World Bank’s $213 Million Project for Flood Victims in Pakistan Likely to Be Restructured

The World Bank’s “Integrated Flood Resilience and Adaptation Project (IFRAP)” worth $213 million is likely to be restructured to facilitate quick disbursements of project funds earmarked for resilient housing reconstruction and restoration. Official documents revealed that IFRAP was signed on 3rd July 2023 aimed at reviving and enhancing the livelihoods of communities affected by the 2022 floods and strengthening adaptive capacity to future extreme flooding events. The project has so far disbursed the equivalent of $ 22.38 million, while the current closing date of the project is 31 December 2028. The project focuses on restoring essential services, including housing, WASH, transport, agriculture, and irrigation, while building a foundation for long-term flood resilience through strengthening institutions and information systems. The project consists of six components, including a Contingent Emergency Response component, aimed at rehabilitation and resilience in response to flood damage, primarily in Balochistan. The Ministry of Planning Development and Special Initiatives (MoPDSI) as the project implementing entity has established a Federal Project Management Unit (FPMU) based in Islamabad, whereas most of the implementation is to take place in the province of Balochistan. To ensure efficient and smooth implementation of the project, this restructuring proposes changes in the withdrawal categories in Section III of the Second Schedule to the Financing Agreement and revision in the Disbursement and Financing Instruction Letter (DFIL) to allow for the opening of a Designated Account for Category 4 for Housing Reconstruction Unit (HRU) activities. The inclusion of HRU under the IFRAP project will involve some changes which include the opening of a separate designated account which means that this change will need the production of separate IUFR and annual financial statements. A dedicated FMS is needed to oversee HRU’s FM function which will be a signatory to the DA and will get a login in for client connection for submitting the reports and performing documentation of expenditures. Project-wide internal audit firm will also perform the IA activity of HRU and the Office of Auditor General will perform its statutory audit. A dedicated implementation unit Housing Reconstruction Unit (HRU) has been established in Quetta as an extension to the Federal Project Management Unit for implementing Component 3 on housing reconstruction and restoration. The HRU is responsible for managing and monitoring the performance of implementing partners, whose selection is in the final stages. The HRU will receive Damage Assessment and Verification (DAV) data collected by the implementing partners. The HRU will also carry out spot checks and monitor data collection not only of the DAV but also of technical inspections for the release of housing reconstruction subsidy grant tranches. The HRU will open centralized bank accounts in commercial bank branches of the choice of beneficiaries to transfer housing reconstruction grants directly into individual beneficiaries’ bank accounts without the involvement of any third party. This necessitates ring-fencing the financial management arrangement under this component to maintain separate and clean housing subsidy records as it is likely to involve over half a million small transactions. The current DFIL restricts the opening of a separate designated account for the HRU, requiring all disbursements to be processed through the Federal Project Management Unit (FPMU) housed in the Ministry of Planning Development and Special Initiatives (MoPDSI). This arrangement may lead to inefficiencies and delays in fund disbursement due to the centralized nature of the financial management. By amending the withdrawal categories and revising the DFIL, the HRU would have direct access to the funds, which would result in a more streamlined and responsive financial management system. This change would enable the HRU to operate more autonomously and respond more quickly to the project’s needs, thereby enhancing the overall effectiveness and efficiency of Part 3’s implementation. The proposed amendments would also align the financial management structure with the operational structure, as the HRU has been established to specifically handle the tasks under Part 3.