Improving the Urban Environment in Rawalpindi, Pakistan

MANILA, PHILIPPINES - Two ADB loans totaling US$60 million will help improve the urban environment for about 1.4 million people living in the city of Rawalpindi in Punjab, Pakistan.

As with other urban areas of the country, high growth has resulted in uncontrolled urban sprawl, deteriorated environments, and deficiencies in Rawalpindi's urban services. The lack of sanitation facilities has caused serious environmental problems, particularly with the quality of drinking water. As a result, the incidence of typhoid, hepatitis and other water-related diseases have been noticed.

The loans are for the second of three projects aimed at improving water and sanitation services in Rawalpindi. The first ADB project for Rawalpindi's water supply and sanitation, completed in 2003, focused on improving the city's water supply. It rehabilitated and extended the water supply distribution network and increased water supplies from 192,000 cubic meters per day to 256,000 m3/day. Major institutional and financial reforms were executed for the Rawalpindi Water and Sanitation Agency (WASA) - and engineering studies for future development of sewerage and drainage and a solid waste management plan were prepared.

The new project will improve the city's water supply and sanitation facilities. Among others, it will install major sewerage networks, provide a sewage treatment plant, develop a landfill site and construct a solid waste transfer station, build a hygienic slaughterhouse and public toilets, and provide latrines and safe drinking water to all schools in the project area.

It will also boost the management, planning, and local resource generation capacities of the implementing agencies - Rawal Town and Rawalpindi WASA.

"The project will considerably reduce environmental degradation and lead to sustainable operation of basic urban services," says Shakeel Khan, an ADB Senior Urban Development Specialist.

ADB has provided eight loans, totaling about $450 million, to Pakistan's urban sector since 1976. About $7.1 million in grants have been provided for technical assistance projects in water supply, sanitation, and urban development.

ADB's loans will cover 70% of the project's estimated total cost of $85.7 million. A $40 million loan comes from ADB's concessional Asian Development Fund, carrying a 32-year term, including an 8-year grace period. Interest is charged at a rate of 1% per annum during the grace period, and 1.5% thereafter.

A $20 million loan comes from ADB's ordinary capital resources, carrying a 25-year term, including a 5-year grace period. Interest will be determined in accordance with ADB's LIBOR-based lending facility.

The provincial government of Punjab will contribute $21.4 million equivalent to the project, and the balance $4.3 million will be shouldered by Rawal Town and the Water and Sanitation Agency.

The City District of Rawalpindi is the executing agency for the project, which is due for completion in March 2011.