Mass Transit Body Likely to Create PPP-MQM rift

KARACHI, Sept 24: In a move that may create another rift between the Pakistan People’s Party and the Muttahida Qaumi Movement, the government of Sindh has established a Sindh Mass Transit Authority (SMTA) under the provincial finance department.

A notification in this regard was issued some 10 days ago, and Dawn has learnt from well-placed sources neither the Karachi city government nor the provincial transport department was consulted beforehand.Additionally, the Sindh government has appointed senior official Mukhtar Ahmed Soomro as the managing director of the new provincial body.

The sources said that the SMTA has been put under the administrative control of the Sindh finance department instead of the transport department, since the finance department is already handling the Karachi Mega City Development Project (KMCDP), funded by the Asian Development Bank (ADB), under which the bank will provide a $600 million loan for the implementation of a Bus Rapid Transit System.“The transport department and the Karachi city government do not have the capacity to manage the mass transit authority,” said the source.

“However, it will eventually be put under control of the provincial transport department.”The MQM and the city government which it dominates were opposed to the setting up of a provincial mass transit body. The issue came up for discussion during a London meeting between MQM chief Altaf Hussain and President Asif Ali Zardari, during which the president gave an assurance that a decision would be taken only after consultation with all stakeholders.

The sources also referred to a meeting in Islamabad attended by the Sindh chief minister, ministers belonging to the PPP and the MQM, and the nazims of Karachi and Hyderabad, during which President Zardari stated categorically that mass transit should remain within the domain of the city government, since it was not part of the provincial government’s job.

The notification regarding the establishment of the SMTA was reportedly issued before President Zardari’s meeting with ministers of the Sindh cabinet, and it has not yet been withdrawn. Except for the chief minister of Sindh and his daughter, who heads the Sindh finance department, no one knows exactly what the terms of reference of the new body are, or who its members are, maintained the sources.

Reportedly, the terms of reference for the SMTA are to be determined through an ordinance or act passed by the provincial assembly. “It remains unclear whether or not the new body will deal with the revival of the Karachi Circular Railway given the existence of the Karachi Urban Transport Corporation, which was formed for the sole purpose of the circular railway’s revival,” said a source.

“The SMTA was set up primarily to utilise the proposed $600 million ADB loan under the Karachi Mega City Development Project, for implementing the bus rapid transit system and conducting a study on light rapid transit,” the sources informed Dawn.City government’s role minimizedIt is widely believed that the provincial government’s move is aimed at minimising the city government’s role in the Karachi Mega City Development Project and transport projects for the city, for the government of Sindh has already decided not to avail itself of ADB loan facilities for water, sewerage and other projects.

It was initially decided that the ADB’s main investment loan would cover priority projects that included water, sewerage and drainage, solid waste management, the up-gradation of informal settlements, roads and transport. After the Feb 18 general elections and the establishment of a PPP-led government in Sindh, however, it was decided that the full ADB loan would be diverted towards the transport sector.

During his budget speech, in fact, the Sindh chief minister – who also holds the finance portfolio – stated that the ADB-funded Karachi Mega City Development Project was being upgraded and would specifically attend to mass transit needs, including light rail.The negotiations to secure financial assistance from the ADB were initiated during the tenure of the earlier government. According to Dawn’s sources, the ADB expressed willingness to extend a $800 million loan for the launch of the mega city development project, which would increase Karachi’s economic potential, strengthen its functioning and improve living conditions.

The ADB believed that the project would provide resources for the city government, the town municipal administrations and utilities that would enable improvements in their planning, management and financing, and in applying commercial principles in the provision of infrastructure and services.ADB funding for mass transit aloneIn the first phase, the bank extended a $13 million loan for technical assistance in carrying out studies in various sectors including water, sewerage and transport.

The ADB loan covers 75 per cent of the Karachi Mega City Development Project’s total estimated cost of $13.330 million, and carries a 32-year term, including a grace period of eight years. Interest is to be charged at 1 per cent per annum during the grace period, and at 1.5 per cent thereafter. The government contributes the balance of the equivalent of $3.33 million.

The mega city development project was being supervised through two offices, the Project Support Unit (PSU) administered by the Sindh Finance Department, and the Local Support Unit (LSU) administered by the Karachi city government. The PSU is the executing agency while the LSU is the project’s implementing agency.Sources said that the LSU has already conducted various studies with the technical assistance loan, almost all of which have been completed.

These studies included the development of IT platforms for tracking and maintaining the systems of the Karachi Water and Sewerage Board, a study on the construction of a Malir Bund Road, and another on forestation and aesthetic plantation in the city.In the meantime, however, the provincial government decided that it did not need the ADB’s assistance in the sectors of water, sewerage and the up-gradation of informal settlements, and that it wanted the bank to extend a main investment loan for the transport sector alone.

The sources maintained that the government of Sindh also decided to seek $600 million from the ADB instead of the $800 million sought earlier for the launch of the Bus Rapid Transit System and the Light Rapid Transit. “The ADB will also extend financial assistance for the implementation of the Light Rapid Transit,” a senior official told Dawn.

The sources said that the final talks to obtain the $600 million main investment ADB loan begin next month. After the agreement is signed, the first tranche of around $250 million is expected to be released within two to three months. “The government is in the process of winding up the Project Support Unit and the Local Support Unit, and of forming a Programme Reform Monitoring Unit and a Project Implementation Unit,” said a source. “Winding up the Local Support Unit means ending the Karachi city government’s role in the project.”