Financial Irregularities Uncovered in KP Cities Improvement Project

A significant financial scandal has emerged in Khyber Pakhtunkhwa, as official documents indicate alleged irregularities amounting to Rs32 billion within the KP Cities Improvement Project (KPCIP). This project is designed to upgrade urban infrastructure and municipal services across key cities in the province.

The Rs97 billion urban development initiative receives joint funding from the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), and the KP government.

The project’s goal is to improve urban infrastructure and municipal services in five cities: Peshawar, Abbottabad, Kohat, Mardan, and Mingora. Initiated in late 2022, its completion is anticipated by the close of 2026.

These alleged irregularities have spurred several provincial legislators—including PTI MPA Muhammad Arif, JUI-F’s Sajjad Ullah, and independent lawmakers Taj Muhammad, Munir Hussain Lughmani, and Muhammad Riaz—to petition the chairman of the Public Accounts Committee (PAC), requesting a thorough investigation.

According to the formal request, a joint venture involving a Pakistani company and an unregistered foreign entity was awarded contracts worth billions. Allegedly these contracts were not registered with the Federal Board of Revenue (FBR), KP Revenue Authority, or the Pakistan Engineering Council.

Despite limited tangible progress, it is alleged that Rs32 billion was disbursed to the involved company. The request indicates these payments were based on fabricated progress reports, inadequate supervision, and possible collusion between project staff and consultants.

The formal request further asserts that the foreign company dodged taxes, as there is no recorded payment of income, sales, or withholding tax, leading to substantial losses for the national treasury.

Legislators are calling for a formal investigation into the alleged unlawful payments, and they seek the summoning of relevant officials from the KPCIP, the Local Government Department, and project consultants.

The formal request also presses for the matter to be directed to the National Accountability Bureau (NAB), FBR, and other regulatory organizations, holding accountable all officers who sanctioned payments based on fraudulent or incomplete documentation.

Taking cognizance of the complaints, Speaker of the KP Assembly and PAC Chairman Babar Saleem Swati has scheduled a committee meeting for July 17 to deliberate on the matter. Officials from the Local Government and Communications & Works Departments, along with the Deputy Auditor General (North), have been instructed to be present.

The PAC chairman has instructed all involved departments to formulate comprehensive responses concerning this issue.

JUI-F MPA Sajjad Ullah verified that a formal request was presented to the PAC regarding the alleged large-scale financial discrepancies. “The speaker has called a session, and clarity will be provided,” he stated.

In February 2025, an audit of the cities improvement project revealed similar financial discrepancies, misappropriations, unlawful payments, and wasteful expenditure.

The audit’s conclusions point to a total of Rs8.4853 billion in financial discrepancies, which raises substantial concerns regarding governance, oversight, and accountability within the province.

The audit report underscores numerous occurrences of financial mismanagement, including misappropriation of funds, unauthorized activities, unapproved adjustments, and intentional cost inflations. Funds were distributed for uncompleted work, leading to significant financial setbacks. Approximately Rs8.80 million was misappropriated for work not executed at the project site, and Rs11.219 million was falsely claimed for fibreglass installation in a parking facility.