LAHORE URBAN DEVELOPMENT PROJECT

Example of:

• Institution Building

Lahore, Pakistan

The low-income population of Lahore did not have access to urban services and housing at affordable prices because of high urban land prices, ineffective planning, inadequate supply of serviced land, and lack of access to established financial markets. This resulted in severe overcrowding and subsequent deterioration of the housing stock.

The Lahore Urban Development Project is a World Bank-funded project that tried to alleviate the problem while also emphasizing the importance of strengthening the capacity of the Pakistani agencies to implement similar projects in the future.

• to strengthen the capacity of local institutions to prepare and implement integrated urban development programs to arrest the decay in urban living conditions;
• to improve municipal services and to develop strategies to deliver services and shelter to the urban poor; and
• to address the delivery of services and shelter to the urban poor

• Infrastructure upgrading in the Walled City of Lahore (45 ha, 75,000 beneficiaries);
• a sites and services scheme in Gujjapura (224 ha, 60,000 beneficiaries);
• house construction/rehabilitation loans;
• solid waste collection, municipal management and maintenance plan;
• studies

To cover the cost of these components, the city implemented:

• charges for water and sewage services;
• property tax increases in the Walled City;
• housing investment repayments;
• sale of serviced plots and development charges at Gujjapura;
• municipal taxes in the case of the solid waste management component;
• a 5% increase in rental values every 5 years.

The project goals of bringing about policy changes, building the capacity of local institutions, and improving the delivery of municipal services were met, to some extent, by using the existing city agencies as the implementing agencies, performing a municipal management and maintenance study, offering technical assistance and training, and through the experience gained by project implementation. These strategies were intended to strengthen the city’s capacity to plan, finance, and implement similar schemes in the future. In addition, the project included funds for the development of a future urban investment program.

The upgrading component provided improved shelter and living conditions within a reasonable time frame (4 years), while the sites and services component did not (14 years).

There was a four year delay in the completion of the sites and services component of the project because of:

a) the relative inexperience of the Lahore Development Agency in handling IDA-assisted programs;
b) serious land acquisition difficulties at the Gujjapura site (protests and ownership confusion);
c) indifferent performance of selected consultants and contractors;
d) procurement difficulties; and
e) weak institutional capacity of the Metropolitan Corporation of Lahore.

Also, support for the project varied because of the different priorities of the various Mayors elected during the life of the project, making management difficult and adding to the delay.

With respect to funding, the estimated total project cost was US$24 million with an IDA credit of US$16 million. The final project cost was only US$21.4 million. In terms of rupees however, the final project cost increased 72 percent over the original estimate because of inflation, making the loan difficult to repay.

Land acquisition tip: Defer appraisal until executing agencies have ‘authority to enter’ or ‘possession’ which cannot be challenged in the courts, and until compensation has been paid over to the landowners by the government ‘Collector.’

Multi-agency execution tip: Projects should include a mechanism for integrated project monitoring, coordination, and evaluation, perhaps located in the Government Planning and Development Board.

Housing loans tip: The borrower recommended that the loans be for repairs rather than construction/reconstruction.

Future projects should concentrate on area upgrading rather than on sites and services.