Increase water availability, improve the safety of water and sewerage services in Karachi, and improve Karachi Water and Sewerage Corporation (KWSC)’s financial and operational performance.
The Project will deepen the reforms undertaken under the Phase-1 project and significantly scale-up the infrastructure investments to improve water supply and sewerage services in Karachi. The investments in rehabilitation of existing and construction of new infrastructure will enhance the development impacts by reaching more beneficiaries, at the same time, building support for continued mainstreaming of the operational reforms and new investments. Proposed activities are grouped into four components:
Applicable Policy and Categorization: The Project is co-financed with the World Bank (WB) as a lead co-financier and the environmental and social (E&S) risks and impacts of the Project are assessed in accordance with the WB’s Environment and Social Framework (ESF). To ensure a harmonized approach to addressing the E&S risks and impacts of the Project, and as permitted under AIIB’s ESF, AIIB agrees that the WB ESF will be applicable to the Project in lieu of AIIB’s ESF. AIIB has reviewed the WB ESF and is satisfied that: (a) it is consistent with AIIB’s Articles of Agreement and materially consistent with the provisions of AIIB’s ESF and the relevant E&S Standards; and (b) the monitoring procedures that are in place are appropriate for the Project. The WB has categorized the environmental risk rating as ‘Substantial’ and the social risk rating as ‘High’, making the overall E&S risk rating of the Project as ‘High’. The WB categorization of the Project as High is equivalent to the AIIB’s categorization as ‘Category A’ (if AIIB’s ESF were applicable).
Environmental and Social Instruments: To manage the E&S risks and impacts, the following E&S instruments have been prepared: 1) a combined Resettlement Action Plan (RAP) for specific project interventions (Malir Basin Wastewater Interceptors, Treatment Plant, priority sewer networks and K-IV Augmentation); 2) an Abbreviated RAP for investments in water and sewerage networks for 10 Katchi Abadis’ communities; 3) an Environmental and Social Impact Assessment (ESIA) for K-IV Augmentation and a Corrective Action Plan (CAP) to address legacy resettlement issues for K-IV Main Project; 4) ESIA for Malir basin wastewater interceptors, treatment plant; 5) Labor Management Procedures (LMP) to manage risks and impacts associated with labor and working conditions and occupational health and safety; 6) an Stakeholder Engagement Plan (SEP), including Grievance Redress Mechanism (GRM), aimed to establish a systematic and inclusive approach to stakeholder engagement and consultation; and 7) five Environmental and Social Management Plans (ESMPs) prepared for sub-projects which included: (i) rehabilitation of existing and construction of new filtration plants, (ii) improved water supply and sewerage in additional low income Katchi Abadis, (iii) priority sewer network rehabilitation and extension project, (iv) priority water network rehabilitation and extension project, and (v) reducing energy consumption at Dhabeji and NEK pumping stations.
Environment Aspects: Project activities planned under Component B involve construction and rehabilitation of large-scale water supply system, wastewater treatment plant and water and sewerage networks. The environmental impacts during the construction phase are diverse and include: (i) an increase in air and noise pollution; (ii) loss of trees and vegetation; (iii) generation of construction and solid wastes and wastewater; (iv) quarrying activities and associated soil erosion; (v) Operational Health and Safety (OHS) and Community Health and Safety issues due to the activities in densely populated areas; and (vi) temporary blockage of access and diversion of local traffic due to mobilization of heavy machinery and localized excavation works within areas subjected to public access. During project operation, the environmental impacts include the generation of sludge from wastewater and water treatment, OHS hazards related to chemicals management, potential soil and groundwater contamination due to any leakages of the sewerage pipes, the mixing of sewage into the water distribution system and over-abstraction from Keenjhar Lake without offsetting or regulating additional withdrawals for K-IV Phase. Mitigation measures to manage environmental and social impacts have been included in the relevant E&S instruments. A water balance study for Keenjhar Lake to assess the impacts of the additional water withdrawals was carried out as part of ESIA of K-IV Augmentation sub-project. The study concluded that fulfilling K-IV project water needs requires a mix of structural and non-structural interventions including Kalri Baghar Feeder Upper (KBFU) lining and regional water management and efficiency respectively. Keenjhar Lake Conservation Action Plan (KLCAP) has been developed to address the cumulative impacts of water abstraction projects and will be implemented prior to start of works on K-IV augmentation. This action plan outlines a comprehensive management framework and set of actions for conserving the lake. Sindh Transmission and Dispatch Company (STDC) carried out ESIA study as per WB ESF for the transmission line that will provide power to K-IV Main water pumps.
Social and Gender Aspects: Overall, the Project will result in positive social impacts, including for women, children and vulnerable groups, as the improvement in water and sanitation services will benefit the local population in the project area. However, the Project will induce some significant social risks, mainly related to working conditions, OHS of workers, and other risks related to community health safety including sexual exploitation abuse/sexual harassment. Other social risks are related to minor potential risks and impacts on losses of assets and economic displacement of affected households living along the right-of-way or in sub-project locations. The key social risks are associated with the legacy issues related to land acquisition and resettlement of K-IV Main Project (an associated facility), which will be addressed through implementation of the Corrective Action Plan (CAP) in line with the WB’s ESF. Additionally, it is important to address gender inequality in the Project and therefore KWSSIP-1 has implemented a Gender Action Plan (GAP), which has resulted in implementing some specific activities to support women, such as women-designated bathrooms and prayer areas, on-site daycare support, and skills training for KWSC employees. Under the Project, the GAP will be reinforced focusing on addressing the gender gap in employment representation, and leadership at the KWSC. The Project also includes measures to address issues and risks related to sexual exploitation and abuse and sexual harassment, as well as other risk management measures, ensuring women’s active participation during stakeholder engagement and consultation process.
Occupational Health and Safety, Labor and Employment Conditions: The construction and rehabilitation activities will pose significant risks and impacts associated with labor and working conditions and OHS for all project workers and in the supply chains during both construction and operations and maintenance phases. LMP have been prepared to manage these risks. Aspects of LMPs alongside mitigation measures have been included in the ESIAs and ESMPs. The Project Implementation Unit (PIU) will ensure that these measures are specified in tender documents for civil work contracts. The contractors as part of Construction-phase ESMP (C-ESMP) will prepare traffic management plans, community health and safety measures and emergency response preparedness plan to mitigate all the health and safety risks during construction of the Project.
Stakeholder Engagement, Consultation and Information Disclosure: Extensive consultations were carried out with all relevant stakeholders throughout the course of project preparation, including a series of stakeholder engagement with relevant government institutions and agencies. A SEP has been prepared to create a system for effective and inclusive engagement with defined stakeholders including vulnerable groups and the project-affected people. Furthermore, all E&S safeguard instruments along with translation of executive summaries in Urdu language were disclosed by the PIU and WB on their websites. The same documents were disclosed on AIIB website through this link: https://www.aiib.org/en/projects/details/2025/approved/Pakistan-Karachi-Water-and-Sewerage-Services-Improvement-Project-2.html.
Project Grievance Redress Mechanism (GRM): A Project GRM established for the Phase-1 project has been updated and adapted for the Project in line with the requirements of the WB’s ESF and included in the SEP. Communities and individuals, who believe that they are adversely affected by the Project, will be able to submit complaints to the Project-level GRM for their resolution. A basic GRM, developed as part of the LMP for project workers, will report any issues relating to workplace safety and other concerns.
Monitoring and Supervision Arrangements: The PIU will hire the services of an independent E&S consultancy firm for the Third-Party Validation (TPV) for monitoring of E&S parameters and evaluation of compliance level. The project management consultants (PMC) firm hired to support the PIU will also be part of the overall monitoring arrangements. One permanent E&S Cell in KWSC with a clear mandate and appropriate E&S organizational structure will be established during the first year of project effectiveness. PIU will submit quarterly progress reports including E&S monitoring reports to the Bank based on agreed format and the Bank team will coordinate with the WB and regularly conduct joint supervision missions and provide support and guidance to PIU during project implementation.
Asian Infrastructure Investment Bank
Drazen Kucan
Project Team Leader
World Bank
Tiziana Smith
Co-Team Leader
Government of Pakistan
Yahya Akhunzada
Joint Secretary, Economic Affairs Division, Ministry of Economic Affairs
Karachi Water and Sewerage Corporation (KWSC)
Muhammad Usman Moazzam
Project Director, PIU
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