Pehur High-Level Canal Project

Home , Gandaf, Sard Cheena, Swabi District, Yaqubi

Completion Report

Project Number: PAK 19141 Loan Number: 1294-PAK(SF) November 2005

Pakistan: Pehur High-Level Canal Project

CURRENCY EQUIVALENTS (as of 30 June 2005)

Currency Unit – Pakistan rupee/s (PRe/PRs)

At Appraisal At Project Completion (30 November 1993) (30 June 2005) PRe1.00 = $0.033 $0.0168 $1.00 = PRs30.1256 PRs59.66 For the purpose of calculation in this report, the rate of PRs50.00 to $1.00 is used.

ABBREVIATIONS

ADB – Asian Development Bank ADC – agriculture development component ASPL-II – Agriculture Sector Program Loan II BME – benefit monitoring and evaluation CBIO – crop-based irrigation operations CCA – cultivable command area CR – cross regulators CRBC – Chashma Right Bank Canal DAE – Department of Agriculture Extension DOA – Department of Agriculture DOFWM – Directorate of On-Farm Water Management DOI – Irrigation and Drainage Department EA – executing agency EIRR – economic internal rate of return FIDIC – Fédération Internationale des Ingénieurs-Conseils (International Federation of Consulting Engineers) FO – farmers organization FSC – farmer services center FSU – farmer support unit IBIS – Indus Basin Irrigation System ICB – international competitive bidding ISF – irrigation service fee ISRIP – International Sedimentation Research Institute, Pakistan IWMI – International Water Management Institute LCB – local competitive bidding LSC – Lower Swat Canal M&E – monitoring and evaluation NDSP – National Drainage Sector Program NGO – nongovernment organization NWFP – North-West Frontier Province O&M – operation and maintenance PC-1 – Planning Commission Performa 1 PCR – project completion review P&DD – Planning and Development Department PHLC – Pehur High-Level Canal PIDA – Provincial Irrigation and Drainage Authority PPTA – project preparatory technical assistance PRM – Pakistan Resident Mission (ADB)

PSC – project steering committee RD – reduced distance SAWB – Swat Area Water Board SCARP – Salinity Control and Reclamation Project SDC – Swiss Agency for Development and Cooperation SDR – special drawing rights SMO – SCARP Monitoring Organization (WAPDA) SSP – Swabi SCARP Project SWHP – Service Water Hydrology Project TA – technical assistance TOR – terms of reference TPA – Topi Priority Area USC – Upper Swat Canal WAPDA – Water and Power Development Authority WC – Watercourse WMED – Watercourse Monitoring and Evaluation Directorate WO – women’s organization WSIPS – Water Sector Investment Planning Study WUA – water users association

WEIGHTS AND MEASURES

ft3/sec – cubic feet per second GWh – gigawatt-hour KWh – kilowatt-hour m3/sec – cubic meter per second

NOTES

(i) The fiscal year (FY) of the Government and its agencies 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 iii MAP vii I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2 A. Relevance of Project Design 3 B. Project Outputs 6 C. Project Costs 6 D. Disbursements 6 E. Project Schedule 7 F. Implementation Arrangements 7 G. Conditions and Covenants 8 H. Consultants Recruitment and Procurement 9 I. Performance of Consultants, Contractors, and Suppliers 9 J. Performance of the Borrower and the Executing Agencies 9 K. Performance of the Asian Development Bank 10 III. EVALUATION OF PERFORMANCE 10 A. Relevance 10 B. Efficacy in Achievement of Purpose 11 C. Efficiency in Achievement of Outputs and Purpose 11 D. Preliminary Assessment of Sustainability 12 E. Environmental, Sociocultural, and Other Impacts 13 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14 A. Overall Assessment 14 B. Lessons Learned 15 C. Recommendations 15 APPENDIXES 1. Civil Works Contracts 17 2. Project Scope (Appraised and Actual) 18 3. Hydraulic Capacity Test Report 20 4. Operational Issues and PCR Mission Recommendations 26 5. Consulting Inputs 30 6. Project Costs 31 7. Annual Loan Disbursements 35 8. Project Implementation Schedule 36 9. Status of Compliance with Loan Covenants 38 10. O&M Funding 48 11. Subsurface Drainage System Performance Report 53 12. Status of Compensation for Land Acquisition 55 13. Economic Cost and Benefit Analysis 56 14. Farm Budget 69 15. Watercourse Discharge and Conveyance Efficiency 75 16. Labor Data 77 17. Groundwater and Soil Quality Data 79 18. Socioeconomic Impact of the Project 81

BASIC DATA

A. Loan Identification

1. Country Pakistan 2. Loan Number 1294-PAK(SF) 3. Project Title Pehur High-Level Canal Project 4. Borrower Islamic Republic of Pakistan 5. Executing Agency Water and Power Development Authority Department of Irrigation, North-West Frontier Province 6. Amount of Loan SDR91,542,000 (or $127,600,000) 7. Project Completion Report Number PAK-907

B. Loan Data 1. Appraisal – Date Started 8 September 1993 – Date Completed 29 September 1993

2. Loan Negotiations – Date Started 18 November 1993 – Date Completed 20 November 1993

3. Date of Board Approval 22 December 1993

4. Date of Loan Agreement 6 June 1994

5. Date of Loan Effectiveness – In Loan Agreement 4 September 1994 – Actual 2 November 1994 – Number of Extensions 2

6. Closing Date – In Loan Agreement 31 December 2002 – Actual 30 June 2005 – Number of Extensions 2

7. Terms of Loan – Interest Rate 1% per annum – Maturity (number of years) 35 – Grace Period (number of years) 10

8. Terms of Relending (if any) – Interest Rate 1% per annum – Maturity (number of years) 35 – Grace Period (number of years) 10 – Second-Step Borrower Government of North-West Frontier Province

9. Disbursements

a. Dates Initial Disbursement Final Disbursement Time Interval 27 December 1994 15 November 2005 130 months Effective Date Original Closing Date Time Interval 2 November 1994 31 December 2002 96 months Revised Closing Date Time Interval 30 June 2005 138 months Actual Closing Date Time Interval 20 November 2005 143 months b. Amount ($ as of 30 June 2005) Category or Subloan Original Last Amount Net Amount Amount Undisbursed Allocation Revised Canceled Available Disbursed Balance Allocation 01A Civil Works - Part A 81,970,221 74,863,299 83,435,968a (8,571,169) 01B Civil Works - Part B 4,690,547 4,567,420 1,731,511 2,835909 02 Equipment & Vehicles 3,764,219 3,775,358 1,568,846 2,206,512 03 Consulting Services 17,698,131 17,355,316 12,147,435 5,207,881 04C LOC Exp- Investigations and Surveys b 395,222 350,292 1,401,822 (1,051,530) 04F LOC Exp-Adaptive Research & Demo Program. 967,063 954,059 488,040 466,019 04G LOC Exp-IOC 6,801,294 6,750,404 1,321,390 5,429,014 05 Service Charge 5,001,803 4,693,467 4,693,467 0 06 Unallocated 11,396,294 11,466,434 11,466,434 Total 132,684,794 124,776,049 106,788,479 17,989,070 BME = benefit monitoring and evaluation, Demo = demonstration, Exp = expenditure , IOC = incremental operation cost, LOC = local, a Includes pipeline disbursements of about $2.5 million. b Includes expenditure of $0.43 million on BME related activities.

10. Local Costs (Financed) - Amount ($ million) 59.46 - Percent of Local Costs 65.48 - Percent of Total Cost 43.05

C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 52.20 47.33 Local Currency Cost 110.80 90.81 Total 163.00 138.14

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 35.40 31.35 ADB Financed 127.60 106.79 Total 163.00 138.14 IDC Costs Borrower Financed 0.00 0.00 ADB Financed 4.81 4.69 Other External Financing 0.00 0.00 Total 4.808 4.693 ADB = Asian Development Bank, IDC = interest during construction.

3. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual A. Irrigation and Drainage 107.42 124.30 B. Agriculture Development 8.55 4.97 C. Land Resource Conservation 0.12 a D. Environmental and Benefit Monitoring and Evaluation 1.38 0.41

Total Base Cost 117.47 129.68 Physical Contingencies 15.03 0.90 Price Escalation 25.70 2.86 E. Service Charge during Construction 4.81 4.70 Total Cost 163.00 138.14 a Component C was awarded to Component B consultants and charged to Component B.

4. Project Schedule

Item Appraisal Estimate Actual Date of Contract with Engineering Consultants Jan 1994 Dec 1994 Completion of Engineering Designs Dec 1995 Jun 1996 Civil Works Contract Date of Award Jun 1995 Nov 1996a Completion of Work Sep 2001 Jun 2005 Equipment and Supplies Dates First Procurement (PCSS005) Jan 1995 Jan 1995 Last Procurement (PCSS0069) Sep 1996 May 2005 Completion of Equipment Installation Start of Operations Completion of Tests and Commissioning Jun 1999 Nov 2003 Beginning of Start-Up Jul 1999 Nov 2002 a Minor civil work contract for construction of residential quarters. The first large civil works contract for tunnel and canal works was awarded on 19 Dec 1997.

5. Project Performance Report Ratings Ratings

Implementation Period Development Implementation Objectives Progress

1 October 1998 to 31 December 1998 Satisfactory Satisfactory 1 January 1999 to 31 December 1999 Satisfactory Satisfactory 1 January 2000 to 31 December 2000 Satisfactory Satisfactory 1 January 2001 to 31 December 2001 Satisfactory Satisfactory 1 January 2002 to 31 December 2002 Satisfactory Satisfactory 1 January 2003 to 31 December 2003 Satisfactory Satisfactory 1 January 2004 to 31 December 2004 Satisfactory Satisfactory 1 January 2005 to 28 April 2005 Satisfactory Satisfactory

D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Mission Date Persons Person- of Membersa Days

Fact-finding 14 Jun–6 Jul 1993 5 – a,b,c,d,e Appraisal 9 Sep–1 Oct 1993 8 160 f,b,c,g,h,i,j,k Special Loan Administration 1 23 Jun–19 Jul 1994 1 26 a Special Loan Administration 2 30 Nov–10 Dec 1994 1 10 a Follow-up 1 19–26 June 1996 2 9 a,m Review 1 17–19 Dec 1996 1 2 a Special Loan Administration 3 5–7, 11–12 Nov 1997 2 9 a,n Review 2 18–22, 27–29 May 1998 3 13 o,p,n Review 3 12–14 Oct 1999 3 30 o,e,q Mid-term Review 21 Feb–2 Mar 2000 2 20 p,m Review 4 8–16 Dec 2000 1 8 p Review 5 18–22 March 2002 2 8 p,r Review 6 12–19 Aug 2002 2 14 p,r Review 7 28 Mar–5 Apr 2003 2 16 p,r Review 8 1–6 Dec 2003 2 10 p,r Review 9 20–26 July 2004 2 12 p,r Project Completion Reviewb 25 April to 6 May 2005 3 26 p,o,j – = data not available. a a - senior project engineer, b - project specialist, c - project economist, d - senior implementation officer (Pakistan resident office), e - staff consultant, f - project agronomist, g - counsel, h - project engineer, i - programs officer, j - staff consultant, k - mission secretary, l - senior project engineer, m - resident representative (Pakistan Resident Mission), n - loan administration assistant, o - senior project implementation officer, p - project implementation officer, q - assistant project analyst, r - associate project analyst, s - senior project assistant. b The project completion report was prepared by Mian S. Shafi, Project Implementation Officer.

o o o 73 00'E 72 00'E 72 50'E

PAKISTAN . R r a n u K PAKISTAN Chitral PEHUR HIGH-LEVEL CANAL PROJECT NORTH - WEST FRONTIER (as completed)

. R

t o a Dasu o 35 00'N w 35 00'N Amandara Headworks Project Location S

Batkhela Mansehra Malakand Tarbela Dam o o Mardan Swabi 34 50'N 34 50'N Kab ul R. Nowsehra N Peshawar . R ISLAMABAD s d nu I Rawalpindi U Mangla Dam P 0 5 10 15 20 P Bannu PUNJAB E R Jhelum S w S Kilometers Mianwali a W t . A R R m T lu . i e R v h b e C J o a Gujranwala A 73 00'E n r he N C A L chai Main B (Ma ran ch) Munda Headworks

LOW Irrigation System Remodeling ER Km. 73.8 SWAT CANAL Ka Old Indus Branch Irrigation System Improvement lp an i Dagai Distributary Badri Siphon New Irrigation System Ri ve r Daulat Minor Subsurface Drainage Area Mardan P E r Drain H Swabi Salinity Control and Reclamation Project lla U Ba R H National Capital IG H Ka - LE Provincial Capital bul VEL Riv CANA er Swabi L City/Town CH AN Town BR IRA Topi Tarbela Dam MA Barrage/Headwork Risalpur Gandaf Tunnel Highway NAL CA AIN Kundal Siphon Tunnel/Syphon UR M PEH Baja Tunnel o Existing Canal o 34 00'N Peshawar 34 00'N Nowsehra Maini Distributary New Canal r ive R Kotha East Minor Remodeled/Improved Canal Chowki Distributary us to Islamabad Ind River/Drain Pirsabaq Distributary Provincial Boundary International Boundary Boundaries are not necessarily authoritative. 0 5 - 4 7 4 9

H o o i

R 72 00'E 72 50'E i

I. PROJECT DESCRIPTION

1. Irrigated agriculture in Pakistan accounts for 90% of crop production from 16.5 million hectares (ha) of irrigated land. Some 14.3 million ha are under the Indus Basin Irrigation System (IBIS), which comprises three major reservoirs (Chashma, Mangla, and Tarbela,), 23 barrages/headworks, 12 inter-river link canals, and 45 canal systems—extending about 60,800 kilometers (km) to serve over 140,000 farmer-operated watercourses. Agriculture production accounts for 23% of the gross domestic product (declining steadily from 30% in the late 1970s), employs 42% of the workforce, provides livelihood for 68% of rural inhabitants, and contributes 60% of export revenues. However, the overall irrigation efficiency of IBIS is below 40%. The main technical limitations constraining agriculture production are (i) seasonal disparities between water supplies and crop water requirements, (ii) weakness in water conveyance efficiency, (iii) waterlogging and salinity, (iv) quality of agriculture extension/research, and (v) inefficient use of inputs.

2. The Pehur High-Level Canal (PHLC) Project is located in the North-West Frontier Province (NWFP). The province covers 10 million ha and has a total population of 17.5 million, of which 83% live in rural areas and are predominantly dependent on agriculture. Current agriculture production levels in NWFP cannot meet the basic food needs of its population. An estimated 1.7 million ha per year are cultivated in NWFP but only 0.9 million ha are irrigated. The project area is located at the far reaches of the Upper Swat Canal (USC) system, and suffers from inadequate water supply, waterlogging, and salinity.

3. The main aim of the Project is to realize the full agricultural potential of about 40,300 ha in the project area by (i) alleviating shortage of irrigation supplies to about 35,800 ha at the far reaches of the USC; (ii) reclaiming about 6,000 ha of waterlogged land within the USC command area; and (iii) providing irrigation development for about 4,500 ha of mainly rain-fed land outside USC command in Topi Priority Area (TPA). The Project also intended to increase agricultural production in the adjacent Swabi Salinity Control and Reclamation Program (SCARP) Project1 (SSP) area by supplementing its water resources and allowing additional irrigation development of about 4,000 ha of mainly rain-fed land. To achieve these objectives, the Project had four components: (i) irrigation and drainage improvement and development; (ii) measures for accelerating agriculture development, capitalizing on improved irrigation and drainage conditions (Agriculture Development Component [ADC]); (iii) land resource conservation study; and (iv) environment and benefit monitoring and evaluation (BME) program.

4. The project loan, currently valued at $125.47 million (as of 30 June 2005), was approved on 22 December 1993, and became effective on 2 November 1994. Implementation was expected to take place over 9 years and the original loan closing date was 31 December 2002. The Water and Power Development Authority (WAPDA)—the main Executing Agency (EA) of the Project—was supported by the government of NWFP’s Department of Irrigation (DOI) and Department of Agriculture (DOA) through its Directorate of On-Farm Water Management (DOFWM) and Department of Agriculture Extension (DAE), in implementing the Project.

1 Loan No. 976 PAK (SF) (ADB. Year. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan for SWABI Salinity Control and Area Reclamation Project, Manila.) This was approved in 1989 and completed in 2000. The Asian Development Bank (ADB) contributed $118 million.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

5. The Project was consistent with the Government of Pakistan’s (the Government’s) development strategies and the Asian Development Bank’s (ADB’s) country strategy at appraisal. The Government’s Seventh Five-Year Plan (1988–1993) projected annual growth of 4.7% in agriculture2 through a program designed to bridge the gap between actual and potential farm yield. The Water Sector Investment Planning Study (WSIPS) was published in December 1990 3 and the subsequent Water Apportionment Accord (1991)4 allocated Indus water resources between provinces and opened the doors for further investment in water sector infrastructure. The WSIPS focused on integrated management of the IBIS, including (i) construction of surface and subsurface drainage, (ii) rehabilitation and improvement of existing distribution systems (including watercourses), (iii) efficient use of available water supplies, and (iv) initiation of selected new pilot schemes. In the 1990s, ADB's strategy in Pakistan supported the Government’s approach. In particular, ADB operations focused on export growth and improved efficiency of existing investment. Given the relative lack of additional land and water, increased agricultural growth was to be achieved through enhanced production by addressing inadequate capacity and low efficiency of existing irrigation systems, inefficient water management at farm level, waterlogging and salinity, and farm to market roads. The Project was in line with government and ADB water sector strategies, with its focus on production increase through (i) increased water supplies, (ii) on-farm water management and better extension services, (iii) surface and subsurface drainage, and (iv) demand-based integrated water management.

6. The Project’s innovative design and approach are still relevant and consistent with current policies and strategies of the Government and ADB. Under the Government’s Poverty Reduction Strategy Paper5, the water sector approach focuses on (i) integrated irrigation, hydropower, and agriculture development investment; (ii) modernizing water infrastructure and institutional and governance arrangements; and (iii) balancing investment in (a) water infrastructure and water management and (b) supply and demand management. Water conservation remains a priority area through watercourse maintenance, organizing water users associations (WUAs), and transferring responsibility for irrigation and drainage management to local water boards and farmers organizations (FOs). According to the draft National Water Policy, draft Medium-Term Development Framework (2005–2010), and the National Water Sector Strategy currently being processed, the scarcity of irrigation water will be reduced through augmentation and conservation measures, including (i) developing large reservoirs; (ii) improving the efficiency of the irrigation system; (iii) restoring agricultural productivity through control of waterlogging, salinity, and floods; (iv) enhancing institutional performance through reforms, and implementation of an integrated flood and on-farm water management program. In drainage, one of the key guiding policy principles is the implementation of a drainage strategy to reduce generation and ensure safe disposal of drainage effluent. The Project is relevant to ADB’s current country strategy outlined in Country Strategy Program Update 2006–08, and the Government’s development strategy in the sector, with its focus on (i) improvement in irrigation supplies and drainage infrastructure, (ii) demand management and efficient water use, (iii) support for institutional reforms, (iv) on-farm water management and extension services, and (v) multipurpose design supporting irrigation and hydropower generation.

2 Based on the Report of the National Commission on Agriculture (March 1988). 3 Full reference to be given here 4 Executed between Government of Pakistan, and four federating units namely Punjab, Sindh, NWFP, and Balochistan on Indus water distribution.. 5 Approved by Government of Pakistan in December 2003 3

7. The Project was technically and economically viable within the original implementation schedule. The design of individual components was satisfactory, except for the subsurface drainage component (para. 8). Implementation arrangements were partly satisfactory, as they had to be adjusted to consider the capacity of the EAs, and efficient and economical use of consultants, as desired by the borrower. WAPDA’s weak technical capacity and centralized management were not fully taken into account at the design stage, which resulted in major delays in contract award and implementation. Design work on PHLC started in 1970 but the Project’s technical assistance (TA) consultants based their design appraisal on the updated project proposal prepared by WAPDA in 1991. The key components of the Project were based on further studies, surveys, and investigations (land use, soil, drainage, groundwater, and socioeconomic) carried out during the design phase by the consultants and the EA, including review of existing surveys/studies. This was followed by consultation workshops with beneficiary communities on key packages and approval by the DOI-led design committee, with representation from key government agencies. The project cost estimates at design stage were satisfactory (para. 19). Consultations with farming communities were not comprehensive and efforts were not well coordinated between different project stakeholders, leading to more intensive consultation before project commissioning. However, during remodeling and construction of watercourses (WCs), dialogue with beneficiaries was quite extensive which resulted in ownership of the completed WCs by the communities.

8. Changes to the appraised design and scope of components were introduced during the detailed design stage and, in some cases, during implementation (para 10). Lessons learned from the SSP were intended to be incorporated in the ADC design but limited interest from the NWFP government meant that ADB recommendations were not included. However, consultants incorporated lessons learned from the SSP’s irrigation and surface drainage in the project design. In contrast, lessons learned from subsurface drainage in other projects were not fully incorporated in the project design, despite the hydro-geological conditions of the area which required subsurface drainage. This caused major problems in system operations after completion (Appendix 11).

B. Project Outputs

9. The project output envisaged at appraisal—to increase irrigation supplies by about 100% in the cultivable command area of 35,800 ha in the far reaches of the USC—has been fully achieved. This includes 7,600 ha where canals were only improved and not remodeled to avoid the risk of waterlogging with increased supplies. The Project also provided irrigation development in about 4,310 ha of mainly rain-fed land in TPA (against the appraisal target of 4,500 ha) and allowed additional irrigation development in about 5,212 ha of mainly rain-fed land in the SSP (Ballar) area (higher than the 4,000 ha appraisal target). About 8,000 ha of waterlogged land within the USC command area was reclaimed (against 6,000 ha envisaged at appraisal) by providing surface drainage under the Project and subsurface drainage under SPP.6 The following section highlights key deviations in project design and outputs, and the reasons for these deviations. Details of civil works contracts awarded are in Appendix 1 and comparison of the Project’s appraised and actual scope is in Appendix 2.

10. Irrigation and Drainage Component (Part A-1). The Gandaf tunnel was constructed as a pressure tunnel with a capacity of 28.3 cubic meters per second (m3/sec) and 4.65 km length, compared with the appraisal proposal for a gravity tunnel with 28.3 m3/sec capacity and 3.9 km

6 Originally included in the Project’s scope but financed by the SSP (footnote 5).

4 length. The change in design created an option for future hydropower generation, allowed a more reliable flow-regulation regime, created flexible capacity, and produced flow to meet Jhanda Boka lift scheme requirements—with no increase in cost. The PHLC was constructed with a capacity of 27.1 m3/sec at the head of the canal as appraised (excluding 1.2 m3/sec for the Jhanda Boka lift scheme). Hydraulically efficient parabolic concrete lining, with 5 downstream control gates, was introduced at the design stage to improve operational and management efficiency of water, introduce automatic operations, and enhance the irrigation system’s response time. In TPA, 4 low pressure piped minors, 1 open channel, and 24 direct outlets were constructed on the PHLC to irrigate 4,310 ha (against 4 minor canals envisaged at appraisal). Low pressure pipes were adopted to increase system efficiency, reduce requirement for land acquisition, and introduce demand management of water. About 78 km of the Maira Branch and associated distributaries and minor canals were remodeled (compared with the appraisal estimate of 98 km) to accommodate the design discharge of 0.7 liters per second per ha. Eight automatic control gates were added and 86 km of exiting canals was improved (equal to appraisal estimate). The remodeled length was cut to reduce the cost of remodeling. Downstream control gates were provided for automatic downstream control of flows and efficient demand management.

11. A total of 25 WCs drawing more than 140 liters/sec were converted into minor canals, as envisaged. Surface drains measuring 46 km were remodeled. About 8,000 ha were provided subsurface drainage (compared with appraisal estimates of 6,000 ha) through 450 km of collector and lateral drains, financed through the SSP. The scope was revised based on actual site conditions (drainability survey) and subsurface drainage component implementation was transferred to SSP—considering the skill required for construction and to make the contract attractive for international competitive bidding (ICB).

12. System Management and Optimization (Part A-2). The operation, hydraulic, and optimization models required for optimal operation and maintenance (O&M) of PHLC and USC were developed by the International Water Management Institute (IWMI), formerly known as International Irrigation Management Institute (IIMI) as envisaged. Fine-tuning of these models (requiring four cropping seasons) was delayed because the PHLC was commissioned late, and will be completed by 31 December 2005. Crop-based irrigation operations (CBIO) designed to provide water (and reduce water wastage), based on crop requirement, faced problems (Appendix 3, paras. 7–9) because of breaks in the system’s automatic operation, initial resistance from farmers, lack of coordination, and manual interventions in system operations by DOI staff. Measures have been agreed to resolve these issues with DOI (Appendix 4, para. 6). The CBIO’s initial results are encouraging—increased acceptance by farmers and DOI staff helped reduce water wastage by (40%) in 2004.

13. Agriculture Development Component (Part B). A total of 444 WCs and associated WUAs have been completed, compared with the appraisal target of 450 WCs and WUAs. This includes WCs in Narranji and Kalu Khan (SSP) not included in the original project scope, as irrigation water was made available to these areas after commissioning the PHLC. The rest of the activities—under extension, adoptive and action research services, land development (93 ha), and training (434 training sessions for farmers)—are also complete. A consortium of consultants won the bid for community mobilization and capacity building and was hired with ADB’s approval, instead of a nongovernment organization (NGO) as envisaged at appraisal. The majority of WUAs developed under the Project are dormant, as water issues have reduced with the increase in water, lining of WCs and outlet structures, and reduced operation and 5 maintenance requirement. Pilot FOs, established under the Project and other initiatives7, for water management at distributaries cover 33% of project WUAs (para. 25). The FOs are functioning in accordance with the Provincial Irrigation and Drainage Authority (PIDA) Act. However, until this Act is fully implemented on the USC, the sustainability of the remaining WUAs (66%), which are part of the FOs, is doubtful. Lessons learned from the SSP (para. 8) have not been incorporated in the ADC design, which reduced the impact of extension services on crop yield in some areas.

14. Land Resource Conservation study (Part C). The study was completed by the DOA in 2000 under the overall guidance of the Planning and Development Department (P&DD) as envisaged at appraisal. The recommendations of the study are being implemented under the ADB-financed Forestry Sector Project.8

15. Monitoring and Evaluation (Part D). As envisaged at appraisal, a detailed environment and BME program was implemented by WAPDA’s SCARP Monitoring Organization (SMO). This component was given additional support from the consultants because the SMO was downsized during project implementation, drastically reducing SMO’s implementation capacity. This remained an issue throughout project implementation and delayed the project completion review (PCR). The key components of monitoring and evaluation (M&E) program included (i) agro- economic and WC discharge monitoring; (ii) groundwater depth, soil, and water quality monitoring; and (iii) canal and drainage discharge monitoring. SMO had overall responsibility for coordination and report preparation for three components. The 1996–97 baseline developed under the M&E program was well developed. However, after regular reporting up to 1999, subsequent reports were so late that they were no longer relevant. Except for 2000 (where data was not collected due to staffing issues), all impact reports providing analysis of data collected from 2001 to 2004 were published from April 2005 to July 2005. However, these reports still have gaps in data analysis and presentation, and some data sets are completely missing.

16. Consulting Services. WAPDA-attached units initiated engineering investigation and engaged consultants for supervision of investigation and survey work in July 1994 (directly engaging 22 person-months of SSP consultants). ADB approved direct engagement of SSP consultants under the Project and consultants were mobilized on 15 December 1994 to supervise surveys and investigations, prepare designs and tender documents, construction supervision, beneficiary consultation campaign, and on-the-job training of EAs. The construction supervision consultants were designated “engineer” in accordance with the provisions of the International Federation of Consulting Engineers (FIDIC). Most investigation and survey works were completed as scheduled. There was a slight increase in consultant inputs compared to appraisal estimates because SSP consultancy work was included in the PHLC consultants contract (Appendix 5),9 and there was a 30-month delay in contract awards and implementation of civil works.

17. The performance of the ADC consultants was satisfactory. The consultant provided momentum which reduced accumulated delays caused by delayed approval from the Planning

7 Loan No. 1413 PAK (ADB. 1995. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan, for National Drainage Sector Project. Manila) and World Bank- financed On Farm Water Management (OFWM) Program II. 8 Loan No. 1403-PAK(SF) (ADB. 1995. Report and Recommendation of the President to the Board of Directors on on Proposed Loan to the Islamic Republic of Pakistan, for Forestry Sector Project. Manila) approved in November 1995 with current value of $41.2 million (as of 31 Oct 2005) and closing date of 31 Dec. 2004. 9 Construction supervision of works awarded in the Ballar area, under Loan No 976 PAK(SF), was transferred to PHLC consultants.

Commission Performa 1 (PC-1) and delayed recruitment. The consultants used additional inputs within the overall cost ceiling of their contract (Appendix 5). The key reasons for additional inputs were (i) 2-year delay in starting the ADC, (ii) 3-year delay in water availability from PHLC, and (iii) addition of the FO pilot project to the ADC consultancy contract to support reforms under the PIDA Act.

18. IWMI was directly engaged to develop operational procedures and computer simulation models for USC and PHLC, and train DOI staff. The slight increase in IWMI inputs against the appraisal estimate (Appendix 5) is due to an extension in IWMI’s contract because of delays in commissioning the system and testing and fine-tuning of the three models developed by IWMI (para. 12), as well as inclusion of farmer education and awareness campaign in IWMI’s contract.

C. Project Costs

19. ADB provided a loan of SDR91.7 million ($127.60 million) to finance about 78% of the total estimated project cost ($163.00 million), comprising all the foreign exchange cost ($52.20 million) and 68% ($75.41 million equivalent) of the local currency cost (Appendix 6). The Project is expected to disburse $106.89 million10 from ADB’s contribution, financing 77.3% of the total project cost ($138.13 million), comprising $47.33 million of the foreign exchange cost and 65.5% ($59.46 million equivalent) of the local currency cost. ADB’s contribution is 15.7% less than the appraisal estimate, mainly because a large amount of “unallocated” funds ($40 million) was allocated at the design stage to meet conditions encountered during tunneling. This was useful as there were major cost overruns in contracted amounts of irrigation and drainage components because (i) bid prices were high as contractors had to cover the risk of tunneling, and (ii) the overall cost of the component increased by 19% ($20.60 million) compared to the appraisal estimate, but the unallocated funds were still not fully utilized. ADC provided major cost saving (54%) as work carried out through WUAs was completed at 60% of the estimated cost. Consulting services were completed at 73% of the appraisal estimate, as the main consultancy contract was terminated immediately after commissioning the PHLC. There were cost under-runs in the adoptive research and incremental operating costs components. In general, cost underruns had a positive impact ($17.90 million) on the Project’s economic returns.

D. Disbursements

20. The appraisal schedule of annual disbursements expected major expenditures in the first five years of the Project (1995–1999). However, disbursements were low from 1995 to 1997 and did not pick up until 1998 with the award of civil works contracts (Appendix 7). They peaked at $328.95 million in 2001 but remained low during the last 2 years (2004–2005) and relatively high during the remaining 6 years of the Project (1998–2003). The Government opened two imprest accounts for the loan, one with WAPDA and the other with DOA. The DOI was also declared as an EA without any imprest account facility. These arrangements were effective in financing implementation expenditures.

E. Project Schedule

21. There was a delay of 2 months in loan effectiveness (para. 22) and 42 months in project commissioning (Appendix 8). The captioned loan was extended twice to accommodate these delays. The first extension (from 1 January 2003 to 31 December 2004) covered delays in the

10 Includes pipeline expenditure of $2.5 million. 7 main contract,11 mainly due to delay in contract award (para. 27), difficult rock conditions in the Gandaf tunnel,12 and slow work progress by the same contractor towards the end of contract.13 This caused delays in all other contracts for irrigation, ADC, and system operation, which were dependent on PHLC water provision. ADB approved a further 6-month extension in the loan closing date (from 1 January 2005 to 30 June 2005) to complete four remaining minor works, testing of the final system, completion of BME activities, and financing 6 months of IWMI services14 for fine-tuning O&M models. All major civil works contracts were substantially completed within the extended loan period and handed over to DOI. The loan account closed on 20 November 2005, 35 months after the original closing date. F. Implementation Arrangements

22. There was a 2-month delay in loan effectiveness due to disagreement between WAPDA and DOI in finalizing implementation arrangements. The complicated implementation arrangements of the Project were dictated by the Government to reduce consultancy costs at appraisal and to some extent necessitated by the established capacity of WAPDA to manage large contracts. The arrangements made WAPDA a subcontractor and the lead EA, responsible for all civil works under the irrigation and drainage component, consulting services, and BME component. DOI was responsible for developing the water optimization, hydraulic, O&M, and CBIO models.

23. The DOA—through DOFWM and DAE—were responsible for implementing the ADC. A project coordination committee, headed by DOI with representatives from all EAs and consultants, was established to coordinate implementation and review progress. A project steering committee, chaired by the additional chief secretary of P&DD with representation from WAPDA, DOI, DOA, and consultants, met biannually to provide overall guidance and approve major activities. To increase DOI ownership and reduce differences between WAPDA and DOI, upon the request of the NWFP government, ADB allowed a minor change in implementation arrangements, engaging DOI as EA for minor ratification work and procurement of operational equipment.

24. The implementation arrangements not only delivered project physical outputs with delays, but also resulted in developing major gaps in ownership and operations of the Project. This caused unnecessary cost overruns and further delays at loan closing (paras. 31 & 32).

G. Conditions and Covenants

25. The loan covenants were relevant to project implementation and reforms envisaged under ADB's sector strategy. Out of 62 covenants, 48 were complied with, 3 were complied with delays, 9 were partly complied with, 1 was not complied with, and 1 was not applicable (Appendix 9). Out of the 10 partly or not complied with, 7 covenants require further actions for full compliance and 3 do not require any further action. The partly complied with covenants that need further actions relate to (i) delays in provision of counterpart funds, (ii) complete optimization of PHLC-USC operations and implementing CBIO, (iii) timely compensation for land acquisition, (iv) provision of O&M funds for drainage and irrigation facilities remodeled/improved under the

11 Tunnel and Main Canal Contract WP01. 12 Unexpected rock formation in Gandaf tunnel (4.6 km long) reduced speed of tunneling to 0.2% of the target. 13 Subcontractor Siemens Pakistan Engineering Co. Ltd. delayed re-fabrication of electro-mechanical equipment at the tunnel inlet by more than 6 months. The re-fabrication was undertaken against the advice of the consultants, which had proposed new equipment. 14 The NWFP government has already approved financing for a budget neutral extension of the IWMI contract until 31 December 2005.

Project, (v) beneficiary dialogue, and (vi) appointment of regulation cell staff. The covenants requiring the irrigation service fee (ISF) to increase at an annual rate of 25% until full cost recovery of the O&M was complied with (Appendix 10). The covenant requiring effective compliance by the NWFP government with O&M arrangements is partly complied with, as DOI is only receiving 25% of funds required for O&M of the USC and Lower Swat Canal (LSC) systems. The PIDA Act allows the formation of FOs and Swat Area Water Boards (SAWBs), which will take over management and O&M of the irrigation and drainage system from DOI and collect ISF. This initiative is supported mainly by the National Drainage Sector Program (NDSP)15 and is in the pilot stage (complete management was transferred to 5 out of 14 FOs). The PCR Mission reported a loss of productivity and inadequate use of project infrastructure, because of limited availability of O&M funds and staff for DOI. The NWFP government has made financial allocations in the budget for the year 2005–06, to comply with all the partly complied with loan covenants. Recommendations for full compliance are in Appendix 9.

H. Consultant Recruitment and Procurement

26. A breakdown of consultancy input is in Appendix 5 and details of consultant recruitment and inputs are in paras. 16–18. There was no major disagreement on the recruitment of consultants, which was timely and efficient. However, reduction in consultants’ overall inputs to reduce the cost of consulting services to less than 10% of project cost (based on government policy) required changes in implementation arrangements that caused difficulties in project operations and handover (para. 31). Direct recruitment allowed the Project’s investigation and surveys work to be completed according to schedule. There was major disagreement between the consultant and EA on extension of time and liquidated damages under the main contracts, which caused major delays in implementation. A major issue arose between the consultant and the NWFP government when the NWFP government pre-audited the consultant’s accounts for the last 10 years, after the post-audit. Most of these issues were resolved with ADB’s interventions (Appendix 4, para. 13) but some consultant payments are still outstanding on this account.

27. The main civil works contracts for irrigation and drainage activities were bundled into 5 contract packages (compared with 16 contract packages at appraisal), including an ICB contract16 for constructoin of main canal and tunnels, and four local competitive bidding (LCB) contracts for providing irrigation systems in TPA, remodeling and improvement of Maira Branch and associated distributaries and minors, surface drainage (mainly in Ballar area), and conversion of WCs into minors (Appendix 2). The average time taken between prequalification and tender was 25 months and the time between tender and award was on average 11 months. The delays were mainly due to lengthy negotiations and slow decision making by WAPDA, which often challenged consultants’ (engineers’) recommendations. The main contract was re-tendered due to high bid prices, resulting in a delay of 18 months without any improvement in bidding rates. The reduction in the number of contracts facilitated construction supervision and improved quality control but caused major contractual issues towards the end of the Project due to interdependence of contracts,17 making it difficult to determine extension of time and liquidated damages. Some of the main contractors on remodeling of canals contract, had to be terminated

15 Loan No.1413 PAK (SF) for $64.8 million was approved in December 1995 (footnote 7) and its current loan closing date is 31 December 2006. 16 Excluding the ICB contract for subsurface drainage in the project scope that was funded by SSP Loan No. 976 (footnote 1). 17 The contract period of WP-02 was 102 weeks compared with 165 weeks for contracts WP-01 and WP-03, although WP-02 was awarded 1 month after WP-01 in April 1998. Interdependence was not taken into account in packaging different contracts. 9 prematurely (without adequate testing) to settle issues of delays and interdependence. As a result, 15 minor contracts (totaling $1.1 million) were awarded to rectify shortcomings observed during system testing. While effective monitoring by ADB and efficient management of contacts by consultants recovered some of the lost time, this delay contributed 30 months to the overall delay in contract implementation.

28. Procurement of goods (including vehicles and office equipment) was satisfactory and was undertaken in line with ADB’s Guidelines for Procurement. Vehicles were procured under international shopping and all office equipment was procured following LCB procedures.

I. Performance of Consultants, Contractors, and Suppliers

29. The overall performance of consultants for all three components was satisfactory. The quality of the consultants’ design was tested by DOI and verified independently by IWMI (Appendix 3). The main consultants were able to act as a balancing force in a multi-institutional arrangement and dealt with bureaucracy in WAPDA and DOI very effectively. There were minor issues related to design and construction supervision in the subsurface drainage components, which did not receive the required attention from consultants (Appendix 11). In addition, major differences in the engineer’s estimate and bid prices on all major contracts (especially the main PHLC and tunnel contract) caused major controversies (including re-bidding) and delayed contract awards (para. 27).

30. The quality of work performed by most contractors was satisfactory. However, delay in implementation of the main tunnel and PHLC contract (para. 21) delayed project commissioning and caused overlap of contracts (para. 27). The quality of work done on TPA piped minor (contract WP-02) delayed availability of water to TPA by 24 months, which reduced the overall EIRR of the Project (para. 42). Most of the supply contracts were awarded and delivered on time and generally involved procurement of operational equipment and vehicles in small numbers, based on the requirement of WAPDA authorities and consultants during different phases of implementation.

J. Performance of the Borrower and the Executing Agency

31. The performance of the NWFP government and DOI was partially satisfactory. The NWFP government regularly delayed provision of adequate counterpart funds for the Project (Appendix 4, para. 12). In particular, it supported two extensions for the Project but was unable to finance WAPDA for costs incurred during the extension, and was unable to provide adequate O&M funds to DOI for regular O&M of the drainage infrastructure handed over to DOI in 2000. DOI unnecessarily delayed the handing-taking over of completed irrigation schemes and caused WAPDA to sustain additional management costs. Payment of compensation to landowners by the NWFP government’s revenue department was also very slow (Appendix 12) and some payments are still outstanding. Changes made at mid term review were not implemented by the NWFP government, even after major investment in the low pressure piped minor had already been made, with the consent of the NWFP government (para. 8). DOI has still not deployed regulation staff, although the NWFP government has approved recruitment funds.

32. WAPDA's overall performance as lead EA was also partially satisfactory. However, the performance of WAPDA’s field staff was satisfactory, as they implemented the Project despite WAPDA management’s centralized and delayed decision-making throughout the Project. Due to difficult implementation arrangements, WAPDA had to make extra efforts to coordinate project activities with the NWFP government, DOA, and DOI. Its centralized decision-making often disputed engineers’ decisions, which delayed the Project substantially without any added value.

In particular, its award of contracts and settlement of issues on the TPA contract was unreasonably long (para. 27), which delayed provision of water to TPA by 2 years. Its unusually delayed audit18 of consultants interfered with project activities and affected consultant’s performance.

33. DOA’s performance was generally satisfactory. It had a slow start but performance improved during implementation and ADC activities were completed 6 months before the completion of the first extension in the loan closing date, in accordance with the revised plan. The delay in the original schedule was caused by delayed availability of water from PHLC, which was critical to delivery of the OFWM component.

K. Performance of the Asian Development Bank

34. ADB’s performance was satisfactory. It played an effective role in project implementation. Regular and special missions reviewed implementation process and provided the required technical review and guidance to the EAs. ADB's responsiveness was enhanced after delegating the Project to the Pakistan Resident Mission (PRM). PRM conducted regular training of EA staff in procurement and disbursement, which had a positive impact on the performance of the EA. There were no reported delays in disbursement and processing of withdrawal applications by ADB.

35. ADB staff was actively involved in resolution of disputes between contractors and the EA, and settlement of payment and audit issues between consultants and the EA. ADB played a key role in resolving disputes between WAPDA and DOI on system performance and handover of project components. As a result of ADB’s interventions, there were no major disruptions to project implementation.

III. EVALUATION OF PERFORMANCE AND BENEFITS A. Relevance 36. The Project is rated relevant and consistent with ADB’s country operation strategy/program at appraisal and the Government’s development strategies in the water sector at PCR (paras. 5–8). The overall impact of the Project (paras. 38–43), shows that the majority of the appraised design aspects of the Project were relevant (paras. 10–13) and had a positive impact in increasing farm productivity, reducing water losses, increasing water use efficiency, improving drainage, and increasing income of small farmers.

37. Design changes during implementation improved the relevance of the Project and its overall operations and impact. The quality of extension services and expansion of the scope of WC renovation component to include and repair damaged canals in Ballar (paras. 13 and 41) helped restore water supplies to a major portion of the SSP area, and made it possible to achieve higher intensities more quickly than anticipated at appraisal. In addition, flexibility in project design allows development of additional irrigation and energy projects, which can further improve project relevance (Appendix 13, para. 28, cases II and IV). Inclusion of lessons learned from the SSP in the project design (para. 8) and improvement in O&M related covenants (para. 25) could have further increased relevance, but these options did not materialize.

18 Day-to-day audit functions were not undertaken during implementation. Suddenly, an audit for the last 10 years was done and many objections were raised, which were extremely difficult to settle after such a long period. 11

B. Efficacy in Achievement of Purpose

38. The Project was efficacious in achieving its immediate development objectives and purpose (para. 9). Incremental production at full development (by 2014) was re-estimated to compare favorably with appraisal estimates: 54,700 metric tons (t) of wheat (against 23,500 t at appraisal), 100,000 t of maize (against 25,700 t), 15,700 t of tobacco (against 14,300 t), and 116,000 t of sugarcane (against 360,000 t at appraisal). See Appendix 14, Table 5. The more than anticipated increase in maize is related to the high adoption rate of hybrid maize in the area. The less than anticipated increase in sugarcane is due to much less than anticipated increase in area under sugarcane because of low potential yields and absence of local sugar industry. Data from IWMI and the Watercourse Monitoring and Evaluation Directorate (WMED) shows that except Maira Branch canal, PHLC, and all associated distributaries and minor canals remodeled or improved under the Project, can accommodate their design discharges (Appendix 3, para. 3)19. WCs show an average increase of 41% in summer and 31% in winter in the far reaches of USC (29,800 ha), although average supplies are no longer a measure of project impacts with CBIO. The maximum discharges in the WCs monitored (Appendix 15) show a 50–100% increase in water discharges in project areas under the command of USC, and 12–15% increase in WC conveyance efficiency, in line with project objectives of alleviating the current shortage of irrigation supplies in the USC. However, an increase of 130–230% in WC discharges in the drainage area is a concern that will be addressed during CBIO implementation.

39. The Project was estimated to generate 20.9 person-days of additional employment during construction and 0.9 million person-days of additional farm labor annually upon completion. According to the PCR Mission’s revised estimates, the Project generated 12.05 million person-days of employment during construction and is expected to have generated 0.9 million person-days of additional farm labor annually since 2003 (Appendix 16). The difference in actual and appraised estimates of employment generated during construction is due to a reduction of 16% in the project cost, a 30-month extension to project completion, and use of more efficient construction technology (pre-cast structure and imported machinery).

40. Subsurface drainage completed under SSP and surface drainage completed under the Project and operated by DOI is under-performing due to deferred system maintenance. There are also indications of increased water tables in the area (Appendix 11 and Appendix 17, Table 6). Irrigation systems developed under SSP have been damaged because of deferred maintenance in Ballar area (5,212 ha), although a major portion now receives water after start of PHLC operations and repair works carried out under the Project. However, Ballar is still not fully under canal irrigation (pending minor repairs) and immediate objectives to increase irrigation supplies in the SSP area and improve drainage conditions in Ballar area have not been fully met. Recommendations to meet these objectives are in Appendix 4 (para. 12).

41. The long-term aim of the Project—to realize full agricultural potential of about 40,110 ha of agriculture land in the project area and 5,212 ha in the SSP area—is achievable if the recommendations of the PCR Mission are met (Appendix 4).

C. Efficiency in Achievement of Outputs and Purpose

42. The Project was efficacious in achieving its immediate development objectives and purpose. The quantifiable benefits of the Project include the incremental increase in crop production after 1998, when the Project began. An underlying key assumption at appraisal was

19 Maira branch canal takes 84% of design discharge.

12 that measurable incremental crop benefits would begin to accrue in 1999. However, according to PCR estimates, incremental crop production benefits were taken when benefits actually began to accrue in each part of the four domains of the Project area. (Appendix 13, para 5) The PHLC start date was also shifted from 1999 (as appraised) to 2002. Full development is expected from 2008 to 2014 (compared with the appraisal estimate of 2009 because of the circumstances of different project areas (Appendix 13, para 16). The economic internal rate of return (EIRR) was reevaluated using the same approach as at appraisal[OPD143]. The reestimated EIRR was based on investments made from 1995 to 2005 and incremental benefits gained from 1999 onward. The EIRR reestimated at project completion as 12.0% compares well with the appraisal estimate of 15.4% and the December 1996 estimate of 11.6% (Appendix 13).20 The reestimated EIRR shows that the investment choice was sound even though the EIRR was lower than predicted. The EIRR is still slightly above the opportunity cost of capital and shows that the Project was efficient in achieving its purpose, despite a lower EIRR because of delays in achieving full agricultural development. This was due to (i) 30 months delay in project completion, (ii) 42 months delay in availability of water from PHLC (para. 21), (iii) overestimation of potential yields at appraisal (Appendix 13, paras. 12–15), (iv) inefficiencies of WAPDA (para. 27) and DOI (para. 31) in operationalizing and maintaining the remodeled system (para. 40), and (v) delay by WAPDA in providing water to TPA because of contractual issues (para. 32). The PCR Mission’s observations, based on farmers’ responses in the field, are that the cropping intensities and incremental production at full development will be higher than anticipated at appraisal. This will offset the effects of implementation delays on project benefits. Similarly, an EIRR of 14% has been estimated for a scenario where the pipeline projects for irrigation are considered to have been made possible because of flexibility built into the project design (Appendix 13, para. 32).

43. At 12.0%, the EIRR is moderately sensitive to benefit changes keeping the cost factor constant. The EIRR is specifically sensitive to change in crop yields and power losses at Tarbela (Appendix 13, paras. 28–32).

D. Preliminary Assessment of Sustainability

44. The sustainability of project operations is less likely. Operation of the tunnel has been handed over to WAPDA, adequate staff has been trained and deployed for its operation, and O&M funds have been provided by the NWFP government. The remodeled system was taken over by DOI in June 2005, but there are still gaps in deployment of O&M staff and adequacy of O&M funds. DOI’s capacity and understanding of the remodeled system and its operation is limited to a few staff members who have been involved in project implementation or have been trained by the consultants and IWMI. To offset these shortcomings, IWMI’s overall support for the operation of the system has been extended until December 2005, which should ensure a smooth transition and increase the DOI’s confidence to run the system. Until the PIDA Act is fully implemented, sustained O&M of PHLC can only be ensured by NWFP government funding (para. 25 and 55). However, the commitments made by the NWFP government in terms of provision of additional funds have not been fully met, and drainage infrastructure handed over to DOI is not being maintained (Appendix 4, paras. 2 and 12).

45. To reach the reestimated targets of productivity by 2014, sustained provision of agriculture extension and research services in the project area is crucial. DOA is providing agriculture extension and research services to farmers through its extension staff and partly through farmer service centers

20 EIRR was reestimated during a detailed review by ADB as provided in the back-to-office report dated 24 December 1996. 13

(FSCs). The FSCs are farmer-managed membership organizations, which were established under the SSP and strengthened through the Project. About 490 staff members from extension and research services were trained under the Project. FSCs were given extension machinery and equipment, and the curriculum of the agriculture staff training institution was revised to include approaches (social interaction and technical training) relevant to farmers’ needs. However, due to a delay in water availability, project-funded extension services could not provide to the farmers as envisaged. Support for these activities will continue to be provided through the Agriculture Sector Program Loan II (ASPL-II),21 Provincial Trust Fund for the Joint NGO and extension agent program for small farmers, an improved outreach program for agriculture extension and research in provinces funded from ASPL-II,22 and the NWFP government’s regular annual funds. In addition, WTO pressure (opening up of agricultural-trade with neighbors has already started) and the overall change in the policy environment (deregulation of agriculture commodity prices and drastic reduction in government interference in the market) has increase the incentive for farmers to grow more and receive better returns. As competition grows in the agriculture sector, it will also put more political pressure on decision-makers to allocate more funds for O&M of the irrigation system.

46. Routine WC maintenance is generally provided by individual farmers on a needs basis and is considered adequate for sustained operation, as observed by the condition of completed WCs during the PCR Mission (para. 13). The strengthening of women’s organizations (WO) under the Project through local NGOs has resulted in networking the WOs, which has given WOs access to other programs implemented by the same NGOs after project completion.

47. The monitoring and evaluation system developed under the Project is not sustainable under the SMO’s current institutional setting. This function must be integrated in DOI through its regulation cell in Swabi, as recommended by the PCR Mission (Appendix 4, para. 6) and agreed by the NWFP government for sustained support and operation of the remodeled irrigation system.

E. Environmental, Sociocultural, and Other Impacts

48. At appraisal, no major negative environmental impacts were envisaged. The Project improved drainage and reduced erosion by providing surface/subsurface drainage, land development, and watershed management. No new irrigation development was financed in command areas adjacent to the Project and contracts for Pehur SCARP was awarded to further improve the drainage condition. CBIO and hydraulic models intended to increase water use efficiency and introduce demand based water regime (reducing excessive supply of water) have been functional for 1 year. These measures are adequate to satisfy Loan Agreement covenants (Schedule 6, para. 33). The only environmental impact of the Project is deferred maintenance of the subsurface drainage system and possible failure of the CBIO, which could increase the water table, deteriorate soil quality (Appendix 17, Table 6), and cause loss of productivity. These impacts will be mitigated through regular O&M of the drainage facilities, groundwater monitoring by DOI’s regulation cell, and regular follow-up (para. 61) of CBIO implementation—as agreed during the PCR Mission (Appendix 4). The quality of drainage effluent monitored by SMO poses no threat to fish or micro-fauna in the project area.

21 Loan No. 1877–79 PAK [SF] (ADB. 2001. Report and Recommendation of the President to the Board of Directors on {a} Proposed Loan{s} {and Technical Assistance Grant(s)} to the {full name for DMC} for {project title}. Manila) was valued at the equivalent of $350 million at the time of approval (13 December 2001). 22 One of the conditions for second tranche release under ASPL II.

49. The Project has substantial positive social impacts. As envisaged at appraisal, no major shift in farm sizes, farm operations, or tenancy arrangements were noted in the USC command area.23 About 98.5% of farmers in the project area have a landholding of less than 5 ha, where 90.1% of these small farmers are subsistence farmers with less than 2.5 ha—slightly above 80% subsistence farmers reported at appraisal. About 52.6% of farms are tenant-operated (compared with 55% reported at appraisal), 38.8% are owner-operated (against 30% at appraisal), and the remaining 8.6% are owner-cum-tenant operated (compared with 15% at appraisal).24 This shows that owners are moving to non-farm employment because of further reduction in farm size. The tenancy arrangements in the USC command area without drainage have remained the same. In the drainage area, owners have increased their share from 25% – 33% of the produce to 50%, depending on the level of improvement brought about by the Project. The incomes of both tenants and owners have increased due to increased production (para. 50). Similar revision in tenancy arrangements has been noted in the new areas of TPA and Ballar, where irrigation has been provided. The income and social condition of both tenants and owners have improved in terms of spending on health and education, reduction in conflict and access to services, improvement in agricultural practices, improved water availability, and drainage conditions (Appendix 18, para. 4).

50. The Project is currently benefiting more than 60,000 farm families, in line with appraisal estimates. With increased cropping intensities, higher crop yields, and high income-generating cropping patterns, income at full development for owner-operators is estimated to range from PRs59,408 to PRs78,503 in TPA, Ballar, and Pehur drainage area (against the appraisal estimate of PRs37,619). Tenant-operators’ farm income will range from PRs27,935 to PRs42,585 against the appraisal estimate of PRs25,212 in the same areas. In the USC command area, farm income for owner-operators is estimated at PRs113,310 (against the appraisal estimate of PRs40,554) and farm income for tenant-operators is estimated at PRs74,506 (against the appraisal estimate of PRs25,212). The key reasons for substantial increase in farm income compared to appraisal estimates are provided at Appendix 14 (para 4).

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

51. The Project is rated successful25 considering its relevance to the Government's water and agricultural development strategies and ADB's lending strategies in these sectors, and the achievement of the immediate objectives within appraisal cost, despite delays and reduced economic returns (paras. 38 and 42). The majority of the design aspects conceived at appraisal were implemented, with some minor changes (para. 10 and 11).

52. Difficulties encountered during implementation included (i) delays in decision-making by EAs (para. 32); (ii) delays in completion of civil works (para. 21); (iii) limitation of work to periods of canal closure on Maira branch canal and related distributaries (contracts WP-03 and 05); (iv) delays caused by contractual issues related to contract packaging (para. 27); and (v) delays caused by DOI in handover and management of completed works (paras. 31 and 40).

23 SMO. 2005. Final Impact Evaluation Report: Lahore. 24 SMO. 2005. Agro-Economic Survey Data Report : Lahore. 25 This project completion report is part of a sample independently reviewed by ADB’s Operations Evaluation Department. The review has validated the methodology used and the rating given. 15

53. The key benchmarks for monitoring were increases in water availability, agricultural production, and farm incomes, which were all substantially met (paras. 38, 42, and 50). Other major impacts that showed positive trends included improved water management and use, increases in water delivery efficiency, reduction in water management labor, and reduction in water related conflict (Appendix 18 and para. 38).

B. Lessons Learned

54. Contract packaging caused delays and legal issues (para. 27). To avoid this in the future, overlapping contracts should be packaged together and the legal aspects of delays caused by interdependency should be covered under the contract clauses.

55. DOI did not have adequate O&M resources to operate and maintain the handed over system (para. 40). Covenants did not fully cover the availability of ISF to DOI for O&M, although they provided for increases in ISF to meet O&M requirements (para. 25). Implementation arrangements were imbalanced as the NWFP Government (as the owner) did not have the capacity or technical knowledge to influence and guide WAPDA (para. 31). To ensure sustainability and ownership of water sector projects, new projects should include the necessary support for reforms, which ensure financial autonomy, transparent and efficient decision-making, and availability of resources for O&M of the system. In addition, future initiatives should support capacity building of water sector institutions to implement and monitor water sector projects.

56. To maintain DOI’s ownership of the Project, consultants should be recruited by the lead EA who would ultimately operate the system to improve its capacity to supervise implementation by the subcontracting agency (in this case WAPDA). Delays in contract awards and implementation could also be reduced if training on contract management and ADB procedures are organized at the outset for EAs.

57. Most WUAs developed under the Project became dormant after project completion (para. 13). To sustain operations of community organizations (WUA and WOs), project designs should include entry and exit strategies, which can adequately address WUA objectives.

58. The monitoring system established in the EA was not responsible for operating the Project and was discontinued after the Project. In future, the priority should be to strengthen the existing monitoring systems of EAs responsible for operating the Project, build their capacity, and ensure sustained monitoring.

C. Recommendations

59. Future Monitoring. ADB should monitor DOI’s ISF collection performance, and the gap between levied ISF and collection percentages. This should be carried out during regular reviews of NDSP to improve the ISF collection percentage before handover to the SAWB FO. In addition, ADB should follow up on the implementation of CBIO and hydraulic models for USC operations through ongoing and pipeline TAs26 to sustain USC system operations and apply the results of this water management model in future irrigation sector programs.

60. Covenants. The status of compliance with loan covenants and measures taken for full compliance are in Appendix 9. The covenant on Produce Index Unit is irrelevant since the

26 TAR: PAK37189. ADB. 2004. Technical Assistance to the Islamic Republic of Pakistan for Water Sector Irrigation Development, Manila.

Government abolished the Wealth Tax and introduced agriculture income tax, which adequately meets agriculture revenue requirements (Appendix 9, para. 49).

61. Further Action or Follow-Up. DOI should operationalize the subsurface drainage system to ensure efficient drainage of surplus water, and operationalize parts of Kallu Khan and its tributaries to ensure supply of irrigation water (Appendix 4, paras. 2 and 12). ADB should follow up on these issues with the NWFP government in provincial project review meetings. ADB should also monitor the annual O&M allocation for irrigation and drainage for LSC and USC until the PIDA Act is fully enforced in the area. In addition, appointment of PHLC staff and issues related to settlement of payment to consultants should be closely monitored in provincial project review meetings.

62. Additional Assistance. As agreed with the NWFP government (Appendix 4, para. 2), the subsurface drainage system completed under SSP will be made functional through DOI’s regular O&M funds. The subsurface system should be monitored for at least 6 months after it becomes operational, and major rectifications should be undertaken under NDSP based on year-end review.

63. Timing of Project Performance Audit Report. The water optimization and crop-based model of USC and PHLC system operations are expected to be fully functional by October 2005. DOI is expected to take at least one season (June 2005–June 2006) before its starts running the system optimally without disruptions. As more regular irrigation water supply has only recently (mid-2004) been ensured to all parts of the project area and 98% of farms in the project area are below 5 ha (with limited means), a more noticeable increase in productivity will take at least 2 years (July 2005–June 2007). The Project Performance Audit Report Mission could be fielded after June 2007 when full intensities have been achieved in the majority of the project area. Appendix 1 17

CIVIL WORKS CONTRACTS (amount in PRs million)

Sr. Contract Name Contract EA MOPEngineer's Contract Cost Dates No. No. Estimate Bids Contract Substantial Original Revised Invitation Award Completion

A. Main Contracts 1 Main Canal and Tunnels WP-01 WAPDA ICB 3,022.00 3,136.52 3,664.57 31 Mar 97 19 Dec 97 30 Nov 02 2 Topi Priority Area WP-02 WAPDA LCB 83.23 101.77 101.77 10 Jun 97 19 Mar 98 30 Nov 02 3 Remodeling of Canals WP-03 WAPDA LCB 353.43 414.40 541.46 27 Oct 96 27 Apr 98 30 Jun 01 4 Remodeling of Surface Drains WP-05 WAPDA LCB 174.20 174.20 216.59 17 Oct 97 13 Jul 98 01 Feb 00 5 Conversion of Watercourses WP-08 WAPDA LCB 50.60 50.60 69.18 09 Jun 97 07 Sep 98 12 Sep 00 Subtotal 4,593.57

B. Additional Works

1 Additional Works on WAPDA LCB 9.37 10.78 10.78 15 Mar 04 06 May 04 08 Sep 04 Resurfacing of Patrol Road (Maira Branch) 2 Additional Works on Chowki WAPDA LCB 2.91 3.35 3.35 10 Apr 04 15 Apr 04 13 Jul 04 Disty and Chowki No. 1 & 2 3 Construction of 11 Nos. Link WAPDA LCB 6.02 6.32 6.32 06 May 04 10 May 04 06 Sep 04 water Courses 4 Additional Works on Surbandi WAPDA LCB 1.37 1.57 1.57 10 Apr 04 15 Apr 04 13 Jul 04 Daggai and Yar Hussian mains 5 Additional Works for WAPDA LCB 2.50 2.87 2.87 22 Feb 04 25 Feb 04 27 Apr 04 Construction of 30 Nos. Sumps 6 Additional Works on Kalu Khan WAPDA LCB 1.55 1.68 1.68 15 Apr 04 – 13 Jul 04 New Minor 7 Additional Works on Maira WAPDA LCB 0.07 0.08 0.08 01 Jan 04 08 Jan 04 15 Jul 04 Branch 8 Desilting of Machai Branch WAPDA LCB 0.67 0.72 0.72 07 Jan 04 01 Aug 04 06 Feb 04 9 Construction of permanent WAPDA LCB 0.64 0.72 0.72 10 Jun 03 05 Mar 04 03 May 04 boundary wall 10 Additional Works on Narranji WAPDA LCB 3.19 3.66 3.66 – 14 May 04 11 Aug 04 Minors 1, 2 & 3 11 Additional Protective Work WAPDA LCB 1.42 1.64 1.64 – 15 Apr 04 13 Jul 04 Ground Silting Basin 12 Additional Works on Maira WAPDA LCB 2.99 3.08 3.08 – 15 Apr 04 14 Aug 04 Branch 13 Mechanical Works for manual WAPDA LCB 3.28 2.77 2.77 – 15 Apr 04 13 Jul 04 operation 14 Additional Civil Works, Swabi DOI LCB – 13.58 13.58 – 12 Dec 04 30 Jun 05 Division Subtotal 52.83 Total 4,646.40

– = not available, DOI = Department of Irrigation, EA = executing agency, ICB = International Competitive Bidding, LCB = Local Competitive Bidding, MOP = mode of procurement, No = number, Sr = Serial, WAPDA = Water and Power Development Authority, WP = WAPDA Source: Data provided by executing agencies to project completion review mission, and various bid evaluation reports

18 Appendix 2

PROJECT SCOPE (APPRAISAL AND ACTUAL)

Component Appraisal Targets Actual RRP PC-1

Irrigation and Drainage Component

Realize full potential of agricultural land (ha) 40,300.00 40,110.00 Additional irrigation development in mainly rain-fed 4,000.00 5,212.00 area (ha) Construction of distribution system in Topi (ha) 4,500.00 4,500.00 4,310.00 Canal to be designed for peak irrigation requirement 0.70 0.70 0.70 (l/sec/ha) Conversion of existing watercourse (with a capacity of 30.00 25.00 140 l/sec) to minors (no.)

PHLC Canal Length (km)a 26.20 26.20 24.10

Gundaf Tunnel

Length (km) 3.90 4.55 4.65 Internal diameter (m) 3.80 n.a. 3.10–3.40 m b

Conveyance capacity (m3/sec) 28.30 28.32

Bajja Tunnel

Length (km) 1.20 1.20 1.29 Internal diameter/section 3.50 m 4.30’ x 4.90’ 4.20’ x 4.80'

Total Length of PHLC, including tunnel (km) 31.30 31.95 30.04

Remodeling of existing canals—Machai, Maira, and 98.00 189.00 86.00 others (length in km)

Cross regulators to control water levels along 2.00 - 8.00c Maira Branch (no.)

Length of existing canals (Pehur, Ambar, and Indus) 86.00 86.00 86.00 to be improved (km)

Provision of horizontal subsurface drainage in 6,000.00 6,000.00 8,000.00d waterlogged area (ha)

Improvement of surface drainage system (km) 280.00 46.00

Appendix 2 19

Component Appraisal Targets Actual RRP PC-1

Agriculture Development Component

A. Strengthening Benefit Participation

1. Formation of water users associations (Nos.) 450.00 372.00 444.00

B. On-Farm Water Management

1. Watercourse remodeling and construction 450.00 372.00 444.00 (no.) 2. Land development demonstration program 100.00 92.40 (ha)

C. Agriculture Extension and Adaptive Research

1. Agriculture Extension

a. Demonstration Plots (no.) 566.00 592.00 b. Field days (no.) 132.00 125.00 c. Staff training (no.) 495.00 490.00 d. Refresher courses (no.) 52.00 15.00

2. Adaptive Researche

a. Research plot laid out (no.) 396.00 396.00 b. Action research studies (hectares) 714.68 714.68 c. Training of farmers (no.) 624.00 434.00 d. Field days (no.) 22.00 13.00

ha = hectare, km = kilometer, l = liter, m = meter, m3/sec = cubic meters per second, no. = number, PC-1 = Planning Commission Performa 1, RRP = report and recommendation of the President, sec = second. a Including two siphons. b Internal diameter 3.1 m in steel-lined portion and 3.4 m in reinforced concrete-lined portion. c Downstream control gates instead of cross regulators. d Financed through the Swabi SCARP Project. Source: Borrower’s Project Completion Report prepared by Consultants

20 Appendix 3

HYDRAULIC CAPACITY TEST REPORT1

A. Pehur High-Level Canal and Gandaf Tunnel Operations

1. The design discharge of the Pehur High-Level Canal (PHLC) is 27.1 cubic meters per second (m3/sec). PHLC can easily accommodate and pass this discharge, based on test results. Water was released in PHLC in November 2002. At first, water releases were small for trial and testing purposes and because demand on the system was low. No problems were reported for the testing process conducted by the consultants for the Gandaf tunnel and PHLC. Cross regulators (CRs) were adjusted where needed to respond to fluctuations in water level. No design, construction, or physical capacity problems were reported in PHLC operations and none have been observed to date, during the last (2½ ) years of operations.

2. The tunnel has not caused any interruptions in PHLC operations to date and has functioned satisfactorily since the start of operations in November 2002. The capacity and pressure test undertaken by the consultants and Department of Irrigation (DOI) showed that the tunnel can sustain its design pressure and pass the design discharge.

3. However, some management issues were observed in system operations, which led to disruption in flows to Maira Branch and its secondary off-takes. The observations are reported below:

(i) Low flow in the Tarbela reservoir prevents pressure from being developed in the tunnel, and the system was manually operated as run-of-the-river type in early 2004. (ii) System shutdowns were reported due to electricity failures. A standby generator has been provided but the automatic conversion system was closed when power shutdown took place. This issue has been resolved by the Water and Power Development Authority (WAPDA). (iii) Manual operations continued due to breakdown of a cable linking the water level downstream of the channel to the automatic system. Manual operations affect the implementation of crop-based irrigation operations (CBIO) schedules, as water from PHLC was not flowing according to demand and fluctuations from the Upper Swat Canal did not allow pond development in the upper reaches, affecting the withdrawal of off-takes. However, the system has been running automatically for the last few months (since October 2004) and ran manually for more than half of 2004.

1 Based on information provided by the International Water Management Institute (IWMI), to Project Completion Review Mission.. Appendix 3 21

B. Maira Branch Canal

3. Maira Branch’s design discharge is 26.28 m3/sec. Several tests were conducted on Maira Branch to measure the discharge passing through its cross-sections. The International Water Management Institute (IWMI) carried out 10 tests from May 2003 to December 2004. The maximum discharge was 22.57 m3/sec, which was around 84% of the design discharge (Figure A3.1). Discharge remained low during the other tests because of several factors, including (i) interventions on secondary off-takes by DOI, (ii) manual operation of tunnel by WAPDA, and (iii) improper use of escapes and CRs. In some cases, farmers also tried to intervene with the secondary system. The low demand sometimes caused fewer withdrawals (particularly in November and December), as DOI field staff lowered the discharge of distributaries/minor canals, upon the request of farmers. Restricted cross-sections downstream of CRs 8 and 9 are key impediments to Maira Branch canal passing the design discharge.

C. Secondary Off-Takes below RD 242

4. IWMI has been monitoring the system below RD 242 of Machai Branch since December 2003. Daily discharges passing through the secondary channels are monitored. It has been observed that all the remodeled secondary system can easily pass its design discharge at the head reaches. IWMI did not observe any problem in the head sections of distributaries/minors, but overflowing has been observed in the downstream reaches either due to less demand in the head sections. There is evidence that the head sections of secondary channels accommodated more than design discharge (Table A3.1).

Table A3.1: Measured Discharge at Off-Takes Heads Downstream of RD 242 (m3/sec)

S. No. Channel Design Discharge Actual Discharge Passed 1 Chauki Disty 3.07 3.06 2 Dagi Disty 1.92 2.04 3 Daulat Minor 1.82 1.86 4 Ghazi Kot Minor 0.77 0.86 5 Gumbaad Minor-1 1.04 1.06 6 Gumbaad Minor-2 0.85 0.89 7 Link Cannel 1.04 1.67 8 Neknam Minor 0.23 0.29 9 Old Indus Branch 1.21 0.94 10 Pehur Branch 0.95 1.62 11 Pir Sabaq Disty 2.39 2.83 12 Qasim Minor-1 0.77 0.83 13 Qasim Minor-2 0.66 0.67 14 Sadri Minor 0.21 0.26 15 Sarbandi Minor 0.60 0.61 16 Sard China Minor 0.66 0.68 17 Sudher Minor 0.45 0.56 18 Toru Minor 0.92 0.93 19 Yaqubi Minor 1.00 1.08 20 Yar Hussain Minor 0.72 0.77 disty = distributory, S.No. = serial number Source: Data provided to PCR Mission by IWMI.

22 Appendix 3

5. Average discharges in Maira Branch canal for winter 2003/04 and the summer of 2004 are provided in Table A3.2.

Table A3.2: Average Discharge in Off-Takes Downstream of RD 242 (m3/sec)

S. No. Canals and Minors Maximum Design Discharge Average Discharge Post-Project Pre-Project Post-Project Rabi 2004–05 Kharif 2004 1 Chowki Disty 1.29 3.07 1.87 2.38 2 Dagi Disty 0.90 1.92 0.94 1.31 3 Daulat Minor 0.58 1.82 0.52 1.30 4 Gumbaad 2 Minor 0.21 0.85 0.69 0.70 5 Gumbad1 Minor 0.46 1.04 0.44 0.84 6 Haricot Minor 0.40 0.77 0.39 0.68 7 Link Channel 1.04 1.53 1.45 8 Neknam Minor 0.14 0.23 0.14 0.34 9 Old Indus 0.52 1.21 0.62 1.01 10 Pehur Branch 0.93 1.47 0.99 1.54 11 Pir Sabaq Disty 1.14 2.39 1.20 1.95 12 Qasim Minor 1 0.24 0.77 0.53 0.71 13 Qasim Minor 2 0.22 0.67 0.26 0.51 14 Sadri Minor 0.12 0.2 0.11 0.19 15 Sarbandi Minor 0.27 0.60 0.29 0.40 16 Sard China Minor 0.30 0.66 0.38 0.65 17 Sudher Minor 0.25 0.45 0.35 0.53 18 Toru Minor 0.31 0.92 0.55 0.93 19 Yaqubi Minor 0.42 1.00 0.43 0.97 20 Yar Hussain Minor 2.95 0.72 0.27 0.78 disty = distributory, S. No. = serial number Source: Data provided to PCR Mission by IWMI.

D. Sedimentation in Maira Branch Canal

6. Maira Branch canal’s cross-sectional survey was conducted in January–February 2005 during canal closure to investigate the effect of sedimentation on its capacity. The results are provided in Table A3.3. Overall, there is deposition trend in the canal and scouring has been observed at the canal sections downstream of the CRs.

Table A3.3: Sedimentation in Maira Branch Canal (m2)

S. No. RD Design Cross-Section Existing Cross-Section Difference Effect

1 50 67 75 -8 Scoured 2 600 67 63 4 Deposited 3 1+220 66 45 21 Deposited 4 1+750 74 68 6 Deposited 5 2+200 70 58 12 Deposited 6 2+400 40 35 5 Deposited 7 3+000 43 41 2 Deposited 8 3+655 52 48 4 Deposited 9 4+750 58 52 6 Deposited 10 5+040 47 40 7 Deposited 11 10+075 42 41 1 Deposited 12 11+200 56 53 3 Deposited Appendix 3 23

S. No. RD Design Cross-Section Existing Cross-Section Difference Effect

13 13+780 38 36 2 Deposited 14 14+750 45 43 2 Deposited 15 15+600 50 50 0 16 16+700 56 50 6 Deposited 17 17+600 59 52 7 Deposited 18 25+400 33 30 3 Deposited 19 26+800 38 43 -5 Scoured 20 28+225 35 34 1 Deposited 21 30+800 27 23 4 Deposited 22 32+250 37 37 0 23 33+600 34 34 0 24 35+037 24 23 1 Deposited 25 37+570 23 23 0 26 39+708 39 36 3 Deposited 27 39+745 24 26 (2) Scoured 28 41+620 28 24 4 Deposited 29 44+260 25 24 1 Deposited S.No = serial number, RD = reduced distance. Source: Data provided to PCR Mission by IWMI.

E. Canal Operations and CBIO Implementation

7. Water was released in PHLC in February 2003, when tests of the channel capacity and automatic gates were conducted. Canal operations under CBIO started in December 2003 after considering the availability of water to meet the low demand of the winter season (2003/04). PHLC discharge dropped by about 50% (from about 19.83 m3/sec to about 9.92 m3/sec) after CBIO implementation, as half the off-takes were alternately closed for 1 week due to low demand. Overall, canal operations under CBIO went well until April 2004, with the exception of a few disruptions. Secondary off-takes were operated at lower than their design discharge due to low demand during winter 2003/04, while the average discharge was usually close to design estimates during the summer of 2004 for most of the time when off-takes were open.

8. Automatic water deliveries from PHLC were disrupted during much of the second half of 2004 by power shutdowns, low water level in Tarbela reservoir, and problems with the cable linking the water level in PHLC to the control room. Manual operation of PHLC and sudden fluctuations from the Upper Swat Canal system had an overall negative impact on CBIO. However, CBIO was implemented whenever possible despite resistance from water users who wanted water for tobacco and hybrid maize. Overall, the role of DOI was positive with the exceptional case of the Link Channel, which always created problems due to tail shortages. CBIO operations were regularly disrupted because stop logs were laid across Maira Branch and downstream of Link Channel head regulator, and CR 9 was chained down to raise the water level to feed the Link channel.

9. IWMI conducted a survey during the summer of 2003 on warabandi (water turns for irrigation) implementation and water use during conventional supply driven system operations. A similar survey was conducted during the summer of 2004 and the results were compared:

(i) Water use efficiency improved substantially during the summer of 2004, although water supplies increased. Farmers halved disposal of excess water into drains outlet closures were considerably reduced. Following traditional operations with increased water supplies and frequent rainfall in 2003, 60% of delivered water

24 Appendix 3

was wasted. However, wastage fell to about 20% in 2004 when supplies were higher than the previous season and rainfall was less frequent.

(ii) Irrigation system operations (according to the new concept of CBIO) coupled with active and vigilant monitoring in the field have saved about 40% of delivered water in 2004, compared with 2003. Further improvement is possible if the efficiency of DOI’s field staff is improved, as they are not yet used to CBIO. There are many examples of undesirable manipulation with head regulators by regulation staff or water users, which has reduced the efficiency of CBIO.

F. Maira Branch Capacity Test

10. Simulation of Irrigation Canals (SIC) Model was run for Maira Branch Canal with Design and Actual Cross Sections and following three scenarios were simulated.

11. Scenario I. Maira Branch with design cross-sectional data, while retaining all old bridges (hindering flows) can pass a discharge of 25.25 m3/sec. Manning’s roughness coefficient 0.023 (design) was used for this estimation.

12. Scenario II. Maira Branch discharge with actual cross-section (taken January– February 2005) can pass a total discharge of 19.56 m3/sec through the canal, with Manning’s roughness value of 0.023. Overtopping takes place upstream of CR 9 with higher discharge. CR 8 may pass 22.05 m3/sec by operating escape upstream of CR 9.

13. Scenario III. By removing narrow cross-sections downstream of CR 8 and 9 at RD 11800, RD 17950, and RD 19310 (which seem to cause hindrance), flows through the canal improve significantly. By improving these cross–sections, a total discharge of 23.447 m3/sec (827.91 ft3/sec) can be passed through the canal. This exercise shows that the total flows of 14.767 m3/secs can pass downstream of CR 9 against the design 17.012 m3/sec. Design discharge at CR 8 is 20.680 m3/sec whereas reaches downstream cross regulator (CR)-8 allow only 18.34 m3/sec discharge to pass.

14. Scenario IV. By using actual discharge data (with removed narrow cross-sections) in distributaries/minors (as on 23 Jul 2004 when the discharge measurement exercise was conducted), a total discharge of 23.40 m3/sec passed through the canal using the design Manning’s value of 0.023. However, the actual roughness coefficient is higher than design.

15. Summary. The above discussion shows that a total of 25.25 m3/sec.discharge can pass through Maira Branch at the design cross-sections with retained bridges. However, with actual cross-section, the maximum flow passed through the Maira Branch is 19.56 m3/sec, whereas by removing the problematic cross-sections, a total discharge of 23.46 m3/sec can be passed.

16. By improving and widening the two sections identified above, more than 90% of the design discharge can pass through Maira Branch. The cost of improving these sections is about PRs2 million, which can be accommodated in DOI’s regular annual operation and maintenance budget.

Appendix 3 25

Table A3.4: Actual Versus Design Discharge

S. No. Date Discharge Percent of (m3/sec) Design Discharge 1 08 May 2003 15.67 58.03 2 06 Jun 2003 17.53 64.92 3 19 Jun2003 17.47 64.72 4 10 Sep 2003 16.18 59.94 5 02 Oct 2003 16.76 62.08 6 18 Oct 2003 17.8 65.95 7 20 May 2004 19.92 73.81 8 21 Jul 2004 21.8 80.75 9 23 Jul 2004 22.58 83.65 10 29 Dec 2004 19.14 70.89 s.no = serial number Maira Branch Design Discharge : 952.66 Measurement Location : Maira Branch Head Source: Data provided by IWMI to PCR Mission

26 Appendix 4

OPERATIONAL ISSUES AND PRC MISSION RECOMMENDATIONS

S. No. Issues and Action Target Responsibility Date 1 Maira Branch (contract WP-03) was tested for 84% of Jan 2006 DOI the design discharge in June 2004. The need to further widen two sections was identified but DOI did not widen them during the closure period, even after ADB approval. The key reason for reduction in canal sections is lack of maintenance by DOI. In Maira, which is running canal with a downstream control regime (and was in operation throughout the project implementation period), silt deposits have increased—especially during the period when Indus water from PHLC was not available. As maintenance was not carried out during the January 2005 closure period, the canal’s capacity to take design discharge has further reduced. IWMI has identified two sections downstream of gate 8 and 9, which need further widening (Appendix 3, para. 3). The estimate cost of widening is $400,000. It was agreed that widening will be done by DOI during the next closure period (Jan–Feb every year) through their regular O&M budget. 2 More than 6,000 ha of land were given surface and Jan 2006 DOI: short-term subsurface drainage under the Project. The PCR recommendations Mission visited the drainage area along the Ballar Drain and observed that the tertiary system in most of the Jul 2006 DOI: short-term area visited had been bulldozed and converted into recommendations agricultural fields by landowners, although secondary and primary surface drains were functioning well (except for damage to profile structures). In many 30 Jun 2005 NWFP government: areas visited, the 4-inch subsurface lateral was O&M funding chocked. A general lack of monitoring and maintenance was observed on these drains, mainly due to (i) limited O&M fund availability, (ii) DOI’s failure to follow the O&M manual developed for the project area, and (iii) possible design problems. The state of subsurface drains is seriously undermining crop production in the area, thus putting the achievement of project objectives at risk. IWMI has provided a report on the performance of the system and recommended remedial measures (Appendix 11). DOI will implement IWMI’s short- and long-term recommendations. In addition, the NWFP government will make special provisions in its O&M budget (fixed percentage) for drainage. DOI will also develop and approve laws to control interference in and blocking of tertiary drainage systems and develop a monitoring system as part of O&M operations to closely monitor waterlogged areas for timely O&M intervention. DOI will operationalize all clogged piped drains and, if necessary, submit a separate proposal to ADB for undertaking improvement works under NDSP (Appendix 11).

Appendix 4 27

S. No. Action Target Responsibility Date 3 It was agreed that final withdrawals for all outstanding 15 Aug 2005 DOI, WAPDA, and liabilities of the Project will be submitted by DOI, DOA WAPDA, and DOA to ADB by 15 August 2005 and the Compliance imprest account will be closed by 30 August 2005. delayed by one month. 4 DOI will complete warabandi (schedule for water turns) 28 Feb 2006 DOI for farmers on a priority basis by end-February 2006. 5 PHLC has been tested to design discharge as certified 30 June 2005 DOI and WAPDA by DOI. After minor rectification by WAPDA (requested (complied with) by DOI) and testing of the piped minors in TPA, DOI will take over the PHLC system. 6 CBIO has been in operation for two seasons (1 year) 30 June– DOI for the Pehur system and the next season has started 15 July 2005: since April 2005. CBIO faced problems because of staff breaks in the system’s automatic operation, initial appointment resistance from farmers, and lack of coordination and interventions from DOI. Initial results are very 30 Sep 2005: IWMI and DOI encouraging—there has been wide acceptance by streamlining farmers and DOI staff, and water wastage has reduced CBIO 40–60%. Farmers’ adherence to the warabundi (water operations turns) schedule has increased from 20% to 40%. It was agreed that successful operation and fine-tuning of this 30 Oct 2005: DOI regulation cell model requires the following measures: take-over monitoring (i) WAPDA and DOI will ensure that automatic role by DOI canal operations are maintained throughout the regulation year without interference. cell from (ii) DOI will ensure that appointment of all staff IWMI. positions for PHLC operations (16–19 staff) is made by 30 June 2005 and appointments for the regulation cell (4–6 staff) by 15 July 2005. (iii) DOI will ensure recruitment of dedicated and professionally sound staff who understand the operations of the models developed for the PHLC system and operate the system accordingly. (iv) The increase in watercourse discharges (from 130% to 230%) in drainage area will be addressed during CBIO implementation through close monitoring and by ensuring supplies according to requirements and demand only. (v) IWMI will train DOI staff to monitor groundwater in the drainage area and transfer all monitoring stations and equipment to regulation cell staff. The regulation cell will take over the monitoring role, SMO (in agro-economic terms), cropping pattern, groundwater depth, soil, canal and drainage discharge, and monitoring.

28 Appendix 4

S. No. Action Target Responsibility Date 7. DOI will make allocation in their next budget (2005–06) 30 June 05 DOI and NWFP to support IWMI activities until 31 December 2005. government (complied with)

8. Final BME report based on agro-economic, soil, 31 May 2005 SMO/WAPDA groundwater and hydraulic data collected by WAPDA (not complied will be completed and provided to ADB by with) 31 May 2005. 9 NWFP government will comply with all 11 partly See NWFP complied with and 2 not complied with loan covenants Appendix 9 government (Appendix 9), where compliance actions have been agreed. This does not include the revision of the Produce Index Unit for the Wealth tax (LA schedule 4, para. 49), which has been abolished by the Government and replaced by agriculture income tax, making this covenant irrelevant. 10 NWFP government will approve the revised PC-1 and 30 Jun 2005 NWFP make the outstanding counterpart funds available to government WAPDA to settle outstanding counterpart fund liabilities (not complied on completed contracts. with) 11 DOA will send request for closing of the imprest 15 Aug 2005 DOA account to ADB, surrendering the remaining balance of Not complied yet. the imprest account. 12 The PCR Mission observed that the O&M budget for Allocation in NWFP the last 5 years (2000–01 to 2004–05) is only 20–25% 2005–06 government of the actual requirement of the Swat Canal System. budget by The increase in ISF was maintained at 25% per annum 30 Jun 2005 from 1995 to 2003. The current levels of levying ISF and in are adequate to meet the O&M requirement of the subsequent Swat Canal system (Appendix 10). However, these budgets until funds are not being channeled back to the area and the PIDA Act there seems to be a major gap in the increase in the is fully level of ISF levied and the increase in revenue implemented collection (only 50% of ISF levied is collected). The in USC and PCR Mission observed that a large portion of the Swat LSC. Canal system was receiving inadequate water, although water is available in the main canals (5,012 Development NWFP ha in Ballar Area are affected) and another major of revised government portion (1,200 ha along Ballar Drain) is waterlogged formula by Not complied. due to deferred maintenance. It is clear that the full 30 Jun 2005 potential of the system is not being exploited because of lack of O&M funds for essential works. Most bottlenecks were minor essential repairs (Kalu Khan Minor) which would be met with a slight increase in the O&M budget. (i) NWFP government agreed to make an O&M allocation for the Lower and Upper Swat Canal system equal to the ISF collected from USC and LSC last year (2004–05) in the 2005–06 O&M budget. NWFP government will continue to ensure adequate O&M allocation to the LSC and USC based on the above formula until the PIDA Act is fully implemented in the project Appendix 4 29

S. No. Action Target Responsibility Date area. (ii) All damaged portions of Narranji and Kalu Khan minors will be repaired during the next closure period (January 2006) using DOI’s O&M budget to ensure full water supply to these areas for the next cropping season in 2006. (iii) NWFP government agreed to develop and approve a formula for the O&M budget as a percentage of ISF generated from the area. The percentage will be worked out based on current O&M requirements in the area (irrigation and drainage), and budget would increase and decrease based on the collection efficiency of ISF from different irrigation circles. (iv) The irrigation and drainage budget would be separate to check against lack of spending on drainage facilities.

13 WAPDA has withheld payments to PHLC consultants 15 Aug 2005 WAPDA as a result of pre-audit observations. Most of the issues Partially complied. have been settled and general agreements have been reached on remaining issues. WAPDA management will issue instructions on the remaining issues to settle all liabilities on which agreements have been reached by 30 June 2005 and send relevant withdrawal applications to ADB by 15 August 2005. Failing this, all remaining liabilities will have to be settled by WAPDA from its own funds. ADB = Asian Development Bank, BME = benefit monitoring and evaluation, CBIO = crop-based irrigation operations, DOA = Department of Agriculture, DOI = Department of Irrigation, ha = hectare, ISF = irrigation service fee, IWMI = International Water Management Institute, LSC = Lower Swat Canal, NDSP = National Drainage Sector Program, NWFP = North-West Frontier Province, O&M = operation and maintenance, PC-1 = Planning Commission Performa 1, PCR = project completion review, PHLC = Pehur High-Level Canal, SCARP = Salinity Control and Reclamation Project, SMO = SCARP Monitoring Organization, TPA = Topi Priority Area, USC = Upper Swat Canal, WAPDA = Water and Power Development Authority. Source: Data collected by PCR Mission.

30 Appendix 5

CONSULTING INPUTS (person-months)

Component APPRAISAL UTILIZED/a Reason for Deviation International Domestic Total International Domestic Total Irrigation and Drainage 433 830 1,263 248 1,059 1,306 M&E activities were shifted from LRC Consultancy to this Package.

Delay in some major Civil Works Contracts

Supervision of Surveys 7 15 22 and Investigation

Development of 38 55 93 13 105 119 Operational Procedures and a Computer Simulation Model for USC-PHLC b

Agriculture 3 117 120 8 269 277 LRC Studies were Development added in TORs of Component ADC Consultants

Land Resource 19 33 52 LRC studies were Conservation (Including assigned to ADC M&E) consultants while M&E was assigned to the main (irrigation and drainage) consultants. Total 500 1,050 1,550 269 1,433 1,702 ADC = agriculture development consultants, I = international water management institute, L = land resource conservation, M&E = monitoring and evaluation, PHLC = pehur high-level canal, TOR = terms of reference, USC = upper swat canal. a Including all approved variations/addendums. b Through IWMI). Source: Report and recommendations of president, Borrower’s PCR, data collected by PCR Mission.

Appendix 6 31

PROJECT COSTS

Table 6.1:Project Cost Summary ($ ‘000’)

Component At Appraisal Actual FC LC Total FC LC Total A. Irrigation & Drainage 35,186 72,230 107,416 41,465 86,586 128,051

1 Construction, Remodeling 34,711 71,617 106,328 40,869 86,586 127,456 and Improvement 2 System Optimization 475 613 1,088 595 – 595

B. Agriculture Development Component 848 7,702 8,550 1,170 3,800 4,971

1 Strengthening Beneficiary Participation – 424 424 – 379 379

2 Watercourse Remodeling and Construction 708 5,287 5,995 1,170 1,851 3,021 3 Adaptive Research and Extension 140 1,991 2,131 – 1,570 1,570

C. Land Resource Conservation a 60 58 118

D. Environmental Benefit Monitoring & Evaluation 328 1,054 1,382 – 418 418

Subtotal 36,422 81,044 117,466 42,635 90,804 133,439

E. Unallocated 10,961 29,765 40,726 – – –

F. Service Charge During Construction 4,808 – 4,808 4,693 – 4,693

Total 52,191 110,809 163,000 47,328 90,804 138,133 – = zero magnitude, ADC = agriculture development consultants, FC = foreign currency, LC = local currency a carried out by agriculture development component consultants. Source: Report and recommendations of president, loan financial information system, data collected by PCR Mission.

32 Appendix 6

Table A6.2: FINANCING PLAN (ACTUAL AND APPRAISED) ($ ‘000’)

Component Appraisal Estimate ADB Government Total FC LC Total FC LC Total FC LC Total A. Irrigation & drainage 35,186 46,168 81,354 0 26,062 26,062 35,186 72,230 107,416 1. Construction, Remodeling and, Improvement 34,711 45,704 80,415 0 25,913 25,913 34,711 71,617 106,328 WAPDA 25,761 33,917 59,678 0 10,239 10,239 25,761 44,156 69,917 a. Investigations and Surveys 303 324 324 0 0 0 0 324 324 b. Civil works i. Tunnels a 5,128 9,168 14,296 0 3,800 3,800 5,128 12,968 18,096 ii. Irrigation canal system 7,411 16,890 24,301 0 4,039 4,039 7,411 20,929 28,340 iii. Subsurface drainage 1,484 2,384 3,868 0 967 967 1,484 3,351 4,835 iv. Remodeling of surface drains b 0 0 0 0 0 0 0 0 0 c. Office and residential facilities 0 0 0 0 0 0 0 0 0 d. Vehicles and equipment 451 758 1,209 0 685 685 451 1,443 1,894 e. Consulting services 11,287 2,922 14,209 0 748 748 11,287 3,670 14,957

Irrigation Department 8,950 11,787 20,737 0 15,674 15,574 8,950 27,460 36,410 a. Land acquisition 0 0 0 0 11,397 11,397 0 11,397 11,397 b. Civ il works i. Irrigation canal system 3,736 4,443 8,179 0 1,919 1,919 3,736 6,362 10,098 ii. Surface drainage 4,956 6,607 11,563 0 2,203 2,203 4,956 8,810 13,766 iii. Office and residential facilities 180 221 401 0 50 50 180 270 450 c. Vehicles and equipment 78 53 131 0 105 105 78 158 236 d. Supervision and administration 0 463 463 0 0 0 0 463 463 2. System Optimization 475 125 550 0 29 29 425 154 579 a. Vehicles and equipment 50 339 389 0 120 120 50 459 509 b. Consulting services 425 125 550 0 29 29 425 154 579

B. Agriculture development 0 388 388 0 36 36 0 424 424 component 1. Strengthening beneficiary participation 0 388 388 0 36 36 0 424 424 a. Vehicles and equipment 0 201 201 0 36 36 0 237 237 b. Operational cost 0 187 187 0 0 0 0 187 187 2. Watercourse remodeling and construction 708 4,665 5,373 0 622 622 708 5,287 5,995 a. Civil Works (including land development demonstration) 578 2,734 3,312 0 409 409 578 3,143 3,721 b. Vehicles and equipment 130 191 321 0 193 193 130 384 514 c. Consulting services 0 380 380 0 20 20 0 400 400 d. Supervision and administration 0 1,360 1,360 0 0 0 0 1,360 1,360

3. Adaptive research and extension 140 1,732 1,872 0 259 259 140 1,991 2,131 a. Contract research 0 320 320 0 0 0 0 320 320 b. Vehicles and equipment 140 560 700 0 259 259 0 560 560

C. Land resource conservation c 60 52 112 0 6 6 60 58 118 a. Consulting services d 60 52 112 0 6 6 60 58 118

D. Environmental benefit monitoring 328 944 1,272 0 110 110 328 1,054 1,382 & evaluation a. Vehicles and equipment 68 57 125 0 93 93 68 150 218 b. Consulting services 260 67 327 0 17 17 260 84 344 c. Incremental operation cost 0 820 820 0 0 0 0 820 820 Subtotal 36,422 53,943 90,371 0 27,095 27,095 36,422 81,044 117,466 Appendix 6 33

Component Appraisal Estimate ADB Government Total FC LC Total FC LC Total FC LC Total

E. Unallocated 10,961 21,462 32,423 0 8,303 8,303 10,961 29,765 40,726 a. Physical contingencies 4,388 6,926 11,314 0 3,713 3,713 4,388 10,640 15,028 b. Price contingencies 6,573 14,536 21,109 0 4,590 4,590 6,573 19,126 25,699

F. Service charge during 4,808 0 4,808 0 0 0 4,808 0 4,808 construction

Total 52,191 75,411 127,602 0 35,398 35,398 52,191 110,809 163,000

Component Actual ADB Government Total FC LC Total FC LC Total FC LC Total A. Irrigation & drainage 41,465 55,456 96,920 0 31,131 31,131 41,465 86,586 128,051 1. Construction, remodeling and improvement 40,869 55,456 96,325 0 31,131 31,131 40,869 86,586 127,456 WAPDA a. Investigations and surveys 0 984 984 0 0 0 0 984 984 b. Civil works i. Tunnels a 28,314 49,969 78,284 0 16,098 16,098 28,314 66,067 94,382 ii. Irrigation canal system 0 0 0 0 0 0 0 0 0 iii. Subsurface drainage 0 0 0 0 0 0 0 0 0 iv. Remodeling of surface drainsb 1,148 2,029 3,177 0 651 651 1,148 2,679 3,828 c. Office and residential facilities 360 1,477 1,837 0 0 0 360 1,477 1,837 d. Vehicles and equipment 0 836 836 0 0 0 0 836 836 e. Consulting services 10,877 0 10,877 0 0 0 10,877 0 10,877 f. Supervision and administration 0 0 0 0 10,315 13,315 0 10,315 10,315 Irrigation department a. Land acquisition 0 0 0 0 4,020 4,020 0 4,020 4,020 b. Civil works i. Irrigation canal system 83 146 228 0 47 47 83 193 275 ii. Surface drainage 0 0 0 0 0 0 0 0 0 iii. Office and residential facilities 0 0 0 0 0 0 0 0 0 c. Vehicles and equipment 87 14 101 0 0 0 87 14 101 d. Supervision and administration 2. System optimization 595 0 595 0 0 0 595 0 595 a. Vehicles and equipment 0 0 0 0 0 0 0 0 0 b. Consulting services 595 0 595 0 0 0 595 0 595

B. Agriculture development 1,170 3,586 4,757 0 214 214 1,170 3,800 4,971 component 1. Strengthening beneficiary participation 0 379 379 0 0 0 0 379 379 a. Vehicles and equipment b. Operational cost 2. Watercourse remodeling and construction 1,170 1,637 2,807 0 214 214 1,170 1,851 3,021 a. Civil works (including land development demonstration) 584 1,148 1,732 0 214 214 584 1,362 1,946 b. Vehicles and equipment 0 489 489 0 0 0 0 489 489 c. Consulting services 586 0 586 0 0 0 586 0 586 d. Supervision and administration 0 0 0 0 0 0 0 0 0 3. Adaptive research and extension 0 1,570 1,570 0 0 0 0 1,570 1,570 a. Contract research 0 262 262 0 0 0 0 262 262 b. Demonstration program 0 0 0 0 0 0 0 0 0 c. Vehicles and equipment 0 0 0 0 0 0 0 0 0

34 Appendix 6

Component Actual ADB Government Total FC LC Total FC LC Total FC LC Total d. Incremental operation cost 0 1,308 1,308 0 0 0 0 1,308 1,308

C. Land resource conservation c a. Consulting services

D. Environmental benefit monitoring 0 418 418 0 0 0 0 418 418 & evaluation a. Vehicles and equipment 0 0 0 0 0 0 0 0 0 b. Consulting services 0 418 418 0 0 0 0 418 418 c. Incremental operation cost 0 0 0 0 0 0 0 0 0

Subtotal 42,635 59,460 102,095 0 31,345 31,345 42,635 90,804 133,439

E. Unallocated 0 0 0 0 10,640 10,640 0 10,640 10,640 a. Physical contingencies 0 0 0 0 10,640 10,640 0 10,640 10,640 b. Price contingencies 0 0 0 0 0 0 0 0 0

F. Service charge during construction 4,693 0 4,693 0 0 0 4,693 0 4,693

Total 47,328 59,460 106,788 0 31,345 31,345 47,328 90,804 138,133 ADB = Asian Development Bank, ADC = agriculture development component, DOI = department of irrigation, FC = foreign currency, LC = local currency, WAPDA = water and power development authority a tunnel and main canal were constructed under a single contract. b this work was intended to be carried out by DOI, however it was also executed by WAPDA. c carried out by ADC consultants Source: Report and recommendations of president, loan financial information system, data provided by project implementation agencies Appendix 7 35

(ANNUAL LOAN DISBURSEMENTS) ($ ‘000’)

36 Appendix 8

PROJECT IMPLEMENTATION SCHEDULE Appendix 8 37

38 Appendix 9

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant Reference in Loan Status of Agreement Compliance Central/NWFP Government Section 3.01. (a) The Borrower shall make available the proceeds of Article III Complied with. the Loan to NWFP upon the same terms and conditions as are applicable to the Borrower which shall include interest at the rate of one per cent (1%) per annum and a repayment period of 35 years including a grace period of 10 years. The foreign exchange risk shall be borne by NWFP. (b) The Borrower shall cause NWFP to apply the proceeds of the Loan Article III Complied with. to the financing of expenditures on the Project in accordance with the provisions of this Loan Agreement and the Project Agreement. Section 3.02. The goods and services and other items of expenditure Article III Complied with. to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan among different categories of such goods and services and other items of expenditure shall be in accordance with the provisions of Schedule 3 to this Loan Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank. Section 3.03. Except as the Borrower and the Bank may otherwise Article III Complied with. agree, all goods and services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 and Schedule 5 to this Loan Agreement. The Bank may refuse to finance a contract where goods or services have not been procured under procedures substantially in accordance with those agreed between the Borrower and the Bank or where the terms and conditions of the contract are not satisfactory to the Bank. Section 3.04. Except as the Borrower and the Bank may otherwise Article III Complied with. agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively in the carrying out of the Project. Section 3.05. Withdrawals from the Loan Account in respect of goods Article III Complied with. and services shall be made only on account of expenditures relating to: (a) goods which are produced in and supplied from and services which are supplied from such member countries of the Bank as shall have been specified by the Bank from time to time as eligible sources for procurement, and (b) goods and services which meet such other eligibility requirements as shall have been specified by the Bank from time to time. Section 3.06. The closing date for withdrawals from the Loan Account Article III Complied with. The for the purposes of section 8.03 of the Loan Regulations shall be loan was given two 31 December 2002 or such other date as may from time to time be extensions. The final agreed between the Borrower and the Bank. loan closing date was 30 June 2005. Section 4.01. (a) The Borrower shall cause NWFP to carry out the Article IV Complied with. Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and agricultural and irrigation practices. (b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to this Loan Agreement.

Appendix 9 39

Covenant Reference in Loan Status of Agreement Compliance Section 4.02. The Borrower shall make available to NWFP, promptly Article IV Partly complied with. as needed, and on terms and conditions acceptable to the Bank, the There were constant funds, facilities, services, land and other resources, which are required, problems of delays in in addition to the proceeds of the Loan, for the carrying out of the provision of Project. counterpart funds for the Project. The final tranche of the counterpart funds is expected by 30 Nov 2005, with revision of the Project PC-1. Section 4.03. The Borrower shall ensure that the activities of NWFP, Article IV Complied with. WAPDA and the Borrower's departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures. Section 4.04. The Borrower shall furnish, or cause to be furnished, to Article IV Complied with. the Bank all such reports and information as the Bank shall reasonably request concerning (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the administration, operations and financial condition of NWFP and WAPDA and any other agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof; (v) financial and economic conditions in the territory of the Borrower and the international balance- of-payments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan. Section 4.05. The Borrower shall enable the Bank's representatives to Article IV Complied with. inspect the Project, the goods financed out of the proceeds of the Loan, and any relevant records and documents. Section 4.06. The Borrower shall take all action, which shall be Article IV Complied with. necessary on its part to enable NWFP to perform its obligations under the Project Agreement, including its obligations under Schedule 6 to this Loan Agreement, and shall not take or permit any action, which would interfere with the performance of such obligations. Section 4.07. The Borrower shall promptly inform the Bank of any Article IV Complied with. amendment to the Act or the WUA Ordinance. Section 4.08. (a) It is the mutual intention of the Borrower and the Bank Article IV Complied with. that no other external debt owed a creditor other than the Bank shall have any priority over the Loan by way of a lien on the assets of the Borrower. To that end, the Borrower undertakes (i) that, except as the Bank may otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and service charge and any other charge on, the Loan; and (ii) that the Borrower, in creating or permitting the creation of any such lien, will make express provision to that effect. 12. To ensure detailed coordination of the various agencies involved in Schedule 6 Complied with. Project implementation, NWFP shall, within three (3) months of the Effective Date, establish a Project Coordination Committee (PCC). 14. Prior to the Effective Date, NWFP shall, for the purpose of Schedule 6 Complied with. implementing Parts A and D of the Project, enter into an Implementation Agreement with WAPDA pursuant to which WAPDA shall carry out for NWFP the activities required to implement these Parts. The Implementation Agreement shall have terms and conditions acceptable to the Bank, including the following:

40 Appendix 9

Covenant Reference in Loan Status of Agreement Compliance Beneficiary Participation Schedule 6 18. For the purpose of ensuring involvement and participation of the Complied with. beneficiary farmers in implementing the civil works associated with watercourse remodeling and construction (Part B.2 of the Project), NWFP shall cause DOA through DOFWM to formally organize and register beneficiary farmers at the watercourse level as WUAs under the WUAs Ordinance. NWFP shall ensure that upon completion of the remodeling and construction, the concerned WUAs shall assume full responsibility for O&M of the watercourses. 19. Before beneficiary farmers are organized into WUAs, NWFP and Schedule 6 Complied with. the Bank shall jointly review the experiences gained with the participatory approach under the SSP and initiate modifications in said approach. A second joint review shall be carried out after two years of Project Implementation to evaluate the experiences with the participatory approach in the Project Area. 20. Beneficiary participation shall be effected and assured through the Schedule 6 Complied with. WUAs. They shall be formed through a series of dialogues held between Project staff of DOA and the beneficiary farmers. The dialogues shall be organized by SOs to be engaged by DOA in accordance with paragraph 7 of Schedule 5 to this Loan Agreement. At each dialogue at least 70 per cent of the actual irrigators (owner and tenant farmers) shall be present. 21. NWFP shall ensure that the formation of the WUAs (Part B.1 of the Schedule 6 Complied with. Project) and their involvement and participation in the survey and design of the respective watercourses shall be carried out in an integrated process in accordance with the specific arrangements agreed upon with the Bank. 22. Upon their legal existence through registration with DOFWM, the Schedule 6 Complied with. WUAs, through their respective procurement and construction committees, shall actively engage in carrying out the construction works. This shall include contributions by the WUA members of a total of fifteen per cent (15%) of the total material cost for the works. The WUAs shall also be given the option to provide at their own cost sand, gravel and cement to reduce the WUAs share in the cost of other materials required for lining and structures. 23. For the purpose of construction, NWFP shall cause the WUAs to Schedule 6 Complied with. engage skilled labor or to contribute the labor of the beneficiary farmers for carrying out the works. 24. (a) In order to ensure that the General Bodies of the WUAs can Schedule 6 effectively exercise control over all physical and financial operations of the WUAs, NWFP, if experience during Project implementation so Complied with. requires, shall amend the WUA Ordinance or adopt adequate rules under the WUA Ordinance before Project completion. 26. NWFP shall cause the beneficiary farmers concerned to make Schedule 6 Complied with. available free-of-charge the required land for the remodeling and construction of watercourses. DOFWM shall ensure that, to the maximum extent possible, new watercourse alignments will follow plot boundaries to minimize the division of plots into uneconomic units. 27. NWFP shall ensure that DOFWM staff will receive refresher Schedule 6 Complied with. courses in relevant technical subjects immediately after their Only limited staff assignment to the Project. DOA's Agriculture Officers and Field (75% of project staff) Assistants in the Project Area shall also receive refresher courses and was trained due to training in farm level irrigation techniques during the early years of fund constraints, staff Project implementation. To orient the staff towards the Project's turnover, and time participatory approach, DOFWM and DOE staff shall also receive constraints in making training in social interaction. the staff available.

Appendix 9 41

Covenant Reference in Loan Status of Agreement Compliance 29. The NWFP shall, upon completion of the preparatory work, actively Schedule 6 Complied with. pursue the implementation of a land resource conservation program for the Narranji catchment area subject to the conclusions of the study to be prepared under this Part of the Project. The ensuing project shall be prepared in such a way that it would be eligible as a potential subproject under the proposed Bank-financed Forestry Sector Project for NWFP. Environmental Consideration Schedule 6 32. To safeguard against any possible adverse effects on the Complied with. environment, NWFP shall, in the implementation of the Project, observe the Bank's Environmental Guidelines for Irrigation Projects, Land Clearance and Watershed Development. 33. NWFP shall ensure that the recommendations contained in the Schedule 6 Complied with. Initial Environment Examination (IEE) prepared under the feasibility study for the Project (Bank-financed T.A. No. 1709PAK) are implemented. In particular, NWFP shall ensure that, (i) to avoid further water logging in the existing Pehur Main Canal Schedule 6 Complied with. command area, no irrigation development will be financed with its own No new irrigation or the Borrower's assistance, if said development is based on development is being traditional gravity methods in areas adjacent to above-mentioned financed in areas command area which have soils unsuitable for this type of irrigation adjacent to the until adequate drainage measures have been implemented to Project’s command counteract potential negative impacts; and area. Pehur SCARP has been initiated in this area by the NWFP government, which will further improve drainage conditions in this area (ii) the PHLC-USC system will be operated in such a manner that Schedule 6 Partly complied with. (a) Swat River water resources will be optimized to reduce the loss of CBIO (which supplies power at Tarbela Dam, and (b) excessive irrigation supplies to the water as demanded distributaries and minors of the PHLC, Machai and Maira Branch by different crops and Canals which command the areas adjacent to the Pehur Main Canal reduces wasteful area, will be avoided. supply of water when it is not needed) and the hydraulic model (which will optimize water use in PHLC [Tarbela reservoir water] by giving first use priority to Upper Swat Canal water [river water]) are both operational. However, the CBIO and hydraulic optimization models require further fine-tuning based on operational results, which will be completed by IWMI, and full implementation will start by 30 October 2005.

42 Appendix 9

Covenant Reference in Loan Status of Agreement Compliance 34. NWFP shall pursue the early implementation of the planned Schedule 6 Complied with. Salinity Control and Reclamation Project for the Pehur Main Canal Pehur SCARP command area to facilitate the control and improve the groundwater contract has been table situation in this command area as well as upslope towards the awarded by DOI and Project Area, particularly in the Lahor area. work is ongoing. Land Acquisition Schedule 6 Partly complied with. 35. NWFP shall ensure that all land and rights in land, including rights Funds released to of way and riparian rights, required for the Project will be acquired in a board of revenue but timely manner to ensure Project completion by 30 June 2002. NWFP use and award are shall further ensure that people affected by land acquisition will be extremely low with compensated as provided for under the prevailing law of land less than 70% acquisition. To ensure timely compensation to all concerned affectees, disbursement. NWFP the assessed value of the land acquired shall be deposited with the will make an extra concerned land acquisition collector prior to the award of contracts for effort for complete civil works requiring prior land acquisition. disbursement to affected people by 30 September 2005. Recovery of O&M Cost Schedule 6 42. NWFP shall establish and collect irrigation service fees (ISF) from Complied with. the beneficiary farmers in the areas .encompassing the USC and LSC systems, the Pehur Main Canal System (excluding the cost relating to the O&M of the pump station at the head of the canal) and the PHLC System for O&M of the irrigation (excluding tube-well and lift irrigation schemes), and surface and subsurface drainage systems. 43. The O&M cost to be covered by the ISF shall comprise only the Schedule 6 Complied with. cost incurred at the divisional level and below. Cost incurred at the circle and headquarters level of DOI shall not be considered in determining the level of the ISF. 44. The ISF shall be increased annually by at least 25% of the amount Schedule 6 Complied with. of the ISF as of the date of increase from the year 1994 until full cost recovery is achieved. Thereafter, the ISF shall be adjusted annually, if required, by a rate, which will warrant full recovery of the annual O&M cost as defined in paragraph 43 of this Schedule. 45. Prior to the Effective Date, NWFP shall issue the appropriate, Schedule 6 Complied with. legally binding instrument to establish the ISF at a rate, which will constitute an increase of the ISF as of the date of the Loan Agreement by at least 25% as per 1 July 1994. 46. The issuance of the appropriate instrument to increase the ISF by Schedule 6 Complied with. at least 25% as per 1 July 1995 shall be a condition to be met prior to the Bank's approval of the award of contracts relating to the construction of the PHLC and the Gandaf and Baja tunnels. 47. NWFP shall ensure that a two-step communication campaign will Schedule 6 Partly complied with. be implemented under the Project to create awareness among the Information and beneficiary farmers, foster cooperation between them and the dialogues started but implementing agencies and to incorporate suggestions to improve the the effort was not well implementation and impact of the Project. During the early stage of coordinated. IWMI Project implementation, DOI and WAPDA, assisted by DOA staff, TORs have been jointly shall inform the farmer beneficiaries about the general objectives revised to intensify of the Project, the nature of the Project interventions and their likely the dialogue and impact on them through village-level public meetings, meetings with interaction with elected representatives and NGOs, and the print media in the local farmers on system language. During the preparation of the detailed design of the irrigation operations and CBIO. and drainage facilities, DOI and WAPDA shall present to and discuss Full compliance is with the farmer beneficiaries the designs through village-level public expected by meetings. Appropriate suggestions from the farmer beneficiaries will be 30 October 2005. incorporated in the final design and construction phasing. Audio-visual equipment will be procured and materials prepared for this information campaign with the assistance of consultants.

Appendix 9 43

Covenant Reference in Loan Status of Agreement Compliance Wealth Tax on Agricultural Land Schedule 6 49. To reflect the increased productivity of the land in the Project Area Not relevant. and the adjacent SSP Area after development of the irrigation facilities, The wealth tax was and in the interest of promoting equity of benefits and domestic abolished in 2003 and resource utilization from PHLC, NWFP, through its Revenue this action had no Department, shall, upon Project completion, revise the Produce Index impact on revenue Units classification appropriately. generated from agriculture, as it was replaced by agriculture income tax. The system for increase in agriculture income tax, with increased productivity, is already in place and is adequate. WAPDA 3. WAPDA shall establish a Project Directorate, which shall be headed Article IV Complied with. by a Chief Engineer who will act as Project Director. The Project Director, under the general supervision of WAPDA's General Manager (Water), North, shall be responsible for the overall implementation of Part A of the Project. He shall be assisted by two Deputy Project Directors of the rank of Superintending Engineers, one each from WAPDA and DOI. The Deputy Project Director WAPDA shall be responsible for Part A.l.a)(i)-(iii) of the Project. The Deputy Project Director DOI shall be responsible for Part A.l.a)(iv)-(vi), A.l.b)(i) and A.2 of the Project. The Chief Engineer (O&M) of DOI shall be responsible for Part A.2 of the Project. The subsurface drainage works (Part A.l.b)(ii)) shall be carried out through the Project Director appointed pursuant to paragraph 2(b) of Schedule 6 to the SSP Loan Agreement. 4. The Engineering Consultants shall be engaged by WAPDA to Schedule 6 Complied with. provide services for planning and supervision of engineering surveys and investigations, detailed design, construction supervision and quality control of all the civil works under Part A of the Project. In respect of construction supervision and quality control, the Engineering Consultants shall perform the functions of the Engineer. The Engineering Consultants shall carry out their services under the direction of the Project Director and shall be headed by team leaders. Within the scope of their functions, the team leaders, who shall be delegated the powers of the Engineer as required for the Project by the Engineering consultants, shall (a) have day-to-day responsibility for the execution of the works; and (b) directly supervise (i) the staff of the Engineering Consultants and (ii) the DOI and WAPDA staff acceptable to the team leaders of the Engineering Consultants who shall be assigned to the Consultants' office, as required. 5. A joint WAPDA-DOI design review panel will be established to Schedule 6 Partially complied review design criteria and the detailed designs for irrigation and with. drainage facilities. The panel will be headed by DOA's Chief Engineer DOI played a very (Operation and Maintenance) and will comprise WAPDA's and DOA's passive in the review Deputy Project Directors, DOA's Superintending Engineer (Northern panel and WAPDA Circle), DOA's Executive Engineer (Swabi Division), who will act as exercised control on secretary of the panel, and a representative of IIMI referred to in the approvals. No paragraph 7 of Schedule 5 to this Loan Agreement. further compliance is needed.

44 Appendix 9

Covenant Reference in Loan Status of Agreement Compliance 6. DOFWM shall appoint a Project Director who shall be assisted by Schedule 6 Complied with. technical and administrative staff to carry out the watercourse remodeling and construction and the land development activities (Part B.1-3) under the Project. To organize WUAs, male and female social organizers shall be engaged (see paragraph 21 of this Schedule). Qualified staff of DOA's Soil Conservation Wing and NWFP's Forest Department (FD) shall provide technical assistance to DOFWM for implementing the land development demonstrations under Part B.3 of the Project. 10. The Chief Engineer, WAPDA's Salinity Control and Reclamation Schedule 6 Partly complied with. Project (SCARP) Monitoring Organization (SMO), shall have the Involvement of PEDD overall responsibility for the BME program and coordinate the activities was and continues to of the two other specialized WAPDA agencies involved, i.e. the be marginal. It was Watercourse Monitoring and Evaluation Directorate and the Surface agreed that the M&E Water Hydrology Project Directorate. The Environmental Cell of role would be taken WAPDA's Planning Division shall be associated with the detailed over by DOI’s design of the BME program. The Environmental Section of PEDD shall regulation cell by be given sufficient opportunities by WAPDA to provide its views on the 30 October 2005. various steps and activities to be undertaken and to discuss relevant matters. NWFP-WAPDA Implementation Agreement Schedule 6 (i) WAPDA shall undertake the procurement of all agreed goods and Complied with. services and the selection and engagement of consultants for said Parts in accordance with the relevant procedures described in Schedules 4 and 5 of this Loan Agreement, in consultation with NWFP; (ii) WAPDA shall carry out the implementation of said Parts in Schedule 6 Complied with. accordance with the agreed Project implementation schedule; (iv) WAPDA shall be responsible for operating and maintaining the Schedule 6 Complied with. facilities provided under said Parts, subject to the provisions of paragraphs 36–37 of this schedule. 15. WAPDA, on behalf of NWFP, shall plan surveys and investigations Schedule 6 Complied with. and the design and construction of the irrigation and drainage facilities in such a way that the Project benefits are maximized. Upon completion of the design phase and prior to the award of major civil works contracts of Project implementation, WAPDA, in consultation with DOI and DOFWM, shall prepare a detailed schedule of construction activities which indicates the sequence of all civil works, and a revised estimate of the cost related to the Project's civil works. Such schedule shall be discussed between NWFP, WAPDA and the Bank during the comprehensive review of the Project referred to in paragraph 48 of this Schedule and subsequently be updated by WAPDA on a quarterly basis, and provided to the Bank through quarterly progress reports. b) Remodeling of the Irrigation System Schedule 6 16. The construction activities relating to remodeling of the canal Complied with. systems shall be phased so as to minimize disruptions in irrigation water deliveries. To that end, WAPDA and DOI shall ensure that, where appropriate, remodeling activities are physically accomplished during the annual canal closure period and other appropriate periods when irrigation demands are low.

Appendix 9 45

Covenant Reference in Loan Status of Agreement Compliance Part D of the Project Schedule 6 30. Project benefit and environmental, monitoring and evaluation Complied with delay. (BME) shall be carried out by WAPDA on behalf of NWFP in Submission of reports accordance with the Bank's Handbook on Benefit, Monitoring and was so delayed on Evaluation. BME shall focus on assessing (i) the Project's impact on most accounts that agricultural output, farming practices and income; (ii) the performance they were no longer of the irrigation and drainage facilities, (iii) the Project's effects on relevant. M&E role socio-economically disadvantaged groups including tenants, landless will be transferred laborers and women; and (iv) establishing a causal link between from SMO to DOI’s Project interventions and inferred agricultural and social impacts. regulation cell by 31 October 05. 31. NWFP shall ensure that WAPDA prepares a BME program and Schedule 6 Complied with. submits it to the Bank for review and concurrence by 31 December 1996. Upon approval, the program shall be integrated with the existing program developed by WAPDA for the SSP. This integrated BME program shall continue to be used for the SSP after mid-1998 when the SSP is expected to be completed. (a) the Gandaf tunnel and associated control works provided under Schedule 6 Complied with. Part A.1.a(i) shall be operated and maintained by WAPDA on behalf of NWFP, which shall finance the cost thereof. (b) the PHLC and its new distribution system (Part A.1.a(ii) of the Schedule 6 Complied with delay. Project shall be operated and maintained by WAPDA during the civil The construction works contract period including the contractual maintenance period period expired on and thereafter by DOI. these contracts but the system was handed over to DOI with a delay of more than 2 years in June 2005. Department of Agriculture

7. The Deputy Director, Extension (Mardan), shall be responsible for Schedule 6 Complied with. the extension and adaptive research activities. His responsibilities shall include designing and managing the extension program as well as identifying research needs and contracting research work out to research institutions. DOE's staff in the Project Area shall be strengthened by the posting of four water management subject matter specialists and one research agronomist. 8. To ensure close coordination, regular coordination meetings Schedule 6 Complied with. between staff of DOFWM, DOE and the consultants referred to in paragraph 1(c) of Schedule 5 to this Loan Agreement shall be held. The meetings shall be chaired by DOE's Deputy Director. 9. The Chief of the Agriculture Section of PEDD shall be responsible Schedule 6 Complied with. for providing guidance to the consultants referred to in paragraph 1(d) of Schedule 5 to this Loan Agreement who will prepare the study under this Part C. Staff of FD and DOA's Soil Conservation Wing shall provide assistance. 25. DOA shall ensure that the remodeling of watercourses will Schedule 6 Complied with. generally be undertaken simultaneously with the remodeling of the irrigation system, with priority given to areas where the remodeling will have a high impact. In respect of the subsurface drainage, the remodeling works shall be deferred until the completion of the subsurface drainage works to preclude the need for repairs. DOFWM shall ensure that WUAs shall remodel and construct the earthen sections of the watercourses prior to the procurement of structures and materials for watercourse lining.

46 Appendix 9

Covenant Reference in Loan Status of Agreement Compliance Farm Level Water Management and Extension Schedule 6 Complied with. 28. DOA shall, through demonstration and test plots, provide farm Existing staff of level water management extension to the beneficiary farmers on a agriculture institute continuous basis. Training in irrigation techniques, watercourse have been trained in maintenance and social interaction shall be incorporated in the regular all relevant disciplines in-service training courses for Agriculture Officers and Field Assistants. and social interaction. To ensure this, NWFP, through its own resources, shall suitably Although no new staff strengthen the staffing of DOFWM's Training Center in D.I.Khan in all has been allowed, the relevant technical fields by 31 December 1995. Courses in social curriculum has been interaction shall be arranged through competent local institutions. changed accordingly. 41. Watercourses remodeled and constructed under the Project shall Schedule 6 Complied with. be operated and maintained by the concerned WUAs. For this purpose, DOA shall continue to provide appropriate technical guidance to the WUAs upon completion of the Project. (c) the irrigation facilities remodeled under Part A.l.a)(iii) of the Project Schedule 6 Complied with delay. shall be operated at all times by DOI; the maintenance shall be carried The construction out by WAPDA during the respective civil works contract periods period expired on including the contractual maintenance period, and thereafter by DOI; these contracts but system was handed over to DOI with a delay of more than 2 years in June 2005. (d) the irrigation and drainage facilities remodeled, improved and Department of Partly complied with. converted under Part A.l.a)(iv)-(vi) and l.b)(i) of the Project shall be Irrigation Facilities were operated and maintained by DOI; and handed over to DOI but DOI is not (e) The drainage facilities re-modeled and constructed under undertaking regular Part A.l.b)(ii) of the Project shall be maintained by WAPDA during the O&M of these respective civil works contract periods including the contractual facilities. maintenance period and thereafter by DOI. Recommendations for full compliance are in Appendix 4 (para.12). (f) DOI shall carry out the O&M through its existing Division at Swabi Schedule 6 Complied with. and a new division to be established for the PHLC system during Project implementation. 37. DOI shall also establish a Regulation Cell for the PHLC-USC main Schedule 6 Partly complied with. canal system comprising of one Executive Engineer and a Sub- divisional Officer. This cell shall plan seasonal and weekly canal Regulation cell funds operations; coordinate the daily canal operations by DOI's divisional approved but staff is staff including the head-works of USC at Amandara, and the WAPDA still to be deployed. staff operating the Gandaf tunnel and associated control works; and Staff deployment is monitor and evaluate the actual water distribution on a daily, weekly expected to be and seasonal basis. completed by 15 July 2005. 38. To optimize the use of the Indus and Swat River water resources Schedule 6 Partly complied with. and minimize the loss of energy at Tarbela Dam, DOI shall develop a comprehensive mathematical model of the PHLC and USC main canal Model developed and system. The model shall, as a decision-support tool, assist the is being fine-tuned. divisional staff and the staff of the Regulation Cell in the operation of Full operations are that main canal system. The model shall be developed before the expected by 30 completion and commissioning of the PHLC and calibrated during the November 2005. first two seasons after the canal's commissioning.

Appendix 9 47

Covenant Reference in Loan Status of Agreement Compliance 39. For the management of the PHLC-USC main canal system, DOI Schedule 6 Not complied with. shall install communication facilities, which shall be compatible with DOI will continue to the communication system to be installed for the SSP. To facilitate the use existing facilities. evaluation of the performance of the USC-PHLC main canal system, No further action is data-loggers shall be installed at critical points in the system and the required. surface drainage system. Review of O&M Organization Schedule 6 40. DOI shall examine the current O&M organization for the PHLC- Partly complied with. USC system with a view to identifying measures to improve operational efficiency and reduce DOI's establishment cost. The staff Report developed functions and the lines of command and communication of the and submitted but Northern Irrigation Circle of DOI and the O&M divisions in charge of implementation in this system and associated drainage systems shall be reassessed progress. against system management requirements for crop-based canal Staff appointments operations and cost-effective system maintenance. The review shall are expected by include the findings and recommendations of the Bank-financed 15 July 2005. Technical Assistance for Crop-Based Irrigation Operations (T.A. No. 1481 PAK), the operational procedures to be developed Recommendations for under Part A.2.b) of the Project, and recommendations of other studies full compliance are in which may be commissioned to investigate options for institutional Appendix 4 (para. 12) reforms for NWFP's irrigation sector. To carry out this review, DOI, within six (6) months of the Effective Date, shall constitute a working group comprising the Superintending Engineer at Mardan and the Executive Engineers of the O&M Divisions for the PHLC-USC system. The working group shall report to the Chief Engineer. By 30 June 1996, DOI shall submit a report to NWFP recommending possible organizational changes relevant for the PHLC-USC system and quantifying the impact of these changes on establishment and system maintenance cost. The report shall be discussed between NWFP and the Bank after which appropriate institutional changes for the PHLC-USC system shall be introduced. 11. The Project Steering Committee (PSC) established pursuant to Schedule 6 Complied with. paragraph 5(a) of Schedule 6 to the SSP Loan Agreement shall also function as PSC for the Project. The PSC, chaired by the Additional Chief Secretary NWFP, shall be responsible for the overall Project supervision and coordination. The PSC shall meet, in the same composition as under the SSP, as required, but at least every six (6) months. 13. The members of the PCC shall include the Secretary of the DOI as Schedule 6 Complied with. Chairman, the Project Director, the Deputy Project Directors of DOI and WAPDA, the Project Director of DOFWM, the Deputy Director (Extension), Mardan, of DOE, the team leaders of the consultants engaged under Parts A and B of the Project and representatives of NGOs, if engaged. Representatives of other institutions including contractors may be invited to participate on a case-by-case basis. The PCC shall meet as required, but at least every three (3) months. Miscellaneous Islamabad-Peshawar Motorway 17. To ensure adequate cross-drainage and conveyance of irrigation Schedule 6 Not applicable. supplies across the planned Islamabad-Peshawar Motorway, the No compliance Borrower shall cause its National Highways Authority to consult with required. NWFP on the motorway's design and implementation if the motorway construction is carried out. DOA = department of agriculture, DOE = directorate of agriculture extension, FD = finance department, IWMI = international water management institute formerly known as international irrigation management institute (IIMI) ,NWFP = north-west frontier province, PEDD = planning, environment and development department, PHLC – pehur high-level project, SSP = swabi SCARP project, USC = upper swat canal

48 Appendix 10

O&M FUNDING

Table A1-10.1: Budget Allocations and Expenditure of DOI

Head of Expenditure 2000–01 2001–01 USC LSC TW+LIS FIS drain. Total USC LSC TW+LIS FIS drain. Total

Maintenance 4.0 1.9 5.9 1.4 5.3 18.5 6.6 7.0 6.3 2.2 1.2 23.4 Contracts & Contracts for reh./Imp: works a

Electricity charges for – – 55.3 – – 55.3 – – 55.3 – – 55.3 Pumps/Tubewells Maintaining Office 0.7 1.0 – 1.0 – 2.7 1.5 1.2 – 1.2 – 3.8 related to canal system (Equipment, O&M, Utility charges, and Building etc.

Subtotal 4.7 2.9 61.2 2.4 5.3 76.5 8.0 8.1 61.7 3.4 1.2 82.5

Salary, TA./DA and 27.9 34.1 – – – 62.0 31.0 35.3 – – – 66.3 other costs associated with the O&M of the system b

Total 32.6 37.0 61.2 2.4 5.3 138.5 39.0 43.4 61.7 3.4 1.2 148.8

Head of Expenditure 2002–03 2003–04 USC LSC TW+LIS FIS drain. Total USC LSC TW+LIS FIS drain. Total

Maintenance 6.3 6.7 5.6 3.9 1.0 23.6 13.6 4.0 3.0 1.7 1.4 23.7 Contracts & Contracts for reh:/Imp: works a

Electricity charges for – – 61.0 – – 61.0 – – 43.9 – – 43.9 Pumps/Tubewells

Maintaining Office 1.3 1.7 – 1.7 – 4.8 1.1 1.0 – – – 2.2 related to canal system (Equipment, O&M, Utility charges, and Building etc.

Subtotal 7.6 8.4 66.6 5.6 1.0 89.4 14.8 5.0 46.9 1.7 1.4 69.8

Salary, TA./DA and 33.6 38.8 – – – 72.4 47.3 41.7 – – – 89.0 other costs associated with the O&M of the system b

41.2 47.3 66.6 5.6 1.0 161.8 62.1 46.7 46.9 1.7 1.4 158.8 Total

Appendix 10 49

Head of Expenditure 2004-05 USC LSC TW+LIS FIS drain. Total

Maintenance Contracts & Contracts for reh:/Imp: 15.2 4.6 4.9 3.1 2.4 30.2 works a Electricity charges for Pumps/Tubewells – 54.2 – – 54.2 Maintaining Office related to canal system 1.4 1.3 – – – 2.6 (Equipment, O&M, Utility charges, and Building etc.

Subtotal 16.6 5.9 59.1 3.1 2.4 87.0

Salary, TA./DA and other costs associated with 41.3 48.6 – – – 90.0 the O&M of the system b

Total 57.9 54.5 59.1 3.1 2.4 177.0 DA = daily allowance, DOI = department of irrigation, drain. = drainage, FIS = flow irrigation scheme, LIS = lift irrigation scheme, LSC = lower swat canal, Imp = improvement, reh = rehabilitation, TA = traveling allowance, TW = tubewell, O&M = operation and maintenance, USC = upper swat canal. a Based on estimated annual requirements for O&M sent by 3 divisions in Mardan Circle and review by PCR Mission, on average, O&M expenditure is 25 percent of the required expenditure.b Salary, and TA/DA budget is for all Northern Circle and includes the staff working on Irrigation schemes other than USC, and LSC. Source: data collected by PCR Mission from DOI

50 Appendix 10

Table A1-10.2: Gaps in O&M Allocations

O&M 2000-01 2001-02 USC LSC TW+LIS FIS drain. Total USC LSC TW+LIS FIS drain. Total

Actual Demand 33.0 38.0 17.4 4.9 19.9 113.1 26.5 28.0 13.7 6.4 46.2 120.8

Fund Provided 4.0 1.9 5.9 1.4 5.3 18.5 6.6 7.0 6.3 2.2 1.2 23.4

Deficient (28.9) (36.1) (11.5) (3.5) (14.6) (94.6) (19.9) (21.0) (7.4) (4.1) (45.0) (97.5) Amount/GAP

% of available 12% 5% 34% 28% 27% 16% 25% 25% 46% 35% 3% 19% O&M funds versus actual demand

O&M 2002-03 2003-04 USC LSC TW+LIS FIS drain. Total USC LSC TW+LIS FIS drain. Total

Actual Demand 13.1 25.7 13.2 7.1 43.1 102.2 37.0 32.2 15.2 7.0 56.8 148.2

Fund Provided 6.3 6.7 5.6 3.9 1.0 23.6 13.6 4.0 3.0 1.7 1.4 23.7

Deficient (6.7) (19.0) (7.6) (3.2) (42.1) (78.6) (23.4) (28.2) (12.2) (5.3) (55.3) (124.4) Amt./GAP

% of available 48% 26% 43% 55% 2% 23% 37% 12% 20% 24% 3% 16% O&M funds versus actual demand

O&M 2004–05 USC LSC TW+LIS FIS drain. Total

Actual Demand 44.3 35.4 15.2 10.5 52.8 158.1

Fund Provided 15.2 4.6 4.9 3.1 2.4 30.2

Deficient Amt./GAP (29.1) (30.8) (10.4) (7.4) (50.4) (127.9)

% of available O&M funds versus actual demand 34% 13% 32% 30% 5% 19% DA = daily allowance, DOI = department of irrigation, drain. = drainage, FIS = flow irrigation scheme, LIS = lift irrigation scheme, LSC = lower swat canal, Imp = improvement, reh = rehabilitation, TA = traveling allowance, TW = tubewell, O&M = operation and maintenance, USC = upper swat canal. a Based on estimated annual requirements for O&M sent by 3 divisions in Mardan Circle and review by PCR Mission, on average, O&M expenditure is 25 percent of the required expenditure.b Salary, and TA/DA budget is for all Northern Circle and includes the staff working on Irrigation schemes other than USC, and LSC. Source: data collected by PCR Mission from DOI

Appendix 10 51

Table A1-10.3: Irrigation Service Fee and O&M)

ISF Details 2000-01 2001-02 USC LSC TW+LIS FIS drain. Total USC LSC TW+LIS FIS drain. Total

Overdues 100.2 62.8 48.6 5.9 – 217.5 106.0 63.2 49.7 6.8 – 225.7 Current Levied 46.4 42.3 10.0 2.7 – 101.4 59.8 54.7 12.2 2.8 – 129.6 Total Receivable 146.6 105.1 58.6 8.6 – 318.8 165.8 117.9 62.0 9.6 – 355.3

Recovery Made 40.6 41.9 8.9 1.8 – 93.1 50.0 58.7 6.0 1.8 – 116.5 Balance 106.0 63.2 49.7 6.8 – 225.7 115.8 59.2 56.0 7.8 – 238.8

Collection Efficiency Cumulative 28% 40% 15% 21% – 29% 30% 50% 10% 19% – 33% On Current demand 87% 99% 89% 66% – 92% 84% 107% 49% 65% – 90%

O&M Requirements and ISF O&M Required 33.0 38.0 17.4 4.9 19.9 113.1 26.5 28.0 13.7 6.4 46.2 120.8 ISF receipts 40.6 41.9 8.9 1.8 – 93.1 50.0 58.7 6.0 1.8 – 116.5

Gap in O&M required 7.6 3.9 (8.5) (3.1) (19.9) (19.9) 23.6 30.7 (7.8) (4.5) (46.2) (4.3) and ISF collected %age -18% -4%

ISF Details 2002–03 2003–04 USC LSC TW+LIS FIS drain. Total USC LSC TW+LIS FIS drain. Total

Overdue 115.8 59.2 56.0 7.8 – 238.8 158.6 79.5 65.7 11.2 – 315.0 Current Levied 88.4 56.0 13.8 4.8 – 163.1 93.2 64.8 14.7 3.3 – 176.0 Total Receivable 204.2 115.2 69.8 12.6 – 401.8 251.8 144.4 80.4 14.5 – 491.0

Recovery Made 45.6 35.7 4.1 1.3 – 86.8 64.2 59.7 10.2 2.4 – 136.5 Balance 158.6 79.5 65.7 11.2 – 315.0 187.6 84.7 70.2 12.1 – 354.5 Collection Efficiency Cumulative 22% 31% 6% 11% 0% 22% 26% 41% 13% 17% – 28% On Current demand 52% 64% 30% 28% 0% 53% 69% 92% 69% 75% – 78%

O&M Required 13.1 25.7 13.2 7.1 43.1 102.2 37.0 32.2 15.2 7.0 56.8 148.2 ISF receipts 45.6 35.7 4.1 1.3 – 86.8 64.2 59.7 10.2 2.4 – 136.5 O&M Requirements and ISF Gap in O&M 32.6 9.9 (9.1) (5.8) (15.4) 27.2 27.5 (5.0) (4.6) – (11.7) required and ISF collected %age -15% -8%

ISF Details 2004–05 USC LSC TW+LIS FIS drain. Total

Overdue 187.6 84.7 70.2 12.1 – 354.5 Current Levied 57.7 63.2 13.3 2.0 – 136.2 Total Receivable 245.2 147.9 83.5 14.0 – 490.7

Recovery Made 31.9 25.8 3.2 0.7 – 61.6

52 Appendix 10

ISF Details 2004–05 USC LSC TW+LIS FIS drain. Total Balance 213.3 122.1 80.3 13.3 – 429.1

Collection Efficiency Cumulative 13% 17% 4% 5% – 13% On Current demand 55% 41% 24% 35% – 45%

O&M Requirements and ISF O&M Required 44.3 35.4 15.2 10.5 52.8 158.1 ISF receipts 31.9 25.8 3.2 0.7 – 61.6

Gap in O&M required and ISF collected (12.4) (9.6) (12.0) (9.8) (96.5)

%age -61%

Appendix 11 53

SUBSURFACE DRAINAGE SYSTEM PERFORMANCE REPORT

A. Situation Statement

1. In the tail end areas of the Project, there is a subsurface drainage system which was developed under the Swabi Salinity Control and Reclamation Project (SCARP) Project1 (SSP), to control waterlogging in the drainage survey area. During the project completion review, farmers informed the Mission that the drainage systems had been functioning properly in the first three cropping seasons (2000–2003), cropping intensities and agricultural productions increased until 2003, and land prices also rose. However, improper functioning of the subsurface drainage systems under the prevailing increased canal water supplies caused productivity in the tail end areas to fall due to increased waterlogging.

2. The International Water Management Institute (IWMI) was tasked to review the situation, provide analysis, and make recommendations for making the system functional. According to the IWMI review, provision of manholes was eliminated at the design stage to avoid farmers’ interventions in the operation of subsurface drainage systems. As a result, the subsurface drainage system is totally underground and only has one opening at the end. In such a system, gravity flow conditions could be stopped if air is trapped. This could be one of the reasons for system clogging, which was exposed to heavy rainfall and additional water after the three year drought (2000–2003).

3. Subsurface drainage systems usually have a limitation of excessive drainage flows in irrigated areas. The root zone dries quickly after the irrigation event. Farmers like to avoid this situation, hence the recent popularity of controlled subsurface drainage systems. There is a possibility that farmers intervened in the existing system, which could have caused the system to stop working. This is evident from some farmers’ fields, where holes were found during the Mission.

B. IWMI Recommendations

4. In the light of problem diagnosis, the following short-term recommendations are made:

(i) For maintenance purposes, the Department of Irrigation (DOI) should be given the equipment and facilities for operation and maintenance (O&M) in the relevant irrigation subdivision. Such a facility originally existed in Mardan and Swabi SCARP area, which was later moved to Peshawar. (ii) Improved drainage management and control of waterlogging is part of canal management work. DOI should carry out cleaning of five to six laterals to identify the reason for blockages and the cost of making the whole system operational. Based on this exercise, DOI should submit a proposal for allocation of O&M funds in the 2005–06 budget to include budget for intensified district engineer work in terms of monitoring and field training. (iii) DOI should make crop-based irrigation operations functional in the affected area and control water availability based on regular monitoring of groundwater, as there is more than 700 millimeters (mm) of annual rainfall in the area (washing salts), and the soil and water monitoring report do not indicate any significant salinity/sodicity problems.

1 Originally it was under the scope of the PHLC Project – Loan No. 1294 PAK(SF) (ADB. Year. Report and Recommendation of the President to the Board of Directors on {a} Proposed Loan{s} {and Technical Assistance Grant(s)} to the {full name for DMC} for {project title}. Manila).

54 Appendix 11

6. In the longer term it is recommended that:

(i) Future planning and design of drainage systems in the area should include compulsory analysis of the comparative advantage of surface and subsurface drainage systems. According to IWMI’s analysis, subsurface drainage systems may not be needed in the area, as it has sufficient gradient and excessive lateral groundwater movement. (ii) Manholes (with the control mechanism) should be added to the system if clogging persists—even after support for opening the system has been extended by DOI. These manholes can be multipurpose and can help in (a) maintaining gravity flow conditions due to opening to the atmosphere (air venting), (b) monitoring and maintenance of the subsurface drainage system, (c) providing proper control for farmers in operating these systems, and (d) facilitating the achievement of enhanced water productivity.

Appendix 12 55

STATUS OF COMPENSATION FOR LAND ACQUISITION (PRs ‘000’)

S. District/ Advance Disbursement Period Amount Balance Remarks No. Tehsil Released Disbursed Amount From To 1 Swabi 153,417 Jan 1998 Dec 2003 122,512 30,905 District revenue officers were asked by PD 2 Lahor 20,000 Jul 2000 Dec 2003 10,091 9,909 PHLCP vide letter dated 23 Feb 2005 to 3 Mardan 21,712 Mar 1999 Mar 2002 14,778 6,934 provide the accounting adjustments of the 4 Buner 31,055 – – 13,305 17,750 outstanding amounts.

Total 226,184 160,686 65,498 — = not available, PD = project director, PHLCP = pehur high-level canal project, S.No = serial number Source: Data collected by project completion review mission

56 Appendix 13

ECONOMIC COST AND BENEFIT ANALYSIS 1. The economic internal rate of return (EIRR) has been calculated for the Project on the basis of the capital costs incurred during project implementation, estimated future maintenance costs, benefits achieved to date, and considering estimated future benefits. The composite EIRR for the Project is 12.0%.

A. Production Impact

2. To determine production impact, the same approach was used as at appraisal. At appraisal, it was assessed that improvements in irrigation systems under the Project would lead to (i) an overall increase in cropped area, (ii) yield improvements, (iii) changes in the cropping pattern, and (iv) increased cropping intensities. To capture the differential production regimes in the post-project setting, the cultivable command areas of the Project were disaggregated into four domains, compiled from Water and Power Development Authority (WAPDA) and Department of Irrigation (DOI) records by the Project Completion Review (PCR) Mission. Domain I (with irrigation improvement and surface drainage) consists of 6,000 hectares (ha); Domain II (with the new irrigation system and surface drainage) consists of 5212 ha; Domain III (with irrigation improvement only) consists of 29,800 ha; and Domain IV (with new irrigation system only) consists of 4,310 ha. Table A13.1 illustrates the distribution of domains.

Table A13.1: Distribution of Domains

Item Existing Irrigation System New Irrigation System Domain III Domain IV Upper Swat Canal-Below RD Topi Priority Area No Surface Drainage 242 excluding Pehur (4,310 ha) (29,800 ha) Domain I Domain II Surface Drainage Pehur Drainage Area Ballar Drainage Area (6,000 ha) (5,212 ha) Source: Data collected by PCR Mission.

3. There were changes in the command area of Domain II and IV compared with appraisal estimates. The Project allowed additional irrigation development in 5,212 ha of mainly rain-fed area in Domain II (against 4,000 ha envisaged at appraisal) and provided irrigation in 4,310 ha of mainly rain-fed area in Domain IV (against 4,500 ha envisaged at appraisal). For the purpose of the analysis, drainage area in Domain I has been assumed as 6,000 ha, as at appraisal.

4. Major project activities were implemented over 8 years (from 1998 to 2005). However, some investment expenditures were incurred in 1995, 1996, and 1997, which were included in the economic analysis. Thus, the period of analysis is taken to extend for 30 years (from 1995 to 2024). Salvage values are ignored.

5. An underlying key assumption at appraisal was that measurable incremental crop benefits will begin to accrue in 1999 in all domains. However, in accordance with the PCR analysis, incremental crop production benefits were taken in the year that they actually started accruing in each domain. In Domain I and II, incremental crop production benefits actually started accruing in 1999, which was assumed at the time of appraisal. In Domain III, benefits started accruing in 2001 compared with the appraisal estimate of 1999, as most of the work under the Area Development Component of the Project was carried out in this domain during 2000 and water from the Pehur High-Level Canal (PHLC) became available in this domain from

Appendix 13 57

November 2002 onwards. In Domain IV, benefits started accruing in 2003 in comparison to the appraisal estimate of 1999, as irregular supply of water became available from PHLC in November 2002. Furthermore, the analysis was distributed domain-wise to capture the differential production regimes.

6. Both primary and secondary data were used for the analysis. Secondary data was collected by departments involved in project implementation, i.e., Department of Agriculture (DOA), DOI, WAPDA, and the International Water Management Institute (IWMI).

7. The PCR Mission calculated the cropping intensities of the four domains between 1998 and 2004 by analyzing cropping pattern and cultivable land data reported by WAPDA in the agro-economic survey reports, and used these as the basis for estimating cropping intensity buildup (Table A13.2, Table A13.3, and Table A13.4).

8. The buildup of cropping intensity was assumed to take 12 years (up to 2005) to reach its full potential of 157% in Domain II and 148% in Domain I, II, and IV, at appraisal.

9. The PCR Mission estimated the full cropping intensity of 149% in Domain I to be achieved in 2006–07 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain I in 2003-04 is 126%. In Domain II, the full cropping intensity of 149% is assumed in 2005-06, slightly above the appraisal estimate of 148% in 2005. The cropping intensity in Domain II in 2003-04 is 141%. In Domain III, the full cropping intensity of 162% was achieved in 2002-03 against the appraisal estimate of 157% in 2005. The cropping intensity in Domain III in 2003-04 stands at 167%. In Domain IV, the full cropping intensity of 148% was achieved in 2004-05 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain IV in 2003-04 stands at 147%, which is very close to the appraisal estimate. Thus, cropping intensities in Domain III and IV were achieved earlier than anticipated at the time of appraisal, and in Domain II as envisaged in the appraisal. Only Domain I will achieve its full cropping intensity with a delay of 1 year. The reason was the satisfactory performance of DOA, which was able to complete most of the activities on time. Cropping intensities were adjusted to avoid double counting of perennial crops, i.e., sugarcane and orchards. Table A13.2 shows the cropping intensities until they reach their full potential as assumed in the PCR.

Table A13.2: Cropping Intensity at Full Potential in Four Project Domains (%)

1998– 1999– 2000– 2001– 2002– 2003– 2004– 2005– 2006– Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 (a) With Surface Drainage Domain-I 92 88 88 103 112 126 135 141 149 Domain-II 110 113 115 119 110 141 147 149 (b) Without Surface Drainage Domain-III – – 147 156 162 – Domain-IV – – – – 130 147 148 – = not available, WAPDA = Water and power development authority. Source: WAPDA Agro-Economic Survey Reports for 1998–1999 to 2003–2004.

10. Table A13.2 shows that cropping intensity in each domain was taken in the baseline year after incremental production benefits started to accrue. The baseline year for Domain I and II is 1998, Domain III is 2000, and Domain IV is 2002.

58 Appendix 13

11. To project future incremental agriculture production benefits, a nominal increase of 1% in the area and 7% in the crop yields was assumed until crop yields attained the maximum possible yield or the project area reached its full development potential. Only the maize crop yield has been increased at a rate of 15% due to a drastic increase in the potential yield for maize compared with the appraisal estimates (para. 13). After this, the yields are not likely to increase and, therefore, have been kept constant. The maximum possible yields assumed in the PCR have been based on crop yield data collected from the Directorate of Agriculture Extension (DAE). This data is adjusted based on crop yields attained in demonstration farms established by DAE and actual yields assumed in the project area. This increase in crop yield is also based on the 7.5% growth rate achieved in the agriculture sector this year (2005–06), and targeted growth rate of 8.5% per year for the next five years (2006–07 to 2010–11) through an improved outreach program for agriculture extension and research in provinces funded by the NWFP government from the Agriculture Sector Program Loan II (ASPL-II).

12. The maximum possible yields used in the analysis have been changed from the appraisal estimates. Table 13.3 presents the comparison between maximum possible yields assumed at the time of appraisal, maximum yields expected to be achieved in the project area, and current average yields achieved in the project area.

Table A13.3: Crop-Wise Yield in the Project Area (t/ha)

Crops Maximum Yield Maximum Yield Average Yield Achieved Assumed at Appraisal Assumed in PCR in the Project Area

Kharif Maize 2.5 5.2 4.9 Tobacco 2.8 2.8 2.7 Fodder 28.0 30.0 29.9 Sugarcane 60.0 48.3 48.3 Rice - 2.3 1.9 Orchards 10.0 11.0 9.1 Vegetables 13.0 – –

Rabi Wheat 3.0 3.1 2.7 Oilseed 1.3 – – Fodder 55.8 55.8 51.5 Vegetables 17.5 17.5 12.6 — = data not reported., WAPDA = water and power development authority Sources: Department of Agriculture (Extension), WAPDA Agro-Economic Survey Reports for 1998–1999 to 2003– 2004, appraisal estimates, and PCR mission findings.

13. The potential yield for maize has been drastically increased in comparison to appraisal estimates because DAE has reported that synthetic maize (current average yield 2.2 metric tons per hectare [t/ha]) is being replaced by hybrid maize (current average yield 4.9 t/ha) in the project area.

14. Data on maximum yields for Kharif fodder, Rabi fodder, and Rabi vegetables was not available from DAE and is assumed based on the appraisal estimates and PCR Mission estimates. The crop yield for rice is assumed based on the maximum yields achieved in the Swabi Salinity Control and Reclamation Project (SCARP) project area for these crops. Kharif vegetables and oilseed have not been considered in the PCR analysis, as these were not one of

Appendix 13 59 the major crops reported by WAPDA’s Agro-Economic Survey Reports against the assumption made at the time of appraisal.

15. The crop yield for sugarcane was taken equal to what has already been achieved in the project area (48.37 t/ha), rather the potential production quoted by DAE, compared with the appraisal estimate of 60.00 t/ha. Additionally, the chances of increase in sugarcane’s yield are also less as farmers might tend to reduce its cultivation because there is no sugar mill in the project area and potential for higher yield is low (in comparison with other cropping options). However, sugarcane will not be completely wiped out in the area and will remain as one of the main crops, as it is used to prepare indigenous sugar that is sold in neighboring districts.

16. In accordance with the PCR analysis, crop yields will attain their maximum possible yield or will reach full development potential in each domain as follows: in Domain I, full development will be achieved by 2008–09 against the appraisal estimate of 2009; In Domain II, full development will be achieved by year 2012-13 against the appraisal estimate of 2009; In Domain III, full development will be achieved by year 2010-11 against the appraisal estimate of 2009; and In Domain IV, full development will be achieved by year 2012-13 against the appraisal estimate of 2009. The reason for delayed achievement of full development against appraisal estimates is lower crop yields in the baseline year compared with baseline year appraisal estimates and the delayed completion of the Project.

17. The PCR Mission has used the existing crop yield data of the four domains between year 1998-99 and 2003-04, as reported by WAPDA in their Agro-Economic Survey Reports. The base crop yields in each domain were taken in the year when incremental production benefits started accruing in each domain. Table A13.4 summarizes the projections of the PCR Mission for crop yields.

Table A13.4: Average Yields of Different Crops (t per ha)

Domain I (With Surface Drainage) Domain II (With Surface Drainage) Crops Base Year 2003– Full CI Full Dev. Base 2003– Full CI Full Dev. (1998– 2004 (2006– (2008– Year 2004 (2005– (2012– 1999) 2007) 2009) (1998– 2006) 2013) 1999) Kharif Maize 1.6 2.0 3.5 5.2 1.6 1.3 1.8 5.2 Sugarcane 29.0 48.4 41.2 48.4 29.0 26.2 30.0 48.4 Fodder 12.4 29.9 30.0 30.0 12.4 23.3 26.7 30.0 Tobacco 1.6 2.3 2.8 2.8 1.6 2.7 2.8 2.8 Rice 1.6 1.9 2.4 2.4 1.3 1.4 1.7 2.4

Rabi Wheat 1.6 2.4 2.9 3.1 1.6 1.4 1.8 3.1 Fodder 23.6 51.5 55.8 55.8 23.6 42.8 49.0 55.8 Vegetables – 12.6 – 17.5 – 12.0 13.7 17.5

60 Appendix 13

Crops Domain III (Without Surface Drainage) Domain IV (Without Surface Drainage) Base Year 2003– Full CI Full Dev. Base 2003– Full CI Full Dev. (2000– 2004 (2002– (2010– Year 2004 (2004– (2012– 2001) 2003) 2011) (2002– 2005) 2013) 2003) Kharif Maize 1.4 2.0 1.4 5.2 1.3 1.4 1.7 5.2 Sugarcane 33.5 27.1 32.3 48.4 22.0 26.0 27.8 48.4 Fodder 12.9 25.6 13.4 30.0 23.0 24.9 26.6 30.0 Tobacco 1.1 2.5 2.3 2.8 2.3 2.3 2.5 2.8 Orchards 8.4 9.1 8.8 11.0 8.6 8.7 9.3 11.0

Rabi Wheat 2.6 2.7 2.6 3.1 1.9 2.0 2.2 3.1 Fodder 43.9 48.2 44.2 55.8 38.5 40.5 43.3 55.8 Vegetables 11.3 12.0 12.0 17.5 11.3 11.9 12.7 17.5 – = not available, CI = cropping intensity, dev = development Source: WAPDA Agro-Economic Survey Reports for 1998–1999 to 2003–2004.

18. Table A13.5 presents the change in cropped area for different crops by giving a comparison of the cropped area at baseline and full development in each domain.

Table A13.5: Change in Cropped Area Domain-Wise (ha) Crops Domain I (With Surface Drainage) Domain II (With Surface Drainage) Base Year Full Dev. Inc. Area Base Year Full Dev. Increased (1998–1999) (2008–2009) (1998–1999) (2012–2013) Area Production increased Production increased Production Production Kharif Maize 588 1,649 1,061 349 1,206 857 Sugarcane 756 1,225 469 125 554 430 Fodder 376 135 (241) 684 79 (606) Tobacco 350 456 106 77 98 21 Rice 346 557 212 310 898 588

Rabi Wheat 1,192 3,189 1,997 1,340 3,565 2,224 Fodder 384 482 98 233 518 285 Vegetables – 56 56 – 45 45

Crops Domain III (Without Surface Drainage) Domain IV (Without Surface Drainage) Base Year Full Dev. Increased Base Year Full Dev. Increased (2000–2001) (2010–2011) Area (2002–2003) (2012–2013) Area Production increased Production increased Production Production Kharif Maize 15,836 18,008 2,172 1,919 2,808 889 Sugarcane 1,208 1,554 347 19 36 17 Fodder 497 675 178 8 11 4 Tobacco 5,654 7,039 1,385 186 491 305 Orchards 1,208 1,261 54 42 54 12

Appendix 13 61

Crops Domain III (Without Surface Drainage) Domain IV (Without Surface Drainage) Base Year Full Dev. Increased Base Year Full Dev. Increased (2000–2001) (2010–2011) Area (2002–2003) (2012–2013) Area Production increased Production increased Production Production Rabi Wheat 11,802 14,833 3,032 2,618 2,892 274 Fodder 1,949 2,349 400 90 100 9 Vegetables 1,949 2,906 958 161 178 17 – = not available, dev = development Source: WAPDA Agro-Economic Survey Reports for 1998–1999 to 2003–2004 and PCR mission projection estimates.

19. Table A13.6 depicts the pattern of incremental production in the project area. Against the appraisal estimates of annual incremental production at full development of 25,670 t of maize, 360,000 t of sugarcane, 10,400 t of Kharif fodder, 14,281 t of Tobacco, 23,459 t of wheat, 16,950 t of Rabi fodder, and 6,200 t of Rabi vegetables, the agriculture incremental production at full development according to the PCR estimate is 97,136 t of maize, 96,594 t of sugarcane, 7,238 t of Kharif fodder, 15,284 t of Tobacco, 36,104 t of wheat, 88,848 t of Rabi fodder, and 31,886 t of Rabi vegetables. Rice production was not assumed at the time of appraisal as a major crop but it became one of the main crops in Domain I and II, according WAPDA’s Agro- Economic Survey Reports. Its incremental production in all four domains at full development is 2,464 t. Orchard production was taken to remain constant at appraisal but its incremental production at full development is 3,959 t, according to PCR estimates. The basis for the increased incremental production is the increase in cropped area (Table A13.5) of the Project and the increase in potential yields (Table A13.3). Table A13.6 compares the incremental crop production as estimated at the time of appraisal and at full development.

Table A13.6: Appraisal and PCR Incremental Production Comparison (t)

Crops Inc. Prod. Inc. Prod. at Full Development Change appraisal With Surface Drainage Without Surface Drainage from Appraisal Total DI DII DIII DIV Total Estimate Kharif Maize 25,670 7,650 5,726 71,653 12,107 97,136 71,466 Sugarcane 360,000 37,346 23,203 34,735 1,310 96,594 (263,406) Fodder 10,400 (619) (6,132) 13,829 160 7,238 (3,162) Tobacco 14,281 716 152 13,471 945 15,284 1,003 Rice – 756 1,708 – – 2,464 2,464 Orchards – – – 3,729 230 3,959 3,959

Rabi Wheat 23,459 7,978 8,905 15,299 3,922 36,104 12,645 Fodder 16,950 17,827 23,407 45,526 2,088 88,848 71,898 Vegetables 6,200 973 780 28,839 1,294 31,886 25,686 — = data not reported, D1 = domain – I, DII = domain – II, “DIII = domain-III, DIV = domain – IV, inc. prod = increased production Source: WAPDA Agro-Economic Survey Reports for 1998 to 2005.

20. Incremental production of major crops at full development on a domain-wise basis (Table A13.7) assumes that farmers would give greater preference to increasing production and productivity of cash crops (such as maize and tobacco) in the summer, and vegetables and fodder in the winter due to water availability. Fodder will also be continually grown in the area as

62 Appendix 13 it satisfies the livestock feeding needs of farmers. However, the production of sugarcane will decrease substantially from the appraisal estimates as there is no sugar mill in the project area and its potential yield in the area also will remain much below yields demonstrated in other agro- economic zones. At the same time, the food security aspect will not be so easily dismissed by farmers and they will not produce fewer grains. This is partly due to the lack of an alternate winter cash crop to replace wheat, and partly due to fears of water shortages, similar to those experienced in the recent past (2000–2003).

Appendix 13 63

Table A13.7: Incremental Production Comparison at Full Development Domain-Wise (t)

Crops Domain I (With Surface Drainage) Domain II (With Surface Drainage) Base Full Dev. Increase Change Base Full Dev Increase Change Year (2008-09) as per from Year (2012-13) as per from (1998-99) inc. Prod. Appraisal Appraisal (1998-99) inc. Appraisal Appraisal Prod. Estimate at Prod. Prod. Estimate at Full Dev. Full Dev.

Kharif Maize 940 8,590 5,000 3,590 559 5,726 5,000 726 Sugarcane 21,886 59,232 78,000 (18,768) 3,618 23,203 78,000 (54,797) Fodder 4,660 4,041 – 4,041 8,487 (6,132) – (6,132) Tobacco 560 1,275 2,427 (1,152) 123 152 2,427 (2,275) Rice 553 1,309 – 1,309 402 1,708 – 1,708

Rabi Wheat 1,908 7,978 4,833 3,145 2,145 8,905 4,833 4,072 Fodder 9,074 26,900 – 26,900 5,496 23,407 – 23,407 Vegetables 538 973 – 973 58 780 – 780

Rabi Wheat 30,684 15,299 6,339 8,960 5,042 3,922 4,833 (1,120) Fodder 85,546 45,526 16,950 28,576 3,485 2,088 – 2,088 Vegetables 22,020 28,839 6,200 22,639 1,821 1,294 – 1,294 = data not reported, dev = development, inc. prod = increased production Source: WAPDA Agro-Economic Survey Reports for 1998–1999 to 2003–2004 and PCR mission projection estimates.

B. Non-Quantifiable Benefits

21. The economic analysis does not quantify the following benefits: (i) additional power- generating capacity of (a) power generation plant installed at Malakand with a sustained capacity of 562 gigawatt-hours (GWh), and (b) seven contracts for installing power generating turbines at 22 waterfalls on Machai Branch that will have a combined sustained capacity of 25 GWh; (ii) values of crop by-products, livestock, and off-farm income; (iii) economic value of additional labor that was required during the construction of irrigation and drainage systems, and the renovation of watercourses and higher future labor demand that will be created due to incremental crop production; (iv) improvement of social amenities along irrigation channels, including clothes washing facilities and animal drinking wallows; (v) creation of women’s organizations that promote awareness of the status and empowerment of rural women; (vi) development of water users associations and organizing them into and/or linking them to

64 Appendix 13 farmer support units and other groups that have improved the delivery of extension services and could open further rural development opportunities; (vii) impact of integrated pest management techniques, introduced particularly for sugarcane and tobacco; and (viii) development of social capital that will enable farmers to play a greater role in irrigation system management in future.

C. Costs and Prices

1. Investment Costs

22. Investment costs in current Pakistan rupees (PRs) were converted to economic prices in constant 2002 prices by applying a minimum unit value index, in US dollar terms, to exports from G-5 countries and then correcting the dollar to Pakistan rupee parity ratio to the 2005 exchange rate of PRs59.87 to $1. The minimum unit values are derived from the World Bank Commodity Prices Forecast. The total capital cost of the Project (PRs6,011.8 million) in current terms has been converted to 2005 constant Pakistan rupees, which amounts to PRs6,570.1 million. This figure reflects all investment costs reported by project executing agencies.

2. Operation and Maintenance Costs

23. Incremental operation and maintenance (O&M) and repair costs of project facilities were based on estimates provided by the DOI (Appendix 10).

3. Prices

24. For project outputs, economic prices were also derived from the World Bank Commodity Prices Forecast and expressed in constant 2005 US dollar to Pakistan rupee equivalents. Farm gate prices were taken from the WAPDA Agro-Economic Survey Reports for each year and converted into economic prices. A standard conversion factor of 0.9 was used.

4. Energy Costs

25. In accordance with appraisal, the Indus River flows to be diverted for the Project have an economic opportunity cost as a result of the energy reduction at Tarbela and its potential use for augmenting the water resources for the Chashma Right Bank Canal (CRBC) system during the Rabi season. The 53 GWh energy loss (equivalent to 0.3% of the energy generated at Tarbela) was valued at PRs58.3 million at appraisal, based on the long-run marginal cost of electricity at high voltage in Pakistan. However, the findings of the PCR mission show that this energy loss has been reduced to 25 GWh per year due to implementation of demand managed crop-based irrigation operation (CBIO) in the project area, which has resulted in 40–60% water saving. This energy loss started occurring in 2003 and will continue throughout the life of the Project. The total energy loss in this duration (2003–2004) is valued at PRs75 million per year calculated at the cost of PRs3 per kilowatt-hour (KWh). At appraisal, the maximum annual agriculture production foregone in the CRBC area was estimated at PRs102.9 million in year 20 (2013) when agriculture production in this area stabilizes. This has been taken as appraised in the PCR analysis.

D. Estimates of Economic Internal Rate of Return

26. A computer model was developed using differential data related to cropped area and cropping patterns to calculate the project benefits for the project area. In calculating the overall

Appendix 13 65

EIRR, four domains were constructed. These domains were then aggregated to Project level. Crop benefits were estimated by taking incremental crop production for each year starting from the base year in each domain. Full development was assumed to occur in 2009 for Domains I and II, 2013 in Domain III, and 2014 in Domain IV. After that, the cropped area and cropping pattern changes have been kept constant. The useful life of infrastructure assets was estimated to be 30 years from 1994, with no salvage value. The EIRR is shown in Table A13.8.

Table A13.8: Economic Internal Rate of Return (%)

Item Project Completion Report Appraisal Report EIRR (%) 12.0 15.4 EIRR = economic internal rate of return. {**Source{s}: ?**}

27. The main reasons for the lower EIRR are (i) much higher baseline intensities than analyzed at appraisal resulting in reduced gaps between baseline and potential intensities, (ii) lower potential yield than anticipated at appraisal, (iii) delay of 30 months in implementation of the Project and 42 months in availability of water from Tarbela, (iv) inefficiency of the irrigation department in taking over and management of the drainage and irrigation system, and (v) delay in availability of water to Topi Priority Area due to contractual issues and ineffective decision making by WAPDA.

E. Sensitivity Analysis

28. Five scenarios were developed to test the sensitivity of the EIRR: (i) where all additional water required downstream of RD 242 is supplied by PHLC (Tarbela) to augment the additional water consumed by two pipeline schemes upstream of RD-242, (ii) 20% decrease in anticipated crops yields, (iii) 2-year delay in achieving full production, (iv) agricultural development occurs in Hero Shah and Bazai1 command area due to the flexibility offered by the Project in terms of tapping shortfall of water for tail reaches of USC from PHLC, and (v) power generation plant2 being installed at Gandaf Tunnel starts generating electricity equivalent to 57 GWh, thus compensating the power generation loss at Tarbela.

Table A13.9: Sensitivity Analysis

Variable Tested EIRR (%) Base Case (overall EIRR at project completion) 12.0 Case I. PHLC meeting all the demand downstream RD 242 in Maira Branch 7.8 Case II. 20% decrease in anticipated crops yields 8.2 Case III. 2-year delay in achieving yields at full production 11.7 Case IV. Agricultural development occurs in Hero Shah and Bazai command area due to 13.8 the Project Case V. Power Generation plant installed at Gandaf Tunnel 12.3 EIRR = economic internal rate of return, PHLC = Pehur High-Level Canal, RD = reduced distance Source: PCR Mission estimates, data provided by implementation agencies.

1 Bazai and Hero Shah are pipeline schemes for which studies have been completed and funds allocated for Bazai in the NWFP’s budget of 2005–2006. 2 The contract for the power plant has been awarded and PRS140 million has been allocated in the current year’s budget.

66 Appendix 13

29. Case I analyses the scenario when additional water required downstream of RD 242 is supplied by PHLC (Tarbela) to augment all the additional water consumed by two pipeline schemes upstream of RD-242, without considering the benefit of the pipeline schemes (para. 28). The EIRR is quite sensitive to this case as the loss of electricity at Tarbela increases substantially from 25 GWh to 55 GWh, thus reducing the EIRR from 12.0% to 7.8%.

30. Case II analyses the sensitivity of the EIRR by decreasing the anticipated crop yields by 20%. However, anticipated crop yields are not continuously decreased by 20% for every crop. The yields have only been dropped by 20% to the level where they either reach or remain a bit higher than actual yields obtained in the project area. The EIRR is quite sensitive to the yield increase as this affects the incremental crop production substantially, which contributes heavily towards the benefit stream of the EIRR. Thus, a 20% decrease in anticipated crop yields would decrease the Project’s EIRR from 12.0% to 8.2%.

31. Case III analyses the sensitivity of the EIRR by assuming a 2-year delay in achieving the yields at full development. This scenario has been analyzed by resetting the crop yields in a way that full development occurs 2 years later in each domain than anticipated in the original analysis. The EIRR is less sensitive to this, as full development is already occurring later in the original analysis than anticipated at the time of appraisal. Thus, a 2-year delay in achieving full development in the Project will reduce the EIRR from 12.0% to 11.7%.

32. Case IV analyses the sensitivity of the EIRR by assuming the additional area of Hero Shah and Bazai coming under the Project command (22,350 ha). The EIRR is sensitive to this scenario as this substantially increases production within the project area, thus increasing the EIRR from 12.0% to 13.8%.

33. Case V analyses the sensitivity of the EIRR by assuming that from 2007 onwards, a Power Generation Plant will be installed at Gandaf Tunnel, costing PRs861 million. This plant will start generating electricity equivalent to 57 GWh, which will compensate the power generation loss at Tarbela, thus resulting in a net gain of 32 GWh per year in the Project. The EIRR is less sensitive to this scenario as implementation of CBIO system has already reduced the power loss at Tarbela. In this scenario, the EIRR will increase from 12.0% to 12.3%.

Table A13.10: Area, Yield and Production in Four Domains

Domain I Year Baseline (1998-1999) Full C-I (2006-2007) Full Development (2008-2009) Area Yield Production Area Yield Production Area Yield Production (ha) (t) (t) (ha) (t) (t) (ha) (t) (t) Crops Maize 588 1.6 940.0 1,616.25 3.48 5,624.54 1,648.73 5.21 8,589.90 Sugarcane 756 29.0 21,886.2 1,200.44 41.16 49,411.73 1,224.57 48.37 59,232.26 Fodder 376 12.4 4,660.4 132.05 30.00 3,961.44 134.70 30.00 4,041.07 Tobacco 350 1.6 559.9 446.55 2.80 1,250.33 455.52 2.80 1,275.46 Rice 346 1.6 553.0 546.20 2.35 1,283.57 557.18 2.35 1,309.37 Wheat 1,192 1.6 1,907.7 3,126.35 2.99 9,349.76 3,189.19 3.10 9,886.48 Fodder 384 23.6 9,073.7 472.59 55.80 26,370.37 482.09 55.80 26,900.41 Vegetables – – – 54.53 15.40 839.59 55.63 17.50 973.44

Appendix 13 67

Domain II Year Baseline (1998-1999) Full C-I (2005-2006) Full Development (2012-2113) Area Yield Production Area Yield Production Area Yield Production (ha) (t) (t) (ha) (t) (t) (ha) (t) (t) Crops Maize 349 1.6 558.9 1,125.07 1.77 1,995.98 1,206.23 5.21 6,284.44 Sugarcane 125 29.0 3,617.6 517.18 29.96 15,495.84 554.49 48.37 26,820.67 Fodder 684 12.4 8,487.1 73.23 26.66 1,952.56 78.51 30.00 2,355.35 Tobacco 77 1.6 122.7 91.54 2.80 256.30 98.14 2.80 274.79 Rice 310 1.3 402.4 837.56 1.57 1,318.52 897.98 2.35 2,110.25 Wheat 1,340 1.6 2,144.8 3,324.72 1.71 5,692.46 3,564.55 3.10 11,050.10 Fodder 233 23.6 5,496.0 483.12 49.00 23,675.42 517.97 55.80 28,902.93 Vegetables – – – 41.56 13.74 570.97 44.56 17.50 779.75

Domain III Year Baseline (2000-01) Full C-I (2002-03) Full Development (2010-11) Area Yield Production Area Yield Production Area Yield Production (ha) (t) (t) (ha) (t) (t) (ha) (t) (t) Crops Maize 15,836 1.4 22,170.7 15,703 1.4 22,597.2 18,008.47 5.21 93,824.15 Sugarcane 1,208 33.5 40,455.1 1,262 32.3 40,733.5 1,554.48 48.37 75,190.08 Fodder 497 12.9 6,408.3 841 13.4 11,313.2 674.58 30.00 20,237.54 Tobacco 5,654 1.1 6,238.4 7,067 2.3 16,337.8 7,039.14 2.80 19,709.60 Orchards 1,208 8.4 10,144.0 1,346 8.8 11,777.6 1,261.18 11.00 13,872.98 Wheat 11,802 2.6 30,684.4 13,698 2.6 35,616.1 14,833.50 3.10 45,983.84 Fodder 1,949 43.9 85,545.8 2,169 44.2 95,968.6 2,348.96 55.80 131,071.84 Vegetables 1,949 11.3 22,019.8 2,684 12.0 32,125.7 2,906.22 17.50 50,858.89

Domain IV Year Baseline (2002-2003) Full C-I (2004-2005) Full Development (2012-2113) Area Yield Production Area Yield Production Area Yield Production (ha) (t) (t) (ha) (t) (t) (ha) (t) (t) Crops

Maize 1,919.16 1.312,521.77 2,592.98 1.66 4,307.25 2,807.83 5.21 14,628.78 Sugarcane 18.96 22.00 417.21 32.98 27.82 917.48 35.71 48.37 1,727.37 Fodder 7.59 22.98174.32 10.31 26.65 274.60 11.16 30.00 334.80 Tobacco 185.85 2.31 429.68 453.46 2.50 1,135.38 491.03 2.80 1,374.90 Orchards 41.72 8.60 358.80 49.47 9.31 460.50 53.57 11.00 589.24 Wheat 2,617.86 1.93 5,042.00 2,670.48 2.16 5,778.54 2,891.75 3.10 8,964.41 Fodder 90.41 38.55 3,484.81 92.22 43.34 3,996.52 99.87 55.80 5,572.47 Vegetables 161.16 11.30 1,821.10 164.40 12.73 2,093.29 178.02 17.50 3,115.36 – = data not reported, C-I = cropping intensity, Note: Yields at full cropping intensity between year 2002 and 2007 are based on actual data or estimated data in relation to actual data as much as possible. Source: WAPDA Agro-Economic Survey Reports for 1998–1999 to 2003–2004 and PCR mission projection estimates.

68 Appendix 13

Table A13.11: Economic Analysis Cost in Million (PRs.) (Constant Prices: 2005)

Incr. Incr. Flow Cash

Tot al Benefits Benefits Incr. Agri. Agri. Incr. EIRR = 11.7% 2005) To ta l I nv. (Constant Parity U.S $-PKr $-PKr U.S Cost (Eco.) Tot al I nv. MUV (2005=100) Cost Total inv. Eco. Loss 2 Eco. Eco. Loss 1 Incr. Incr. Cost Prod. Prod. Costs Year Cost Inv. O&M 12 19953 19964 19975 94.7 1998 113.46 1999 229.67 2000 484.68 2001 822.19 1,271.8 2002 1,298.4 2003 984.3 536.6 22.0 4.9 59.8 72.7 93.6 75.0 9.3 7.2 2.1 15.4 94.7 1,303.1 113.4 25.7 1,373.6 834.2 20.6 486.7 229.6 730.9 1,077.6 93.8 96.5 94.9 89.2 94.1 94.4 94.7 1,222.8 1,225.8 93.1 97.5 107.6 91.4 785.0 459.4 217.3 1,002.9 53.4 712.3 64.0 35.4 31.3 1,371.0 51.6 53.5 40.6 1,147.6 59.5 58.5 182.0 175.1 1,008.6 910.9 514.1 320.3 62.7 190.0 729.6 462.6 190.0 62.7 17.1 614.9 (1,308.3) 462.6 (957.6) 17.1 614.9 (546.1) - - (893.8) - (114.7) - (182.0) (175.1) (514.1) (320.3) 1011 200412 200513 2006 130.614 200715 45.7 200816 2009 61.017 2010 112.0 103.918 201119 61.0 75.0 2012 75.020 61.0 120.6 201321 61.0 51.5 127.0 36.0 201422 75.0 61.0 133.5 201523 75.0 345.3 61.0 345.4 139.2 2016 66.924 75.0 61.0 145.1 2017 72.025 75.0 61.0 146.5 2018 323.5 77.2 100.026 75.0 61.0 148.0 2019 98.7 335.0 82.327 75.0 61.0 148.0 2020 346.7 92.628 345.3 75.0 61.0 148.0 2021 102.4 341.0 357.5 97.829 75.0 61.0 148.0 2022 104.8 102.9 373.730 75.0 61.0 148.0 2023 107.1 102.9 59.9 331.2 380.3 75.0 57.6 61.0 386.9 148.0 2024 109.5 102.9 350.9 75.0 61.0 386.9 148.0 111.9 102.9 371.4 345.3 75.0 58.0 354.5 61.0 386.9 148.0 113.7 102.9 391.5 75.0 115.4 58.0 61.0 386.9 148.0 102.9 418.1 75.0 117.2 58.0 341.9 61.0 386.9 148.0 858.1 102.9 432.3 119.0 75.0 771.4 58.0 446.6 362.2 61.0 386.9 148.0 102.9 120.8 75.0 58.0 453.4 383.4 61.0 858.1 386.9 148.0 1,095.2 102.9 771.4 120.8 75.0 58.0 460.3 404.1 386.9 148.0 1,233.8 1,095.2 102.9 58.0 120.8 75.0 467.1 431.6 512.9 386.9 1,390.3 1,233.8 102.9 58.0 416.9 120.8 75.0 467.1 446.2 386.9 1,537.0 753.4 1,390.3 102.9 58.0 461.0 120.8 467.1 386.9 1,664.2 871.6 1,537.0 102.9 58.0 468.0 1,007.0 120.8 467.1 386.9 1,698.6 1,664.2 58.0 475.1 1,132.8 1,727.4 120.8 467.1 386.9 1,698.6 58.0 482.2 1,232.6 1,727.4 1,727.4 120.8 467.1 58.0 482.2 1,252.4 1,727.4 120.8 1,727.4 467.1 1,266.4 58.0 482.2 1,727.4 120.8 1,727.4 467.1 1,259.4 58.0 482.2 1,727.4 1,727.4 467.1 1,252.3 58.0 482.2 1,727.4 1,727.4 467.1 1,245.2 58.0 482.2 1,727.4 1,727.4 1,245.2 58.0 482.2 1,727.4 1,727.4 1,245.2 58.0 482.2 1,727.4 1,727.4 1,245.2 482.2 1,727.4 1,727.4 1,245.2 482.2 1,727.4 1,727.4 1,245.2 1,727.4 1,727.4 1,245.2 1,727.4 1,727.4 1,245.2 1,727.4 1,245.2 1,245.2 Sr. Sr. No. Agri number agricultural,= serial = Sr.No Ec production, = Dam o = economic,Prod Tarbela at IncrLoss incr Energy = 1: Loss Loss emental, Production Economic Inv agencies. Agricultural = inv estment,implementation Downstream 2: Loss project by O&M Economic = operation provided data estimates, and maintenance, Mission PCR Source: PKr=Pak rupees ,

Appendix 14 69

FARM BUDGET

1. To evaluate the impact of the Project on beneficiary farmers, financial farm budgets have been developed based on data in the Water and Power Development Authority’s (WAPDA’s) Agro-Economic Survey Reports for 1998–99 to 2003–04, and Department of Agriculture data. An average farm size of 1.5 hectares (ha) has been taken and farm budgets are developed for both owner-operated farms and tenant-operated farms for the purpose of analysis, as assumed at the time of appraisal.

2. To capture the differential farm-income regimes in the post-project setting, farms are disaggregated into four domains. Domain I includes areas with irrigation improvement and surface drainage, Domain II includes new irrigation system and surface drainage, Domain III includes areas with irrigation improvement only, and Domain IV includes areas with new irrigation system only.

3. The farm budget analysis takes into account production derived from major crops. The value of crop by-products and off-farm income are not considered. Farm enterprise budgets have been constructed from the baseline year in each domain. The baseline year for Domains I and II is 1998–1999, 2000–2001 for Domain III, and 2002–2003 for Domain IV to 2003–04, as data from WAPDA’s Agro-Economic Survey Reports is only available from 1998–99 to 2003–04. After 2003–2004, crop budgets are projected for the year in which each domain will achieve full cropping intensity and full development. The tenant-operated farm budget has been calculated based on ratios projected in the appraisal estimate in relation to the owner-operated farm budget, as tenancy arrangements in the project area without drainage have remained the same. In the drainage area, owners have increased their share from 25% or 33% of the produce to 50% of the produce, depending on the level of improvement brought about by the Project. This has been incorporated in the tenant-operated farm budgets. The current local market and farm- gate prices for inputs and outputs are assumed for all four domains as reported in WAPDA’s Agro-economic Survey Reports. Table A14.1 shows the net farm incomes of owner-operated and tenant-operated farms in the project area.

Table A14.1: Gross Margin of Owner-operated and Tenant-Operated Farms (PRs)

Owner-Operator Appraisal Estimates PCR Estimates Baseline Full Net Baseline 2003–04 Full CI Full Net Dev. Increase Year Dev. Increase (a) With Surface Drainage Domain I 3,121 37,619 34,498 21,049 33,538 51,393 63,779 42,730 Domain II 3,121 37,619 34,498 9,788 13,501 20,954 59,408 49,620 (b) Without Surface Drainage Domain III 29,361 40,554 11,193 31,976 55,360 59,458 113,310 81,333 Domain IV 3,121 37,619 34,498 10,292 26,918 31,501 78,503 68,211

70 Appendix 14

Tenant- Appraisal Estimates PCR Estimates Operator Baseline Full Net Baseline 2003-04 Full CI Full Net Dev. Increase Year Dev. Increase (a) With Surface Drainage Domain I 1,568 23,164 21,596 17,028 21,590 31,367 39,331 22,303 Domain II 1,568 23,164 21,596 4,620 5,975 10,452 32,555 27,935 (b) Without Surface Drainage Domain III 18,542 25,212 6,670 20,830 35,900 38,821 74,506 53,676 Domain IV 1,568 23,164 21,596 2,637 13,797 16,499 42,585 39,948 CI = cropping intensity, dev = development, PCR = project completion review Source: Agro-Economic Survey Reports WAPDA (1998–2004).

4. With the increase in cropping intensities, higher crop yields of newly adopted varieties, and high income-generating cropping patterns for all four domains, future “with Project” net farm incomes at full development (estimated to be 2008–09 for Domain I, 2012–13 for Domain II and IV, and 2010–11 for Domain III) for owner-operators will be PRs63,779 in Domain I (against the appraisal estimate of PRs37,619); PRs59,408 in Domain II (against the appraisal estimate of PRs37,619); PRs113,310 in Domain III (against the appraisal estimate of PRs40,554); and PRs78,503 in Domain IV (against the appraisal estimate of PRs37,619). For tenant-operators, the net farm incomes at full development will be PRs39,331 in Domain I (against the appraisal estimate of PRs23,164); PRs27,935 in Domain II (against the appraisal estimate of PRs23,164); PRs74,506 in Domain III (against the appraisal estimate of PRs25,212); and PRs42,585 in Domain IV (against the appraisal estimate of PRs23,164). The reasons for substantial increase in farm incomes of both owners and tenants in Domain III and Domain IV compared with appraisal estimates are (i) delays in achieving full development in both domains against appraisal estimates, (ii) potential increase in maize yield compared with appraisal estimates;1(iii) improved price for agriculture commodities/produce due to the Government’s agriculture promotion policies; and (iv) shift in cropping patterns towards higher value-added crops (hybrid maize). The government achieved 7.5% growth in the agricultural sector this year (2005–06) and expects to achieve 8.5% growth in the next five years (2006–07 to 2011–12) by improving agriculture outreach, research, and market liberalization in the provinces. This is expected to contribute towards increased farm income. These initiatives will be funded through the Agriculture Sector Program Loan II2 (ASPL-II), funded by the Asian Development Bank and implemented by the North-West Frontier Province government.

5. The farm budget analysis demonstrates that the Project is expected to have a significant impact on farm incomes. All farmers in the project area are expected to receive substantial social and economic benefits from the Project and activities being financed through ASPL-II, indicating that adequate incentives will be present for farmers to adopt better agricultural practices and improve the quality of their lives.

1 Synthetic maize with a current average yield of 2.2 metric tons per hectare (t/ha) is being replaced by hybrid maize with a current average yield of 4.9 t/ha in the project area, thus having a substantial impact of increasing farmers’ incomes. 2 Loan No. 1877–79 PAK (SF): (ADB. 2001. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan for Agriculture Sector Program Loan II. Manila.) This was approved in 13 Dec 2001.

Appendix 14 71

Table A14.2: FORM BUDGET (DOMAIN–I)

Year Owner Operator Tenant Operator Full C.I Full Dev. Full C.I Full Dev. 1998-99 2003-04 2006-07 2008-09 1998-99 2003-04 2006-07 2008-09

Farm Holding (Ha) 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

Kharif Maize 0.20 0.40 0.48 0.49 0.20 0.40 0.48 0.49 Sugarcane 0.26 0.30 0.35 0.36 0.26 0.30 0.35 0.36 Fodder 0.13 0.03 0.04 0.04 0.13 0.03 0.04 0.04 Tobbaco 0.12 0.11 0.13 0.13 0.12 0.11 0.13 0.13 Rice 0.12 0.14 0.16 0.16 0.12 0.14 0.16 0.16

Rabi Wheat 0.41 0.77 0.91 0.93 0.41 0.77 0.91 0.93 Fodder 0.13 0.12 0.14 0.14 0.13 0.12 0.14 0.14 Sugar Beet –– –– –––– Vegetables – 0.01 0.02 0.02 - 0.01 0.02 0.02

Total Cropped Area (Ha) 1.39 1.89 2.23 2.27 1.39 1.89 2.23 2.27 Croppining Intensity 92.4% 125.7% 148.6% 151.6% 92.4% 125.7% 148.6% 151.6%

Gross Production Value (PRs)

Kharif Maize 1,441 4,171 9,060 14,396 721 2,085 4,530 7,198 Sugarcane 6,678 14,874 15,845 19,762 6,010 13,386 14,261 17,786 Fodder 763 543 682 723 763 543 682 723 Tobbaco 5,104 7,589 11,980 12,714 3,063 4,553 7,188 7,629 Rice 1,363 1,836 2,851 3,026 682 918 1,426 1,513

Rabi Wheat 4,755 14,649 22,466 24,715 2,377 7,325 11,233 12,358 Fodder 12,080 3,348 4,540 4,818 12,080 3,348 4,540 4,818 Sugar Beet –– –– –––– Vegetables – 1,202 1,844 2,224 – 1,202 1,844 2,224

Total 32,185 48,211 69,268 82,379 25,696 33,361 45,703 54,249

Production Cost (PRs/ha)

Kharif Maize 785 2,135 2,608 2,714 361 982 1,200 1,248 Sugarcane 4,371 3,386 4,116 4,283 2,885 2,235 2,716 2,827 Fodder 228 142 173 180 228 142 173 180 Tobbaco 937 1,192 1,477 1,536 815 1,037 1,285 1,337 Rice 872 888 1,080 1,123 436 444 540 562

Rabi Wheat 3,363 5,718 6,950 7,233 3,363 5,718 6,950 7,233 Fodder 579 978 1,189 1,237 579 978 1,189 1,237 Sugar Beet –– –– –––– Vegetables – 233 284 295 – 233 284 295

Total 11,136 14,674 17,875 18,601 8,668 11,770 14,336 14,918

Gross Margin (PRs) 21,049 33,538 51,393 63,779 17,028 21,590 31,367 39,331 – = data not reported, CI = cropping intensity, Dev = development Source: PCR Mission findings, data provided by DOA.

72 Appendix 14

Table A14.3: FORM BUDGET (DOMAIN–II)

Year Owner Operator Tenant Operator 1998–99 2003–04 Full C.I Full Dev. 1998–99 2003–04 Full C.I Full Dev. 2005–06 2012–13 2005–06 2012–13 Farm Holding (Ha) 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

Kharif Maize 0.18 0.37 0.39 0.42 0.18 0.37 0.39 0.42 Sugarcane 0.07 0.17 0.18 0.19 0.07 0.17 0.18 0.19 Fodder 0.36 0.02 0.03 0.03 0.36 0.02 0.03 0.03 Tobbaco 0.04 0.03 0.03 0.03 0.04 0.03 0.03 0.03 Rice 0.16 0.27 0.29 0.31 0.16 0.27 0.29 0.31

Rabi Wheat 0.71 1.08 1.14 1.22 0.71 1.08 1.14 1.22 Fodder 0.12 0.16 0.17 0.18 0.12 0.16 0.17 0.18 Vegetables – 0.01 0.01 0.02 – 0.01 0.01 0.02

Total Cropped Area (Ha) 1.65 2.12 2.23 2.39 1.65 2.12 2.23 2.39 Croppining Intensity 109.8% 141.1% 148.8% 159.5% 109.8% 141.1% 148.8% 159.5% Gross Production Value (PRs)

Kharif Maize 1,521 2,472 3,699 13,377 760 1,236 1,849 6,688 Sugarcane 1,990 4,547 5,716 11,365 1,791 4,092 5,144 10,228 Fodder 2,331 307 386 536 2,331 307 386 536 Tobbaco 1,866 2,481 2,825 3,479 1,119 1,488 1,695 2,087 Rice 1,509 2,680 3,369 6,194 755 1,340 1,685 3,097

Rabi Wheat 8,666 11,824 15,711 35,032 4,333 5,912 7,855 17,516 Fodder 1,539 3,725 4,683 6,566 1,539 3,725 4,683 6,566 Vegetables – 1,142 1,435 2,251 – 1,142 1,435 2,251

Total 19,421 29,177 37,824 78,799 12,627 19,242 24,733 48,970

Production Cost (PRs)

Kharif Maize 1,084 1,679 1,799 2,068 499 772 828 951 Sugarcane 905 1,804 1,943 2,233 597 1,191 1,282 1,474 Fodder 885 168 181 208 885 168 181 208 Tobbaco 800 202 217 249 696 175 189 217 Rice 1,257 1,726 1,858 2,135 628 863 929 1,068

Rabi Wheat 4,010 8,057 8,674 9,971 4,010 8,057 8,674 9,971 Fodder 691 1,805 1,943 2,233 691 1,805 1,943 2,233 Vegetables – 237 255 293 – 237 255 293

Total 9,633 15,676 16,870 19,391 8,007 13,267 14,280 16,415

Gross Margin (PRs) 9,788 13,501 20,954 59,408 4,620 5,975 10,452 32,555 – = data not reported, CI = cropping intensity, Dev = development Source: PCR Mission findings, data provided by DOA.

Appendix 14 73

Table A14.4: FORM BUDGET (DOMAIN–III)

Year Owner Operator Tenant Operator 2000-01 Full C.I 2003-04 Full Dev. 2000-01 Full C.I 2003-04 Full Dev. 2002-03 2010-11 2002-03 2010-11 Farm Holding (Ha) 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

Kharif Maize 0.87 0.84 0.92 1.00 0.87 0.84 0.92 1.00 Sugarcane 0.07 0.07 0.08 0.09 0.07 0.07 0.08 0.09 Fodder 0.03 0.05 0.03 0.04 0.03 0.05 0.03 0.04 Tobbaco 0.31 0.38 0.36 0.39 0.31 0.38 0.36 0.39 Orchards 0.07 0.07 0.06 0.07 0.07 0.07 0.06 0.07

Rabi Wheat 0.65 0.75 0.77 0.82 0.65 0.75 0.77 0.82 Fodder 0.11 0.12 0.12 0.13 0.11 0.12 0.12 0.13 Sugar Beet 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Vegetables 0.11 0.15 0.15 0.16 0.11 0.15 0.15 0.16

Total Cropped Area (Ha) 2.21 2.43 2.51 2.71 2.21 2.43 2.51 2.71 Croppining Intensity 147.2% 161.8% 167.2% 180.6% 147.2% 161.8% 167.2% 180.6%

Gross Production Value (PRs)

Kharif Maize 6,240 7,680 9,573 30,808 3,120 3,840 4,787 15,404 Sugarcane 2,266 2,233 2,307 5,130 2,040 2,010 2,076 4,617 Fodder 193 333 485 710 193 333 485 710 Tobbaco 10,442 26,759 27,375 38,478 6,265 16,056 16,425 23,087 Orchards 4,430 5,040 4,696 7,075 4,430 5,040 4,696 7,075

Rabi Wheat 12,984 14,972 15,913 22,501 6,492 7,486 7,957 11,251 Fodder 2,594 2,891 3,226 4,596 2,594 2,891 3,226 4,596 Sugar Beet 229 313 2,379 3,445 206 282 2,141 3,101 Vegetables 8,486 12,300 12,587 22,663 8,486 12,300 12,587 22,663

Total 47,863 72,522 78,541 135,406 33,825 50,237 54,379 92,502

Production Cost (PRs/Ha)

Kharif Maize 3742 3,520 4,710 5,480 1,721 1,619 2,167 2,521 Sugarcane 1066 914 1,041 1,211 703 603 687 799 Fodder 111 147 227 265 111 147 227 265 Tobbaco 3641 4,451 4,558 5,303 3,168 3,872 3,965 4,613 Orchards 1078 1,046 975 1,134 1,078 1,046 975 1,134

Rabi Wheat 2986 3,278 3,493 4,015 2,986 3,278 3,493 4,015 Fodder 1106 981 1,006 1,156 1,106 981 1,006 1,156 Sugar Beet 104 100 102 117 69 66 67 77 Vegetables 2053 2,725 2,972 3,416 2,053 2,725 2,972 3,416

Total 15,887 17,162 19,083 22,096 12,995 14,338 15,559 17,996

Gross Margin (PRs) 31,976 55,360 59,458 113,310 20,830 35,900 38,821 74,506 – = data not reported, CI = cropping intensity, Dev = development Source: PCR Mission findings, data provided by DOA.

74 Appendix 14

Table A14.5: FORM BUDGET (DOMAIN–IV)

Year Owner Operator Tenant Operator 2002–03 2003–04 Full C.I Full Dev. 2002-03 2003-04 Full C.I Full Dev. 2004–05 2012–13 2004–05 2012–13 Farm Holding (Ha) 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 Kharif Maize 0.76 0.94 0.95 1.03 0.76 0.94 0.95 1.03 Sugarcane 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Fodder 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Tobbaco 0.07 0.17 0.17 0.18 0.07 0.17 0.17 0.18 Orchards 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Rabi Wheat 1.00 0.97 0.98 1.06 1.00 0.97 0.98 1.06 Fodder 0.03 0.03 0.03 0.04 0.03 0.03 0.03 0.04 Vegetables 0.06 0.06 0.06 0.07 0.06 0.06 0.06 0.07

Total Cropped Area (Ha) 1.95 2.20 2.22 2.41 1.95 2.20 2.22 2.41 Croppining Intensity 130.3% 146.8% 148.2% 160.5% 130.3% 146.8% 148.2% 160.5%

Gross Production Value (PRs)

Kharif Maize 6,358 6,959 8,317 33,094 3,179 3,480 4,158 16,547 Sugarcane 169 334 368 812 152 301 331 731 Fodder 38 51 57 81 38 51 57 81 Tobbaco 5,203 11,824 13,034 18,493 3,122 7,095 7,820 11,096 Orchards 1,135 1,253 1,381 2,070 1,135 1,253 1,381 2,070

Rabi Wheat 11,221 15,005 16,540 30,063 5,611 7,502 8,270 15,032 Fodder 159 743 820 1,339 159 743 820 1,339 Vegetables 237 4,942 5,464 9,528 237 4,942 5,464 9,528

Total 24,521 41,111 45,980 95,480 13,633 25,366 28,301 56,423

Production Cost (PRs/ha)

Kharif Maize 5,686 4,193 4,277 5,015 2,616 1,929 1,968 2,307 Sugarcane 139 259 264 309 92 171 174 204 Fodder 10 33 33 39 10 33 33 39 Tobbaco 881 2,094 2,136 2,505 766 1,822 1,858 2,179 Orchards 231 267 272 319 231 267 272 319

Rabi Wheat 5,862 5,917 6,036 7,078 5,862 5,917 6,036 7,078 Fodder 316 330 336 394 316 330 336 394 Vegetables 1,105 1,102 1,124 1,318 1,105 1,102 1,124 1,318

Total 14,229 14,193 14,479 16,977 10,996 11,569 11,802 13,838

Gross Margin (PRs) 10,292 26,918 31,501 78,503 2,637 13,797 16,499 42,585 CI = cropping intensity, Dev = development Source: PCR Mission findings, data provided by DOA.

Appendix 15 75

WATERCOURSE DISCHARGE AND CONVEYANCE EFFICIENCY

Table A15.1: Outlet Discharge of Original Watercourses (Domain I)

WC Kharif Rabi Kharif Rabi Kharif Rabi Kharif Rabi Code 1997 1997–98 2001 2001–02 2002 2002–03 2003 2003–04 DI-1 1.40 1.38 2.11 1.99 1.84 2.05 3.30 2.88

DI-2 1.10 1.20 1.41 1.46 1.60 0.86a 1.83 1.68

DI-3 0.77 0.69 1.28 1.79 1.99 1.92 2.05 1.58

DI-4 0.70 0.73 1.31 0.96 1.51 1.48 3.28 2.71

DI-5 1.16 1.16 2.13 1.94 0.97 1.23 1.87 2.04

DI-6 1.00 0.90 1.15 1.46 1.44 1.25 2.05 2.31

DI-7 0.54 0.57 1.14 1.37 4.67 4.28 3.41 6.72

DI-8 0.71 0.80 1.33 1.61 2.12 2.03 1.93 2.12

DI-9 1.20 1.19 2.60 1.55 1.49 1.19 2.00 2.14

DI-10 0.50 0.43 1.69 1.63 2.49 2.17 2.30 2.67

DI-11 0.40 0.45 2.17 1.38 4.01 3.62 6.11 8.74

DI-12 0.30 0.34 0.86 0.82 0.95 0.93 1.00 1.35

DI-13 1.13 1.43 1.20 1.03 2.38 2.19 2.83 2.3

DI-14 0.71 0.68 0.50 1.15 1.87 1.90 3.01 3.15

DI-15 1.00 1.05 1.89 1.66 3.67 2.92 4.34 10.98

Minimum 0.30 0.34 0.50 0.82 0.95 0.86 1.00 1.35

Maximum 1.40 1.43 2.17 1.99 4.67 4.28 6.11 10.98

Mean 0.84 0.87 1.51 1.46 2.20 2.00 2.75 3.56 Average increase over – – 79.76 67.82 161.90 129.88 227.38 309.20 base year Increase in maximum discharge – – 55.00 39.16 233.57 299.30 336.43 667.80 over base year WC = watercourse Note: Abnormally high discharge in Domain I (DSA) may have been the cause of water-logging reported in the area during the PCR Mission. .a Less discharge is due to low supply in the canal. Source: PCR Mission findings, data provided by IWMI.

76 Appendix 15

Table A15.2: Outlet Discharge of Original Watercourses (Domain III)

WC Kharif Rabi Kharif Rabi Kharif Rabi Kharif Rabi Code 1997 1997–98 2001 2001–02 2002 2002–03 2003 2003–04 DIII-1 0.92 0.90 0.91 1.01 0.83 1.11 1.22 1.25

DIII-2 2.30 3.00 2.91 1.71a 2.32 1.67a 2.62 3.00

DIII-3 0.80 0.85 1.09 1.41 1.06 1.15 1.26 1.19

DIII-4 b b 1.20 1.01 1.78 2.15 1.30 1.88

DIII-5 1.00 1.50 1.14 0.94 a 0.96 a 0.96 a 1.10 1.13

DIII-6 2.50 2.60 2.76 3.48 2.98 2.89 3.61 3.21

DIII-7 1.07 2.06 1.65 2.01 1.42 1.00 a 1.32 1.58

DIII-8 1.46 1.60 2.82 2.83 2.53 2.19 2.23 2.51

DIII-9 2.76 2.71 3.93 3.92 4.37 3.58 5.41 4.43

DIII-10 1.95 1.93 1.94 2.05 2.10 2.07 2.29 2.33

DIII-11 0.68 0.70 0.65 0.95 1.39 1.70 1.13 1.11

DIII-12 1.06 1.04 1.09 1.02 1.83 1.46 2.70 2.07

DIII-13 1.01 1.04 1.27 1.38 1.47 1.51 1.88 2.21

DIII-14 2.06 2.11 1.93 1.89 a 1.95 1.95 2.09 2.65

DIII-15 0.54 0.57 0.42 0.61 0.89 0.67 0.48 1.06

Minimum 0.54 0.57 0.42 0.61 0.83 0.67 0.48 1.06

Maximum 2.76 3.00 3.93 3.92 4.37 3.58 5.41 4.43

Mean 1.44 1.61 1.71 1.75 1.86 1.74 2.04 2.11 Average increase over – – 18.75 8.70 29.17 8.07 41.67 31.06 base year Increase in maximum – – 42.39 30.66 58.33 19.33 96.02 47.66 discharge over base year

– data not reported, WC = watercourse a Less discharge is due to low supply in the canal. b Not observed due to no supply of water to the watercourse. Source: PCR Mission findings, data provided by IWMI.

Appendix 16 77

LABOUR DATA

1. This appendix provides data on labor days generated during and after construction period of the Project.

Table 16.1: Person Days Generated During Construction

Contract No./Name Contract Labor Mason Unskilled Labor Cost Cost Cost days Cost Days A. Irrigation and Drainage Component WP-01 3,664,574,784 1,099,372,435 274,843,109 1,099,372 824,529,326 8,245,293 WP-02 101,774,387 30,532,316 7,633,079 30,532 22,899,237 228,992 WP-03 541,456,737 162,437,021 40,609,255 162,437 121,827,766 1,218,278 WP-05 216,585,124 64,975,537 16,243,884 64,976 48,731,653 487,317 WP-08 69,177,885 20,753,366 5,188,341 20,753 15,565,024 155,650 Additional works 39,253,820 7,850,764 1,570,153 6,281 6,280,611 62,806 Labor days on pipes 15,970,185 63,881 5,323,395 53,234 used for WP-02 contract. Labor days on pipes 3,044,625.00 12,178.50 1,014,875.00 4,059.50 used on additional civil works Subtotal 4,632,822,737 1,385,921,439 365,102,632 1,460,411 1,046,171,888 10,455,630

B. Agriculture Development Component Area TPA direct outlet 857,320 3,429.28 833,876 8,338.76 TPA Maini & pipe minor outlets 1,574,790 6,299.16 1,485,277 14,852.77 Narranji Disty 521,620 2,086.48 511,480 5,114.80 Kalu Khan minor 368,480 1,473.92 415,760 4,157.60 Regular Area 1,768,256 7,073.02 1,589,916 15,899.16 Labor days calculated for PCLPs 7,202,592.00 28,810.37 1,800,648.00 18,006.48 Labor days calculated for Naccas 3,470,884.00 13,883.54 867,721.00 8,677.21 Subtotal 15,763,942.00 63,055.77 7,504,678.00 75,046.78 Total 1,523,466 10,530,676 Total Labor Days (Skilled and Unskilled) 12,054,143 Disty = distributory, TPA = topi priority area Source: Report and recommendations of president, data collected by project completion review mission

2. The project generated an additional farm labor requirement of 0.9 million labor days annually in 2003-04 worth PRs.54.518 million against the appraisal estimate of 0.90 million labor days annually at the completion of the project i.e. 2005. Thus, the project achieved its additional farm labor requirement a year earlier than anticipated at the time of appraisal. Table A16.2 shows the incremental labor days generated domain wise.

Table A16.2: Person-days Generated after Construction

Area Increased Labor Rate Incremental Labor Days per Day Labor Value (2003–04) (PRs.) (PRs.) Domain I 195,050 60 11,703,025 Domain II 189,658 60 11,379,465 Domain III 482,662 60 28,959,707 Domain IV 41,272 60 2,476,305 Total 908,642 54,518,502 PRs = Pak rupees Source: Report and recommendations of president, data collected by project completion review mission

78 Appendix 16

3. Additional farm labor days are calculated based on the data reported in the farm budgets of WAPDA’s agro-economic survey reports for years 1998-99 to 2003-04. The additional farm labor is calculated by taking the total person hours consumed for each crop and then multiplying these by the total cropped area of that particular crop in each domain. A standard labor rate of PRs.60 per day or PRS. 7.5 per hour is assumed for calculating the incremental labor value. This rate has been adjusted as per the existing market rate of agriculture labor in the area and the figure reported in WAPDA’s agro economic report of PRs.56 per day or PRs.7 per hour.

Appendix 17 79

GROUNDWATER AND SOIL QUALITY DATA

Table A17.1: Groundwater Levels in Sample Watercourses (PHLC Domain I) (Percent of watercourse reaches with depth to water table at critical levels) (%)

Month 1998 1999 2000 April >90 cms 47 49 16 >150 cms 84 84 49

June >90 cms 20 20 13 >150 cms 47 49 49

October/D >90 cms 44 18 44 >150 cms 78 51 82 cm = centimeter, D = , PHLC = Pehur High-Level Canal, SMO = SCARP Monitoring Organization. Source: SMO agro-economic reports from 1997 to 2000.

Table A17.2: Groundwater Levels in Sample Squares (PHLC Domain II) (Percent of watercourse reaches with depth to water table at critical levels) (%)

Month 1998 1999 2000 April >90 cms 23 27 10 >150 cms 53 60 23

June >90 cms 10 10 10 >150 cms 23 23 23

October/D >90 cms 30 10 30 >150 cms 57 23 57 Source: SMO agro-economic reports from 1997 to 2003.

Table A17.3: Comparison of Surface Salinity in PHLC Project Area

Agency/Survey Total Area Non- Slightly Moderately Strongly Misc. Area Period (ha) Saline Saline Saline Area Saline Area Type Area (SI) Area (S2) (S3) (S4) MP&RD,WAPDA 159,105 152,253 1064 ha 2914 ha 295 2579 ha 1977–79 ha % 95.7 0.7 1.8 0.2 1.6 SMO WAPDA 159,105 151,253 974ha 508 ha – 6370 ha (2003) ha % 95.1 0.6 0.3 – 4.0 MP&RD = master planning and review division, PHLC = Pehur High-Level Canal, S1= non-saline, S2 = slightly saline, S3 = moderately saline, S4 = strongly saline, SMO = SCARP Monitoring Organization, WAPDA = Water and Power Development Authority. Note: Overall, there is a 1.8% decrease in the salt affected profile, showing that the total salt affected area has reduced from 2.7% to 0.9% in the project area. Source: SMO report on soil salinity and sodicity in the Project area (May 2005).

80 Appendix 17

Table A17.4: Comparison of Salinity/Sodicity Status of Soil Profile

Agency/Survey Total NS-NS S-NS S-S NS-S Missing Period Profiles Data MP&RD,WAPDA 248 237 ha 1 ha 7 ha 2 ha 1 ha 1977–79 % 95 0.4 2.8 0.8 0.4 S&R SMO 100 ha 98 ha 1 ha – 1 ha – WAPDA (2003) % 98 1.0 – 1.0 – MP&RD = master planning and review division, NS-NS = non saline non sodic-normal soils, S-NS = saline non sodic-salt affected soils, NS-S = non saline sodic - salt affected soils, S-S = saline sodic-salt affected soils. Results: As a whole there is 2 % decrease in the saline/sodic profile, showing that in the Project area (PHLC) total non-saline/non sodic soils area has increased from 95 to 98%. Source: SMO report on soil salinity and sodicity in the project area (May 2005).

Table A17.5: Soil Salinity and Sodicity Status 1996–97 to 2004–05 (Domain I)

NS-NS NS-S S-S Total Salt Affected Total Term/Year (WCs) (WCs) (WCs) (WCs) (WCs) No. % No. % No. % No. % 1/1996–97 15 7 46.67 5 33.33 3 20.00 8 53.33 2/1998–99 15 7 46.67 4 26.67 4 26.67 8 53.33 3/1999–00 15 7 46.67 6 40.00 2 13.33 8 53.33 4/2000–01 15 8 53.33 7 46.67 0 0.00 7 46.67 5/2001–02 15 9 60.00 6 40.00 0 0.00 6 40.00 6/2002–03 15 9 60.00 5 33.33 1 6.67 6 40.00 7/2004–05 15 10 66.67 2 13.33 3 20.00 5 33.33 WCs = water courses NS-NS = Non Saline Non Sodic - Normal Soils NS-S = Non Saline Sodic - Salt Affected Soils S-S = Saline Sodic - Salt Affected Soils[WB354] Source: SMO report on Soil Salinity and Sodicity in the Project Area (May 2005)

Table A17.6: Soil Salinity and Sodicity Status 1996-97 to 2004-05 Domain – II (Ballar DSA)

NS-NS NS-S S-S Total Total Salt Affected Term/Year (WCs) No. % No. % No. % No. % 1/1996–97 30 5 16.67 14 46.67 11 36.67 25 83.33 2/1998–99 30 7 23.33 17 56.67 6 20.00 23 76.67 3/1999–00 30 8 26.67 16 53.33 6 20.00 22 73.33 4/2000–01 30 11 36.67 9 30.00 10 33.33 19 63.33 5/2001–02 30 15 50.00 7 23.33 8 26.67 15 50.00 6/2002–03 30 15 50.00 10 33.33 5 16.67 15 50.00 7/2004–05 30 12 40.00 14 46.67 4 3.33 18 60.00 NS-NS = Non Saline Non Sodic - Normal Soils NS-S = Non Saline Sodic - Salt Affected Soils S-S = Saline Sodic - Salt Affected Soils Source: SMO report on Soil Salinity and Sodicity in the Project Area (May 2005)

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SOCIOECONOMIC PROFILE OF THE PROJECT AREA

1. The socioeconomic profile is based on review of secondary data from the Department of Agriculture, Department of Irrigation (DOI), Water and Power Development Authority (WAPDA), and Statistical Department of the North-West Frontier Province (NWFP) government.

2. According to NWFP Development Statistics 2004, on average 86% of farms are less than 2 hectares (ha), compared with the appraisal estimate of 72%. The most dominant size class comprises farms up to 1 ha, representing about 63.9% of all farm sizes against the appraisal estimate of 44%. However, farms under 5 ha remain more or less as envisaged at appraisal (96% at appraisal vs 98.5% in 2004). The dominance of small holdings reflects rapid population growth and local inheritance laws, as farm size has further reduced from appraisal estimates.

Table A18.1: Operational Farm Holdings (%)

Appraisal Actual Size (ha) Percent of Farms Percent of Farms Less than 1 44 63.9 1.0 to 2.0 28 22.2 2.0 to 5.0 24 12.4 5.0 to 10.0 3 1.3 Above 10.0 1 0.2 ha = hectare. Source: North-West Frontier Province Development Statistics, 2004

3. According to WAPDA’s Agro-Economic Survey Reports, about 52.6% of the farms are tenant-operated, 38.8% are owner-operated, and the remaining 8.6% are owner-cum-tenant operated, compared with 55% owner-operated, 30% tenant-operated, and 15% tenant-cum- owner operated farms reported at appraisal. This shows that further reduction in farm sizes are forcing owners to move to nonfarm employment. Tenancy arrangements in the project area without drainage have remained the same. In the drainage area, owners have increased their share from 25% or 33% of the produce to 50% of the produce depending on the level of improvement brought about by the Project. Similar revision in tenancy arrangements has been noted in the new areas, which have been provided irrigation water (Topi Priority Area [TPA] and Ballar Drainage Area).

4. The income and social condition of farmers have registered an improvement in terms of health, education, reduction in conflict, and access to services, with improvement in agriculture practices, higher agricultural income, improved water availability, and drainage conditions in the project area. Increased household income, as a result of the Project, is likely to benefit farmers by allowing higher expenditure for food, health care, and education. In the case of drinking water, water supply in the project area is now available to 83.18% of the rural households as compared to the appraisal status of 40%. The major sources of energy for cooking and heating remain the same, i.e., trees, crop residues, cow dung cakes, and kerosene oil.

5. Current education estimates show that 80–90% of boys and 50–60% of girls aged 6–11 years are going to school. This shows no change in the percentage of boys and girls going to school compared with appraisal estimates. However, it can be assumed that the number in absolute terms has slightly increased in comparison to appraisal estimates, as the actual number of boys and girls currently going to school has increased. Nonetheless, the percentage

84 Appendix 18

remains unchanged because the total population of girls and boys in the project area has also increased.

6. Currently, there are about 714 boys’ and 458 girls’ schools in the project area with enrollment of 119,828 boys and 68,592 girls. No statistics for these indicators were reported at appraisal so comparison is not possible.

7. Health care to most people in the project area is provided by traditional healers. The government health care infrastructure in the project area consists of 41 basic health units (against the appraisal figure of 28), 2 rural health centers (against the appraisal figure of 2), 9 medical dispensaries (against the appraisal figure of 11), and 4 hospitals in Swabi district (against the appraisal figure of 2). In addition, 2 TB clinics and 3 additional mother and child health centers were reported in the NWFP Development Statistics 2004 in the project area, which were not reported at the time of appraisal. This shows improvement in health facilities in the project area compared with appraisal, specifically in the case of basic health units, which have increased substantially. However, most of these facilities are poorly staffed because there are only 77 doctors in Swabi and , 105 nurses, and 43 female health workers in these health facilities. This makes the doctor to patient ratio 1:13,335. The situation becomes dismal when compared to the current ratio of 1:8,115 persons per hospital/dispensary beds in Pakistan.

A. Impact of Project Components

8. The Project has resulted in an overall increase in cropped area, yield improvements, changes in the cropping pattern, and increased cropping intensities. It has also improved social mobility through creation of women’s organizations (WOs), which promote awareness on the status and empowerment of rural women. Development of water users associations (WUAs) has improved the delivery of extension services and can further open rural development opportunities. Development of social capital will enable farmers to play a greater role in irrigation system management in the future. Another key outcome is an overall increase in the farm incomes of the majority of 60,000 farm families located in the project area. Some project benefits are elaborated below.

1. Increased Water Delivery Efficiency

a. Increase in Water Supplies and Reduction in Water Losses

9. WAPDA’s Agro-Economic Survey Report (April 2005) indicates that the Project has helped to increase the overall conveyance efficiency of watercourses (WCs) by 12%. The water conveyance efficiency in Domain I has increased from 66% to 81% and in Domain II from 75% to 87%. This has also helped to increase cropping intensity and crop yields in the project area.

b. Reduction in Labor

10. Lining of WCs and increased water supplies have reduced water losses from the channel, watercourse maintenance cost and labor, and conflicts over water sharing (because of WC control structures). The main savings resulted from lower labor needs for managing an irrigation turn, less silt to be removed from the WC, and fewer repairs. Farmers reported that irrigation management now takes one person where two to three had been needed in the past.

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c. Reduction in Conflicts

11. Many farmer groups reported a reduction in disputes over irrigation supplies to the Project Completion Review (PCR) Mission. This helps reduce demands on farmers’ time. Theft of water from a lined channel is more difficult and easier to detect if attempted than with an unlined WC. Greater water availability has also drastically reduced the need to steal water. Damages due to unplanned flooding in unlined WCs have also been almost eliminated.

2. Increased Crop Production

12. A significant impact with clearly quantifiable benefits to farmers is the increase in farm productivity compared to baseline years. While the cultivable command area (CCA) may have shown some increase in land use intensity, principal gains are from increased cropping intensity, continuing change in the cropping pattern in favor of more high value crops, and higher yields per unit of cropped area (Appendix 14).

a. Increased Command Area

13. DOI has reported changes in the command area of Domain II (Ballar Drainage Area) and Domain IV (Topi Priority Area) of the Project in comparison to appraisal estimates. The Project has allowed additional irrigation development in 5,212 ha of mainly rain-fed area in Domain II against 4,000 ha envisaged at appraisal. However, there has been a reduction in the command area of Domain IV. The Project has provided irrigation in 4,310 ha of mainly rain-fed area in Domain IV against 4,500 ha envisaged at appraisal. Although DOI has not reported any change in the CCA, farmers reported to the PCR Mission that availability of extra water has allowed them to irrigate land outside the CCA from canal water.

b. Increased Production

14. The Project has resulted in increasing incremental production in the area for the majority of crops. Appraisal estimates of annual incremental production at full development were 25,670 metric tons (t) of maize, 360,000 of sugarcane, 10,400 t of Kharif (summer crop) fodder, 14,281 t of tobacco, 23,459 t of wheat, 16,950 t of Rabi fodder, and 6,200 t of Rabi vegetables. Agriculture incremental production at full development (according to PCR estimate) is 97,136 t of maize, 96,594 t of sugarcane, 7,238 t of Kharif fodder, 15,284 t of tobacco, 36,104 t of wheat, 88,848 t of Rabi (winter crop) fodder, and 31,886 t of Rabi vegetables. Rice production was not assumed at appraisal as a major crop but became one of the main crops in Domain I and II, according to WAPDA’s Agro-Economic Survey Reports. Its incremental production in all four domains at full development is 2,464 t. Orchard production was taken to remain constant at appraisal but its incremental production according to PCR estimates at full development is 3,959 t. The basis for increased incremental production is the increase in cropped area (Table A18.7) of the Project and the increase in potential yields (Table A18.5). Table A18.2 compares incremental crop production as estimated at appraisal and at full development.

86 Appendix 18

Table A18.2: Appraisal and PCR Incremental Production Comparison (t)

Crops Inc. Prod. Inc Prod. at Full Dev Change Appraisal With Surface Without Surface from Drainage Drainage Appraisal Estimate Total DI DII DIII DIV Total Kharif Maize 25,670 7,650 5,726 71,653 12,107 97,136 71,466 Sugarcane 360,000 37,346 23,203 34,735 1,310 96,594 (263,406) Fodder 10,400 (619) (6,132) 13,829 160 7,238 (3,162) Tobacco 14,281 716 152 13,471 945 15,284 1,003 Rice – 756 1,708 – – 2,464 2,464 Orchards –- – – 3,729 230 3,959 3,959

15. Incremental production of major crops at full development on a domain-wise basis (Table A18.3) indicates that farmers would give greater preference to increasing production and productivity of cash crops (such as maize and tobacco) in the summer, and vegetables and fodder in the winter, due to water availability. Fodder will also be continually grown in the area as it satisfies the livestock feed needs of the farmers. However, production of sugarcane will decrease substantially from appraisal estimates as there is no sugar mill in the project area and its potential yield in the area will also remain far below yields demonstrated in other agro- economic zones. At the same time, the food security aspect will not be so easily dismissed by farmers and they will not produce fewer grains. This is partly due to lack of an alternate winter cash crop to replace wheat and partly due to fears of water shortages, similar to those experienced in the recent past.

Table A18.3: Incremental Production at Full Development Domain-Wise (t)

Crops Domain I (With Surface Drainage) Domain II (With Surface Drainage) Base Year Full Dev Increase Change Base Full Dev Increase Change (1998-99) (2008-09) as per from Year (2012-13) as per from Prod. inc. Prod. Appraisal Appraisal (1998-99) inc. Appraisal Appraisal at Full Estimate Prod. Prod. Estimate Dev. at Full at Full Dev. Dev. Kharif Maize 940 8,590 5,000 3,590 559 5,726 5,000 726 Sugarcane 21,886 59,232 78,000 (18,768) 3,618 23,203 78,000 (54,797) Fodder 4,660 4,041 – 4,041 8,487 (6,132) – (6,132) Tobacco 560 1,275 2,427 (1,152) 123 152 2,427 (2,275) Rice 553 1,309 – 1,309 402 1,708 – 1,708

Rabi Wheat 1,908 7,978 4,833 3,145 2,145 8,905 4,833 4,072 Fodder 9,074 26,900 – 26,900 5,496 23,407 – 23,407 Vegetables 538a 973 – 973 58a 780 – 780

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Crops Domain III (Without Surface Drainage) Domain IV (Without Surface Drainage) Base Full Dev Increase Change Base Full Dev Increase Change Year (2010-11) as per from Year (2012-13) as per from (2000-01) Inc. appraisal appraisal (2002-03) Inc. Prod. appraisal appraisal Prod. Prod. estimate at Prod. estimate full dev. at full dev. Kharif Maize 22,171 71,653 10,670 60,983 2,522 12,107 5,000 7,107 Sugarcane 40,455 34,735 126,000 (91,265) 417 1,310 78,000 (76,690) Fodder 6,408 13,829 10,400 3,429 174 160 – 160 Tobacco 6,238 13,471 7,000 6,471 430 945 2,427 (1,482) Orchards 10,144 3,729 – 3,729 359 230 – 230 Rabi Wheat 30,684 15,299 6,339 8,960 5,042 3,922 4,833 (1,120) Fodder 85,546 45,526 16,950 28,576 3,485 2,088 – 2,088 Vegetables 22,020 28,839 6,200 22,639 1,821 1,294 – 1,294 — = data not reported, dev = development, Inc. Prod = incremental production. a The base year for vegetables is taken as 2001–02, as previously no vegetable production was reported. Source: WAPDA Agro-Economic Survey Reports for 1998-99 to 2003-04 and PCR Mission estimates.

c. Increase and Changes in Cropping Intensity

16. In the case of the PCR Mission, the full cropping intensity in Domain I of 149% will be achieved in 2006–07 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain I in 2003–04 stands at 126%. In Domain II, the full cropping intensity of 149% will be achieved in 2005–06 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain II in 2003–04 stands at 141%. In Domain III, the full cropping intensity of 162% was achieved in 2002–03 against the appraisal estimate of 157% in 2005. The cropping intensity in Domain III in 2003–04 stands at 167%. In Domain IV, the full cropping intensity of 148% was achieved in 2004-05 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain IV in 2003–04 stands at 147%, which is very close to the appraisal estimate. Thus, cropping intensities in Domain III and IV were achieved earlier than anticipated at appraisal, and in Domain II as envisaged at appraisal. Only Domain I will achieve its full cropping intensity with a delay of 1 year because of the satisfactory performance of Department of Agriculture (DOA), which completed most of the activities on time. Cropping intensities were adjusted to avoid double counting of perennial crops, i.e., sugarcane and orchards. Table A18.4 shows the cropping intensities until they reach their full potential as assumed in the PCR mission.

Table A18.4: Cropping Intensity at Full Potential in Four Project Domains (%)

Year 1998–99 1999–00 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 (a) with surface drainage

Domain I 92 88 88 103 112 126 135 141 149 Domain II 110 113 115 119 110 141 147 149

(b) without surface drainage

Domain III – – 147 156 162 – Domain IV – – – – 130 147 148 Source: Data provided to PCR Mission by DOA.

88 Appendix 18

d. Increase in Crop Yields

17. The maximum possible yields used in the analysis have been changed in comparison to appraisal estimates. Table A18.5 presents the comparison between maximum possible yields assumed at the time of appraisal, maximum yields expected to be achieved in the project area, and current average yields achieved in the project area.

Table A18.5: Crop-Wise Yield in the Project Area (t/ha)

Crops Maximum Yield assumed Maximum Yield assumed in Average yield achieved in the at Appraisal the PCR Project area

Kharif (summer)

Maize 2.5 5.2 4.9 Tobacco 2.8 2.8 2.7 Fodder 28.0 30.0 29.9 Sugarcane 60.0 48.3 48.3 Rice – 2.3 1.9 Orchards 10.0 11.0 9.1 Vegetables 13.0 – –

Rabi (winter)

Wheat 3.0 3.1 2.7 Oilseed 1.3 – – Fodder 55.8 55.8 51.5 Vegetables 17.5 17.5 12.6 — = data not reported. Source: Department of Agriculture Extension, WAPDA Agro-Economic Survey Reports for 1998-99 to 2003-04, and appraisal estimates.

18. The potential yield for maize has been drastically increased in comparison to appraisal estimates because the Department of Agriculture Extension (DAE) has reported that synthetic maize (current average yield 2.2 t/ha) is being replaced by hybrid maize (current average yield 4.9 t/ha) in the project area.

19. Data on maximum yields for Kharif fodder, Rabi fodder, and Rabi vegetables was not available from DAE and is assumed based on the appraisal estimates and PCR mission estimates. The crop yield for rice is assumed based on maximum yields achieved in the Swabi Salinity Control and Reclamation Project (SCARP) Project (SSP) area for these crops. Kharif vegetables and oilseed have not been considered in the PCR analysis as these were not major crops reported by WAPDA’s Agro-Economic Survey Reports.

20. The crop yield for sugarcane as explained by DAE was lower (46.1 t/ha) than what has already been achieved in the project area (48.37 t/ha). Thus, the maximum sugarcane yield achieved in the project area has been assumed as sugarcane’s maximum potential yield (48.37 t/ha compared with the appraisal estimate of 60 t/ha). The chances of increase in sugarcane yield are also less, as farmers’ might tend to reduce its cultivation because there is no sugar mill in the project area. However, sugarcane will not be completely wiped out in the area and will remain one of the main crops as it is used to prepare indigenous sugar that is sold in neighboring districts.

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21. PCR analysis shows that crop yields will attain their maximum possible yield or reach full development potential in each domain as follows. In Domain I, full development will be achieved by 2008–09 against the appraisal estimate of 2009. In Domain II, full development will be achieved by 2012-13 against the appraisal estimate of 2009. In Domain III, full development will be achieved by 2010-11 against the appraisal estimate of 2009. In Domain IV, full development will be achieved by 2012-13 against the appraisal estimate of 2009. The reason for delayed achievement of full development against appraisal estimates is lower crop yields in the baseline year compared with baseline year estimates of appraisal, and delayed completion of the Project. The increase in crop yield is also based on the 7.5% growth rate achieved in the agriculture sector this year (2005–06) and targeted annual growth rate of 8.5% in the next 5 years through an improved outreach program for agriculture extension and research in provinces funded from the Agriculture Sector Program Loan II (ASPL-II). Table A18.6 summarizes the projections of the PCR Mission for crop yields.

Table A18.6: Average Yields of Different Crops (t per ha)

Crops Domain I (With Surface Drainage) Domain II (With Surface Drainage) Base 2003–04 Full CI Full Dev. Base Year 2003–04 Full CI Full Dev. Year (2006–07) (2008–09) (1998–99) (2005–06) (2012–13) (1998–99)

Kharif (summer) Maize 1.6 2.0 3.5 5.2 1.6 1.3 1.8 5.2 Sugarcane 29.0 48.4 41.2 48.4 29.0 26.2 30.0 48.4 Fodder 12.4 29.9 30.0 30.0 12.4 23.3 26.7 30.0 Tobacco 1.6 2.3 2.8 2.8 1.6 2.7 2.8 2.8 Rice 1.6 1.9 2.4 2.4 1.3 1.4 1.7 2.4

Rabi (winter) Wheat 1.6 2.4 2.9 3.1 1.6 1.4 1.8 3.1 Fodder 23.6 51.5 55.8 55.8 23.6 42.8 49.0 55.8 Vegetables – 12.6 – 17.5 – 12.0 13.7 17.5

Crops Domain III (Without Surface Drainage) Domain IV (Without Surface Drainage)

Base 2003–04 Full CI Full Dev. Base Year 2003–04 Full CI Full Dev. Year (2002–03) (2010–11) (2002–03) (2004–05) (2012–13) (2000–01) Kharif (summer) Maize 1.4 2.0 1.4 5.2 1.3 1.4 1.7 5.2 Sugarcane 33.5 27.1 32.3 48.4 22.0 26.0 27.8 48.4 Fodder 12.9 25.6 13.4 30.0 23.0 24.9 26.6 30.0 Tobacco 1.1 2.5 2.3 2.8 2.3 2.3 2.5 2.8 Orchards 8.4 9.1 8.8 11.0 8.6 8.7 9.3 11.0

Rabi (winter) Wheat 2.6 2.7 2.6 3.1 1.9 2.0 2.2 3.1 Fodder 43.9 48.2 44.2 55.8 38.5 40.5 43.3 55.8 Vegetables 11.3 12.0 12.0 17.5 11.3 11.9 12.7 17.5 — = data not reported. CI = cropping intensity, Dev = development Source: WAPDA Agro-Economic Survey Reports for 1998-99 to 2003-04.

90 Appendix 18

22. Table A18.7 presents the change in cropped area for different crops by comparing the cropped area at baseline and full development in each domain.

Table 18.7: Change in Cropped Area Domain-Wise (ha)

Crops Domain I (With Surface Drainage) Domain II (With Surface Drainage)

Base Year Full Dev. Inc. Area Base Year Full Dev. Inc. Area (1998–99) (2008–09) (1998–99) (2012–13) Prod. inc. Prod. Prod. inc. Prod. Kharif (summer) Maize 588 1,649 1,061 349 1,206 857 Sugarcane 756 1,225 469 125 554 430 Fodder 376 135 (241) 684 79 (606) Tobacco 350 456 106 77 98 21 Rice 346 557 212 310 898 588

Rabi (winter) Wheat 1,192 3,189 1,997 1,340 3,565 2,224 Fodder 384 482 98 233 518 285 Vegetables – 56 56 – 45 45

Crops Domain III (Without Surface Drainage) Domain IV (Without Surface Drainage)

Base Year Full Dev. Inc. Area Base Year Full Dev. Inc. Area (2000–01) (2010–11) (2002–03) (2012–13) Prod. inc. Prod. Prod. inc. Prod.

Kharif (summer) Maize 15,836 18,008 2,172 1,919 2,808 889 Sugarcane 1,208 1,554 347 19 36 17 Fodder 497 675 178 8 11 4 Tobacco 5,654 7,039 1,385 186 491 305 Orchards 1,208 1,261 54 42 54 12

Rabi (winter) Wheat 11,802 14,833 3,032 2,618 2,892 274 Fodder 1,949 2,349 400 90 100 9 Vegetables 1,949 2,906 958 161 178 17 — = data not reported. Source: WAPDA Agro-Economic Survey Reports for 1998–99 to 2003–04 and PCR mission projection estimates.

e. Additional Farm Labor generated

23. In accordance with PCR estimates, there is a substantial increase in the farm labor requirement in the project area. The Project is generating an additional farm labor requirement of 0.9 million person-days annually in 2003–04 against the appraisal estimate of 0.90 million person-days annually at completion of the Project (2005).

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f. Nonfarm Income

24. Reports prepared by the SCARP Monitoring Organization (SMO) show a general decrease in nonfarm income. The key reason may be increased opportunity in the agricultural sector and dependence of the majority of the population on agriculture and farm income. On average, the total population of the project area was estimated at 400,000 people at appraisal. If this population is projected to grow by 3% per year, the current population of the project area would be around 560,000 people, with 60,000 households directly or indirectly (farm labor) targeted under the Project. The population served is around 87% (at 8 persons per household, although SMO quotes 12 persons per household). If these figures are assumed to be correct, the majority of the population in the project area is rural and predominantly dependent on farm income. The Project also created 0.9 million person-days of additional farm labor (para. 23). A major part of this additional opportunity could be used by employing labor from sources other than farm owners and tenants. SMO data also shows that there was an increase in the use of modern agricultural implements. There is no evidence to suggest that the Project contributed to increased nonfarm income in the project area. However, increased agricultural activity should have increased employment opportunities in transportation, agri-processing industry, storage and marketing, agriculture input markets, and others. These impacts were not monitored during the Project or by the PCR Mission.

4. Improvement in Farming Support Services

25. There was considerable improvement in the farmer support services through the Department of Agriculture (DOA) by extending agricultural and adaptive research related support. This component of the Project aimed at enhancing farm productivity by helping farmers to take full advantage of increased water supplies. DOA is also providing agriculture extension and research services to farmers through its extension staff and partly through farmer service centers (FSCs). The FSCs are farmer managed membership organizations, which were established under the SSP and strengthened/supported through the Project. Support for these activities will be further provided under the ASPL-II through the Provincial Trust Fund for the Joint nongovernment organization (NGO) and extension agent program for small farmers, and an ASPL-II funded improved outreach program for agriculture extension and research in provinces.

a. Agricultural Extension Component

26. Agriculture extension services in the project area were extended to farmers through farm demonstrations that improved agronomic practices, including modern planting techniques, better tillage practices, proper irrigation scheduling, improved system for water conveyance, and land development. A total of 592 farm demonstration plots were established against the target of 566. The owner farmers of these demonstration plots were fully involved in carrying out all the operations. When the crop matured on all the successful demonstration centers, field days were organized where farmers from the project area were invited to show the effect of the demonstration technology on crop yields. A total of 125 farmer field days were organized against the target of 132. A total of 7 agricultural fairs were arranged against the target of 9 at central locations in the project area to raise the general awareness of farmers regarding project activities.

27. Apart from these, 490 DOA staff members/extension workers were trained in improved production technologies. This improved their capacity to carry out the extension activities more effectively.

92 Appendix 18

28. In organizing these highly targeted farming support services, DOA and the Directorate of On-Farm Water Management (DOFWM) have been vital. Both departments were able to use the social capital developed by the Project as a medium to meet its target. All of these activities were undertaken in direct consultation with WUAs.

b. Adaptive Research Component

29. Under the adaptive research component, a total of 347 adaptive research trials were conducted through the participation of farmers. These trials demonstrated the effect of improved crop production technologies on crop yields/production.

30. Action research studies were also carried out on 1,766 acres of land in the project area through the participation of the farmers. These studies provided a basis for facilitating the farmers in the procurement of quality inputs, application of the improved irrigation and agronomic practices, and training to help promote the adoption of new technologies.

31. About 484 farmers were trained in fruit plant nursery training, potato and onion seed production techniques, off-season vegetable production, orchard management, and biological control of stem borer in sugar cane under the adaptive research component.

c. Land Development

32. The Project successfully completed land development demonstration on an area of 8.41 ha in the Narranji distributaries command and 84 ha in the TPA command, whereas originally the land development program was targeted at 100 ha of TPA area having erodible soils with relatively steep slopes. The impact of this demonstration was that farmers leveled about 1,000 ha of land through their own resources.

5. Build up of Social Capital

33. The Project made a major investment in building social capital in the form of mobilizing, organizing, and strengthening WUAs and WOs. This increased the capacity of farmers to access farming support services and other basic services and operate and maintain project infrastructure in a sustainable manner. It also increased the capacity of women to become more active in income-generating activities.

a. Water Users Associations

34. The participation of farmers—individually and collectively—in renovating WCs was considered necessary to optimize immediate benefits and introduce elements of cost sharing and greater ownership and sustainability of investments. Therefore, creation of WUAs at each WC was an integral part of the process of WC renovation. A total of 444 WUAs were organized and registered with the DOFWM. These WUAs were quite functional during WC remodeling/construction and for carrying out all required activities and providing assistance in cost recovery. However, they tended to lose interest as soon as the civil works were completed after a year or so. The sustainability of about 66% of these WUAs is doubtful beyond project closure, as the remaining 33% have been integrated into farmers organizations (FOs). One of the key assumptions under the Project was that support would be extended to WUAs through

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the National Drainage Sector Program (NDSP) (Loan No. 1413)1 for integrating all WUAs in FOs. However, the slow implementation of NDSP has affected the sustainability of the remaining 66% WUAs. The other option was to network the WUAs into FSCs—managed by farmers and providing extension services. However, the NWFP government chose to form FSCs as individual membership organizations to avoid the massive task of developing WUAs across the province, so WUAs are not represented in FSCs. Only some wealthy farmers who can individually afford the membership fee are represented in FSCs. The third and the most important common ground for continued WUA interaction was to form a body, which would resolve all water related issues on the WC, including maintenance. The Project provided hydraulically efficient parabolic sections for watercourse lining, and provided control structure and major increase in water allowance. The WUA informed the PCR Mission that increase in water and control structures on WCs had drastically reduced water disputes, and the parabolic section is very efficient and requires very little maintenance, so there are no water-related issues to meet and discuss anymore. The PCR Mission observed that almost all the lined WCs visited were in good working condition.

35. A total of 14 pilot FOs were established in the project area for the smooth transfer of management, and operation and maintenance of the distributaries from the Government to the WUAs. Two of these organizations were supported by the Project. Only five pilot FOs have had complete management responsibility transferred to them. These organizations are functioning in accordance with the Provincial Irrigation and Drainage Authority Act and cover about 33% of the project WUAs.

b. Women’s Empowerment

36. A total of 20 WOs were formed in the project area and women in these organizations were trained in community mobilization, financial management and record keeping, livestock management, poultry management, mushroom production, kitchen gardening, and grain storage. These WOs were also registered with the Social Welfare Department to give them legal status. In order to sustain and continue their activities, the WOs were linked with NGOs such as the Aurat Foundation, Trust for Volunteer Organization, and Strengthening Participatory Organizations. At present, WO members are actively involved in a variety of schemes with these NGOs, including activities related to income generation, social forestry program, running skills centers, establishing human resource development center, and establishing women’s information resource centers.

1 See footnote 6 of main text.