ISLAMABAD: The Khyber Pakhtunkhwa government, through the Ministry of Economic Affairs (EAD), has sought a 10-month extension and restructuring of the USD 100 million World Bank-funded Khyber Pakhtunkhwa Integrated Tourism Development Project (KITE), following persistent implementation delays, particularly in land acquisition and environmental safeguards for the Mankiyal-Bada Serai Road.
Official sources revealed that the World Bank is likely to extend the project’s closing date from June 30, 2026, to April 30, 2027, but has warned that the flagship road project is unlikely to be completed before November 2028, well beyond the project’s lifespan.
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Official documents show that while the project has exceeded most of its development targets, serious delays in the 22-kilometre Mankiyal-Bada Serai Road have forced the Bank to prolong the project, even though officials acknowledge that the road itself is unlikely to be completed before November 2028—well after World Bank financing ends.
The KITE project, originally approved in 2019 with USD 70 million in financing, was expanded to USD 100 million last year through an additional USD 30 million allocation to cover cost overruns, replenish emergency funds, and strengthen project management.
According to the documents, the latest extension was requested by the Khyber Pakhtunkhwa government after delays in finalising compensation rates for private land required along the Mankiyal-Bada Serai Road prevented construction from moving forward.
Construction on the road has remained suspended since October 2025 pending approval of a revised Resettlement Action Plan (RAP), while the World Bank has warned that work cannot resume until land acquisition is completed in accordance with its environmental and social safeguard policies.
The Bank has consequently raised the project’s technical design risk rating from “Low” to “Moderate,” citing uncertainty over completing the road before the project’s closure.
Despite these setbacks, the World Bank has maintained the project’s overall implementation rating at “Moderately Satisfactory,” noting that it has already disbursed USD 74 million, or about 74 percent of the total financing.
The Bank said the project has exceeded three of its four Project Development Objective (PDO) indicators and surpassed targets for half of its intermediate performance indicators.
Among its achievements, the project mobilised over USD 82.9 million in private investment, far exceeding the revised target of USD 6 million following the signing of a concession agreement for the Thandiani Integrated Tourism Zone.
It has also benefited more than 376,000 people through improved tourism infrastructure and services—more than double the revised target of 175,000—including rescue services, tourist facilitation centres, sanitation facilities, and heritage conservation initiatives.
The project also generated more than 114,000 labour days, created 2,705 direct and indirect jobs, trained more than 1,000 tourism entrepreneurs and workers, and introduced 13 tourism sector reforms, including tax incentives, regulatory changes, and tourism police regulations.
However, several targets remain behind schedule, particularly those related to women-focused employment, tourism facilities, and public-private investment initiatives.
The World Bank said the extension until April 2027 would primarily allow completion of the 24-kilometre Thandiani Road, expected by December 2026, facilitate land acquisition along the Mankiyal-Bada Serai Road, and provide additional time to achieve the remaining development indicators, including increased tourist spending.
Nevertheless, the Bank made it clear that once the project closes in April 2027, all contractual liabilities and environmental and social obligations related to the unfinished Mankiyal-Bada Serai Road will be transferred to the Khyber Pakhtunkhwa government.
The restructuring does not alter the project’s original objective of improving tourism infrastructure, strengthening destination management, and promoting sustainable tourism development across Khyber Pakhtunkhwa.
Copyright Business Recorder, 2026
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