ECNEC okays Karachi civic services project

Revises cost to Rs186b, higher by Rs19b from earlier estimate

ISLAMABAD:

The Executive Committee of the National Economic Council (Ecnec) on Monday approved the second phase of the Karachi water and sewerage services improvement project at a cost of $665 million, or Rs186 billion, to meet civic service needs in the country's largest metropolitan city.

Headed by Deputy Prime Minister Ishaq Dar, Ecnec also cleared, in principle, the revised project for acquisition of land for the construction of interchanges at the Karachi-Lahore motorway at a higher cost of Rs68.8 billion. Ecnec, the highest project-approving authority, approved the Karachi water and sewerage services project at a revised cost of Rs186 billion, which was Rs19 billion, or 11%, higher than the price sanctioned over a year ago. The original project had been approved in 2024 at Rs167 billion.

Ecnec was informed that the World Bank was providing a $240 million loan and the Asian Infrastructure Investment Bank (AIIB) would extend another $240 million for the scheme. The European Investment Bank would give a 60-million-euro loan and three million euros in grant. The provincial government would arrange $60 million from its own resources. Karachi, the country's most populated city, is facing a severe lack of clean drinking water and its sewerage system also needs major upgrade. The water supply & sewerage services improvement project had been conceived on the basis of the Karachi Diagnostic study conducted in 2016. The World Bank and AIIB have committed $1.6 billion in loans to four phases of the project. These loans constitute 40% of the total cost of the four schemes to be completed by 2032.

The first phase was under implementation and is scheduled to be completed by June 2026.

Motorway project

Ecnec approved land acquisition for the Karachi-Lahore motorway at a cost of Rs68.8 billion. The revised PC-1 envisages acquisition of 25,925 acres for construction of 959km section of the 1,152km-long motorway as priority project of the government.

The scope of work includes acquisition of land, damages compensation & allied facilities, right of way (RoW) and interchanges, resettlement & relocation cost and shifting utilities. The acquisition of land will be carried out by district collectors and Boards of Revenue of the governments of Punjab and Sindh. The proposed acquisition of land and relocation of utilities will provide a clear right of way for construction of the Karachi-Lahore Motorway, which will improve road connectivity along the main North-South traffic corridor.

The original PC-I of the project was approved by Ecnec in 2014 at a cost of Rs51 billion. Accumulated expenditures to date stood at Rs46.7 billion, according to project documents. Ecnec was informed that the cost had been increased by 34%, or Rs18 billion, due to a rise in land valuation, which is now valued at current market rates determined by the revenue authorities of Sindh, reflecting significant appreciation over the past decade.

Ecnec also increased the cost due to a surge in prices of utilities and labour. It directed that the land required for construction of the project and owned by the government of Sindh would be provided to the National Highway Authority free of cost.