A $10 million loan from ADB will help address the long-term development needs of the city of Karachi, contributing to a sustainable improvement in the quality of life of its residents. Karachi, the capital of Sindh province, is home to more than 12 million people.
As the commercial hub and gateway of Pakistan, it accounts for 95 percent of Pakistan's foreign trade, and contributes 30 percent of Pakistan's industrial production, according to a report aired by a private TV channel.
Given the magnitude of the city's investment requirements, the loan would support a series of integrated actions that together would act as a catalyst to speed up the development process in Karachi.
The project will provide resources for Karachi City District Government, the town municipal administrations, and utilities to improve their city planning, management, and financing, as well as in applying commercial principles in the provision of infrastructure and services.
It will then help prepare projects for expanding and improving the mega city's infrastructure and services that may be funded by ADB in its lending program for Karachi over the next four years.
Priority projects, to be prepared, cover water, sewerage, and drainage, solid waste management, roads and transport and upgrading of informal settlements (Katchi Abadis). The project will establish an innovative financing vehicle for the mega city's infrastructure and services that will act as a means to channel development funds to the city, a catalyst for reforming the city agencies, and an agent to mobilise funds from non-government sources for large-scale capital investment needs.
ADB's loan will cover 75 percent of the project's total estimated cost of $13.33 million. The loan comes from ADB's concessional Asian Development Fund and carries a 32-year term, including a grace period of 8 years.
Interest is to be charged at 1 percent per annum during the grace period and 1.5 percent per annum thereafter. The government will contribute the balance of $3.33 million equivalent.