Audit of Usaid/Pakistan's Khyber Pakhtunkhwa Municipal Services Program

Pakistani municipalities are important entities in the delivery of key public services. These services include solid waste disposal, drinking water supply, education, and health facilities. However, the low quality of municipal services delivery in Pakistan has contributed to the country's poor social indicators and lack of citizen confidence in government. To help improve municipal services, in February 2011 USAID/Pakistan signed a 5-year agreement with Khyber Pakhtunkhwa Province's Planning and Development Department (the grantee) to carry out the Khyber Pakhtunkhwa Municipal Services Program (the program). The goal of the program is the improvement of municipal service delivery to better address the basic needs of citizens located in small and medium-sized towns in Khyber Pakhtunkhwa. Because of the limited scope of resources in comparison to needs, the program was to focus on a few essential urban services, starting with safe water, sanitation, and solid waste collection and disposal. Sixty percent of the funds were to be used to implement municipal infrastructure upgrades. The rest will go toward building the government's capacity, community engagement, management systems reform, and project management. One year after signing the initial agreement, USAID/Pakistan and the grantee signed an amended agreement to extend the completion date by a few months to September 30, 2016. USAID agreed to provide the grantee with up to $84.75 million in direct government-to-government (G2G) assistance. The mission budgeted an additional $5.25 million to fund direct agreements between USAID and outside contractors (for design, planning, monitoring and evaluation oversight) as well as account for USAID direct expense costs. In addition, the grantee agreed to contribute a total of $12.71 million over the life of the program. Therefore, the total budget is $102.71 million. USAID/Pakistan and the grantee agreed that the program would focus activities in three Divisions of the Khyber Pakhtunkhwa Province: Dera Ismail Khan, Malakand, and Peshawar. As of March 31, 2014, USAID/Pakistan had obligated $63.7 million and disbursed $8.7 million under the program for G2G assistance and other expenses incurred by outside contractors as well as USAID.