WB to Restructure Competitive and Livable City of Karachi Project to meet Post Floods Needs

The World Bank project “Competitive and Livable City of Karachi” (CLICK), worth $230 million, is rated as moderately unsatisfactory and therefore is restructured with the inclusion of a Contingent Emergency Response Component (CERC) to repurpose $27 million of the CLICK loan to meet the immediate needs of the flood emergency response.

Official documents available with ProPakistani revealed that CERC is proposed to be added to the project as Component 5, which will be immediately activated to respond to the ongoing flood emergency when the loan amendment is effective. CERC will be allocated $27 million of the CLICK loan.

A new disbursement category (Category 5) will be introduced for CERC emergency expenditures. CERC manual and an ‘Emergency Action Plan’ detailing the use of these funds are currently under preparation. Payments under the CERC will be made from the Local Government Department (LGD) Project Implementation Unit (LGD-PIU) Designated Account. The Direct Payment method will be utilized, as needed.

As per documents, the LGD-PIU’s Financial Management team will record the CERC-related expenditures separately in the books of account under the segregated component and category. The IFRs will also report CERC-related expenditures separately. The CERC will be audited as part of the CLICK audit, as required under Section 29 of the Bank Guidance on CERC, stated documents.

The current implementation arrangements of CLICK will remain unchanged. The CERC will be implemented by the LGD-PIU, which will be responsible for procurement and financial management for CERC. The LGD-PIU will receive technical assistance from the Sindh Resilience Project – Provincial Development Agency (PDMA) PIU (SRP-PIU). The SRP PIU will

1. Undertake a market assessment to identify both national and international suppliers
2. Estimate costs associated with the supply of goods, services and works
3. Draft key terms of the contract and technical specifications
4. Identify risks associated with the existing market and describe measures to manage these risks.

Overview of CLICK Project

The World Bank loan of $230 million for the CLICK Project was approved on June 27, 2019, and became effective on November 26, 2019. The closing date of the loan is June 30, 2024. The project development objective (PDO) is to improve urban management, service delivery and the business environment in Karachi. The project comprises four components, mentioned below.

1. Performance-based grants to local councils and capacity building
2. Modernizing urban property tax administration and systems
3. Improvement of city competitiveness and business environment
4. Technical assistance for ‘Solid Waste Management’

The project was restructured on 18th May 2022 when the implementation responsibility for component 2, modernizing urban property tax administration and systems, was transferred from the Excise, Taxation and Narcotics Department (ETD) to the Local Government Department (LGD).

As of 8th September 2022, disbursement from the loan was $43.07 million (18.7 percent of the loan). Project implementation has been slow, in part due to the impact of the COVID-19 pandemic since March 2020, the monsoon rains and the subsequent flooding in 2020, as well as the notification of 25 Town Municipal Councils (TMCs) based on the amendment to the ‘Local Government Law’ that was passed on 26th November 2021.

The likelihood of achieving the PDO and overall implementation progress are currently rated moderately unsatisfactory; however, the provincial government remains committed to achieving the PDO. Following the project mid-term review (MTR) in May 2022, several adjustments will be implemented in the coming months.

Implementation Status of Project Components

The status of implementation of the project components is summarized below

1. Performance-based grants to local councils and capacity building. Contracts for all 15 subprojects being financed under the first Minimum Condition (MC) Grant ($7 million) have been awarded and ten are under implementation. One sub-project financed under the Emergency Response Grant ($25 million) is under implementation. Performance Measure (PM) Grants have not yet been disbursed, as it was agreed during the MTR that the PMs would be revised through a project restructuring.
2. Modernizing property tax administration and systems. Following the recent restructuring in May 2022, activities under this component have recommenced and procurement documents for the property tax survey are being finalized. The request for a proposal for the satellite imagery to inform the property tax survey is expected to be completed by the end of September 2022.
3. Improvement of city competitiveness and business environment. Under Sub-component 3.1: Streamlining and integrating business regulations for city competitiveness. The business process re-engineering (BPR) consultant is developing the systems requirements as well as specifications and requests for proposal documents for the subsequent procurement related to automation of business processes through the Sindh Business-One-Stop-Shop (S-BOSS). Under Sub-component 3.2: Establishment of the Public Private Partnership (PPP) Node at LGD, a PPP node has been established, with the LGD Special Secretary as the Head of the Node. A Technical Specialist and a Finance Specialist have been recruited; the position of Legal Advisor is currently vacant.
4. Technical Assistance for ‘Solid Waste Management’. The Sindh Solid Waste Management Board (SSWMB) has made use of the Technical Assistance available from CLICK for several important activities, including the engagement of capacity to improve waste management services; engagement of technical, financial, and legal consultants to advise on setting up performance-based waste collection and transfer contracts for Districts Central and Korangi; technical, financial, and legal consultants to help in the preparation of a roadmap for the development of advanced waste diversion and treatment capacity; and communications and media consultants to develop a communications strategy as well as content for various media and communication channels.