ADB Cancels Sewerage Loan

Earlier this month the Asian Development Bank withdrew from the
Korangi-Landhi Wastewater Treatment Project and cancelled the
associated loan of $70 million. The Project was severely criticised by
citizens from the outset. Like the ADB-financed Baldia sewerage
project, the Korangi Project appeared to be a certain boondoggle for
multinational consultants and contractors, and their international
clients, but quite useless for residents - and hence another huge,
unnecessary burden on taxpayers.

ADB responses to criticism have been inadequate. However, key
officials of the Sindh Government remained firm in their position that
the Project is neither necessary nor feasible. When Governor Moinuddin
Haider understood that the Project was a boondoggle, he declined the
loan last April. We hope that his successor Governor Mamnoon Hussain
also stood up to the federal government in refusing the ADB loan.

Cancellation of the ADB Korangi Project is most welcome: as a victory
of good sense at the ADB and among citizens here, both in Karachi and
Islamabad, in civil society as well as in government. The national
media, including Herald and Newsline, demonstrated an admirable
commitment to public interest by publishing critical analyses of the
Korangi boondoggle. Cancellation of the ADB Project signifies the
growing resistance of the city and province against being held to
ransom - in the Korangi Project, taxpayers were asked to welcome an
additional debt of over Rs 5 billion for use by KWSB which is already
unable to service its outstanding debt of nearly Rs 50 billion.

The first formal complaint by citizens through creed was rejected by
the ADB Board on the (flimsy) ground that complainants did not reside
in the Project area. The protest was joined formally this year by
Korangi residents after the situation was explained to them by the
Urban Resource Centre. This second complaint was pending with the its
Inspection Committee when ADB announced cancellation of the
Project. Despite the cancellation, we think that ADB needs to
undertake a serious investigation of such poor project preparation -
pushed by Bank staff, accepted by the federal government, but rejected
by the provincial government and citizens. Who knows, the Korangi
Project may well be a catalyst for substantive reforms in Bank
operations. We urge citizens to join us in writing ADB President Chino
and ADB Inspection Committee Chair Stryk (adbhq@mail.asiandevbank.org).

Plunder and squander in public projects will be minimal only when we
reform our own mechanisms and processes for project preparation. Recent experience - ranging from the Korangi Project as well as the KWSB Privatisation proposals and Karachi Mass Transit Plan - suggests the main elements of such a reform. First, the city needs a permanent Commission for oversight of major infrastructure and utilities; the Commission would include public representatives, professionals, and officials. Second, this commission must have Public Hearings as a central component of its functioning. Third, Commission
recommendations should be implemented only when ratified by the Sindh
Assembly. Perhaps Karachi can once again become the innovator for
urban governance in Pakistan.

Cancellation of the ADB Project does not, of course, mean that we
abandon its goals: expanding sewerage collection and wastewater
treatment. As the critique of the Korangi Project established (notably
through the work at OPP-RTI), there is a workable and cost-effective
alternative to the ADB design. What is best in this alternative is
that no external debt is required. Islamabad's expropriation of the
city's tax capacity through octroi has certainly made the task harder
for KMC to finance new infrastructure. But there are other options,
such as municipal bonds which earmark public funds for specific
projects. In addition, the city has every right to claim a fair share
of the incremental property tax revenue for city infrastructure
projects.

Governor Mamnoon Hussain would be well advised to implement his
predecessor's decision to develop and implement a cost-effective
wastewater project for Korangi-Landhi residents and factories --
through broad-based, transparent, and accountable mechanisms for
participation of citizens and their public representatives. For a
start, the Governor should endorse the committee formed by his
predecessor.