ISLAMABAD: The Sindh government has submitted a request to the World Bank for a loan of $200 million for enhancing the institutional performance and management capacity of the Karachi Metropolitan Corporation (KMC) and District Municipal Corporations (DMCs) and improve provision of municipal infrastructure in the provincial metropolis.

Sources said on Monday that the WB agreed in principle to sanction the loan and a process in this regard had begun.

The project will totally be financed by the International Development Association (IDA), an affiliate of the World Bank group. Karachi’s local governments have limited financial management capacity and limited authority over major sources of revenue. The city needs an estimated investment of $9 billion to $10bn over the coming years to close the infrastructure and revenue gap, yet infrastructure spending is well below these requirements.

The poor level of urban infrastructure and basic service provision in the city reflects two underpinning challenges. These are financial constraints for capital investments, due to poor own-source revenue (OSR) generation and very low cost-recovery for services; and low institutional capacity, as a result of institutional fragmentation, weak systems and capacity for urban governance and service delivery agencies, and unclear and overlapping responsibilities.

The loan will be used for strengthening institutional and financial capacity of KMC and six DMCs

Inadequate availability of financing is largely due to very low collections of the urban immovable property tax in Sindh. Like in other provinces, such tax is collected by the provincial government and then partly transferred to various municipal entities. Capital expenditure represents only eight per cent of the KMC and 18pc of DMCs’ budgets.

The local governments are financially weak with a high dependence on fiscal transfers from the Sindh government and have limited authority over major sources of own-source revenue such as property taxes.

The project will address local governments’ weak municipal management capacity and limited financial resources for capital expenditure. It would focus on strengthening the institutional and financial capacity of the KMC and six DMCs to deliver and maintain critical urban infrastructure and services. It builds on analytical work and consultations conducted by the bank on the identification of critical needs of the city.

The project has identified storm-water drainage as a critical infrastructure investment with a large-scale impact. A capital development grant would be provided to the KMC to support metropolitan-level flood management and rehabilitation of the urban drainage infrastructure. Specifically, a hydraulic master plan for the city will be developed in addition to an investment programme for drainage rehabilitation and expansion and feasibility studies for works in other basins.

Under the project, the World Bank will provide technical assistance for devolution of urban immovable property tax to the DMCs. It will support a roadmap to implement the devolution and set up an institutional model to provide an efficient structure for administration of local taxes.

The proposed project will aim to substantially strengthen environmental and social safeguards capacity of the DMCs and KMC. Specific actions will be based on the findings of an institutional and capacity assessment that will be carried out during project preparation. Specifically, the option will be explored to incentivise the KMC and DMCs to improve performance on environment and social management by the project, through the use of performance grants mechanisms.

Karachi is drained by 41 natural and engineered drains, functioning as a combined storm water-waste water system. However, due to poor management and lack of maintenance, the hydraulic performance of the drainage networks is inadequate. The system is largely blocked by uncollected solid waste and unplanned low-income settlements along drainage channels.

This has increased the frequency and intensity of flooding in certain neighbourhoods. Many roads experience reduced life cycles given the undermining of soil-based materials by annual flooding conditions. The city lacks a full assessment of the drainage system’s conditions and performance required to develop an adequate city flood management plan.

Karachi is also one of the least liveable cities in the world. The city ranks 134 out of 140 in the 2017 Global Liveability Index. During the last few decades, the city has suffered infrastructure neglect and has experienced lower access and quality of urban services. Karachi’s urban planning, management and service delivery has been unable to keep pace with the needs of the growing population.

Currently, only 55pc of water requirements are met; less than 60pc of the population has access to public sewerage; 60pc of solid waste never reaches a dump site; most of the local road network is in poor condition; and over half of residents are living in katchi abadis. Karachi’s high risk to climate disasters, particularly recurrent floods, adds to these challenges.

Published in Dawn, June 26th, 2018