ASIAN DEVELOPMENT BANK PCR: PAK 17044
PROJECT COMPLETION REPORT
ON THE
PAT FEEDER CANAL REHABILITATION AND IMPROVEMENT PROJECT (Loan 772-PAK [SF])
IN
PAKISTAN
December 2004
CURRENCY EQUIVALENTS
Currency Unit – Pakistan rupee/s (Pre/PRs)
At Appraisal At Project Completion 31 October 1985 3 April 2000 PRe1.00 = $0.0625 $0.01927 $1.00 = PRs15.9878 PRs51.90
ABBREVIATIONS
ADB – Asian Development Bank BAD – Balochistan Agriculture Department BIPD – Balochistan Irrigation and Power Department c3/sec – cubic meters per second DOA – Department of Agriculture EIRR – economic internal rate of return GOB – Government of Balochistan ha – hectare IFAD – International Fund for Agriculture Development IPD – Irrigation and Power Department km – kilometer mm – millimeter NDSP – Natural Drainage Sector Project JBIC - Japan Bank for International Cooperation O&M – operation and maintenance OFWM – on-farm water management PBME – project benefit monitoring and evaluation PCR – project completion report PFCADP – Pat Feeder Command Area Development Project pm – person-month PMO – project management organization PSC – project steering committee RD – reduced distance (for indicating canal station number) WAPDA – Pakistan Water and Power Development Authority
WEIGHTS AND MEASURES
1 cubic meter per second (c3/sec) – 35.3 cubic feet per second (ft3/sec) 1 hectare (ha) – 2.471 acres (ac) 1 reduced distance (RD) – 1,000 feet
GLOSSARY
Abiana – Local term for water changes Kharif – The hot (summer) cropping season (April–September) Rabi – The cold (winter) cropping season (October–March)
NOTES
(i) The fiscal year (FY) of the Government ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2000 ends on 30 June 2000. (ii) In this report, "$" refers to US dollars.
CONTENTS Page
BASIC DATA i
MAP vii
I. PROJECT DESCRIPTION 1
II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 3 B. Project Outputs 4 C. Project Costs and Financing 5 D. Disbursements 6 E. Project Schedule 6 F. Implementation Arrangements 7 G. Conditions and Covenants 7 H. Consultant Recruitment and Procurement 7 I. Performance of Consultants, Contractors, and Suppliers 8 J. Performance of the Borrower and the Executing Agency 9 K. Performance of the Asian Development Bank 9
III. EVALUATION OF PERFORMANCE A. Relevance 10 B. Efficacy in Achievement of Purpose 10 C. Efficiency in Achievement of Outputs and Purpose 10 D. Preliminary Assessment of Sustainability 11 E. Environmental, Sociocultural, and Other Impacts 13
IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 14 B. Lessons Learned 14 C. Recommendations 15
APPENDIXES 1. Project Outputs 17 2. Implementation Schedule 21 3. Status of Compliance with Loan covenants 22 4. Economic Analysis 30 5. Status of Operation and Maintenance of Completed Works 48 and Cost Recovery 6. Salient Features of Water Apportionment Accord and 51 Water Utilization in Balochistan 7. Pat Feeder Command Area Development Project 53
BASIC DATA
A. Loan Identification
1. Country Pakistan 2. Loan Number 772-PAK(SF) 3. Project Title Pat Feeder Canal Rehabilitation and Improvement Project 4. Borrower Islamic Republic of Pakistan 5. Executing Agencies Water and Power Development Authority; Irrigation and Power Department, Balochistan; Department of Agriculture, Balochistan 6. Amount of Loan SDR 118.676 million 7. Project Completion Report PCR: PAK 871 Number
B. Loan Data
1. Appraisal – Date Started 13 July 1985 – Date Completed 2 August 1985
2. Loan Negotiations – Date Started 15 November 1985 – Date Completed 21 November 1985
3. Date of Board Approval 17 December 1985
4. Date of Loan Agreement 17 January 1986
5. Date of Loan Effectiveness – In Loan Agreement 16 April 1986 – Actual 9 June 1987 – Number of Extensions 5
6. Closing Date – In Loan Agreement 31 December 1993 – Actual 3 April 2000 – Number of Extensions 4
7. Terms of Loan – Interest Rate 1% service charge – Maturity 40 years – Grace Period 10 years ii
8. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval
9 June 1987 3 April 2000 153 months
Effective Date Original Closing Date Time Interval
9 June 1987 31 December 1993 78 months
b. Amount ($ million)
Last Net Category or Original Amount Amount Undisbursed Revised Amount Subloan Allocation Canceled Disbursed Balance Allocation Available 01A - Civil Works 26.52 96.69 (70.17) 117.94 113.24 4.70 for Part A.1 to 5 01B - Civil Works 0.00 0.00 0.00 0.00 0.00 0.00 for Part A.2 to 4 01C - Civil Works 41.63 22.35 19.28 19.06 19.21 (0.16) for Part C 01D - Civil Works 3.19 4.21 (1.02) 2.66 2.67 (0.01) for Part D 02 - OFWM 4.80 0.00 4.80 0.00 0.00 0.00 Materials 03 - Drainage 0.34 0.10 0.24 0.10 0.10 0.01 Investigations for Part C 04 - Soil Survey for 0.01 0.03 (0.02) 0.03 0.03 0.00 Part C 05 - Consulting 4.82 13.15 (8.66) 15.29 13.57 1.72 Services for Part E 06 – Training for 0.10 0.01 0.09 0.01 0.01 0.00 Part E 07G - Local Exp.- 10.13 6.24 3.89 8.09 8.58 (0.49) Domestic Consulting Services for PBME for Part E 07I - Local Exp.- 0.29 0.15 0.15 0.15 0.06 0.09 PBME for Part E 08 - Service 3.37 6.67 (3.31) 4.58 4.60 (0.02) Charge During Construction 09 - Prior Technical 0.07 0.08 (0.01) 0.09 0.08 0.01 Assistance Unallocated 21.73 3.80 18.26 0.00 0.00 0.00 Total 117.00 153.48 (36.48) 168.00 162.15 5.85 OFWM = on-farm water management, PBME = project benefit monitoring and evaluation.
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9. Local Costs (Financed) – Amount ($ million) 59.37 –% of Local Costs 47.37 –% of Total Cost 25.44
C. Project Data
1. Project Cost ($ million)
Cost Appraisal Estimate Revised Estimate Actual Foreign Exchange Cost 94.70 133.60 108.08 Local Currency Cost 87.60 110.35 125.34 Total 182.30 243.95 233.42
2. Financing Plan ($ million)
Cost Appraisal Estimate Actual Implementation Costs Borrower-Financed 35.30 65.20 ADB-Financed 117.00 157.55 Other External Financing-JBIC 30.00 5.30 Subtotal 182.30 228.05 IDC Costs Borrower-Financed 0.00 0.77 ADB-Financed 0.00 4.60 Other External Financing 0.00 0.00 Total 182.30 233.42 ADB = Asian Development Bank, IDC = interest during construction, JBIC = Japan Bank for International Cooperation.
3. Cost Breakdown by Project Components ($ million)
Component Appraisal Estimate Reformulated 1993 Actual A. Mapping 4.06 1.90 1.57 B. Soil Survey 0.10 0.07 0.03 C. Drainage Investigations 0.32 0.09 0.10 D. Civil Works 1. Main Canal 29.71 81.98 86.58 2. Flood Protection 1.83 0.00 0.00 3. Distributary Canals 4.22 31.28 24.63 4. Minor Canals 5.35 21.84 25.59 5. Surface Drainage 15.70 17.39 20.58 6. Subsurface Drainage 26.60 12.96 0.00 7. BIPD Infrastructure 2.60 1.91 3.14 8. Marketing Facilities 0.70 1.00 Included in D7 9. WAPDA Facilities 2.00 2.12 5.58 10. BAD Housing 0.70 0.85 Included in D7 E. OFWM Materials 3.20 2.25 3.22 F. Vehicles and Equipment 3.43 5.00 9.59
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Cost Breakdown by Project Components – Continued
Component Appraisal Estimate Reformulated 1993 Actual G. Design and Construction 7.50 6.24 11.12 Supervision H. Consulting Services and 4.50 13.25 16.50 Training I. Project Benefit Monitoring & 0.20 0.15 0.06 Evaluation J. Land Acquisition 5.75 8.94 13.91 K. Project Administration 5.79 1. OFWM 1.13 0.96 Combined in K 2. BIPD 0.53 1.34 Combined in K 3. BAD 0.58 0.85 Combined in K Total Base Cost 119.60 212.35 227.970 L. Physical Contingencies 10.44 8.77 0.00 M. Escalation 45.83 15.31 0.00 N. Prior Technical Assistance 0.07 0.08 0.08 Cost Interest During Construction 3.37 6.67 4.60 Interest on JBIC Credit 3.01 0.77 0.77 Total 182.30 243.95 233.42 BAD = Balochistan Agriculture Department, BIPD = Balochistan Irrigation and Power Department, JBIC = Japan Bank of International Cooperation, OFWM = on-farm water management, WAPDA = Water and Power Development Authority.
4. Project Schedule
Item Appraisal Estimate Actual Date of Contract with Consultants 6 November 1986 13 March 1988 Completion of Engineering Designs December 1989 December 1995 Civil Works Contract Date of Award July 1987 September 1990 Completion of Work December 1992 May 1998 Equipment and Supplies — 23 January 1990 Completion of Tests and Commissioning 1992 1998
5. Project Performance Report Ratings
Ratings Implementation Period Development Implementation Objectives Progress From 9 June 1987 to December 1989 S U From 1 January 1989 to 31 December 1989 S S From 1 January 1990 to 31 December 1990 S S From 1 January 1991 to 31 December 1991 S S
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Project Performance Report Ratings – Continued
Ratings Implementation Period Development Implementation Objectives Progress From 1 January 1992 to 31 December 1992 S S From 1 January 1993 to 31 December 1993 S S From 1 January 1994 to 31 December 1994 S S From 1 January 1995 to 31 December 1995 S S From 1 January 1996 to 31 December 1996 S S From 1 January 1997 to 31 December 1997 S S From 1 January 1998 to 31 December 1998 S S From 1 January 1999 to 31 December 1999 S U From 1 January 2000 to 31 December 2000 S U S = satisfactory, U = unsatisfactory. Source: 1987–1997 interpreted from BTOR reports of ADB missions; ratings for 1998–2000 are from ADB’s Project Performance Report database.
D. Data on Asian Development Bank Missions
No. of No. of Specialization Name of Mission Date Persons Person-Days of Members Appraisal Mission 13 Jul–2 Aug 1985 8 168 a, c, d, g, h, m Review Mission-I (Inception) 11–20 Jan 1989 1 8 a Review Mission-II 1 Jul 1989 1 1 a Review Mission-III 4–15 Oct 1989 2 24 a, h Review Mission-IV 27 Feb–5 Mar 1990 2 11 a, h Review Mission-V 8–14 Oct 1990 1 7 a Follow-Up Mission 24–25 April 1990 2 4 a, d Special Loan Administration 27 Jul–26 Aug 1991 3 46 a, h, m Mission-I Special Loan Administration 25 Jul–10 Aug 1991 3 35 a, l, k Mission-II Special Loan Administration 1–9 Nov 1992 2 10 a, g Mission-III Special Loan Administration 14–28 Apr 1993 2 33 a, m Mission-IV (plus visited Rome to attend Technical Review Meeting of IFAD for potential cofinancing of CAD component) Participation in Loan Negotiations 11–13 Apr 1994 1 3 a with IFAD Review Mission-VI 7–19 May 1994 3 26 a, d, g Special Loan Administration 24–30 May 1995 1 7 g, jointly with Mission-V IFAD Review Mission-VII 5–15 Jan 1996 3 14 e, g, j Special Loan Administration 20–25 May 1996 2 12 e, g Mission-VI
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Data on Asian Development Bank Missions – Continued
No. of No. of Specialization Name of Mission Date Persons Person-Days of Members Special Loan Administration 23–24 Jul 1996 1 2 g Mission-VII Review Mission-VIII 11–14 Oct 1996 3 12 a, g, j Review Mission-IX 19–28 May 1997 2 20 g, j Review Mission-X 14 Sep 1997 1 1 g Special Loan Administration 29–31 Oct 1997 2 6 a, g Mission-VIII Special Loan Administration 29–30 Apr 1998 4 8 a, f, g, j Mission-IX Review Mission-XI 7–11 Dec 1998 2 10 a, g Review Mission-XII 8–9 May 1999 2 4 g, d Project Completion Review 31 Jan–4 Feb 2000 2 10 a, j Mission I Project Completion Review 23 Aug–3 Sep 2004 3 36 g, j, m Mission II a=engineer, b=financial analyst, c=counsel, d=economist, e=resident representative PRM, f=control officer, g=project implementation officer, h=senior clerk (project administrative)/Secretary, j=assistant (loan administration), k=agronomist. l- cotton specialist, m-staff consultant. Source: Back-to-Office Reports of ADB Missions.
The Project Completion Report was prepared by Allan Lee, Senior Project Implementation Specialist.
Continued on next page
I. PROJECT DESCRIPTION
A. Background
1. Balochistan, the largest province in Pakistan in terms of area, is also the least developed. Agriculture accounts for about 60% of Balochistan’s provincial gross domestic product. Approximately 84% of the population is rural, and more than half depends on agriculture. Despite the important role agriculture plays, the province is not self sufficient in most food crops. Accordingly, the Government increased development spending in Balochistan, focusing on agriculture. Investments were targeted at expanding canal capacities in the Kachi Plain, as well as on small irrigation schemes based on groundwater development and the construction of small dams.
2. The Pat Feeder Canal System in the Kachi Plain, constructed between 1963 and 1969 as a part of the Guddu Barrage Project, is the largest irrigation scheme in Balochistan. The canal branches off from the Desert Pat Feeder Canal at RD 371, and carries water for irrigating areas in the Nasirabad and Jafarabad districts of Balochistan. The Desert Pat Feeder Canal takes water from the Indus River at the Guddu Barrage. The gross command area of the Pat Feeder Canal covers about 218,000 hectares (ha), which includes a cultivable command area of 185,000 ha.
B. Rationale
3. Originally, the canal was to provide regulated irrigation supplies for non-rice crops during Kharif (the hot cropping system from April to September). Because of financial constraints, the canal was not constructed to the original design discharge of 190 cubic meters per second (c3/sec). Its discharge capacity at the point of entry into Balochistan (RD 109) was about 90 c3/sec. The cropping intensity reached about 30% in Kharif. Generally, the hierarchical canal system runs from main canals to branch canals, distributaries and/or minors, and watercourses. The 170-kilometer (km) canal had distributary canals, but no minor (tertiary) canal network. The water was delivered to watercourses directly through uncontrolled pipe outlets from the main canal or the distributaries. This led to unauthorized watercourses, and resulted in poor hydraulic conditions in the watercourses.
4. After the commissioning of the Tarbela Dam, additional water became available for paddy cultivation from 1978/79 onwards. Limited supplies were allowed in the Pat Feeder command area during Rabi (the cold cropping season from October to March), and the system became perennial. In 1984/85, cropping intensities reached about 77%— 31 % in Kharif (including 21% paddy) and 46% in Rabi. Only about 142,410 ha of the total cultivable command area of 185,000 ha was irrigated due to a shortage of water. The average flows in the Pat Feeder Canal amounted to about 45.3 c3/sec in Kharif, and 36.3 c3/sec in Rabi. The historic maximum discharge was limited to 90 c3/sec. Thus, the Pat Feeder Canal Rehabilitation and Improvement Project (the Project) was considered desirable to expand agricultural production.
C. Objectives
5. The objectives of the Project, as outlined in the report and recommendation of the President, were to increase (i) agricultural productivity, (ii) jobs, and (iii) farm income on about
1 “RD” means reduced distance for indicating canal station number one RD is equal to 1,000 feet. 2
185,000 ha served by the Pat Feeder Canal. These objectives were to be achieved primarily by renovating and improving the existing facilities, and by providing drainage and flood control facilities. The improved system, complete with more effective management and enhanced agricultural support services, was to increase crop yields as well as cropping intensities. This was expected to boost food grain production and farm family incomes in the area. The Project was given high priority in the Government’s Seventh Five Year Plan (1983/84–1987/88), and was in line with the strategy of the Asian Development Bank (ADB) for Pakistan.
6. The Project aimed to solve problems that had stopped the Pat Feeder Canal from achieving its full potential, including: (i) the main canal capacity was inadequate at the time of construction, and had been reduced since then by siltation; (ii) water distribution systems and system operations were not conducive to efficient and equitable irrigation of crops; (iii) increasing waterlogging and salinity affected about 40% of the area; (iv) floods, which caused damage to the infrastructure and crops, occurred frequently; and (v) satisfactory water management was not practiced on farms, and agricultural support services were deficient.
D. Scope at Appraisal
7. The Project, which had 13 components, was the first phase of a staged development plan for the rehabilitation and improvement of the canal. The project components focused mainly on (i) widening the Desert Pat Canal (about 12 km) and the Pat Feeder Canal (170 km), and widening and building a 182 km road on the left bank of the canal; (ii) remodeling 11 distributary canals, and construction of 320 km of gravel roads along one bank of the distributaries; (iii) constructing about 265 minor canals; (iv) improving the Hairdin drain; (v) constructing a surface drainage network in the eastern part of the command area; (vi) providing a horizontal subsurface drainage network and collector drains; (vii) constructing a new carrier drain; (viii) improving 1,235 watercourses; (iix) promoting water management activities on farms in the Pat Feeder command area; (ix) institutional strengthening of the Balochistan Irrigation and Power Department (IPD); and (x) providing facilities for a cotton research and maximization program. A detailed list of the project components is in Appendix 1.
E. Scope after Reformulation
8. At appraisal, drainage was not provided to the western part of the project area, because waterlogging and salinity problems were not expected to occur in this area before 19952. However, groundwater monitoring after the loan signing indicated that drainage in this area would be required as early as 1995. In 1991, the Water and Power Development Authority (WAPDA) submitted a plan to incorporate in the Project an extension of surface drainage for the disposal of effluent from the project area. WAPDA, which was the Executing Agency for the Project, requested an increase in drainage cover, and the reallocation of loan proceeds to accommodate (i) increases in project costs, and (ii) the unexpected withdrawal of civil works financing by Japan Bank for International Cooperation (JBIC).3 A Special Loan Administration Mission in July and August 1991 reviewed the technical and economic viability of the reformulated Project. ADB approved the reformulated Project in October 1993,4 and extended loan closing date to 31 December 1996.
2 See paras 67 and 133 of Appraisal Report 3 JBIC withdrew financing for the Project due to its reluctance to finance the civil works, and objections to awarding a survey contract to Survey of Pakistan, a Government agency. 4 ADB. 1993. Request by Borrower for Changes in Project Scope, Reallocation of Loan Proceeds, and Extension of Loan Closing Date of the Pat Feeder Canal Rehabilitation and Improvement Project [Loan No. 772-PAK(SF)] Manila.
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9. The reformulated project scope included (i) providing surface drainage for the entire Pat Feeder command area; (ii) constructing a 30 km carrier drain to the Khirther canal; (iii) constructing a new 30 km outfall drain along the western end of new carrier drain; (iv) deepening of the existing carrier drain, thus obviating the need to build an evaporation pond; (v) restoring the Hairdin pumping station, and constructing a second pumping station nearby; (vi) reducing the subsurface drainage area from 25,000 ha to 10,000 ha; (vii) providing interceptor drains between km 46 and km 111 of the main canal instead of lining; and (viii) remodeling the remaining two distributaries. The details are in Appendix 1.
II. EVALUATION OF DESIGN AND IMPLEMENTATION
A. Relevance of Design and Formulation
10. The project formulation and design were consistent with Pakistan’s development priorities at that time. The design also was in line with ADB’s lending strategy in the agriculture and irrigation sector, as contained in its 1984 Pakistan Basic Strategy Study. The Project’s major emphasis was on increasing agricultural productivity of major crops, principally through the rehabilitation and upgrading of irrigation systems, and the improvement of water use management on farms. The Project provided the first opportunity to expand irrigated agriculture in Balochistan, and narrow the economic disparity with the rest of the country.
11. The Japanese International Cooperation Agency studied the feasibility of remodeling the Pat Feeder Canal in 1982. The National Engineering Services of Pakistan updated their findings in 1983. At the request of the Government of Pakistan, ADB provided technical assistance (TA)5 to review and update these two studies, and formulate a project with cofinancing from JBIC. The ADB-financed TA, which was finalized in June 1985, formed the basis for project appraisal.
12. The TA consultants’ evaluated two options. The first was based on peak Kharif diversions of 190 m3/sec to the 185,000 ha served at that time. The second option was based on peak Kharif diversions of 232 m3/sec to serve 242,000 ha. The government of Balochistan preferred the second option of increasing the discharge capacity to 232 m3/sec, and expanding the irrigated area by 56,000 ha. However, the first option was selected at appraisal, because it did not require additional water supplies.6 The Project, as formulated, was the first phase of a staged development.
13. Though the Project was studied by three groups of consultants between 1982 and 1985, the drainage aspect was not evaluated in reasonable detail due to the lack of water table, and topographic and bathymetric data. However, these studies were undertaken at the start of project implementation and incorporated in the 1993 reformulation of the Project.
14. Government stakeholders were consulted during project formulation. However, the interests of most other project beneficiaries were accommodated passively in the project design. The exception was the Irrigator’s Associations, which were associated with the works to improve or construct new watercourses.
5 ADB. 1984. Technical Assistance to Pakistan for Pat Feeder Canal Rehabilitation and Improvement. Manila. 6 At that time, river flows were allocated to the provinces on an ad hoc basis. The Government was not in a position to guarantee 232 m3/sec in a timely manner for processing the loan in 1985, whereas 190 m3/sec was assured. (The Provincial Water Allocation Accord was reached in 1991, and Pat Feeder Canal can now draw 232 m3/sec during the Kharif season.) The details on water allocation and utilization in Balochistan are provided in Appendix 6.
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B. Project Outputs
15. A comparison of the project outputs as appraised with the completed outputs is shown in Appendix 1. The main output of the Project was the widening of about 12 km of the Desert Pat Canal and 170 km of the Pat Feeder Canal to increase its capacity to 190 m3/sec. The Project initially envisaged enlarging seven cross-regulation structures to accommodate the increased flows for the second stage. However, the enlargement plan was changed to rehabilitation during reformulation. The widening of the canal was completed, increasing flows in the main canal starting from the 1996 Kharif season. As part of the canal system handover to the Balochistan government, IPD and WAPDA’s Surface Water Hydrology Department took four discharge observations 20–30 July 1997. The measurements showed a maximum discharge of 133.1 m3/sec, which was entered into the canal computer model. The results suggested that a discharge of 171.5 m3/sec (91% of the design discharge) was passed on 22 July 1997. In 1998, the main canal and its distribution system operated at the discharge level envisaged in the design. The widening and construction of a 182 km road on the left bank of the canal was not pursued due to funding constraints.
16. At project commencement, sedimentation rates in the main canal were higher than originally estimated (400,000 m3 compared to 260,000 m3). Accordingly, a sedimentation study began in 1992. The project consultants prepared a draft report in 1997 that concluded that the increased sedimentation had resulted from the shift of the main channel of the Indus River upstream from Guddu Barrage. During the study, possible solutions were investigated, including (i) redirecting the Indus to the left with the use of groins, (ii) remodeling the barrage to include sediment excluder tunnels, (iii) installing sediment ejectors in the bed of the Desert Pat Feeder Canal, and (iv) initiating a dredging program in the head reaches of the Desert Pat Feeder Canal. The study recommended a dredging program in the head reaches of the Desert Pat Feeder Canal, but it was not implemented before the handover of the Project to the Balochistan government.
17. The Project Completion Review (PCR) Mission visited the main canal from Dera Murad Jamali (RD 489) to the Cross-Regulator (RD 418), and the headworks of the Nasirabad and Temple distributaries. The main canal showed evidence of siltation, as well as erosion of berms. The Mission was informed that sandy soil was causing excessive erosion of berms in the upper reaches of the main canal near RD 238. The Mission could not inspect the affected area due to security problems.
18. Under the Project, 13 distributary canals were remodeled (instead of 11 as proposed at appraisal), control structures were modified, and additional control structures were built. Due to funding constraints, the remodeling of the distributaries did not include construction of gravel roads on the banks of the distributaries, as envisaged at appraisal. The Mission visited segments of the Temple and Judher distributaries, as well as minors of the Judher distributary. Like the main canal, the distributaries and minors showed evidence of siltation and erosion of berms. The Mission found the quality of construction to be generally satisfactory. At the Nasirabad distributary, however, one area of the sidewall of the regulator had eroded, and urgent repairs were needed to avoid further damage.
19. IFAD handled the watercourse component of the Project under the separate Pat Feeder Command Area Development Project (PFCADP). IFAD issued a PCR report on this component
5 in May 2004,7 which found that the impact of the on-farm water management (OFWM) component was positive. Appendix 7 provides a summary of PFCADP.
20. The Project expanded irrigation coverage considerably to 82,374 ha in Kharif and 139,055 ha in Rabi, increasing cropping intensity to about 120%. Greater availability of water increased cultivable area, raising crop yields for most of crops. Living standards in the project area also improved significantly, particularly among farmers at the end of the canal system who never received water before the Project. The cost of land in the project area tripled or quadrupled. The agricultural production as envisaged at appraisal and the actual production in 2002–2003 are shown in Appendix 1.
C. Project Costs and Financing
21. The project cost was $227.9 million, nearly double the appraisal estimated of $119.5 million. The major cost increases were in (i) main canal civil works, which rose from $29.7 million to $86.5 million; (ii) rehabilitation of distributary canals, from $4.2 million to $24.6 million; (iii) minor canals, from $5.3 million to $20.5 million; (iv) design and construction supervision, from $7.5 million to $11.1 million; (v) consultancy services and training, from $4.5 million to $16.4 million; and (vi) land acquisition, from $5.4 million to $13.9 million.
22. The reasons for the increase above the appraised estimates included (i) the absence of topographic and bathymetric surveys at appraisal, (ii) feasibility costs that were based on conceptual designs, and (iii) inadequate rates used for costing construction items. Factors that contributed to the increase in project cost since the reformulation of the Project included (i) price escalation, (ii) increased scope of works for flood protection and drainage, (iii) higher cost for land acquisition, (iv) increased consultancy costs, and (v) a longer-than-expected implementation period (153 months compared to 78 months envisaged originally). Poor security in the project area also contributed to increased cost, as contractors made additional claims for extra security measures.
23. Due to the higher costs from the reformulation of the Project, and JBIC’s decision to withdraw from financing civil works (up to $30 million), the Project faced a financing gap of $85.2 million. The shortfall was covered partly by an IFAD loan of SDR20.25 million ($28.6 million) for financing the development of watercourses, agriculture and livestock, and community development in the Pat Feeder command area. Additional ADB financing of SDR10.1 million ($18.1million) from the National Drainage Sector Project (NDSP) also helped fill the financing gap.8
24. The $18.1 million equivalent from NDSP was allocated for cost overruns in four areas: (i) about $11.6 million for price escalation, and additional support costs associated with delays; (ii) about $2.4 million for contractors claims resulting directly from security problems, and the deployment of security forces; (iii) about $1.8 million for desilting the main canal in preparation for its transfer to the Balochistan Irrigation and Drainage Authority (BIDA); and (iv) about $0.2 million for design changes. With this additional financing, ADB increased its net approved loan
7 IFAD. 2004. Project Completion Review Report on Pat Feeder Command Area Development Project in Pakistan. Rome. 8 ADB. 1995. National Drainage (Sector) Project in Pakistan [Loan No. 1413-PAK (SF)]. Manila. The National Drainage Sector Project (NDSP) is a part of the National Drainage Program (NDP) cofinanced by JBIC ($100 million) and the World Bank ($285 million).
6 amount to $168.95 million as of 8 February 2000. At project completion, $162.1 million had been disbursed, and the unutilized $5.8 million was canceled.
25. The IFAD loan of $28.6 million equivalent for the PFCADP became effective on 2 February 1995. The investment for that project was estimated at $41.46 million. The original loan closing date was 30 June 2001, though it did not actually close until 31 December 2003. ADB was appointed as IFAD’s project cooperating institution. PFCADP envisaged (i) improvement of watercourses, (ii) institutional support for enhancing agricultural and livestock extension services, and (iii) formation of community organizations at the village level. IFAD later canceled SDR5 million of its loan. The final project cost for PFCADP was PRs1022.13 million (PRs714.94 million financed by IFAD, and PRs307.19 million financed by the Balochistan government).9
D. Disbursements
26. The disbursal schedule outlined at appraisal was formulated reasonably. It gradually increased from 6% in the first year to a maximum of 25.8% in the fifth year, and then tapered off to 7.6% in the last year. The schedule, however, could not be followed due to long delays in the startup and implementation of the Project. The cumulative disbursements in the first 5 years of the Project totaled a meager 2.6%. After the Project was reformulated in 1993, disbursements increased to about 10.8% in 1993, peaked at 20.3% in 1996, and then tapered off to 2.2% in 2000. The loan account was closed on 3 April 2000, and the unutilized balance of $6.8 million was canceled. The final status of loan utilization is shown in Section B.9 (b) of Basic Data.
E. Project Schedule
27. Loan effectiveness was delayed by 14 months due to the Government’s difficulty in finalizing the water allocation for the Project, which was—and still is—an extremely sensitive political issue in Pakistan. ADB talked effectively with the Government to obtain the required assurance on water availability. On 7 February 1987, the Government approved the water allocation for the Project.
28. Project implementation required 153 months, 75 months more than originally estimated for completion. The main reasons for slower-than-expected implementation were (i) a shortage of local counterpart funding, (ii) a lack of counterpart staff (WAPDA was to provide 1,600 person-months of counterpart engineering staff), (iii) a delay in the appointment of consultants, (iv) a delay in the award and completion of the mapping contract, (v) poor security in the project area, and (vii) a delay in land acquisition.
29. During construction, funding constraints and the low compensation rates created problems in paying for land. Under the revised PC110, the compensation rate for land was set at PRs5000/acre (PRs12,350/ha), which was below market rates and not acceptable to the landowners. The affected people did not allow work to proceed unless they received adequate compensation. Subsequently, the compensation rate was increased to PRs25,000/acre (PRs61,750/ha). From July 1997 to January 1998, construction of minor canals was suspended for the most part. This delayed project completion, and increased costs due to demobilization and remobilization of contractors.
9 A summary of IFAD’s PCR report is in Appendix 7. 10 Planning Commission Form 1 (Project Pro forma)
7
30. Slower-than-expected recruitment and fielding of the consultants caused initial delays in project implementation. The consultants were not fielded until April 1988. WAPDA had difficulty assigning qualified professional staff to work in the Quetta project management organization (PMO) and with the consultants as counterpart staff, further slowing the startup of the Project. The consultants later were authorized to recruit domestic staff if WAPDA was unable to find the necessary personnel. However, the consultants also had trouble recruiting qualified and experienced staff through their domestic associates. As a result, international consultants were recruited. The project implementation schedule is shown in Appendix 2.
31. In addition to delays in recruiting consultants, the Project also awarded civil works contracts more slowly than envisaged. Bids for the Nasirabad distributary, the first civil works contract, were received on May 15, 1989. However, only one pre-qualified contractor submitted a bid, which was not accepted. The contract was repackaged, bids were invited again, and the contract was awarded in September 1990. This delayed the start of civil works by a year.
F. Implementation Arrangements
32. The Project was implemented in accordance with the arrangements envisaged at appraisal. As the Executing Agency, WAPDA was responsible for overseeing project construction, and assisting the project consultants in fulfilling their responsibilities. While construction was underway, IPD undertook the day-to-day maintenance of the canal.
33. To ensure effective and efficient project coordination and supervision, two organizations—the Project Steering Committee and the PMO—were created as envisaged at appraisal. Both functioned satisfactorily. IPD was not involved in the management and coordination of the Project. IPD staff would have benefited from inclusion in the PMO, which would have familiarized them with the design and construction, and established institutional memory, before taking over the Project. Because IPD was not fully involved in the Project, the handover of the facilities after construction was fraught with difficulties. The consultant provided the records, including design reports and as-built drawings, to WAPDA and the IPD. However, these organizations do not have proper records of the available data and drawings. The design reports and as-built drawings are necessary for proper operation and maintenance (O&M), as well as the future development of the canal system.
G. Conditions and Covenants
34. Of the 38 loan covenants, 28 were complied with, 6 partly complied with, and 4 not complied with. The partly complied with covenants involved (i) inadequate staffing of the PMO, (ii) inadequate staffing of minors canals cell, (iii) lack of sub-surface drainage, (iv) lack of equitable distribution of water due to the tardy establishment of Water User Associations (WUAs), (v) inadequate extension services, and (vi) improper monitoring and evaluation. The covenants not complied with related to failure to (i) provide subsurface drainage, (ii) provide adequate O&M for the completed works, (iii) recover full O&M costs, and (iv) enforce diversified cropping patterns by reducing paddy cultivation and increasing other Kharif crops. Overall, compliance with loan covenants during project implementation was satisfactory. However, several post-completion covenants have not been complied with, and the Government should follow up on them (paras. 69–73).
H. Consultant Recruitment and Procurement
35. The consultants were selected in accordance with ADB’s procedures, with no deviations from the agreed evaluation criteria. The selection and recruitment of consultants took 21 months
8 from the date of invitation of proposals. Invitations for selection of consultants were issued on 16 June 1986, and the evaluation process was completed on 31 March 1987. ADB concurred with the evaluation recommendations on 29 April 1987. However, this was followed by protracted contract negotiations, concluding with a signed contract on 3 March 1988—almost 8 months after loan effectiveness.
36. At appraisal, the Project envisaged 364 person-months (pm) of consultant services, comprising 182 pms of international consultants and 182 pms of domestic consultants. On project completion, consultant services totaled 3,451 pms, almost 10 times the appraisal estimate. This included more than 1,000 pms of international consultants. One of the main reasons for this drastic increase was the underestimation of consultant requirements at appraisal, which was based on the assumption that WAPDA would provide engineering counterpart staff to the consultants. In their proposal, the consultants proposed 264 pms for design and 100 pms for advice during construction. In 1991, WAPDA approved 355 pms (121 international and 234 domestic) to strengthen the design team. Other reasons for the increase included (i) a change of consultant’s role to engineer11 from advising and assisting during construction, resulting in an increase of 2,269 pms (499 international and 1770 domestic) that was approved in 1993; (ii) the provision of additional people to replace the counterpart staff that WAPDA could not provide; and (iii) a delay in project implementation, which required an additional 450 pms beyond January 1997. The 19 civil works contracts also contributed to increased pms of consulting services for the construction phase. By changing the consultant’s role to engineer, the Government was able to continue implementation of the Project, despite staff shortages, while contract packaging procurement problems were resolved.
37. The procurement of goods and services were in accordance with ADB guidelines. Nineteen civil works contracts were awarded: 2 for the main canal, 5 for distributaries, 3 for drains, and 9 for construction of minor canals. Domestic contractors won 12 contracts, while international contractors won seven contracts. Except for the main canal contract, which was valued at PRs2.05 billion, the contract amounts ranged from PRs2.7 million to PRs386.3 million. Instead of 19 contracts, the work probably could have been implemented better in 8–10 contracts. The two contracts for the main canal—one 25 km and one for 158 km—could have been combined into one. Similarly, the work on distributaries was undertaken in lots of 1, 6, 3, and 2 distributaries, which might have been executed better in two contracts. Finally, the minor canals in the Nasirabad distributary were built under 5 contracts, which could have been reduced.
I. Performance of Consultants, Contractors, and Suppliers
38. The performance of the consultant was generally satisfactory. The consultant prepared designs and tender documents, and supervised project implementation. In 1991, the consultant also was designated as the project engineer, which significantly increased consultancy inputs.
39. The performance of the contractors and suppliers engaged under the Project ranged from partly satisfactory to satisfactory. Some of the smaller contractors lacked management skills, thus requiring more supervision by project management consultants. Inspection reports of ADB missions showed that the quality of works and materials was generally satisfactory.
11 As engineer, the consultants were responsible for contract administration and quality control of the project works, and provided detailed supervision of construction.
9
J. Performance of the Borrower and the Executing Agency
40. The overall performance of the Borrower was assessed as unsatisfactory. The Government was slow to meet the loan effectiveness conditions, delaying the start of the Project by more than a year. The release of counterpart funds, land acquisition, and payment of compensation were also problematic, causing cash flow problems and delaying project implementation. The Government did not comply with covenants on adequate O&M funding, recovery of water charges, and enforcement of a diversified cropping pattern.
41. As the main Executing Agency, WAPDA was responsible for the selection and recruitment of consultants, supervision of all studies and designs, procurement of contractors, and supervision of project construction activities. The performance of WAPDA was generally satisfactory during implementation. WAPDA coordinated well with ADB, the consultant, and contractors; supported ADB missions; and provided unrestricted access to project records. However, WAPDA’s selection and appointment of consultants was generally unsatisfactory (para. 36), and WAPDA had difficulty assigning qualified professional staff to work in the PMO at Quetta and with the consultants.
42. The Department of Agriculture (DOA) was associated with the implementation of the IFAD-funded PFCADP. In IFAD’s PCR (see footnote 7), their performance was assessed as partly satisfactory: “The performance of (the government of Balochistan), the Borrower, was not found at par with the appraisal stipulations, particularly during the pre Mid Term Review period of the Project. The main operational problems included: (i) high rate of turn over of key project staff including the Project Coordinator/Team Leader, and their inadequate orientation and training; (ii) delayed mobilization of TA consultants; (iii) poor performance of some TA staff; (iv) contracting of an incompetent Non Governmental Organisation for assisting in implementation; (v) lack of attention to setting up of an independent and dependable Monitoring and Evaluation unit in the Project; (vi) tendency of the project staff to live in the provincial capital instead of the Project area; (vii) large scale use of the vehicles outside the Project area by the project as well as non project officials; and (vii) lack of proper accounting system and financial control (see footnote 7).”
43. While IPD was not responsible for the implementation of any of the project components, it was responsible for O&M of the existing system throughout implementation. During project implementation, IPD operated the canal in a satisfactory manner. However, the maintenance of the project works was deficient, because the provincial government released inadequate funds.
K. Performance of the Asian Development Bank
44. ADB supervised the Project extensively, and played a key role in its reformulation. However, ADB’s involvement, which included 24 review or special loan administration missions, could not prevent the initial delays. After 1998, ADB’s reviews were combined with the reviews of IFAD’s PFCADP. Project administration, which was delegated to ADB’s Pakistan Resident Mission (PRM) on 30 June 1994, continued satisfactorily.
45. ADB coordinated well with the executing agencies and the cofinanciers, first JBIC and then IFAD. ADB assisted the Government in seeking financing from IFAD, and participated in the discussions at different stages, including loan negotiations. ADB administered the loan on behalf of IFAD, and fund releases were made on a timely basis.
10
46. ADB fielded a preliminary PCR Mission in January and February 2000, which concluded with the preparation of a project performance report. However, the PCR report was deferred until completion of the IFAD’s PFCADP to fully recognize the project benefits of the canal system. IFAD’s project was completed substantially in November 2003, and its PCR was finalized in May 2004. ADB’s PCR mission was fielded thereafter.
47. Overall, ADB’s performance was assessed as satisfactory.
III. EVALUATION OF PERFORMANCE
A. Relevance
48. The Project was rated as highly relevant. It was relevant to its stated objectives of developing the full agricultural potential of the project area by increasing irrigation supplies and improving their distribution. The aims were to increase the production of wheat, rice, and cotton; and to raise the living standards of domestic farmers in the most underdeveloped province of Pakistan. The Project also was relevant to the policy goals of the Government, which included maximizing the efficiency of irrigation facilities through remodeling and rehabilitation.
49. Since 1995, the Government has emphasized management, particularly with farmers’ participation and cost sharing, more than physical development and/or improvement. The Project continues to be relevant to this new policy, as it involved the transfer of responsibility for watercourse management to farmers and envisaged better recovery of O&M costs. The Project was assessed as highly relevant going forward.
B. Efficacy in Achievement of Purpose
50. The Project was rated as less efficacious, because it did not fully achieve the physical outcomes envisaged at appraisal or at reformulation. Despite the long delay in completion and deletion of several project components, the Project attained its primary objective of increasing irrigation supplies. The main canal and the distribution system were enlarged to carry the design discharge as envisaged at appraisal. The objective of improving distribution throughout the area was partially met.
51. In 2002–2003, the cropped area totaled 221,429 ha (82,374 ha in Kharif and 139,055 ha in Rabi), which resulted in a cropping intensity of 120%. This far exceeded the 77% cropping intensity (31% Kharif and 46% Rabi) in 1984/85, and the 100% (53% Kharif and 47% in Rabi) estimated during appraisal if the Project were carried out. Rice is the predominant Kharif crop. Its substitution with cotton and other crops that require less water could increase the intensity further. Since 1998, the main canal and its distributaries and minors have operated at the design discharge every year for about 41 days—from the last 10 days of June through July. The canal had no capacity constraints in Rabi, and continues to receive its allocated share during Rabi.
C. Efficiency in Achievement of Outputs and Purpose
52. The Project was rated as inefficient. The envisaged outputs were partially attained, though the cost increased significantly. The Project was substantially reformulated due to the shortage of counterpart funds, resulting in adjustments to the size and content of the components. The most substantial change under the project reformulation was in the drainage component, as the extension of surface drainage to the western part of the project area and the
11 provision for subsurface drainage was reduced to 10,000 ha from 25,000 ha at appraisal. In 1998, the subsurface drainage component was removed from the project scope and transferred to the NDSP (see footnote 8). Further, the agriculture components of the Project were transferred to the IFAD-funded PFCADP, and the watercourses targeted for improvements were reduced from 1,235 to 360. However, ADB processed the Project efficiently and in a timely manner. ADB’s role in arranging financing and administering OFWM activities was critical in achieving the project objectives.
53. The Project increased cultivable area and crop production. The irrigation coverage expanded considerably to 82,374 ha in Kharif and 139,055 ha in Rabi, which allowed a cropping intensity of about 120%. Production of paddy increased from 117,900 metric tons (mt) in 1986/87to 290,500 mt in 2002–2003 due to increased water availability. Yields of paddy also increased significantly after project completion, from 2.4 ton/ha in 1986 to 5.0 ton/ha (compared with a target yield of 4.8 ton/ha). Similarly, about 9,800 mt of incremental cotton was produced. The cultivable area under wheat increased to 85,765 ha, compared to 54,070 ha at appraisal. However, the yield for wheat reportedly fell to 1.0 ton/ha (2002-2003) from 1.2 ton/ha in 1986 (compared with a target yield of 3.2 ton/ha). This decline was caused by excessive rice cultivation, which left little time for proper land preparation for sowing wheat. However, the reduction in wheat yield was considered temporary as the initial emphasis of the Project was the expansion of the cropped area. With that achieved, farmers are expected to attempt to raise yields and production. Recently, the Government increased the support price for wheat by about 15%. In addition, farmers reportedly are getting prices higher than the support price from private sector buyers. These factors are likely to help in achieving a yield of about 2 ton/ha (close to the provincial average). Further, cropping pulses, vegetables, melons, etc. has started. In 2002– 2003, the Project produced about 18,000 mt of vegetables, 5,000 mt of pulses, and 780 mt of melons. Living standards in the project area have improved significantly, particularly among farmers at the end of the canal system who never received water before the Project. The cost of land in the project area has tripled or quadrupled.
54. Due to the long delay in project completion, reformulation of the Project, and significant increases in cost, the economic internal rate of return (EIRR) was reassessed (Appendix4). At appraisal, the EIRR for the Project was estimated at 13.00%. The project benefits from improvements to irrigation facilities consisted primarily of the incremental agricultural production that would result from increased supplies of water. The baseline yields were taken as appraised, while actual yields were based on the review of present yields in the project area. The cost stream represented the actual expenditure on the Project. Based on the benefits and cost stream, the Project’s EIRR was estimated at 10.09%. A project sensitivity analysis, which is summarized in Appendix 4, was undertaken to assess different assumptions that might affect project performance in the future. Stagnation of wheat yield at 1 ton/ha would reduce the EIRR to 7.09%, whereas an increase of 10% in the yield of all crops, except rice, would increase the EIRR to 10.76%. A price increase of 10% in all commodities would improve the EIRR to 11.03%.
D. Preliminary Assessment of Sustainability
55. The Project’s sustainability was rated as less likely but this is considered as temporary. Some of the negative ratings for the “sustainability” rating criterias are likely to turn positive in the near future. The negative rating for probability of funds availability (cash flow) for continued operations, maintenance and growth requirements are reversible. The Government of Balochistan (GOB) assured the PCR mission that funds for proper O&M would be ensured. Also, GOB is now pursuing institutional reforms, which will improve community participation to
12 maintain project benefits and Balochistan and Pakistan have enough irrigation engineers to ensure the continued operation of the project canal system.
56. After completion of the canal system, IPD took over responsibility for O&M. Site visits by the PCR Mission revealed that sections of the main canal and distributaries were in poor condition. The main canal, distributaries, minors, and drains showed evidence of siltation, as well as erosion of berms. The Mission learned that no major siltation maintenance had been done for the past 6 years. However, this was viewed as a temporary situation as the provincial government was fully committed to the Project, and planning is in progress for the expansion of the canal system in the near future.
57. Discussions with the IPD staff indicated that O&M funding had increased only nominally since the completion of the Project, and the number of staff assigned to O&M of the Pat Feeder Canal System had remained the same. The annual funding was considered inadequate to finance the substantially higher O&M needs of the extended irrigation and drainage works. The sustainability of the Project would remain uncertain unless adequate funds are provided for O&M. If the current insufficient funding were to continue, the estimated 50-year life of the Project would be shortened, and a deferred-maintenance project would be required in 10–15 years. Details on the O&M of the Project are in Appendix 5.
58. After project completion, paddy cultivation dominated Kharif cropping. However, paddy cultivation required larger amounts of water than other crops. The continued application of large amounts of irrigation water is not sustainable in the long run. It is likely to cause waterlogging and accentuate the drainage problem, thereby reducing crop yields. The yield for wheat has declined from the appraisal target of 3.2 ton/ha to current yield of 2 ton/ha. Most of the wheat is now sown on residual moisture from rice. A crop diversification program was planned under the IFAD-assisted project, and legislation to control paddy cultivation also was being prepared. However, neither has been implemented. Due to weak extension services in the project area, a major shift in cropping patterns cannot be expected in the near future. The Balochistan government needs to take urgent steps to prepare and enforce the required legislation. At the same time, DOA’s extension services should be strengthened to educate the farmers about the benefits of adopting diversified cropping patterns, and increasing area for cotton. Extension services are also needed for educating the farmers on ways to improve wheat yields.
59. For financial sustainability, the water rates and drainage charges should be high enough to cover the full O&M costs of the system. Though the water rates have increased progressively, these increases have been offset by poor recovery. From FY1999 to FY2004, only PRs54.3 million (or 26%) of the total assessment of PRs208.9 million was recovered. Drainage fees have not been levied yet. Full recovery of O&M costs is highly unlikely in the near future, thereby requiring subsidies from the Government. This will endanger the physical sustainability of the project facilities.
60. Institutional reforms in the water sector aimed at shifting operational control of the system from a central line Government department to decentralized and quasi-autonomous state-owned and/or farmer-managed agencies began under NDSP. These reforms are designed to build accountability, transparency, efficiency, and equity into the management of irrigation infrastructure and water supply. The implementation of the reforms has proceeded more slowly than expected due to the absence of social mobilization, a lack of political will and commitment from some Government functionaries, and procedural delays. One of the objectives of these reforms was to transfer O&M responsibility of distributary and minor canals to farmers
13 organizations, and improve assessment and recovery of abiana12 by making these farmer groups responsible for collection and assessment. The Balochistan Government is now participating in NDSP (see foonote 8) and is evaluating the introduction of the institutional reforms and studying sector institutional reforms undertaken in Sindh Province.
E. Environmental, Sociocultural, and Other Impacts
61. The Project was rated to have moderate environmental and sociocultural impacts. While the Project had no immediate major adverse environmental effects, the unrestricted production of paddy and poor maintenance of surface drains will accentuate the drainage problem in the long run. This, in turn, will constrain cropping intensity. About 5,000 ha of wetland in the command area was reclaimed. However, this process had little adverse effect as it is close to other congested drainage areas and the Hamal Lake, which is a larger and protected wetland. The Project has caused drainage congestion in about 12,000 ha downstream from the Project’s drainage outfall. This situation will be mitigated with the completion of the third stage of the right bank outfall drain, which is being designed to discharge the effluent into the sea. No adverse impacts on water quality or on project area aquatic life has been reported. The Project also provided flood protection to the Khirthar canal area.
62. The Project is having a positive social impact in the area.13 At appraisal, the Project targeted about 23,500 farm families, consisting of 13,200 tenants and 10,300 owner-cultivators. The average farm size was 8 ha. The baseline survey of 2000 indicated that the farming community comprises owners (24%), owner-cum-tenants (12%), tenants (37%), and sharecroppers (17%). The average farm size of the owners was 27.8 ha, owner-cum-tenants 8.9 ha, tenants 6.5 ha, and sharecroppers 9.3 ha. About 78% of the households lived below poverty line, of which the majority was small owners and operators. Thus, the Project benefited all categories of farmers. Living standards in the project area improved significantly, particularly among farmers at the end of canal system who never had received adequate water before the Project. Cultivable area and yield per hectare of some crops increased significantly. The rise in productivity brought in marketing facilities—a farmers market for auctioning crops was constructed under the Project—and increased the value of agriculture produce. As a result, the capacity to absorb more labor—on farms and in agro-industries—was enhanced, creating more employment opportunities. Drinking water facilities also improved and became more reliable. In addition, under the OFWM component, the Project mobilized the formation of community and water user organizations, which pursued common goals that improved the wellness of the community. As a result, 164 Agricultural Development Groups and 214 Women Development Groups, were established, which will contribute towards economic development. In addition, technical skills training and rural credit were provided for the benefit of the community.
63. Tribal resistance was not adequately addressed at the project planning stage, and sufficient and timely mitigation measures were not taken during project implementation. Security problems were encountered in 1993, 1994, and 1995, and the situation grew worse in 1997. The Government deployed additional security forces for safety during construction. One of the
12 Abiana is the local term for water charges. 13 Evaluation based on several studies: i) PCR by the Borrower-Pat Feeder Canal Rehabilitation and Improvement Project, December 1987; ii) Socioeconomic Baseline Survey, Pat Feeder Canal Command Area Balochistan, 1999, by Mushtaq Ahmad; iii) PCR by Halcrow, January 2001; iv) Pat Feeder Command Area Development Project- Impact Evaluation Report by Syed Mohammad Arif, October 2003; v) Pakistan Pat Feeder Canal Rehabilitation and Improvement Project Report, October 2002, ODA Japan; and vi) Pat Feeder Command Area Development Project (IFAD Loan 353-PK) PCR (Report No. 1507-PK, May 2004).
14 reasons for tribal resistance was the low compensation price for land. Compensation rates were increased significantly during project implementation, removing one of the main irritants and decreasing the security problem.
IV. OVERALL ASSESSMENT AND RECOMMENDATIONS
A. Overall Assessment
64. Overall, the Project was rated partly successful.14 The Project was highly relevant to development strategy of the Government and ADB. However, it was less efficacious, and inefficient in implementation and post-completion O&M. The sustainability of the Project was rated as less likely, though the demand for the Project’s output is sustainable, and the Balochistan government is committed to ensuring adequate supplies are maintained. The institutional developments and other impacts of the Project also were moderate.
65. The objective of improving distribution throughout the project area was partially met. Fewer new minor canals were constructed than envisaged at appraisal, and the number of watercourses improved was far below the appraisal estimate. Similarly, the drainage objectives also were partially achieved. However, the Project increased cropping intensity more than envisaged in the project design. For improved and efficient functioning of the canal system, construction of additional minors and drainage facilities is needed, as well as improvement of watercourses. The Balochistan government started construction of 43 additional minors from 2003 onwards under the federal Public Sector Development Program (PSDP), and is remodeling and/or extending another 49 minors. Recently, the federal Government started a watercourse improvement program throughout Pakistan. These measures should improve water use efficiency of the system.
66. The long-term sustainability of the Project require close monitoring, because of inadequate O&M funding. However, the Government is committed to ensuring that adequate supplies are maintained, and plans are in place for the expansion of the canal system and improvements in institutional arrangements.
67. Excessive paddy cultivation and the inefficient use of water also pose a threat to the sustainability of the Project, because greater amounts of irrigation water at the field level are likely to accelerate the drainage problem. However, the completion of the third stage of the right bank outfall drain is expected to mitigate this negative impact. The preparation and implementation of a crop diversification program is urgently required. As a result, strengthening of agricultural extension services, and enactment of legislation to control paddy cultivation, are an immediate high priority.
B. Lessons Learned
68. Major lessons learned from the Project included:
(i) All formalities, including approval of the PC1 (see footnote 10) document, should be completed before proposed projects are submitted for financing by multilateral and bilateral agencies. Specifically, attention should be focused on staffing the project management unit, appointment of project management consultants (and
14This PCR is part of a sample of PCRs independently reviewed by the Operations Evaluation Department. The review has validated the methodology used and the rating given.
15
the possible role as project engineer), counterpart staff, and advance preparation of procurement packages.
(ii) For efficient and cost-effective implementation of projects, continuity of key personnel should be ensured. The transfer of staff during project implementation should be minimal.
(iii) As part of project preparation, domestic conditions—resettlement, land acquisition prices, environmental concerns, and domestic cultural practices— should be carefully assessed. Mitigation measures should be incorporated in the project design, and brought into the physical implementation plan.
(iv) In multidisciplinary projects, adequate and strong coordination should be in place between the executing agency and the agency responsible for assuming the O&M responsibilities of the completed project facilities.
(v) Sufficient institutional development efforts are needed in association with the large physical investments. Farmers should be consulted intensively at the planning and design stage, and the farmers should accept responsibilities for O&M of distributary, minor canals, and subsurface drainage facilities on completion.
C. Recommendations
1. Project-Related
69. Operations and Maintenance Funding. Major siltation problems exist in the main canal, distributaries and minors, and the drains. Desiltation works have not been undertaken for the main canal since completion approximately 6 years ago. Under one of the project loan covenants, the Balochistan government is required to ensure that adequate and timely funds are made available to ensure sustainability of the Project, and the continuing achievement of project benefits. In addition, the operations manual prepared under the Project is not fully utilized. O&M works should be undertaken immediately to prevent further damage to the Pat Feeder Canal System. The management of the distributary and minor canals also should be transferred to farmers organizations as envisaged in the institutional reforms under NDSP.
70. Cropping Patterns. Paddy cultivation is extensive throughout the Pat Feeder Canal area. This deviates from the project objectives of promoting alternative crop cultivation, such as cotton, wheat, vegetables, etc. In addition, waterlogging is now a major concern due to extensive paddy cultivation. A monitoring system should be established to enforce (i) legislation for rice and other crop areas, (ii) irrigation water use patterns, and (iii) drainage water quantity and quality. Agricultural extension services also need strengthening to educate the farmers on adopting diversified cropping patterns, and reducing the area under paddy.
71. Requirement for Additional Drainage. The drainage facilities constructed under the Project are inadequate. The construction of subsurface drainage facilities, which was to be undertaken through NDSP, has not been done. To ensure project sustainability, the need for additional drainage must be assessed. If needed, additional facilities should be constructed under NDSP or as a separate follow-up project. The O&M of surface drains also needs to be improved.
16
72. Project Financial Sustainability. Over the past 6 years, only 26% of water assessments totaling PRs209 million has been collected (PRs54 million). In addition, while the required annual O&M budget is estimated to be PRs126.81 million, the actual budget in FY2003 was only PRs12.9 million. This was grossly inadequate. Consultations should begin with the Finance Department on revenue assessments by the Irrigation Department, so an equitable amount is allocated for O&M. In addition, the implementation of reforms under NDSP is likely to improve the assessment and collection by transferring this responsibility to farmers organizations, which would pay part of the revenue to Area Water Board and use part of the revenue for O&M of distributaries and minor canals.
73. Institutional Capacity of Irrigation Department. During project implementation, capacity building for the Irrigation Department was not undertaken. An institutional review plan should be undertaken to identify the effective role that the department can play, and how it can fulfill its obligations on a financially sustainable basis. In addition, due consideration should be given to the participation of private sector operators undertaking O&M contracts.
74. Timing of Project Performance Audit Report Preparation. Since the Project is substantially completed, the project performance audit report can be undertaken in 2005.
2. General
75. The following issues should be taken into consideration for future projects:
(i) Project sustainability. Where projects are designed on a provincial basis and project implementation is undertaken by a non-provincial entity (e.g., WAPDA), the respective provincial government should take into consideration the issues arising with project operations, maintenance, and sustainability after project completion.
(ii) Project cost estimation. Estimates for civil works packages should be based on realistic rates and quantities, taking into account the field and market conditions.
(iii) Project scheduling. Estimating project implementation periods should take into consideration the field conditions and schedules prepared by the executing agency early in project formulation.
(iv) Recruitment of project management consultants. The recruitment process for project management consultants should begin before loan negotiations.
Appendix 1 17
PROJECT OUTPUTS
Table A1.1: Physical Project Outputs
Targets Component Actual Appraisal Reformulation Part A. Main Irrigation Facilities 1. Main Canal Rehabilitation Desert Pat Widening 12 km 12 km 12 km Pat Feeder Widening 170 km 170 km 170 km Pat Feeder Lining 12.8 km 12.8 km 0 Interceptor Drains 0 10 0 Widening of Cross-Regulators 7 0 0 Rehabilitation of Cross-Regulators 0 7 7 Construction of Offtake Structures 46 83 104 Access Roads, Widening, and Construction 182 km 182 km 0 Village Road Bridges (widening) 3 0 0 Village Road Bridges (construction) 5 0 0 Village Road Bridges (lengthening) 1 0 0 Communication System 1 1 1
2. Distributary Canals Canal Widening 320 km 300 km 272 km Head Regulator Widening 2 2 0 Head Regulator Rehabilitation 0 12 12 Gravel Roads (construction) 320 km 283 km 0
3. Minor Canals Minor Canals Construction 800 km 622 km 368 km Constant Orifice Structures 265 200 179
4. Flood Protection Raised Right Bank Section 104 K 65 km 65 km Sloping Right Bank 54 km 80 km 80 km Flood Channels 4 2 0 Flood Inlet Structures 5 9 9 Flood Embankment Construction 0 17 km 17 km Flood Embankment Heightening 0 23 km 23 km
5. Vehicles, Offices, and Housing 4 WD Jeep Type-Vehicles 25 25 26 Office Facilities 3 3 3 Housing Facilities 89 89 89 Part B. On-Farm Water Management 1. Field Extension Teams 99 Transferred to 2. Water Course Improvement 1,235 1,235 IFAD Project
Continued on next page
18 Appendix 1
TABLE A1.1 – Continued
Targets Component Actual Appraisal Reformulation 3. Vehicles and Equipment 4 WD Jeep-Type Vehicles 10 10 10 4 WD Pickups 10 10 10 Motorcycles 10 10 10 Office Equipment and Furniture Sets 10 10 10 Survey Equipment Sets 10 10 10
4. Housing Facilities 13 13 13
Part C: Drainage Facilities 1. Carrier Drain Hairdeen Drain Deepening 26 km 39 km 39 km Hairdeen Drain Widening 17 km 5 km 5 km Evaporation Pond 3600 ha 0 0 Pumping Station Construction 2 1 1 Pumping Station Rehabilitation 0 1 1
2. New Carrier Drain and Outfall Carrier Drain No. 2 0 30 km 30 km Single-Bund Outfall Drain 0 40 km 40 km
3. Surface Drainage Main Drains 113 km 275 km 302 km Branch Drains 383 km 526 km 604 km
4. Subsurface Drainage 25,000 ha 10,000 ha 0
Part D: Project Institutional Support 1. Marketing Facilities (D.M. Jamali) Market Square 1 1 1 Housing Facilities 1 1 3
2. Cotton Research Maximization Housing Facilities (BAD) 23 23 23
3. Pilot Farm Equipment Seed Testing & Processing Equipment 1 lot 1 lot 1 lot Metrological Equipment 1 lot 1 lot 1 lot Soil and Water Laboratory Equipment 1 lot 1 lot 1 lot
4. Strengthening of BIPD (O&M) Professional Incremental Staff 16 16 0 Workshop 1 1 1 Office and Housing Facilities 4 contracts 4 contracts 4 contracts
Continued on next page
Appendix 1 19
TABLE A1.1 – Continued
Targets Component Actual Appraisal Reformulation 5. Vehicles and Equipment BIPD 4 WD Jeep Type Vehicles 25 25 25 Motorcycles 18 18 23 130 HP Floating Dredger 1 1 0 Backhoe 2 2 4 Motor Grader 3 3 4 50 HP Tractors 3 3 4 600 Gallon Water Trailer with Pump 3 3 3 Smooth Road Roller 3 3 3 Dragline 0 0 5 Wheel Loader 0 0 3 BAD 4 WD Jeep-Type Vehicles 2 2 2 4 WD Pickups 7 7 7 Motorcycles 22 22 20 Cotton-Seed Drills 20 20 0 Hand Sprayers 1,000 1,000 0 Power Sprayers 1,000 1,000 0 Generators 0 0 2
Part E: Consulting Services and Training 1. Consulting Services Design 263 mm 699 mm 1,000 mm Construction Supervision 100 mm 2235 mm 2,451 mm
2. Training Overseas Training 1 1 1 Study Tour 4 4 1 BAD = Balochistan Agriculture Department, BIDP = Balochistan Irrigation and Power Department, IFAD = International Fund for Agriculture Development, ha = hectare, km = kilometer, mm = millimeter, O&M = operation and maintenance. Source: Halcrow. 2001. Project Completion Report on Pat Feeder Canal Rehabilitation and Improvement Project. Pakistan.
20 Appendix 1
Table A1.2: Agricultural Production
Appraisal Targets (metric tons) Actual 2002– Crop Without With 2003 Project Project Kharif Paddy 117,900 204,800 290,500 Sorghum 13,700 18,600 10,400 Oilseeds 1,000 10,200 562 Cotton 0 47,303 9,800 Fodder 0 408,100 53,600 Vegetables and Melons 0 0 1,480 Rabi Wheat 81,105 118,720 85,766 Oilseeds 2,649 5,600 11,795 Gram 3,900 37,100 24,842 Barley In others 0 10,282 Pulses In others 0 5,302 Fodder 185,220 356,160 46,851 Vegetables In others 0 17,378 Others 1,752 0 0 Source: The data of 2002–2003 taken from Executive District Office (EDO) Agriculture Nasirabad.(Copy of Letter No. 758-60 of 12 July 2004 Addressed to Deputy Director Statistics Quetta).
Appendix 2 21
22 Appendix 3
STATUS OF COMPLIANCE WITH LOAN COVENANTS
Description Reference Status General Implementation Arrangements 1. The executing agencies shall be responsible Loan Complied with. for the overall supervision, control, and Agreement (LA) execution of the various parts of the Project, Schedule 6, as follows: para. 1 - Water and Power Development Authority (WAPDA) (Pats A, C & E) - Balochistan Irrigation and Power Department (BIPD) and Balochistan Agriculture Department (BAD) (Parts B and D) 2. The Borrower shall establish a Project LA Schedule 6, Complied with. Steering Committee (PSC), chaired by the para. 2 additional chief secretary of the Planning and Development Department of Balochistan. The chief engineer, Project Management Organization (PMO), shall serve as the executive secretary. The PSC shall meet at least quarterly, and more often if required. 3. The PSC shall be assisted by two LA Schedule 6, Complied with. subcommittees for effective project para. 3 coordination. - an administrative subcommittee, chaired by the commissioner of the Sibi Division; and - a technical subcommittee, chaired by the secretary of BIPD The two subcommittees shall meet and take action in accordance with instructions issued by the PSC. 4. The Borrower shall establish a project LA Schedule 6, Partly complied with. management organization (PMO), headed by paras. 4 and 5 a full-time chief engineer from WAPDA and including three units, each headed by a The timely project director, as follows: a design and recruitment of monitoring unit and an implementation unit qualified and (under WAPDA); and an on-farm water experienced staff management unit (under BAD). The PMO encountered shall be adequately staffed with qualified, full- problems. time technical and administrative staff in Quetta and D.M. Jamali.
Appendix 3 23
Description Reference Status 5. The design and monitoring and LA Schedule 6, Partly complied with. implementation units shall be assisted by a para. 6 minor canal cell to be established within BIPD, and shall function under the administration of BIPD. The minor canal cell shall be staffed by two experienced engineers and other suitable technical personnel. 6. The on-farm water management unit shall be LA Schedule 6, Complied with under assisted by nine on farm water management para. 7 Pat Feeder field teams, consisting of nine persons each. Command Area The teams shall be constituted within the Development Project Department of Agriculture Extension (DAE) of (PFCADP). BAD and assigned to the Project. The covenant under PFCADP was changed to: “The Borrower shall cause (the Balochistan government) to ensure that BAD is able to recruit incremental staff required to execute the Project.” 7. The PMO shall closely liaise with the Pat LA Schedule 6, Complied with. Feeder Circle, which will be responsible for para. 8 the operation and maintenance (O&M) of all irrigation facilities in the project area throughout project implementation and thereafter. 8. Appropriate arrangements shall be made LA Schedule 6, Complied with. promptly by Balochistan for effective para. 9 implementation of Part D of the Project
through (i) DAE of BAD, (ii) the Directorate of Agricultural Research (DAR) of BAD, and (iii) BIPD. The chief engineer of the PMO shall coordinate the activities carried out under Part D with the other project activities. 9. The Directorate of Agricultural Extension of LA Schedule 6, Complied with under BAD shall establish, as required, special units para. 10 PFCADP. in the project area for the implementation of the cotton maximization program and cotton research. The Borrower shall ensure that the Pakistan Central Cotton Committee will provide necessary technical assistance to this unit.
24 Appendix 3
Description Reference Status Implementation Aspects 10. The Borrower shall ensure that the functions LA Schedule 6, Complied with. of the pilot farm be expanded by means of paras. 11 & 12 the additional equipment provided under the Project. This equipment shall not be procured before the establishment of the pilot farm has been completed substantially. WAPDA staff assigned to the Project shall be allowed to use the soil and water-testing laboratory to facilitate drainage investigations as required for the implementation of the Project. 11. The PMO shall conduct detailed drainage LA Schedule 6, Complied with. investigations at the initial stage of project para. 13 implementation. Data generated from these Salinity Control and investigations, as well as from the simulation Reclamation Project model and the monitoring program, shall (SCARP) Monitoring serve to refine design parameters and areal Organization of extent for the subsurface and surface WAPDA carried out a drainage facilities to be constructed under the groundwater Project and to identify necessary adjustments monitoring program. to the configuration and areal extent of the contemplated drainage system. 12. The design configuration and extent of LA Schedule 6, Not complied with. subsurface drainage under the Project will be para. 14 such as is necessary to provide adequate Additional studies subsurface drainage treatment to all areas were carried out and identified by the technical exercise described the total area to be above, which are projected before the end of covered by implementation period to have groundwater subsurface drainage levels within 0–5 feet of ground surface. was reduced from 25,000 ha to 10,000 ha during reformulation, but was not implemented. 13. BIPD and WAPDA shall perform in situ LA Schedule 6, Complied with. seepage testing of main canal sections RD para. 15 109-238 and RD 238-342, during the annual Lining of the main closure of the canal in April and May 1986 canal was deleted with a view to identifying reaches requiring from the Project. lining and the most suitable lining material for such reaches.
Appendix 3 25
Description Reference Status 14. The Borrower shall ensure that (i) before the LA Schedule 6, Complied with under start of any work to improve any watercourse para. 16 PFCADP. in the project area, the Directorate of Agricultural Extension (DAE) will organize the
farmers whose lands are located within the
command of such watercourse into an Irrigators Association under the Water Users Association Ordinance; and (ii) all Irrigators Associations are organized into Distributary Associations, and such Distributary Associations into a Canal Associations, under the Water Users Associations Ordinance, as soon as the conditions required in such ordinance for the formation of such associations are met. 15. A comprehensive training program shall be LA Schedule 6, Complied with. submitted to the Asian Development Bank para. 17 (ADB) within 9 months of the effective date and before the assignment of any staff for training in other member countries. In the event it is proposed that such training be accommodated under alternative financing, such proposal shall be indicated in the program submitted to ADB for approval. Bonding arrangements shall be provided by the Borrower. 16. The Borrower shall ensure effective LA Schedule 6, Complied with. coordination between Balochistan and the para. 18 Sindh Province on project-related matters involving the interest of both provinces, in particular through the administrative and the technical subcommittees of the Project Steering Committee (PSC). Operation and Maintenance of Project Facilities 17. The Borrower shall ensure that the LA Schedule 6, Complied with. discharges of the irrigation water required for para. 19 the Project are made, and remain available The discharge for the Project, from the Indus River as allocation is now follows: (i) peak Kharif diversion of 6,700 3 protected under the ft /sec., and (ii) annual Rabi diversions of Water Accord of 470,000 acre feet. 1991. 18. The operation and maintenance (O&M) of the LA Schedule 6, Complied with. project facilities shall be carried out by the para. 20 following Government agencies: OFWM and - BIPD for the main irrigation facilities agriculture during and after project implementation, components were
26 Appendix 3
Description Reference Status with WAPDA’s assistance; deleted from the - Concerned water users associations Project and (WUA) for the watercourses; undertaken through - WAPDA (with the assistance of BIPD) for International Fund for the drainage facilities during project Agriculture implementation, and for not less than 1 Development (IFAD) year after completion of such facilities. Loan. The market WAPDA, within 3 months after a joint committee is still inspection shall turn such facilities over to functioning. BIPD for sustained operation and maintenance. - BAD, through DAR, for the facilities for the pilot farms; and - BAD, through DAE, for the marketing facilities, during a brief initial period; thereafter, a market committee shall be established under arrangements satisfactory to ADB. The Borrower shall ensure that the proposed Balochistan Agricultural Produce Marketing Act comes into force and effect in a timely manner for the establishment and operation of the market committee. 19. The Borrower shall promptly provide all LA Schedule 6, Not Complied with. funds, staff, and equipment required for the para. 21 O&M of the project facilities. Adequate O&M funds were not made available, and the Project has accumulated deferred maintenance. 20. In the event that the groundwater levels reach LA Schedule 6, Partly complied with. within 5.0 feet of the ground surface in the para. 22 project area after project completion, the Surface drainage Borrower shall promptly carry out the cover was extended, expansion of the drainage facilities in the but the sub-surface project area as required, providing all drainage component necessary funds for this purpose. could not be implemented due to funding constraints. 21. BIPD shall distribute irrigation water LA Schedule 6, Partly complied with. throughout the project area down to the level paras. 23 & 24 of watercourse head in an equitable manner. WUAs exist only in DAE shall coordinate closely with the relevant part of the project WUAs to ensure the equitable distribution of area. irrigation water at the watercourse level.
Appendix 3 27
Description Reference Status 22. The Borrower shall ensure that the agriculture LA Schedule 6, Partly complied with. extension services provided for Balochistan, para. 25 including those financed by the IDA under the OFWM and ongoing Extension and Adaptive Research agriculture Project, are made available to the project components, area on a priority basis, and that staff including extension, responsible for such extension services are were deleted from properly selected and oriented to provide the the project and specific extension services required for the undertaken through project area. the IFAD loan. After completion of the IFAD project, the extension services are inadequate. 23. Upon completion of the irrigation works in LA Schedule 6, Not complied with. each distributary command, Balochistan shall paras 26 and begin enforcement within such command of a 27 BAD prepared cropping pattern, which shall include Planning progressive elimination of paddy cultivation Commission 1 (PC-1) and introduction of crop diversification, covering all aspects including cultivation of cotton and non- of cropping patterns traditional oil seeds. and cotton maximization. The PCR mission found that paddy is still the dominant Kharif crop, and crop diversification has not been achieved. 24. The Borrower shall ensure that the electrical LA Schedule 6, Complied with. energy required for the operation of the para. 28 project facilities (including a peak of about 2,100 kW) is promptly supplied. 25. Starting with a third calendar year after work LA Schedule 6, Not complied with. completion in the command of each para. 29 distributary, Balochistan shall increase the The water rates have irrigation service fees and start collecting been progressively drainage fees (where applicable) in such increased. However, command; and in the subsequent years shall these increases have increase such fees progressively to ensure been offset by poor full recovery annually of O&M costs for the recovery. From irrigation and drainage for the project area by 1998/1999 to year 2000 and thereafter. 2003/2004, only PRs54.374 million (26%) of the total assessment of
28 Appendix 3
Description Reference Status PRs208.939 million was recovered. The levy of drainage fees has not started. 26. In the event that the Borrower determines LA Schedule 6, Complied with. that full recovery of O&M costs is not para. 30 commensurate with accruing project benefits, The benefits from the the Borrower shall review with ADB and Project are more than proposed adjustments to the above originally envisaged. requirements. 27. Except as ADB and the Borrower might LA Schedule 6, Complied with under otherwise agree, 25% of the costs of the on- para. 31 PFCADP. farm water management materials provided for each WUA under part B of the Project shall be repaid by the WUA to Balochistan, without interest in five equal annual payments, starting 2 years after the beginning of satisfactory operation of the improved watercourse. Monitoring and Evaluation 28. The PMO shall gather essential information LA Schedule 6, Complied with. with respect to the Project’s physical progress para. 32 during implementation, and utilize such information as a base for management decisions regarding implementation. 29. WAPDA shall include the whole project area LA Schedule 6, Complied with. within its groundwater-monitoring program. para. 33 Observation points shall be established on the normal 3,000-meter grid pattern, and measurements made twice annually in April and October. 30. With the assistance of a local institution to be LA Schedule 6, Partly complied with. engaged, WAPDA shall carry out a suitably para. 34 designed and statistically significant Benchmark survey sequence of socioeconomic surveys to was conducted. quantify the impact of the Project on the beneficiaries. 31. The Borrower shall continue to ensure that LA Schedule 6, Complied with. ADBP, commercial banks, and FBC make para. 35 available to farmers an adequate volume of production and development credits for the purchase of fertilizer and other cash costs of production, and to meet the medium- and long-term investment requirements of the farmers.
Appendix 3 29
Description Reference Status 32. The Borrower shall discuss annually with LA Schedule 6, Complied with. ADB policies affecting the operations of the para. 36 agricultural financial institutions in Pakistan, regarding mobilization of resources and provision of adequate and effective credit to farmers. 33. The Borrower shall ensure that crop support LA Schedule 6, Complied with. prices and procurement policies and para. 37 arrangements—in particular for water, rice, The Borrower cotton, and oilseeds—will provide adequate establishes crop incentives to farmers, induce expanded support prices and production and increased productivity, and procurement policies promote balanced development of the and arrangements. agriculture sector. 34. The Borrower shall gradually reduce the LA Schedule 6, Complied with. average subsidy per unit cost of fertilizer, and para. 38 shall eliminate the subsidy within the Sixth Five-Year Plan, or by such other date as the Borrower and ADB may agree. The effect of price movements of fertilizer on offtakes, farm production costs, and outputs shall be reviewed periodically. 35. At least annually, or as the need arises, the LA Schedule 6, Complied with. Borrower, provincial governments, and ADB para. 39 will discuss changes in prices of agricultural inputs and outputs and other economic developments as they affect project implementation and policy issues. 36. WAPDA, BIPD, and BAD shall furnish to ADB Project Complied with. quarterly reports on the execution of the Agreement (PA) Project and on the operation and Section 2.06 (b) management of the project facilities. 37. After physical completion of the Project and PA Section 2.06 Complied with. not later than 3 months thereafter, WAPDA, (b) BIPD, and BAD, through the PMO, shall prepare and furnish to ADB a report on the execution and initial operation of the Project. 38. WAPDA, BIPD, and BAD shall maintain PA Section 2.06 Complied with. separate accounts for the Project and for its (b) overall operations, and have such accounts WAPDA’s audited audited annually in accordance with sound accounts were auditing standards by independent auditors sometimes delayed. acceptable to ADB. Unaudited reports shall be submitted to ADB not later than 6 months after the close of the said fiscal year, and audited reports not later than 9 months.
30 Appendix 4
ECONOMIC ANALYSIS
A. Economic Analysis
1. General
1. The Project’s economic viability was reexamined based on the updated costs, extended implementation period, and updated benefit stream. The project benefits from improved irrigation facilities consist of the incremental agricultural production that would result from increased supplies of water. The baseline yields were taken from the appraisal documents, whereas the increase in yields with the Project was based on the review of present yields in the project area. The economic prices were measured as net of all subsidies and price supports to reflect the true societal costs of output and inputs. World prices adjusted to local conditions were used to reflect true economic values. Economic prices of non-traded items were obtained by multiplying prices at farm gate by a standard conversion factor. In undertaking the economic analysis, project benefits from crops were expressed in monetary terms. Indirect benefits of the Project were not considered.
2. The economic analysis was carried out in constant 2004 prices in PRs, using world prices as the numeraire. The benefits were computed on the 2004 price level. Costs before 2004 were converted, using the price indices and exchange rates shown in Table A4.1.
Table A4.1: Exchange and Inflation Rates
Exchange Rate CPI Growth CPI Year (PRs=$1) (%) Factors 1987 17.19 6.00 3.68 1988 17.61 6.00 3.47 1989 19.35 10.40 3.28 1990 21.50 6.00 2.97 1991 22.42 12.70 2.80 1992 24.84 10.60 2.48 1993 25.96 9.80 2.24 1994 30.16 11.30 2.04 1995 30.85 13.00 1.84 1996 33.57 10.80 1.62 1997 38.99 11.80 1.47 1998 43.20 7.80 1.31 1999 46.79 5.70 1.21 2000 51.77 3.60 1.15 2001 58.44 4.40 1.11 2002 58.65 3.50 1.06 2003 57.50 3.10 1.03 2004 58.00 3.90 1.00 CPI = Consumer Price Index Source: Pakistan Economic Survey 2003–2004.
2. Economic Prices
3. To evaluate monetary benefits of crop production from increases in cropped area and average yields due to the implementation of the project works, border prices of inputs and
Appendix 4 31 outputs were used. International border economic prices for the major crops (rice, cotton, and wheat)1 and fertilizer (urea, and DAP 2) were calculated and are summarized in Table A4.4 to Table A4.8. Actual international prices were used for 1997 to 2003, and projected prices were used for 2004 to 2015.The international border economic prices were prepared on the basis of 2004 commodity prices, published by the World Bank, and were adjusted to the farm gate to account for transportation, processing, packing, and handling charges. In estimating benefits, commodity prices were held constant at the 2004 level to avoid the methodological complexity of calculating crop benefits.
4. For the remaining commodities, market prices were collected from the project area (market of Dera Murad Jamali). These prices, adjusted to the farm gate, were expressed in monetary terms by applying Standard Conversion Factor (SCF) of 0.90 to prices used in the economic analysis. Transporting, loading, and packaging charges also were adjusted by applying SCF. The derived farm gate prices of agricultural produce are summarized in Table A4.9.
3. Project Implementation Period and Period of Analysis
5. The project activities were implemented over 15 years, from 1986 to 2000. The on-farm water management (OFWM) expenditure was incurred up to December 2003 under the International Fund for Agriculture Development (IFAD) 3 loan. Since the benefits from the Project financed by the Asian Development Bank (ADB) overlap with those from the IFAD project, the costs of the IFAD project also were accounted for in the analysis. The analysis period was up to 2039 (or 50 years), which corresponded to the original analysis period at appraisal.
4. Economic Costs
6. The local economic costs for the Project were determined based on the actual expenditure schedule included in the Project Completion Report (PCR) prepared by the project consultant in January 2001, after deducting the interest during construction. The annual disbursements by ADB were converted to PRs by applying the corresponding exchange rates, which are shown in Table A4.10. The cost of the Pat Feeder Command Area Development Project (IFAD Loan 353-PK) was taken from its completion review report in May 2004.4 The economic costs for the Project were calculated by taking the annual expenditures in PRs and applying the standard conversion factor of 0.90 to local costs. The costs were brought to 2004 price level using the Pakistan consumer price index, which are shown in Table A4.11. No data were available on the taxes and duties portion of project costs. The results of the analysis were not sensitive to excluding explicit allowances for taxes and duties. Flood control costs and works were part of the irrigation project component. The economic capital cost for the Project was PRs14.97 billion in July 2004 prices.
1 For some years, Pakistan was exporting wheat. However, during the past 3 years, wheat was imported due to shortages. The import of wheat is likely to continue because the demand is rising as the population increases and production stagnates or decreases due to water shortages. 2 Diammonium Phosphate 3 IFAD. 1994. Pat Feeder Command Area Development Project. (Loan 353-PK). Rome 4 IFAD. May 2004. Pat Feeder Command Area Development Project (IFAD Loan 353-PK): Project Completion Review Report. No. 1507-PK. Rome
32 Appendix 4
7. The project consultants estimated the annual operation and maintenance (O&M) costs at PRs113.26 million for 2000, which were outlined in the consultants’ report on O&M guidelines in September 2000. The O&M costs included provision for dredging Desert Pat; and replacement of vehicles, machinery, and equipment at 6 years, and pumps and motors at 10 years. The O&M costs, adjusted to 2004 level, were estimated at PRs130.72 million. The actual O&M costs incurred by the Irrigation and Power Department (IPD) were much lower. However, proper O&M is necessary for sustainability, and the required O&M costs were used in the analysis.
5. Project Benefits
8. The project benefits since the Project’s beginning, and anticipated for the remainder for project life, were estimated based on data collected during the PCR Mission. The project benefits accrued from increases in cropped areas and crop yields resulting from greater efficiency of water use, rehabilitation, and improvements in the Pat Feeder Canal.
9. Table A4.12 summarizes the assumed buildup of cropped area with and without the Project. The cultivated command area (CCA) for the Project was 185,000 hectares (ha). At appraisal, the annual cropped area without the Project was assumed at 129,850 ha, meaning a cropping intensity of 70% (31% in Kharif and 39% in Rabi). With the Project, cropping intensity was estimated at 100% (53% in Kharif and 47% in Rabi). This included 42,665 ha under paddy, 27,825 ha under cotton, and 37,100 ha each under wheat and grams. The actual cropping pattern in the project area developed differently. According to the data supplied by Executive District Officer, Agriculture in Nasirabad, the cropping intensity in the project area in 2002–2003 was 120% (45% in Kharif and 75% in Rabi), which has been adopted as the “with Project” cropping intensity for the Economic Analysis.5 With the Project, the Kharif intensity was lower than the appraisal estimates due to excessive paddy cultivation, which needs more water than other crops. The area under paddy increased to 58,100 ha, whereas the area under cotton was restricted to 9,847 ha. Initially, the area under cotton increased. However, the returns were low due to pest attacks, prompting farmers to shift away from cotton. Rabi intensity was much higher than appraisal estimates, because most of the gram, barley, and some wheat were planted as dobari crops (crops sown on residual moisture from paddy, needing much less irrigation water than normal sowing). At appraisal, the wheat and gram area with the Project was estimated at 74200 ha. Now, the combined area under wheat, barley, and grams has increased to 110,566 ha, which is 51,870 ha higher than the appraisal estimates. This suggests that most of the paddy cultivation area is being used for raising wheat, gram, and barley. The cropping pattern at appraisal did not include pulses, vegetables, melons, etc., which now occupy about 7,800 ha. Due to weak extension services in the project area, no major shift in the cropping
5 The estimates of cropping intensity by different organizations differ considerably. At Appraisal as well as at Project Reformulation the ‘without Project’ cropping intensity was taken as 70% and ‘with Project’ intensity was taken as 100%. The ADB Report “Optimizing Existing Investments in the Water Resources Sector in the Islamic Republic of Pakistan-June 1999” observed that the cropping intensity both at Appraisal and at Reformulation were underestimated. The Report indicated a cropping intensity of 133 percent in 1996, the year prior to the commencement of additional flows, and estimated that it would increase from 133 percent to 149 percent at the completion of the Project. The PCR Mission collected data on cropping intensity from the Department of Agriculture, which indicated a cropping intensity of 120% in 2003. The Mission also reviewed data collected by other consultants working in the area. The consultants for National Drainage Project prepared an Appraisal Report on “Pat Feeder Minors Remodeling Sub-Project” in April 2001.They reported the cropping intensity as 86% in 1998- 99. As per their Report, the cropping intensity is based on review of published data, and the necessary adjustments made after survey of the command area and discussions with farmers. Syed M. Arif in his “Impact Evaluation Report of Pat Feeder Command Area Development Project (October 2003) observed, “The average cropping intensity, as per information from EDO, Agriculture Department, is quoted as 118%, while as per official source of PFCADP it is 130%. However during appraisal the cropping intensity under the project situation was calculated to be 116-118%. Based on this review the PCR Mission adopted the “without Project” cropping intensity as 70%, the same as at Appraisal and the “with Project” cropping intensity as 120%.
Appendix 4 33 patterns is expected in the near future. However, considering the poor maintenance of irrigation and drainage infrastructure, and the rise in the water table, the cropping intensity might not increase further. In fact, the intensity could decrease in the long run. The effect of this reduction was tested in the sensitivity analysis.
10. Crop yields were assumed to increase with the Project, considering the previous crop yields in the project area and their trend in the past (Table A4.13). The base yields were those prevailing in the project area at the time of appraisal. The wheat yield in 2002–2003 was reported to have fallen to 1 ton/ha. During the PCR Mission, this issue was discussed with the Agriculture Extension personnel, who considered this a temporary phase as initially the emphasis was on expansion of the cropped area. With that achieved, the farmers are expected to try to increase yields and production. Recently, the Government increased the support price for wheat by about 15%. In addition, the farmers reportedly are getting prices higher than the support price from private sector buyers. These factors are likely to help in achieving a yield of about 2 tons/ha (close to the provincial average). The effect of wheat yield possibly staying at 1 ton/ha was examined in the sensitivity analysis.
11. Based on the agronomic data related to present and future cropping intensities, crop yields, and associated crop inputs, crop budgets with and without the Project were prepared. Gross Production Value (GPV), cost of production, and gross margins for the project area were computed by multiplying respective areas of different crops with corresponding yields without and with the Project. The difference of crop gross margins with and without the Project was taken to represent net incremental benefits, which are given in Table A4.14.
6. Results
12. The viability of the Project was examined by showing its profitability in terms of excess benefits over costs. Economic justification was evaluated based on such parameters as net present worth, benefit-cost ratio, and internal rate of return. Based on the benefits and costs, the internal rate of return was computed. The results of the analysis are shown in Table A4.15 and are summarized below:
Table A4.2: Summary of Economic Indicators (PRs million)
Economic Indicators At 12% Discount Rate At Appraisal At Completion Present Worth of Benefits 3,353.03 4,171.00 Present Worth of Costs 3,225.68 5,251.54 Net Present Worth 127.35 (1,080.54) Benefit/Cost Ratio @ 12% 1.04:1 0.79:1 EIRR (%) 13.00 10.09 EIRR: Economic Internal Rate of Return. Source: Asian Development Bank estimates.
13. The Project had an economic internal rate of return (EIRR) of 10.09%, lower than the appraisal estimate of 13.00%. This was due to the long delay in project completion, deletion of some of the project components, and significant increases in costs.
7. Sensitivity Analysis
14. A sensitivity analysis was carried out to evaluate the economic viability of the project in case some assumptions did not materialize. The usual sensitivity analysis scenarios were not applicable, because the Project was already complete. With better water management and
34 Appendix 4 extension services, better yields of crops could be achieved and the benefits from the Project could be increased. For comparison, a sensitivity analysis was undertaken by varying the following assumptions:
(i) 10% decrease in project benefits; (ii) 20% decrease in project benefits; (iii) Wheat yield stagnating at 1 ton/ha; (iv) 10% increase in price of all commodities; (v) 10% increase in yield of all crops except rice; (vi) 10% increase in the price of all commodities, and 10% increase in the yield of all crops except rice (occurring together); (vii) Rice area reduced to 38,000 ha and cotton area increased to 30,000 ha; and (viii) Appraisal cropping pattern with current level of yields.
15. The results of the sensitivity analysis are shown in Table A4.3.
Table A4.3: Sensitivity Analysis
Alternative Scenarios EIRR (%) Base Case 10.09 Sensitivity Analysis i) 10% decrease in project benefits 9.26 ii) 20% decrease in project benefits 8.37 iii) Wheat yield stagnating at 1 ton/ha 7.09 iv) 10% increase in yields of all crops except rice 10.76 v) 10% increase in prices of all crops 11.03 vi) 10% increase in yields of all crops except rice and 10% increase in prices of all 11.67 crops (occurring together) vii) Rice area reduced to 38,000 ha and cotton area increased to 30,000 ha 9.84 viii) With Project cropping pattern assumed at appraisal with current level of yields 7.70 EIRR = economic internal rate of return, ha= hectare. Source: Mission Estimates.
16. The results of the sensitivity analysis indicate that Project was quite sensitive to various assumptions. Increase in yield of different crops would have a positive impact on the Project, and efforts are needed to improve yields, particularly the yield of wheat.
B. Financial Analysis
17. Household incomes were modeled for a median farm of 4 ha (Table A4.16). The median farm is half of the average farm size of 8 ha. Financial prices, based on 2004 prices at Dera Murad Jamali market, were used for inputs and outputs, and the cost of water was added to crop budgets. The analysis was based on the same cropping pattern, cropping intensity, input usage. and yields that were used in the economic analysis.
18. The gross farm income from the 4 ha farm without the Project, estimated at PRs24,320, was expected to increase by about 2.8 times6 to PRs67,930. This included return on family labor. The incremental income from the 4ha farm was about PRs43,610. According to the Balochistan Agricultural Statistics (2002–2003), the average household size in Nasirabad district was 6.4, and in Jafarabad district was 7.1. Since more than two thirds of the project area is in Nasirabad district, the average household size in the project area was taken as 6.6. As such, the per capital income on a 4 ha farm increased from PRs3,685 to PRs10,292 yearly. Thus, the Project appears successful in benefiting a number of relatively poor farm families.
6 At appraisal, household incomes were expected to almost triple after completion of the Project.
Table A4.4: Economic Price of Paddy (Irri) for Use in Pat Feeder Canal Project (Export Parity)
Item 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015
Thai 5% Broken Milled White Rice FOB 219.24 213.12 206.97 200.78 199.87 198.92 196.86 202.00 201.90 207.29 207.37 Bangkoka Quality Adjustment b 197.32 191.81 186.27 180.70 179.88 179.02 177.18 181.80 181.71 186.56 186.63 Exchange Rate c 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 FOB Karachi 11543.24 11221.0 10896.8 10570.8 10523.0 10473.0 10364.9 10635.3 10630.0 10913.8 10917.9 Karachi Port Handling Charges 150.06 145.87 141.66 137.42 136.80 136.15 134.74 138.26 138.19 141.88 141.93 Packing Charges (50 kg. bag) 60.02 58.35 56.66 54.97 54.72 54.46 53.90 55.30 55.28 56.75 56.77 Losses @ 2% 230.86 224.4 217.9 211.4 210.5 209.5 207.3 212.7 212.6 218.3 218.4 Storage and Handling 80.00 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 Transport Charges from Local Market to (266.3) (266.3) (266.3) (266.3) (266.3) (266.3) (266.3) (266.3) (266.3) (266.3) (266.3) Karachid Ex. Mill Value of Rice 11288.53 10978.6 10666.8 10353.3 10307.2 10259.1 10155.2 10415.3 10410.2 10683.2 10687.1 Convert to Paddy Milled Rice, Export Parity (65%) 7337.55 7136.1 6933.4 6729.6 6699.7 6668.4 6600.9 6769.9 6766.6 6944.1 6946.6 Husk Local Sale 200.00 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 Total Value Paddy Rice 7537.55 7336.1 7133.4 6929.6 6899.7 6868.4 6800.9 6969.9 6966.6 7144.1 7146.6 Milling Charges 856.00 856.0 856.0 856.0 856.0 856.0 856.0 856.0 856.0 856.0 856.0 Local Transport and Market Charges 135.00 135.0 135.0 135.0 135.0 135.0 135.0 135.0 135.0 135.0 135.0 Farm Gate Price of Paddy PRs/ Metric ton 6546.55 6345.1 6142.4 5938.6 5908.7 5877.4 5809.9 5978.9 5975.6 6153.1 6155.6 PRs per Kg 6.55 6.35 6.14 5.94 5.91 5.88 5.81 5.98 5.98 6.15 6.16 FOB=Freight on board a World Bank Commodity Price Pink Sheets and Global Commodity Price Prospects 4 Appendix b For differences in quality and marketing: based on relationship between export unit price c US$1=PRs58.5 d Adjusted by SCF of 0.90 Source: World Bank Commodity Price Pink Sheets and Global Commodity Price Prospects 35
36 Table A4.5: Economic Prices of Wheat for Use in Pat Feeder Canal Project (Import Parity)
4 Appendix Item 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015
Canadian No. 1 WRS, in Store, 86.09 79.59 73.04 113.18 132.91 153.51 145.56 135.00 128.03 136.62 139.75 St. Lawrence, Current $ per Metric Ton a Adjusted by Factor of 88.64 81.95 75.21 116.54 136.84 158.06 149.87 139.00 131.83 140.67 143.89 1.03 b Freight and Insurance 29.64 29.64 29.64 29.64 29.64 29.64 29.64 29.64 29.64 29.64 29.64 CIF Karachi, Constant $ per 118.28 111.58 104.84 146.17 166.48 187.70 179.50 168.63 161.46 170.31 173.52 Metric Ton Exchange Rate c 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 CIF Karachi, Constant PRs per 6919.50 6527.60 6133.40 8551.10 9739.00 10980.30 10501.00 9865.10 9445.66 9962.90 10151.10 Metric Ton Handling & Transport between 328.13 328.13 328.13 328.13 328.13 328.13 328.13 328.13 328.13 328.13 328.13 Port and Market Adjusted by SCF d Local Market Price 7247.63 6855.73 6461.53 8879.23 10067.13 11308.5 10829.13 10193.23 9773.79 10291.03 10479.23 Handling & Transportation (135.00) (135.00) (135.00) (135.00) (135.00) (135.00) (135.00) (135.00) (135.00) (135.00) (135.00) between Farm Gate and Market Adjusted by SCF Farm gate Price, Constant PRs 7112.63 6720.73 6326.53 8744.23 9932.13 11173.5 10694.13 10058.23 9638.79 10156.03 10344.23 per Metric Ton PRs per Kg 7.11 6.72 6.33 8.74 9.93 11.17 10.69 10.06 9.64 10.16 10.34 CIF = Cost Insurance Freight. SCF = Standard Conversion Factor a World Bank commodity price pink sheets and global commodity price prospects. b For differences in quality and marketing; based on relationship between export unit price and prices of reference quality. c $1 = PRs58.5 d Adjusted by SCF of 0.90. Source: World Bank commodity price pink sheets and global commodity price prospects
Table A4.6: Economic Prices of Cotton for Use in Pat Feeder Canal Project (Export Parity)
Item 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015
Middling, 1-3/32 Inch, CIF 1741.6 1739.9 1738.2 1291.5 1176.5 1056.3 1393.8 1290.0 1303.0 1329.5 1292.0 Europe Current $ per Metric Ton a
Adjusted by Factor of .97b 1683.2 1681.6 1679.9 1248.3 1137.1 1020.9 1347.1 1246.8 1259.3 1284.9 1248.7
Exchange Rate c 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5
FOB Karachi, Constant PRs per 98469.8 98373.0 98275.6 73023.3 66517.9 59720.1 78804.2 72935.7 73670.4 75168.2 73048.4 Metric Ton
Handling and Transport between (244.2) (244.2) (244.2) (244.2) (244.2) (244.2) (244.2) (244.2) (244.2) (244.2) (244.2) Port and Market Adjusted by SCF d
Ex-Ginnery Price of Lint 98225.6 98128.8 98031.4 72779.1 66273.7 59475.9 78560.0 72691.5 73426.2 74924.0 72804.2
Lint Value from 1 Ton of Seed 32741.9 32709.6 32677.1 24259.7 22091.2 19825.3 26186.7 24230.5 24475.4 24974.7 24268.1 Cotton @ 1/3
Ginning, Baling, etc. Adjusted by (883.9) (883.9) (883.9) (883.9) (883.9) (883.9) (883.9) (883.9) (883.9) (883.9) (883.9) SCF
Handling and Transportation (135.0) (135.0) (135.0) (135.0) (135.0) (135.0) (135.0) (135.0) (135.0) (135.0) (135.0) between Farm Gate and Mill Adjusted by SCF
Price at Ginnery, per Metric Ton 31722.9 31690.7 31658.2 23240.8 21072.3 18806.4 25167.7 23211.6 23456.5 23955.7 23249.1 of Lint
Price PRs per Kg 31.7 31.7 31.6 23.2 21.1 18.8 25.2 23.2 23.5 24.00 23.2 CIF = Cost Insurance Freight, FOB = Freight on board, SCF = Standard Conversion Factor a World Bank commodity price pink sheets and global commodity price prospects. b For differences in quality and marketing; based on relationship between export unit price and prices of reference quality. c
$ 1 = PRs58.5. 4 Appendix d Adjusted by SCF of 0.90. Source: World Bank commodity price pink sheets and global commodity price prospects.
37
38 Table A4.7: Economic Prices of Urea for Use in Pat Feeder Canal Project (Import Parity)
Appendix 4 Appendix Item 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015
Urea (Varying Origin), 70.16 63.61 57.02 100.29 99.10 97.85 138.38 128.00 124.78 117.78 117.21 Bagged, FOB. Europe. Current $ per Metric Ton a Freight and Insurance 29.64 29.64 29.64 29.64 29.64 29.64 29.64 29.64 29.64 29.64 29.64 CIF Karachi, Constant $ per 99.80 93.25 86.66 129.92 128.73 127.49 168.02 157.64 154.42 147.41 146.84 Metric Ton Exchange Rate b 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 58.50 FOB Karachi, PRs per Metric 5838.33 5455.01 5069.47 7600.60 7530.89 7458.04 9829.14 9221.73 9033.59 8623.77 8590.39 Ton Handling and Transportation 351.00 351.00 351.00 351.00 351.00 351.00 351.00 351.00 351.00 351.00 351.00 between Port and Market Adjusted by SCF c Local Market Price 6189.33 5806.01 5420.47 7951.60 7881.89 7809.04 10180.14 9572.73 9384.59 8974.77 8941.39 Handling and Transportation 135.00 135.00 135.00 135.00 135.00 135.00 135.00 135.00 135.00 135.00 135.00 between Farm Gate and Mill Adjusted by SCF Farm Gate Price 6324.33 5941.01 5555.47 8086.60 8016.89 7944.04 10315.14 9707.73 9519.59 9109.77 9076.39 Price per Metric Ton of 13748.55 12915.2 12077.1 17579.57 17428.02 17269.66 22424.22 21103.75 20694.77 19803.86 19731.29 Nutrient (0.46) PRs Per Nutrient Kg 13.75 12.92 12.08 17.58 17.43 17.27 22.42 21.10 20.69 19.80 19.73 CIF= Cost Insurance Freight, FOB= Freight on board, SCF= Standard Conversion Factor a World Bank commodity price pink sheets and global commodity price prospects. b For differences in quality and marketing; based on relationship between export unit price and prices of reference quality. c $1 = PRs58.5. d Adjusted by SCF of 0.90. Source: World Bank commodity price pink sheets and global commodity price prospects
Table A4.8: Economic Prices of Fertilizer (DAP) for Use in Pat Feeder Canal Project (Import Parity)
Item 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015
Diammonium Phosphate, Bulk, FOB US 121.4 115.0 108.6 153.0 158.0 163.3 176.3 175.0 167.4 160.2 157.8 Gulf $ per Metric Ton, Basis a
Freight and Insurance 29.6 29.6 29.6 29.6 29.6 29.6 29.6 29.6 29.6 29.6 29.6
CIF Karachi, Constant $ per Metric Ton 151.0 144.6 138.2 182.6 187.6 192.9 206.0 204.6 197.1 189.8 187.4
Exchange Rate b 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5
CIF Karachi, Constant PRs per Metric Ton 8835.5 8460.9 8084.1 10682.0 10976.6 11284.4 12049.7 11971.2 11528.3 11104.2 10963.9
Handling and Transportation between Port 351.0 351.0 351.0 351.0 351.0 351.0 351.0 351.0 351.0 351.0 351.0 and Market Adjusted by SCF c
Local Market Price 9186.5 8811.9 8435.1 11033.0 11327.6 11635.4 12400.7 12322.2 11879.3 11455.2 11314.9
Handling and Transportation between Farm 135.0 135.0 135.0 135.0 135.0 135.0 135.0 135.0 135.0 135.0 135.0 Gate and Mill Adjusted by SCF
Farm Gate Price 9321.5 8946.9 8570.1 11168.0 11462.6 11770.4 12535.7 12457.2 12014.3 11590.2 11449.9
Price per Metric Ton of Nutrient (0.46) 20264.2 19449.8 18630.6 24278.3 24918.6 25587.7 27251.5 27080.9 26118.1 25196.1 24891.0
PRs per Nutrient Kg 20.2 19.4 18.6 24.3 24.9 25.6 27.2 27.1 26.1 25.2 24.9 CIF= Cost Insurance Freight, DAP = Diammonium Phosphate, FOB= Freight on board, SCF: Standard Conversion Factor a World Bank commodity price pink sheets and global commodity price prospects. b For differences in quality and marketing; based on relationship between export unit price and prices of reference quality. c $1 = PRs58.5. d Adjusted by SCF of 0.90. Source: World Bank commodity price pink sheets and global commodity price prospects.
Appendix 4 Appendix 39
40 Appendix 4
Table A4.9: Farm Gate Prices of Agricultural Outputs and Inputs
Financial Prices Economic Prices S. No. Items Unit (PRs) (PRs) 1 Outputs Rice PRs/kg 7.62 Border Price Sorghum PRs/kg 5.16 4.65 Kharif Fodder PRs/kg 0.87 0.78 Kharif Oilseeds PRs/kg 15.80 14.22 Cotton PRs/kg 25.12 Border Price Kharif Vegetable (tomato) PRs/kg 4.77 4.30 Wheat PRs/kg 8.44 Border Price Rabi Oilseed PRs/kg 15.20 13.68 Gram PRs/kg 17.11 15.40 Rabi Fodder PRs/kg 0.62 0.56 Barley PRs/kg 9.47 8.52 Rabi Vegetable (onion) PRs/kg 5.32 4.79 2 Inputs 3 Seeds Rice PRs/kg 10.06 9.05 Sorghum PRs/kg 7.90 7.11 Kharif Fodder PRs/kg 7.90 7.11 Kharif Oilseeds PRs/kg 18.95 17.06 Cotton PRs/kg 30.00 27.00 Kharif Vegetable (tomato) PRs/kg 50.00 45.00 Wheat PRs/kg 11.60 10.44 Rabi Oilseed PRs/kg 18.24 16.41 Gram PRs/kg 22.70 20.43 Rabi Fodder PRs/kg 19.76 17.78 Barley PRs/kg 10.90 9.81 Rabi Vegetable (onion) PRs/kg 6.38 5.75 4 Fertilizers a Nitrogen (urea) PRs/N. kg 23.91 Border Price Phosphorus (DAP) PRs/N. kg 40.43 Border Price 5 Labor PRs/Day 100.00 75 6 Plowing Rate PRs/Plow 544.00 489 7 Spray Rate PRs/Spray 1236.00 1112 DAP= Diammonium Phosphate, N.Kgm = Nutrient Kilograms a Nutrients Value Source: Market Committee at Dera Murad Jamali.
Appendix 4 41
Table A4.10: Disbursements by Asian Development Bank
Disbursements Exchange PRs Year ($ million) Rate (million) 1987 0.079 17.19 1.36 1988 0.765 17.61 13.47 1989 2.358 19.35 45.63 1990 1.052 21.50 22.62 1991 4.925 22.42 110.42 1992 6.632 24.84 164.74 1993 17.471 25.96 453.55 1994 28.989 30.16 874.31 1995 29.336 30.85 905.02 1996 32.865 33.57 1103.28 1997 18.506 38.99 721.55 1998 8.299 43.20 358.52 1999 7.293 46.79 341.24 2000 3.581 51.77 185.39 Total 162.151 5301.07 Source: Asian Development Bank
42 Table A4.11: Project Cost Computation at July 2004 Prices
4 Appendix PFCRI Project OFWM Total At Current c Growth CPI Growth CPI Year IFAD and Investment Price Level GOPa ADBb JBIC (%) (%) Factor GOP (PRs million) (PRs million)
1987 1.29 1.360 2.65 6.00 1.06 3.69 9.75 1988 16.52 13.470 29.99 6.00 1.06 3.48 104.30 1989 22.98 45.630 68.61 10.40 1.10 3.28 225.14 1990 2.89 22.620 25.51 6.00 1.06 2.97 75.81 1991 38.86 110.420 36.39 185.67 12.70 1.13 2.80 520.62 1992 109.43 164.740 274.17 10.60 1.11 2.49 682.15 1993 161.04 453.550 178.30 792.89 9.80 1.10 2.25 1783.71 1994 254.54 874.310 33.70 16.47 1179.02 11.30 1.11 2.05 2415.63 1995 230.80 905.020 172.11 1307.93 13.00 1.13 1.84 2407.68 1996 351.12 1103.280 140.86 1595.26 10.80 1.11 1.63 2598.76 1997 394.66 721.550 122.51 1238.72 11.80 1.12 1.47 1821.24 1998 240.99 358.520 91.33 690.84 7.80 1.08 1.32 908.51 1999 118.29 341.240 159.06 618.59 5.70 1.06 1.22 754.64 2000 82.90 185.390 114.85 383.14 3.60 1.04 1.15 442.20 2001 91.61 91.61 4.40 1.04 1.11 102.06 2002 113.33 113.33 3.50 1.04 1.07 120.93 2003 3.10 1.03 1.03 0.00 2004 3.90 1.04 1.00 0
2,026.31 5301.100 248.38 1,022.13 8597.92 14973.14 CPI = Consumer Price Index, GOP = Government of Pakistan, IFAD = International Fund for Agriculture Development, JBIC = Japan Bank for International Cooperation, OFWM = On Farm Water Management, PFCRI = Pat Feeder Canal Rehabilitation and Improvement. Sources: a GOP figures taken from Halcrow. 2001. Project Completion Report on Pat Feeder Canal Rehabilitation and Improvement Project, Annex 3 Table 4. bADB annual disbursements converted to PRS by applying corresponding exchange rates. cIFAD. 2004. Project Completion Review Report on Pat Feeder Command Area Development Project in Pakistan, Table 16. Rome.
Table A4.12: Crop Area Buildup With and Without Project (hectares)
Without With Project Crops Project 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 Paddy (Irri) 39300 43060 46820 50580 54340 58100 56550 55000 55000 55000 55000 Sorghum 17100 15520 13940 12360 10780 9200 9600 10000 10000 10000 10000 Kharif Oilseeds 1400 1280 1160 1041 921 801 1151 1500 1500 1500 1500 Kharif Fodder 0 694 1388 2082 2776 3470 3735 4000 4000 4000 4000 Cotton 0 1969 3939 5908 7878 9847 9924 10000 10000 10000 10000 Kharif Vegetable & Other 0 191 382 574 765 956 903 850 850 850 850 Kharif Total 57800 62714 67629 72545 77460 82374 81863 81350 81350 81350 81350 Kharif Intensity 31 34 37 39 42 45 44 44 44 44 44 Wheat 54070 60409 66748 73087 79426 85765 85883 86000 86000 86000 86000 Rabi Oilseeds 4415 7260 10104 12949 15793 18638 18819 19000 19000 19000 19000 Gram & Pulses 5500 8772 12045 15317 18590 21862 22081 22300 22300 22300 22300 Rabi Fodder 5145 4647 4150 3652 3155 2657 2829 3000 3000 3000 3000 Barley 2920 3981 5042 6104 7165 8226 8613 9000 9000 9000 9000 Rabi Vegetable (onion) 0 381 763 1144 1526 1907 1954 2000 2000 2000 2000 Rabi Total 72050 85450 98852 112253 125655 139055 140179 141300 141300 141300 141300 Rabi Intensity 39 46 53 61 68 75 76 76 76 76 76 Annual 129850 148164 166481 184798 203115 221429 222040 222650 222650 222650 222650 Cropping Intensity % 70 80 90 100 110 120 120 120 120 120 120 Total Command Area 185,000 ha Sources: 1. Without project area taken from ADB, Appraisal Report. 4 Appendix 2. Area in 2002 based on data supplied by Executive District Officer Extension, Dera Murad Jamali. 43
Table A4.13: Crop Yields Buildup With and Without Project (kilograms/hectare) 44
Appendix 4 Appendix Without With Project Crops Project 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 Paddy (Irri) 3000 3399 3797 4196 4594 4993 4997 5000 5000 5000 5000
Sorghum 800 866 932 998 1064 1130 1165 1200 1200 1200 1200
Kharif Oilseeds 700 700 701 701 702 702 701 700 700 700 700
Kharif Fodder 0 10000 11362 12724 14085 15447 15724 16000 16000 16000 16000
Cotton 0 700 774 848 921 995 998 1000 1000 1000 1000
Kharif Vegetable and Others 0 1250 1452 1655 1857 2059 2080 2100 2100 2100 2100
Wheat 1500 1400 1300 1200 1100 1000 1500 2000 2000 2000 2000
Rabi Oilseeds 600 614 628 641 655 669 685 700 700 700 700
Gram and Pulses 700 860 1020 1179 1339 1499 1499 1500 1500 1500 1500
Rabi Fodder 36000 32327 28653 24980 21306 17633 17817 18000 18000 18000 18000
Barley 600 730 860 990 1120 1250 1250 1250 1250 1250 1250
Rabi Vegetable (onion) 0 7000 7528 8057 8585 9113 9557 10000 10000 10000 10000 Sources: 1. Without project yields taken from ADB Appraisal Report. 2. Yields in 2002 based on data supplied by Executive District Officer Extension, Dera Murad Jamali.
Table A4.14: Incremental Project Benefits (PRs million at economic prices)
Crops 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015
Paddy (Irri) 604.83 744.09 911.98 1052.39 1269.95 1367.81 1281.58 1301.53 1305.25 1361.07 1362.94
Sorghum 47.55 47.18 45.64 43.31 40.22 36.60 39.32 42.79 42.92 43.10 43.13
Kharif Oilseeds 9.89 9.08 8.26 7.49 6.65 5.78 8.33 10.87 10.89 10.93 10.93
Kharif Fodder 0.00 3.80 8.56 13.60 19.87 26.61 28.84 31.92 31.97 32.08 32.09
Cotton 0.00 33.33 74.57 82.43 107.15 126.20 182.10 153.37 156.25 161.82 154.87
Kharif Vegetable (tomato) 0.00 0.64 1.53 2.51 3.75 5.16 4.89 4.62 4.65 4.70 4.70
Wheat 416.56 413.04 404.39 545.83 606.58 658.14 957.39 1195.85 1198.22 1292.50 1325.73
Rabi Oilseeds 25.40 42.55 60.33 78.47 96.57 120.24 123.35 129.52 129.91 130.49 130.59
Gram 42.04 82.53 144.88 221.79 305.48 400.26 401.85 406.32 407.04 407.73 407.96
Rabi Fodder 70.14 57.22 44.53 32.88 23.36 15.43 16.65 17.97 18.01 18.06 18.07
Barley 6.87 12.87 22.33 33.93 48.34 60.65 62.80 65.81 65.87 65.99 66.00
Rabi Vegetable (onion) 0.00 9.89 21.22 34.13 48.55 64.42 69.25 74.11 74.19 74.29 74.31
Total Benefits 1223.26 1456.21 1748.24 2148.76 2576.47 2887.31 3176.34 3434.67 3445.17 3602.75 3631.33
Benefits Without Project 1223.26 1223.26 1223.26 1223.26 1223.26 1223.26 1223.26 1223.26 1223.26 1223.26 1223.26
Incremental Benefits 0.00 232.95 524.98 925.50 1353.21 1664.04 1953.08 2211.41 2221.90 2379.49 2408.07
Source: ADB Mission Estimates Appendix 4 Appendix 45
46 Appendix 4
Table 4.15: Derivation of Economic Internal Rate of Return (PRs million)
Total Total Year Economic O&M Economic Economic Net Benefits Costs Cost Costs Benefits 1 8.78 0 8.78 0 (8.78) 2 93.87 0 93.87 0 (93.87) 3 202.63 0 202.63 0 (202.63) 4 68.23 0 68.23 0 (68.23) 5 468.56 0 468.56 0 (468.56) 6 613.94 0 613.94 0 (613.94) 7 1605.34 0 1,605.34 0 (1,605.34) 8 2174.06 0 2,174.06 0 (2,174.06) 9 2166.91 0 2,166.91 0 (2,166.91) 10 2338.88 0 2,338.88 0 (2,338.88) 11 1639.12 117.65 1,756.77 232.95 (1523.82) 12 817.66 117.65 935.31 524.98 (410.33) 13 679.18 117.65 796.82 925.50 128.68 14 397.98 117.65 515.63 925.50 409.87 15 91.86 117.65 209.50 1,353.21 1,143.70 16 108.84 117.65 226.49 1,664.04 1,437.56 17-52 4,235.80 4,235.80 37,050.01 35,167.62 Total 13,475.80 4,941.30 18,417.10 4,2676.20 2,6612.10
Discount Rates Present Worth Net Present Worth
10% 6,208.17 6,280.47 72.30 12% 5,251.54 4,171.00 (1,080.54) 15% 4,145.57 2,375.19 (1,770.38) 20% 2,881.52 1,030.55 (1,850.97) Economic Internal Rate of Return 10.09 Benefit/Cost Ratio @ 12% 0.79:1 O&M = operation and maintenance Source: ADB Mission estimates
Appendix 4 47
Table A4.16: Crop Budget for 4-Hectare Farm With and Without Project (PRs ‘000 at Financial Prices)
Without With Project-Years after Project Completion
Project 1 2 3 4 5 6 7 8 Output Rice 21.64 21.64 37.90 41.20 44.51 47.82 51.13 49.77 48.40 Sorghum 1.80 1.80 2.45 2.20 1.95 1.70 1.45 1.51 1.58 Kharif Fodder 0.33 0.33 0.32 0.29 0.26 0.23 0.20 0.29 0.38 Kharif Oilseeds 0 0 0.21 0.42 0.62 0.83 1.04 1.12 1.20 Cotton 0 0 1.13 2.25 3.38 4.50 5.63 5.67 5.71 Kharif Vegetables & Other 0 0 0.04 0.08 0.12 0.17 0.21 0.20 0.18 Wheat 16.72 16.72 24.90 27.51 30.13 32.74 35.35 35.40 35.45 Rabi Oilseed 0.92 0.92 1.81 2.52 3.23 3.94 4.66 4.70 4.75 Gram 1.47 1.47 5.12 7.02 8.93 10.84 12.75 12.88 13.00 Rabi Fodder 2.47 2.47 1.12 1.00 0.88 0.76 0.64 0.68 0.72 Barley 0.38 0.38 1.08 1.37 1.66 1.95 2.24 2.35 2.45 Rabi Vegetable (Onion) 0 0 0.44 0.88 1.32 1.75 2.19 2.25 2.30 Total 45.74 45.74 76.07 85.88 95.68 105.49 115.29 114.56 113.83 Inputs Plowing 4.75 4.75 6.27 7.03 7.80 8.56 9.33 9.32 9.31 Seed 2.03 2.03 2.35 2.67 2.99 3.31 3.63 3.64 3.65 Urea 2.47 2.47 3.93 4.36 4.78 5.21 5.64 5.59 5.55 DAP 2.56 2.56 3.48 3.90 4.31 4.72 5.13 5.09 5.05 Spray 0.63 0.63 1.14 1.31 1.48 1.64 1.81 1.79 1.77 Hired Labor 3.52 3.52 4.93 5.68 6.43 7.18 7.94 7.94 7.94 Family Labor 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Water Charges 0.95 0.95 1.08 1.22 1.36 1.50 1.63 1.63 1.62 Contingencies @ 5% 1.18 1.18 1.62 1.83 2.04 2.25 3.16 2.45 1.74 Total 18.10 18.10 24.81 28.00 31.19 34.37 38.26 37.45 36.64 Gross Return Before Tax 27.64 27.64 51.26 57.88 64.50 71.11 77.03 77.11 77.19 Debt Services @ 12% 3.32 3.32 6.15 6.95 7.74 8.53 9.24 9.25 9.26 Gross Return after Tax 24.32 24.32 45.11 50.93 56.76 62.58 67.79 67.86 67.93 Net Farm Return 0.00 0.00 20.79 26.61 32.44 38.26 43.47 43.54 43.61 DAP = Diammonium Phosphate Source: PCR Mission Calculations
48 Appendix 5
STATUS OF OPERATION AND MAINTENANCE OF COMPLETED WORKS AND COST RECOVERY
1. The sustainability of the Pat Feeder Canal Rehabilitation and Improvement Project (the Project) after completion depends on proper operation and maintenance (O&M), which can be achieved only if adequate funds are made available. Preferably, these funds should come from the beneficiaries through payment of abiana1. However, the O&M of irrigation and drainage system is heavily subsidized by the Government, and the gap between O&M expenditure and cost recovery is increasing. Recognizing the importance of O&M and cost recovery, the Government has introduced fundamental changes in its water sector policy. Institutional reforms in the water sector have been introduced in the provinces, which envisage the creation of autonomous service organizations for irrigation and drainage. These organizations include the Balochistan Irrigation and Drainage Authority (BIDA) and area water boards (AWBs), as well as farmer organizations to take over part of the O&M responsibilities.
2. During project implementation, the Government assured the Asian Development Bank (ADB) that Balochistan's Department of Irrigation had developed, and was implementing, a time-bound action plan to bridge the gap between the O&M expenditures for the Project and the revenue collected from irrigation service fees and drainage charge. Irrigation service fees were increased by about 19% in FY1998, and by 13% in FY1999. The introduction of a drainage charge was planned for FY1999 at the rate of PRs160 per hectare, which was to be increased annually by 13%. However, it has not been levied. These measures, in conjunction with the reforms pursued under the National Drainage Program (NDP) and National Drainage Sector Project (NDSP) , would allow full recovery of O&M costs by FY2007.
3. The Government announced the establishment of an Area Water Board (AWB) for the Project. As the AWB became operational, it was to formulate a comprehensive set of rules and regulations to operate the Project. In addition, the Government indicated that it would initiate by 31 December 1999 other institutional reforms agreed to under the NDSP. These included the award of performance-based multiyear contracts for the O&M of the main canal and drainage system, and the establishment of pilot farmers organizations. The implementation of the reforms proceeded more slowly than expected due to (i) the absence of social mobilization effort, (ii) the lack of political will and commitment from some of the Government functionaries, and (iii) procedural delays. Without improvements to O&M, projects are likely run repeated cycles of deferred maintenance and rehabilitation.
4. Water and Power Development Authority (WAPDA) handed over the Project to the Balochistan government in June 1998. The provincial government is maintaining the irrigation system, including the main canal, distributaries and minor canals, and drains. The Project Completion Review (PCR) Mission visited the main canal from Dera Murad Jamali to the cross- regulator at RD 418 2, where the Nasirabad and Temple Distributaries offtake. The main canal showed evidence of siltation, as well as erosion of berms. The Mission was informed that the condition of the canal in upper reaches, particularly near RD 238, was quite poor due to the excessive erosion of berms from the sandy soils in that area. The Mission could not inspect the reach near RD 238 due to security problems.
1 Abiana is the local term for water rates 2 RD means reduced distance for indicating the canal station number. One RD is equal to 1,000 feet
Appendix 5 49
5. The PCR Mission also visited some reaches of the Temple distributary, and reviewed the Judher distributary from its head to tail. Some minors of the Judher Distributary also were inspected. Like the main canal, the distributaries and minors show evidence of siltation, as well as erosion of berms. Similarly, the drains are silted and have vegetative growth, which reduces their carrying capacity significantly.
6. Since the Project was handed over to the government, O&M funding for the Project has increased only minimally (Table A5). Despite a substantial increase in irrigation and drainage works to be maintained, the number of staff assigned to the O&M of the Pat Feeder Canal circle has remained the same. Under the superintending engineer, 16 engineers and 200 technicians, operators, and workers are engaged in O&M.
Table A5: O&M Funding and Cost Recovery (PRs million)
O&M Expenditure Abiana1 Total Gap in O&M Year Salaries O&M and Abiana Canals Drains & Other Expenditure Assessed Recovered Recovered Costs 1990 4.90 5.60 21.09 31.59 8.40 2.01 6.39 1991 4.90 5.60 21.09 31.59 7.69 2.06 5.63 1992 4.90 5.60 21.09 31.59 9.34 3.21 6.13 1993 4.90 5.60 21.09 31.59 10.33 4.53 5.80 1994 4.90 5.60 21.09 31.59 11.80 4.11 7.69 1995 4.90 5.60 21.09 31.59 11.29 4.29 7.00 1996 4.90 5.60 21.09 31.59 16.70 4.56 12.14 1997 4.90 5.60 21.09 31.59 24.86 7.27 17.59 1998 5.30 6.30 23.79 35.39 22.33 5.44 16.89 1999 5.30 6.30 23.79 35.39 25.74 6.78 18.96 2000 5.30 6.30 23.79 35.39 27.95 9.98 17.97 2001 5.30 6.30 23.79 35.39 30.59 11.82 18.77 2002 5.30 6.30 23.79 35.39 37.36 7.02 30.34 2003 5.30 6.30 23.79 35.39 42.66 4.94 37.72 2004 5.50 6.50 24.57 36.57 44.63 13.84 30.79 Total 331.67 91.86 239.81 Percentage of Abiana 100.00 27.70 72.30 O&M=operations and maintenance 1Abiana is the local term for water rates Source: Balochistan Irrigation and Power Department
7. As seen in Table A5, the O&M allocation increased insignificantly after the completion of the Project. Two thirds of the O&M funds (about PRs24.6 million) were spent on salaries and other expenses in 2004, while the allocation for maintenance of canals and drains (about PRs12 million) was only about a third of the allocation. The consultants had estimated that PRs110 million would be required for maintenance of the system. In real terms, O&M allocations have decreased, as they are not in line with the escalation.
50 Appendix 5
8. Since completion of the Project about 6 years ago, no desiltation works have been undertaken for the main canal. Under one of the project loan covenants, the Balochistan government is required to make available adequate and timely funds to ensure sustainability of the Project and continuing achievement of project benefits. In addition, the operations manual prepared under the Project was not utilized fully. O&M works should be undertaken immediately to prevent further damage to the Pat Feeder Canal System.
9. Unless adequate funds are provided for O&M, the sustainability of the Project is uncertain. With current funding levels, the estimated 50-year life of the Project would be shortened and a deferred-maintenance project would be required probably in about 10–15 years. Past irrigation system rehabilitation projects demonstrated that cropping intensities gradually decrease without adequate O&M, particularly for desilting. Studies by the Punjab Economic Research Institute indicated that cropping intensity decreased by about 7% over 5 years in a poorly maintained distributary. The accumulation of silt also reduces supplies to the tail ends of distributaries.
10. The institutional framework for fee collection system needs to be strengthened to improve the collection rates of irrigation fees. For 1990–2004, the recovery rate was about 27.7%. However, over the past 6 years, collection of water levies was 26%—or PRs54 million out of total water assessments of PRs209 million.
11. The Balochistan government should undertake effective measures to improve the maintenance of the completed works, particularly the irrigation distribution system and related facilities. Further, the government should improve cost recovery through improved assessment and collection of Abiana and drainage cess.
Appendix 6 51
SALIENT FEATURES OF WATER APPORTIONMENT ACCORD AND WATER UTILIZATION IN BALOCHISTAN
1. The 1991 Water Apportionment Accord is the basis for the distribution of water among the provinces. The implementation of the accord is monitored by the Indus River System Authority (IRSA), which has five members (one from the federal Government and one from each province). The head office of IRSA is in Islamabad. The provincial allocations according to the 1991 accord are shown in Table A6.
TableA6: Water Accord Allocation Between Provinces
Water Distribution in MAF Province Kharif Rabi Total Punjab 37.07 18.87 55.94 Sindh 33.94 14.82 48.76 NWFP 3.48 2.30 5.78 Balochistan 2.85 1.02 3.87 Subtotal 77.34 37.01 114.35 Civil Canals in NWFP 1.80 1.20 3.00 Total Allocation 79.14 38.21 117.35 Total (BCM) 97.63 47.14 144.77 BCM = billion cubic meters, MAF = million acre feet, NWFP = North West Frontier Province. Source: Water Apportionment Accord 1991
2. Other significant provisions of the accord include:
(i) Balance river supplies, including flood supplies and future storage, shall be distributed according to the following proportions: (a) Punjab 37% (b) Sindh 37% (c) North West Frontier Province 14 % (d) Balochistan 12%
(ii) Industrial and urban water supplies for metropolitan city, for which allocations were sanctioned, will be prioritized, e.g. Karachi is declared as a metropolitan city per the Accord.
(iii) Storage, wherever feasible on the Indus and other rivers, is needed for the planned future agricultural development.
(iv) Escapages (as used in the Accord) to the sea below Kotri are needed to check saline intrusion. Since earlier studies differed on the optimum number, further studies should be undertaken to establish the minimal escapage needs downstream of Kotri.
(v) Provinces would not be restricted on undertaking new projects within their agreed shares.
(vi) Reservoirs would be operated with priority for the irrigation uses of the provinces.
52 Appendix 6
3. Enforcement of the Water Allocation Accord generally was carried out amicably. However, considerable controversy between the provinces remains over water sharing. Ostensibly, the controversy is over the sharing of surplus flows as well as deficits.
4. The accord allocation of 143.5 billion cubic meters (BCM) or 114.35 million acre feet (MAF), excluding the allocation for NWFP civil canals, is about 9–10% higher than the average historic uses in the Indus Basin before the accord, which were about 127–128 BCM (103–104 MAF) and remain more or less the same today. Presumably, the allocations were fixed at a higher level on the assumption that additional storage would be built for the system. However, that storage never was constructed. As a result, diversion equal to the total allocation of 143.5 BCM (114.35 MAF) has not been achieved since the 1991 accord. Since 1991–2000, the annual canal diversions have varied between 116.5 and 137.1 BCM (94.46 and 111.11 MAF), with an average of 129.6 BCM (105.03 MAF). The system is not capable of supplying the allocated amount due to shortages in river supplies in early Kharif season.
5. At present, Balochistan uses 3.03 MAF (2.00 MAF in Kharif and 1.03 MAF in Rabi) of its water allocation of 3.87 MAF (2.85 MAF in Kharif and 1.02 MAF in Rabi), because of capacity constraints in the Pat Feeder and Khirthar Canals. In Kharif, 0.85 MAF is unutilized. In addition, the province has a 12% share in the balance river supplies (floods and future storage). The Kachhi Canal is being built to allow Balochistan to use its full share from the accord and its share in the flood supplies to irrigate about 288,660 ha. In addition, the Balochistan government has prepared a feasibility study for remodeling the Pat Feeder canal from RD (kilometre [km]) 0 to tail RD (km) 171 to increase its capacity by 52.68 m3/s. The government also is planning to construct a 37 km Pat Feeder extension from the canal’s tail. This would bring an additional 64,375 ha under the command of Pat Feeder Canal in Kharif season, without any increase in Rabi.
Appendix 7 53
PAT FEEDER COMMAND AREA DEVELOPMENT PROJECT
A. Introduction
1. The on-farm water management (OFWM) component of the Pat Feeder Canal Rehabilitation and Improvement Project (the Project) was excluded from the project scope during reformulation in 1993 due to funding constraints. However, the International Fund for Agriculture Development (IFAD) took on this component under a separate project, the Pat Feeder Command Area Development Project (PFCADP). IFAD issued a Project Completion Review Report of this component in May 20041. A brief description of the PFCADP taken from that report is included in this appendix.
2. IFAD fielded a General Identification Mission in December 1992, and appraised the project for a possible loan financing in October 1993.
3. The IFAD Executive Board approved a loan of SDR20.25 million (equivalent to $28.55 million), at 4% service charge in April 1994. The loan became effective on 2 February 1995. The original closing date for the loan was 30 June 2001. However, the project was extended for 2.5 years, and was closed on 31 December 2003. The Asian Development Bank (ADB) was appointed as the cooperating institution to administer the loan for the project.
4. The IFAD loan accounted for about 69% of the total investment for the project, which was estimated at about $41.46 million. The Balochistan government contributed about $7.5 million (18.2%) and beneficiaries provided about $5.2 million (12.6%). During the Midterm Review (MTR), the project scope was reduced and some of the activities were dropped. As a result, IFAD canceled SDR4 million from the total loan proceeds in 2002. At closing, SDR12.16 million, or 95% of the reallocated IFAD loan amount, had been disbursed.
B. Project Description
5. The major goal of the project was to improve the production, incomes, and standard of living of the rural population of the Nasirabad area, especially of the people living within the command area of the Pat Feeder Canal. The project had three specific objectives in pursuit of this major goal and the alleviation of the impact of the identified constraints on the people in the project area: (i) increased quantities of irrigation water available to the farmers; (ii) higher productivity of land, water, and labor for cropping and for livestock; and (iii) increased participation of rural people in the development process.
6. The project was designed to direct resources towards these objectives with a four- pronged strategy: (i) improvement of irrigation, (ii) increase in crop production, (iii) increase in livestock productivity, and (iv) greater community participation in local development. The strategy involved a sequence of initiatives to ensure that farmers in the project area had the resources to take full advantage of the new development opportunities.
1 IFAD. 2004. Pat Feeder Command Area Development Project (IFAD Loan 353-PK): Project Completion Review Report. Rome.
54 Appendix 7
7. The project envisaged the development strategy through five components:
(i) Watercourse development: To improve the delivery of the increased irrigation water supply from the ADB-financed Project, and the efficiency of its use by farmers, by (a) making rapid connections from new minor canals to existing watercourses; (b) establishing water user associations (WUA) for watercourse construction; (c) constructing or rehabilitating watercourses; (d) leveling redundant lengths of watercourses; (e) demonstrating precise land leveling; (f) constructing in-field drains; and (g) training and technical assistance;
(ii) Agriculture: To improve the productivity and intensity of existing crops, and introduce new, higher-value crops through subcomponents of agricultural extension, crop research, and technical services;
(iii) Livestock: To improve the productivity of animals kept by farmers through two subcomponents of extension and animal health, and technical services;
(iv) Community organization support: To improve organization by (a) promoting the formation of village-level groups of men and women; (b) assisting the groups in implementing productive infrastructure schemes; (c) organizing training and demonstrations on income generation; (d) providing training and technical assistance for water supply and health projects in villages; (e) implementing rural credit program financed by villagers' savings and project's grant; and (f) assisting in the recruitment of nongovernment organizations (NGO) to implement the component; and
(v) Project Coordination: To assist implementing agencies in integrating activities, monitoring, and evaluation.
C. Assessment of Project Implementation
8. The project progressed slowly in the early years of implementation. The PFCADP was scheduled to start upon completion of the ADB-financed Project in 1995. However, PFCADP was confronted with a number of operational and managerial issues from the start. Major factors contributing to the slow start and progress of the project were:
(i) Delayed completion and non-achievement of targets for minor canals under the ADB Project, to which the OFWM work was linked. Work on minor canals was completed in 2000, much later than the scheduled completion in 1995–1996. This delay affected almost all the PFCADP activities, particularly the OFWM component.
(ii) Reduction in major targets for the renovation of watercourses from the original 1,135 to 360 due to the revised number of minor canals, delayed start, and slow progress of the project. The targets for the rapid connections, which were to be provided as needed based on the identification by farmers and agricultural development groups (ADG), were revised to 400. Leveling of redundant watercourses was discontinued, because of farmers’ reluctance to bear full operational costs. The land drainage program was restricted to demand-based, in-field drains in accordance with the design of the watercourses.
Appendix 7 55
(iii) Delayed appointment of suitable staff, and frequent turnover of management- level staff and other staff of the project.
(iv) Poor performance of Balochistan Rural Support Program (BRSP), which was engaged for implementation of community development activities, due to its own management problems.
(v) Delayed engagement of technical services. Technical assistance consultants were mobilized in mid 1997.
9. ADB and IFAD were very unhappy about the non-performance of project activities, and signaled their displeasure by suggesting cancellation of the loan. To alleviate the situation, the MTR Mission in 1998 decided to reduce the scope of physical infrastructure. The Mission also reformulated the scope of community development through further mobilization and strengthening of ADGs and women development groups (WDG), ensuring full participation of community members and making the community groups (ADGs and WDGs) focal points for all project activities.
10. On the Mission's recommendations, an action plan was prepared that the Balochistan government, IFAD, and ADB endorsed. With the institution of the action plan, the pace of progress was improved satisfactorily. Project activities gained momentum since 1998/99. The recommendations of the mid-term review (MTR) Mission were complied with, and ADB and IFAD took keen interest in the proper implementation of the project activities.
11. The original target for watercourses renovation was 1,235. This was based on the original design of the irrigation water distribution system of Pat Feeder Canal, comprising 11 distributaries, 265 minor canals, and 1,135 watercourses. The renovation of the watercourses could not start on schedule. The construction of new watercourses also was delayed. The MTR Mission reduced the target to 400, which later was scaled down to 360. The reduced targets and achievements of OFWM activities are shown in Table A7.1.
Table A7.1 Targets and Achievements of On-Farm Water Management Activity Unit Target Achievement Rapid Connections No. 400 167 Water User Associations Formed No. 360 367 Watercourses Renovated No. 360 367 Leveling of Redundant Length of Watercourses ha 2,000 252 Establishment of PLL Demonstration Plots No. 100 100 ha = hectare, no. = number, OFWM = on-farm water management, PLL = precision land leveling. Source = ADB Mission.
12. The geographical area covered by the renovated watercourses was 85,046 hectares (ha), which was 45% of the geographical area covered by the watercourses. According to IFAD’s PCR, irrigation water use efficiency increased 30–33%, implying the availability of 28,000 ha of additional area for cultivation.
13. While constructing the watercourses, the OFWM staff encountered a number of constraints relating to the irrigation system and watercourses. The farmers, who withdrew water through direct outlets from distributary and minor canals, damaged the system and sabotaged the equitable distribution of irrigation water.
56 Appendix 7
14. Recovery of 18% of upfront costs from the beneficiaries was difficult. Most of them were unwilling to pay that amount. In some cases, the farmers were reluctant to provide unskilled labor for earthwork.
15. Training. Training was arranged outside the province for the OFWM staff (106 person- months) and farmers (200 person-months) on OFWM techniques.
16. Agriculture Development. The component was redesigned to help poorer sections of the farming communities (i) gain access to improved technology, (ii) increase farm incomes through diversification and intensification of the cropping systems, (iii) introduce high-value crops, (iv) increase farm labor employment opportunities, and (v) involve women in crop-related activities. This was done by forming 164 ADGs and 214 WDGs. These groups became the entry points of all agriculture-related interventions through intensive extension efforts.
17. The project provided substantial support for cotton cultivation through demonstration and intensified extension efforts. The federal Government and the Balochistan government handled the distribution of improved cotton seed, either free of cost or at subsidized rates, to encourage farmers to grow more cotton. An increase in cotton area in the project area initially was achieved. However, a reduction in rice area could not be achieved.
18. Livestock Development. Extension and animal health programs focused mainly on providing vaccinations to livestock and treatment against contagious and non-contagious diseases. More than 2.7 million animals were vaccinated and treated. Vaccines were provided for free, while medicines and drugs were provided at subsidized rates (about 70% subsidy). The program for mobile camps was reactivated, and about 1 million animal head (mostly sheep and goats) of the nomadic herdsmen were vaccinated and treated. About 1,000 cows and buffaloes were artificially inseminated, though the conception rates reportedly were low. The Bhagnari Cattle Farm at Usta Muhammad was provided 280 improved breeds of sheep and goats to enhance the genetic potential of local breeds. In addition, about 50 does and bucks were distributed to the members of ADGs/WDGs.
19. Community Support. The project envisaged involvement of an NGO in implementing the component. Two NGOs, Balochistan Rural Support Program (BRSP) and Taraqee Foundation (TF), implemented the component. The contract of BRSP was not renewed, and only TF continued. Under this component, 164 ADGs were formed. A revolving fund of PRs15 million was provided to TF for the savings and credit scheme. TF disbursed loans amounting to PRs69 million to 5,839 borrowers through the ADGs. Further, a poultry program, three fish farm demonstrations, and a date palm demonstration were initiated.
20. Project management initially suffered considerably due to the late mobilization of the technical assistance team, as well as frequent turnover of managerial and technical staff. The technical assistance team provided adequate support to the project. However, the team did not perform satisfactorily in community development. The project coordination unit (PCU) established a benefit monitoring and evaluation system. The socioeconomic baseline report was produced in 2000. The PCU assisted in collecting information for the impact evaluation study and the project completion review report. The PCU also organized training courses on upgrading staff capacity.
Appendix 7 57
D. Project Cost
21. IFAD provided a loan of $28.6 million (SDR19.23 million), about 70% of the project costs, to cover all foreign exchange costs and part of the investment and recurrent costs. The United Nations Children’s Fund (UNICEF) allocated $0.14 million for technical assistance on water supply, health, and nutrition activity. The UNICEF fund was not made available to the project. IFAD provided retroactive financing of $500,000 before loan effectiveness to facilitate early project startup. Watercourse improvement was the largest investment component (42%), followed by community organization support (22%), agriculture (22%), livestock (10%), and project coordination (4%).
22. Expenditures by category are given in Table A7.2. IFAD’s share of expenditures during the project life was approximately 70%. The Balochistan government contributed the remaining 30%, which included the beneficiaries' share.
Table A7.2: Expenditure by Category (PRs) IFAD GOP Total Category Description Contribution Contribution Expenditure I Civil Works 126,302,520 26,874,342 153,176,862 II Vehicles, Equipment, and Materials 126,377,358 44,091,768 170,469,126 III Consultant Services and Training 157,971,680 2,466,027 160,437,707 IV Incremental Rural Credit 15,089,181 0 15,089,181 V Incremental Operational Costs 289,201,578 233,756,231 522,957,809 Total 714,942,317 307,188,368 1,022,130,685 GOP = Government of Pakistan, IFAD = International Fund for Agriculture Development. Source: IFAD. 2004. Project Completion Review Report. Rome
E. Impacts and Sustainability
23. General. According to the IFAD PCR, the impacts of the project interventions were positive in most of the cases. These are summarized in paras. 23–28.
24. On-Farm Water Management. At the individual farmers' field, the amount of water available for irrigation increased substantially, which translated into higher crop yields. A majority of the farmers received training on improved water management practices, which also encouraged farmers to settle amicably disputes over water distribution at various lengths of renovated watercourses.
25. Agricultural Development. The project reportedly impacted positively on the adoption of improved farming practices, such as (i) using quality seed, (ii) balanced use of fertilizer, (iii) proper seed dressing and nursery raising, (iv) avoiding over- or under-irrigation, and (vi) pesticide use and pest management. Yields per hectare of major crops cultivated in the area reached encouraging levels compared to national and provincial averages. The intensification and diversification of cropping systems, including the introduction of high-value crops (onions, tomatoes, table vegetables, grams, peas, etc.) substantially increased incomes of farms. This improved the quality of livelihood patterns, and expanded opportunities for employment for landless and marginal farmers, including tenants. The project interventions promoted private sector involvement in processing, storage, and marketing of agricultural produce.
26. Livestock Development. Animal productivity showed positive improvement. However, productivity increases varied from small ruminants to large ruminants. Large ruminants, mostly buffaloes, recorded the highest increases. The Livestock Department, in tandem with Bhagnari
58 Appendix 7
Cattle Farm, developed links with the private sector for supplying, distributing, and marketing livestock inputs and outputs. Consequently, incomes for animal keepers increased substantially. With project support, animal keepers adopted improved animal husbandry practices. However, whether this adoption rate is sustainable in the future is still in question.
27. Community Development. The ADGs and WDGs organized by the project were viewed as vehicles of change in the rural settings. It is too early to predict if these groups are sustainable in the longer term without project support. After the initial setbacks, the project did not promote with project funds the conventional village organizations with support for social and physical infrastructure. However, TF was engaged for savings and credit schemes to meet the credit needs of the members of the groups. The project provided TF with a revolving fund of PRs15 million.
28. Different categories of farming households showed encouraging increases in incomes. Income sources also were diversified. Agriculture still accounts for the major share of income, followed by livestock and off-farm activities. The average increases in incomes varied between 74% and 93% for different strata of farming communities. The question is whether these levels of increases will be sustainable without project support.