Govt seeks 6-month extension from World Bank for $438m Karachi Mobility Project
ISLAMABAD: The government has approached the World Bank seeking a six-month extension for the Karachi Mobility Project (KMP), worth around USD438 million, which provides a crucial lifeline to urban transport initiatives as authorities race to secure additional financing and keep construction work on track.
The extension would shift the project’s closing date from December 31, 2025, to June 30, 2026, preventing an abrupt halt to works on the Bus Rapid Transit (BRT) Yellow Corridor and associated infrastructure. The decision follows a formal request from the Government of Sindh, citing delays linked to internal government processes and the preparation of a major additional financing package.
The extension aims to mitigate implementation delays and prevent project interruptions that may arise due to protracted government internal procedures, particularly during the preparation and approval of an Additional Financing package totaling $173.2 million. This financing is expected to further extend the project’s duration through December 31, 2028. No modifications are proposed regarding the project’s scope, objectives, components, safeguards, procurement processes, or implementation arrangements.
Approved in June 2019, the Karachi Mobility Project is backed by an International Bank for Reconstruction and Development (IBRD) loan of $382 million and aims to improve mobility, accessibility, and road safety along key corridors in Pakistan’s largest city. The broader project envelope totals $438 million, including counterpart funding of $18.4 million from the Government of Sindh and $37.5 million in the private sector equity.
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Despite early setbacks—ranging from staff turnover and weak political backing to disruptions caused by the COVID-19 pandemic—the project has gained momentum over the past year. According to World Bank officials, both Project Development Objective (PDO) progress and implementation performance are now rated “Moderately Satisfactory.”
Major milestones have been reached. Construction of the Jam Sadiq Bridge has been completed and partially opened to traffic. Contracts for two BRT depots are under active implementation, while procurement for critical corridor packages is advancing. An Accelerated Implementation Plan has also helped boost disbursement and tighten oversight.
About $115 million—roughly 30 percent of the IBRD financing—has been disbursed so far. The six-month extension is instead designed to bridge a sensitive transition period while a proposed $173 million Additional Financing package is prepared. If approved, the new financing would extend the project’s life through December 31, 2028, and allow completion of the full BRT Yellow Corridor and its operational systems.
“This is about avoiding disruption,” a source familiar with the project said. “Without the extension, procurement and construction would stall, contracts could lapse, and the project would lose hard-won momentum.”
The extension required a formal exception under the World Bank’s Investment Project Financing Directive, as standard rules typically require that a project’s objectives be achievable within the extended period. Bank management approved the exception, citing satisfactory borrower performance, the absence of outstanding audits, and a clear, agreed plan to move the project forward.
Environmental and social risks remain rated “Substantial,” reflecting the scale and complexity of construction in Karachi’s dense urban environment. However, mitigation measures—including compensation and livelihood rehabilitation plans, a functioning grievance redress mechanism, and a Gender Action Plan—are reported to be on track. Climate resilience features such as elevated corridors and improved drainage have also been embedded in the design.
The restructuring does not alter the project’s scope, components, safeguards, or procurement rules. Only timelines in the results framework will be adjusted to reflect the new closing date.
Copyright Business Recorder, 2025