transparency and accountability during the implementation of the project.

According to a statement issued here, Sindh's second-tier cities (Khairpur Mirs, Sukkur, Shikarpur, Larkana, Nawabshah, Mirpur Khas, Thatta , Badin and other cities in centre and south Sindh ) are under increasing stress of population growth and continuing urban poverty. The provision of urban infrastructure and services falls short of targets for quality, continuity and coverage.

On average, some 55 percent of urban population in Sindh outside Karachi has access to piped water, but the water is of poor quality and flows intermittently. Only 37 percent of the population is served by garbage collection system. No sanitary landfills exist, and waste collected is disposed of by either burning or dumping into open spaces illegally or the drainage channels.

In addition to poor coverage, inadequate institutional infrastructure for planning and management of urban services keeps quality low, cost high and impedes the economic competitiveness of these cities, hence it results in: higher business and household costs, poor urban environment and the low potential investment. All this contributes to a downward spiral of development and push for migration to bigger cities which are already under pressure to cope with rising population.

Government of Sindh (GoS)'s resolve and commitment to improve quality, continuity and coverage of urban services in the second-tier cities of the province on sustained basis thrust upon the government to explore alternative sources of financing, including private sector and new ways of providing infrastructure services and innovative partnerships. These goals to be achieved require a set of sequenced institutional reform actions and sector investment to bring about lasting improvements in the service delivery.

This current initiative with enhanced investment and innovative institutional arrangement will improve health and quality of life while creating more economically competitive secondary cities in Sindh. More than a half million households will also benefit from reforms that deliver a more reliable water supply, wastewater and solid waste management.

The Program introduces local government-organised urban services corporations, staffed by professional managers and skilled technicians and tasked to deliver water supply, wastewater and solid waste management services to participating urban areas.

This approach is innovative as it brings together key elements necessary to improve service delivery -- clear roles and responsibilities, skilled people, including private sector expertise, performance incentives, and increased accountability to consumers. The first of these local-government organized corporations is the Sukkur-based North Sindh Urban Services Corporation Limited (NSUSC), incorporated in November 2008.

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