ADB quits the Malir Motorway project, which was going to cost a lot of money.
The Malir Motorway in Karachi is no longer a priority for the Asian Development Bank (ADB), which has decided not to fund the project, The News reported Saturday.
In a message to Advocate Abira Ashfaq, ADB’s Accountability Mechanism office said, “Malir Motorway Project is no longer an ADB-assisted project.” This was because indigenous farmers had complained about damage to the environment and the threat of being forced to move.
The farmers were happy about this news because on April 15, they had lost a case against the project in the Sindh Environmental Protection Tribunal.
The Sindh Environmental Protection Agency’s (Sepa) approval of the Malir Motorway project was based on an Environmental Impact Assessment (EIA), which the court said was wrong.
It gave the project the green light but told the government to set up a group to make sure that the project didn’t hurt the environment.
With the help of Abira, Malir’s native farmers filed a protest against the Malir Motorway with the ADB on September 22, 2022. After that, the ADB held an online meeting with the lawyer and other people in October.
In the same month, an ADB team from the Philippines and its resident team from Pakistan went to Karachi and met with Abira, Advocate Zubair Abro, who was fighting the case against the motorway in the tribunal, researcher Sadya Siddiqi, and local citizen Salman Baloch. Four hours passed during the meeting.
In November, the ADB listened to Abira and the farmer’s concerns again as part of their system for making sure they are held accountable.
According to the EIA study, the Malir Motorway is a 39-kilometer-long corridor that links the Defence Housing Authority (DHA) to the Karachi-Hyderabad Motorway. The building starts at the Jam Sadiq Bridge on Korangi Road and goes along the right bank of the Malir River until it gets close to DHA City outside of Karachi.
The project was started as a public-private partnership, which meant that the local government had to find private money to build the six-lane road infrastructure.
According to the construction bid document and a press release made by the Sindh chief minister at the financial close in June 2022, the cost of building the project was expected to be Rs27.583 billion.
The Sindh government agreed to pay Rs4.137 billion, or 15% of the total cost, which came to Rs27.583 billion. The private partner or concessionaire’s share was Rs5.517 billion, or 20%, and the business loan to be borrowed from a group of banks was Rs17.929 billion, or 65%.
The consortium of three building companies, Malir Motorway Pvt Ltd, whose office is on Karsaz Road, is the private partner, also called a concessionaire or sponsor.
The deal with the concessionaire is said to have been signed in April 2020. Since the Sindh government and the private partner didn’t have enough money for such an expensive project, they looked to a group of banks for commercial loans to cover the rest.
Since the local government couldn’t easily handle the amount it had promised for the project, it asked the ADB to pay for it. This is called the Viability Gap Fund (VGF) in the public-private partnership language. The VGFs are always used to pay for the public part of partnerships like these.
Basically, the ADB was thinking about giving Rs4.137 billion to the Malir Motorway as part of a larger project to support public-private partnership investments in Sindh. The Malir Motorway was one of the sub-projects of this larger project.
Even before the COVID-19 economic slowdown and the floods of 2022, the provincial government was never able to use its yearly development plan to pay for even the Rs4.137 billion that was needed.
After the complaint was made in September 2022, online meetings were held in October and November, and a face-to-face meeting took place in October of that year, the ADB has decided to take the Malir Motorway project off its list of projects.
This means that the ADB won’t give Sindh the Rs4.137 billion it needs for its part of the building costs.
The local banks that agreed to give business loans for the project may also be aware of this change.
A member of Abira’s team told The News that the Malir Motorway project was not possible right now and that the World Bank was not going to pay for it.
“The ADB agreed with the complaint against the project, which is based on a faulty and fraudulent Environment Impact Assessment study, the non-disclosure of the Land Acquisition and Resettlement Plan (LARP) survey, which could lead to the destruction of homes and the ecological destruction of Karachi’s last remaining river, its riverbed and flood plains, and the fields of Malir.