|Project Rationale and Linkage to Country/Regional Strategy
About 52% of country's population, around 94 million people, is housed in Punjab. This includes 29 million urban populations, out of which nearly 7 million live in 13 intermediate cities. While population growth has stressed the urban environment, urban service delivery has declined. Urban infrastructure and services have not kept pace with growth. Municipal governance is weak due to overlaps in institutional jurisdiction, poor coordination and unclear roles and responsibilities of key players at city level. As a result, integrated urban planning is poor and subsector planning is done in isolation by respective institutions. The lack of professional management in the use of financial, human, and natural resources keeps urban services cost high and quality low. There are no reliable urban service benchmarking to measures performance and quality of life. Urban statistics are inconsistent and vary considerably with no precise data on services coverage, system handling capacity, demand, quality, production, use, disposal and treatment. None of the cities has metered water connections and utilities lack business and customer focus in services they provide. Tap water has quality issues and is intermittently available only to 45% of urban population. Sewage of 54% of urban population flows in open drains and is discharged untreated to agricultural and natural water-bodies. Municipal solid waste collection covers only 40% of urban households, with no sanitary disposal in most cases. Poor public transport and weak traffic management render roads heavily encroached and congested, constraining urban mobility.
The GoPb recognizes the need for urban reforms and envisions modern and efficiently managed urban centers serving as engines of growth for the provincial economy. It is implementing urban reforms in Lahore, the capital of Punjab, and four other major cities to improve local government capacity and performance, and to address the basic needs of urban population. The GoPb has established the Urban Sector Policy and Management Services Unit to provide support in urban sector reforms including policy direction, integrated planning, and legislative reforms. The GoPb strives to sustain urban investment by increasing efficiency and revenue collection, and optimizing subsidies. The Punjab Municipal Development Fund Company (PMDFC), is spearheading this effort in the five cities and exceeding extending to intermediate cities. The GoPb has explored instruments to incentivize performance, improve governance and management of utilities, streamline processes and increase operational efficiency, yet the dividends in the intermediate cities are marginal.
The proposed investment program will address three core causes: (i) absence of strategic vision and integrated urban planning at the cities level, (ii) ineffective and inefficient use of financial and natural resources, and (iii) limited and unreliable financing of infrastructure and operation and maintenance. This will be achieved by introducing integrated urban planning, supporting institutional reforms and constructing and rehabilitating of facilities and infrastructure of prioritized urban services sub-sectors in the selected intermediate cities. New organizational modalities for service delivery with a focus on clarifying roles and responsibilities, improving financial management, and corporate governance will be explored. The investment program scope will cover urban planning and institutional strengthening in the integrated way and physical investment in the selected manner