The Asian Development Bank (ADB) has suggested that innovative financing approaches be adopted to finance the urban infrastructure of Karachi as the old methods for financing urban infrastructure of the city through International Financial Institutions (IFI) and government funds have not worked.
"This observation have been gauged from the detailed consultations in Karachi with the government functionaries, which had the wide-ranging agreement on non-practicability of old financing methods," indicating the ADB's final aide memoire on technical loan facility for Karachi.
The final aide memoire, finalised by a fact-finding mission of ADB consultants from August 30-September 10, has been submitted recently with the provincial government," well-informed sources told Business Recorder here on Wednesday.
The details of the fact-finding mission reveals that the ADB has presented four options for urban structure financing following their meeting with the adviser to the prime minister on finance on August 31 in Islamabad, in which preliminary assessments and various options with respect to Special Financial Intermediary (SFI) for mega city financing came under discussion.
The four options presented by the ADB include a totally new specialised for-profit financial intermediary, which would 'largely' be independent from government; locating an urban infrastructure financing facility/specialised F1 unit within an existing government-owned financial institution (bank or development finance institution) or privately owned F1; locating a specialised for-profit F1 within a non-development corporation such as the District Financing Vehicle of Shanghai Chengtou Corporation and; establishing a totally new government-owned non-profit specialised F1 similar to the US bond banks, Canadian municipal financing corporations, Tamil Nadu Development Fund and other municipal development funds established in many industrialised and developing countries.
It is learnt that many senior government officials viewed the aspects of option number 4 as a good starting point for the overall design of specialised F1. "This will involve ownership by and equity contributions from all three levels of the government as well as perhaps the ADB," the findings suggest.
According to details of the report, some officials had also stressed upon the need for participation from the private sector and existing financial institutions from the outset in terms of membership on the board of directors, a small equity contribution and technical assistance with project preparation, structuring deals and monitoring.
In view of the strong support from the senior officials of the three tiers of the Government of Pakistan for SFI and in response to the request to accelerate the feasibility and design of SFI, ADB has agreed to provide funds to undertake the feasibility and design of the SFI ahead of the technical assistance loan approval and implementation.
On loan project implementation agreement, a Project Steering Committee, headed by Sindh finance minister would be formed to provide overall policy guidelines for the technical assistance loan.
Apart from financing aspect of the technical assistance, the report speaks on performance of indicators and analysis of Karachi's present conditions.
It pointed out that because of geographical location and having the economic potential, Karachi has been drawing both labour and capital flow towards it for many decades. The city, however, has never been in a position to maximise these potentials, as little investment in the city's infrastructure has been made over two decades.
Neither new investments or new addition to the labour force have been optimally located in the city, leading to uncontrolled growth, haphazard development, uneven infrastructure provision, polluted urban environment and for many households, a poor quality of life.
Comments
Comments are closed.