Beijing-based bank likely to approve $100m for Karachi bus project

ISLAMABAD: The Beijing-based Asian Infrastructure Investment Bank (AIIB) is in the process of approving a $100 million loan for the Karachi Bus Rapid Transit (KBRT) project by the end of this year, it’s learnt.

This would be the second loan to be approved by the bank for projects in Sindh. The AAIB is already processing a request for a loan of $160m for the Karachi water and sewerage services improvement project.

Besides, the Asian Development Bank (ADB) has agreed to provide $390m for the KBRT project. With this, the total financing by multilateral development banks will cost over $582m. The Sindh government will contribute $92.5m towards the project.

The project, estimated to cost $220m follows priorities set in the ADB country partnership strategy (2015-19), including improving connectivity and access — especially for the poor — by promoting urban public transport systems, and reducing pollution through mass transit systems.

The ADB has already approved $9.7m as the project design advance in the form of a loan from the bank’s ordinary capital resources. This amount is to be used for undertaking project management and coordination of all project preparatory work; undertaking detailed engineering design, and preparing the operational design and business model, including the design of the bus rapid transit.

The Sindh government has expressed its interest to apply to the Green Climate Fund for potential grant financing of the project’s climate change adaption components with an amount of $50m. If such financing is materialised, the ADB financing amount will be reduced accordingly, according to the bank document.

According to an AIIB document, the executive board is expected to approve the financing by the end of this year.

According to 2017 census, Karachi’s population has been estimated at 14.9m, and 23m in the metropolitan area. In the last two decades, Karachi has been able to nearly retain its very high population density of 282 persons per hectare despite an annual increase in its urban extent of 2.2 per cent. This has put an increasing strain on existing infrastructure in all sectors, causing Karachi to be consistently ranked as one of the world’s most unliveable cities. Traffic congestion and induced air and noise play a major role in these poor rankings.

The proposed project will directly benefit an estimated 1.5m people living within 1km radius from the bus rapid transit corridor and off-corridor services. The primary beneficiaries are passengers on existing privately-owned and operated bus lines, and new passengers expected to switch from private cars and motorcycles to the new KBRT system.

The 28km main corridor will be restructured over its entire width, including the KBRT infrastructure comprises 25 stations and dedicated lanes built at-grade in the median. The additional 2km section of the common corridor, including three stations, will also be remodelled to create a mall for pedestrians and the KBRT only, with renovation of historical building facades. The KBRT infrastructure will be completed with two depots, one underground staging facility and off-corridor bus stops.

It is expected that the project will displace some small businesses and major parts of privately-owned permanent commercial structures that exist in the existing right of way.

Published in Dawn, August 26th, 2018