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Improving Urban Infrastructure in Pakistan's North-West Frontier Province

MANILA, PHILIPPINES (12 November 2001) - Basic infrastructure and urban services will be significantly improved in up to 24 urban centers in Pakistan's North-West Frontier Province (NWFP) as a result of a loan of US$20.8 million equivalent approved by the Asian Development Bank (ADB).

The project has two main components: (i) urban development, including infrastructure improvements and community development and participation; and (ii) institutional development, including municipal finance capacity building.

The aim of the North-West Frontier Province Urban Development Sector Project is to improve the capacity of local governments to provide, operate, and maintain essential services. In line with the government's decentralization program, it will expedite policy reforms and finance high-priority basic infrastructure schemes involving water supply, sewerage and sanitation, drainage, solid waste management, and local access roads.

The key objectives of the Project are to: (i) demonstrate effective interventions in urban services management that can be replicated; (ii) stimulate a progressive shift of responsibilities to urban local governments for financing and management of urban services; and (iii) improve the capabilities for management and resource mobilization of urban local governments.

The Project will better the living conditions of about 400,000 residents by enhancing the quality of life, improving the environment, and creating conditions conducive to sustained urban development and economic growth. It will support improvements to local government capacity by improving their financial and operational management and planning, including local resource generation.

"The project supports the Government's decentralization initiatives in transferring institutional and financial authority and responsibility to local governments," says ADB Senior Urban Development Specialist, William Costin. "Poor infrastructure, weak municipal management, and serious environmental degradation are inhibiting economic growth and constraining urban areas for playing a more significant role in NWFP's economic growth."

Slow urban sector development is resulting in uncontrolled urban sprawl; deteriorating urban environments; and deficiencies in all forms of urban services. The lack of urban planning, land-use control, and construction regulations in most urban centers in NWFP have resulted in unplanned, ad hoc town developments, and the emergence of many slums.

ADB will finance 69 percent of the total project cost of US$30 million, while the NWFP government and urban local governments will finance the balance. The ADB loan will be from its concessionary Asian Development Fund with a repayment period of 32 years, including a grace period of 8 years. The interest rate will be 1 percent per annum during the grace period, and 1.5 percent per annum thereafter.

The executing agency for the project will be the NWFP government through the Local Government, Elections and Rural Development Department. The project is scheduled for completion in December 2007.

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