Cost of K-IV rises by Rs50 billion

Initial estimates were based on a flawed feasibility report, says CM

KARACHI: Karachi's bulk water project, K-IV, hit another snag on Tuesday with the Sindh government officially announcing that its cost has jumped from Rs25 billion to Rs75b.

This was disclosed to Sindh Chief Minister Syed Murad Ali Shah in a meeting at the CM House. The meeting was convened to settle all the issues relating to the project, including the increase in its cost.

The first phase of this project, being jointly developed by the provincial and federal government, to resolve the city's water crises, was supposed to be finished by 2019, but officials said it won't be possible to meet the target to supply the water to Karachi.

"The tender has been awarded to FWO [Frontier Works Organisation]," said a senior official present at the meeting. "The first phase of project is meant to provide 260 MGD to the city, with a 121-kilometre pipeline, starting from Keenjhar Lake, District Thatta, and ending at Deh Allah Phihai, District Malir," he told The Express Tribune.

According to the official, the infrastructure may be developed till Malir, but it would be difficult to supply water to other areas of the city due to the outdated pipelines.

"FWO officials have suggested to add another Rs20 billion to revamp pipelines and their alignment in the city. It will take more time and we can't meet the deadline of 2019," the official explained. The project was originally conceived during the tenure of General [Retd] Musharraf and was approved by the federal government in 2014.

The meeting was attended by Corps Commander Karachi Lt General Humayun Aziz, Planning and Development Chairman Mohammad Waseem, FWO Director-General Major General Inam Hyder Malik, Principal Secretary to CM Sajid Jamal Abro, Karachi Water and Sewerage Board Managing Director Khalid Shaikh and K-IV project director Asad Zamin, among others.

As the meeting started, FWO DG Hyder, Shaikh and Zamin briefed the participants about the progress of the much-talked-about scheme.

According to Zamin, the Greater Karachi Bulk Water Scheme (K-IV Project) is a 650 MGD project of potable water to be executed in three phases. He said that the Executive Committee of the National Economic Council (ECNEC) had approved Rs25.551 billion for the K-IV in 2014, as per the cost estimates from 2010.

The federal government, meanwhile, had committed to share 50% of the cost of the project, while the remaining was to be borne by the provincial government. The project was scheduled to be completed in three years. The Sindh government awarded the project to Frontier Works Organisation (FWO) at an estimated cost of Rs28.187b in June 2016.

Revisions in costs

In an exclusive interview with The Express Tribune on October 17, the chief minister had quoted the total cost of the project as Rs63b, pointing to massive errors in the initial feasibility report.  "I was surprised to see serious technical errors in the feasibility report which was prepared before the Pakistan Peoples Party came into power in 2008," he said, adding that original cost of the project was Rs25b and later, Rs3b were added at the FWO's request.

"Soon after the tender was awarded, Rs5 billion were given for land acquisition," he said, adding that the FWO later sought Rs20 billion to revamp the pipelines and their alignments and Rs10 billion were demanded for missing facilities. "We would not have faced such a situation if a proper feasibility reported had been drafted," he remarked. "We will approach federal government to share fifty per cent of the total cost."

The meeting on Tuesday was informed that in addition to other essential components of the K-IV Project, such as the augmentation project, missing components such as ancillary works, and a 50MW power plant to power the two pumping stations, were also to be developed.

The meeting was informed that the project director has submitted an application to the planning and development department, seeking around Rs22 billion for the acquisition of land and utilities.



The matter will be referred to the Provincial Development Working Party (PDWP), a government body which is empowered to sanction projects for approval. After its approval from the P&D, it would be sent to ECNEC for further approvals. The chief minister said that the federal government should share 50 percent of the cost of the project.

Ancillary works

Ancillary works amounting to Rs9.8 billion have also been submitted to the P&D for its approval from the technical committee. Again, the provincial government expects the federal government to share 50% of these costs.

The meeting was informed that the CM has already decided to set up a 50MW power plant on the public-private partnership model.



Earlier, the meeting was informed that the original cost of the project was Rs25 billion, which was enhanced by Rs45b, for multiple reasons such as design and site issues, major deviations in quantities and hike in exchange rates. Add to this the amount needed for land acquisition and the cost of the K-IV thus would now range between Rs73.4 to Rs75 billion.

The federal and the provincial governments have currently committed to spending Rs12.5b each. Both governments would now have to revise their commitments and each would have to allocate Rs37.5b.

On Tuesday, the CM directed P&D's Waseem to take charge of a committee, comprising experts of the provincial government, water board and FWO to go through all the estimates once again and finalise their recommendations which he would communicate to the prime minister. At the same time, he issued strict instructions to the P&D and FWO to continue work on the project so it may be completed by the end of next year.

Published in The Express Tribune, October 31^st, 2018.