World Bank Labels $100 Million Karachi Sewerage Project ‘High Risk’

The World Bank has rated the $100 million worth of “Karachi Water and Sewerage Services Improvement Project” as a “high risk” while observing that the outcome of operation and maintenance (O&M cost recovery) is off-track because of delays in implementing revenue-enhancing activities envisaged under the project.

The project became effective on February 2020, with the objective to improve access to safe water services in Karachi and to increase KWSB’s financial and operational performance.

This project is the first in a Series of Projects (SoP) aligned with the 2019 Commitment of Cooperation (CoC) signed between the Government of Sindh (GoS), the Karachi Water and Sewerage Board (KWSB), and the World Bank to address the severe water and sanitation service gaps in Karachi.

The project aimed to achieve two outcomes: (i) provide access to safe drinking water for at least two million residents of Karachi, and (ii) increase KWSB’s financial and operational performance by increasing operation and maintenance (O&M) cost recovery (%) from 59 percent to 100 percent.

The project has been under implementation for three years and will close on June 30, 2025. The World Bank and the government of Sindh jointly conducted a Mid-Term Review (MTR) of the project.

The review concluded that the first outcome (access to safe drinking water) remains on track, and the KWSB can achieve it before the project closing date, provided there are no further slippages on the works contracts.

However, the second outcome (O&M cost recovery) is off-track because of delays in implementing revenue-enhancing activities envisaged under the project, including digitization of hydrant management and monitoring, installing large-diameter retail customer meters, and re-introducing the wastewater tariff.

The GoS must maintain the momentum on the reform agenda that will put KWSB on a more sustainable financial footing. Key actions include the prompt selection and approval of the remaining three KWSB executives (chief financial officer, chief information technology officer, and chief internal auditor) and approval of the draft Karachi Water and Sewerage Corporation (KWSC) Act by the provincial assembly as soon as possible

The KWSB must also clear the backlog of financial audits for FY14-22 as a mark of improved corporate governance. Finally, it is important to implement revenue-enhancing measures envisaged in the project, the bank added.

Official documents revealed that the draft KWSC Act was updated to incorporate World Bank comments and a mutually-agreed version was finalized. The KWSB and the secretary of Local Government (LG) will follow up with the Advisor Law for the Act to be placed in the next session of the Parliament by May 31, 2023.

The Board is expected to issue the Rules and Regulations within the next six months. The parliamentary approval of the Act is a prerequisite of negotiation for KWSSIP-2.