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PFR: Pakistan: Punjab Irrigated Agriculture Investment Program

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PFR: Pakistan: Punjab Irrigated Agriculture Investment Program Periodic Financing Request Report Project No. 37231-03 December 2011 MFF 0009-PAK: Punjab Irrigated Agriculture Investment Program: Tranche 2 CURRENCY EQUIVALENTS (as of October 2011) Currency Unit – Pakistan rupee (PRs) PRs1.00 = $0.011785 $1.00 = PRs 85.0 ABBREVIATIONS ADB – Asian Development Bank ADF – Asian Development Fund APs – affected persons AWB – Area Water Board CCA – cultivable command area cms – cubic meters per second EA – executing agency EARF – environmental assessment and review framework EIRR – economic internal rate of return EMP – environmental management plan FFA – framework financing agreement FO – farmers organization GDP – gross domestic product ICB – international competitive bidding IEE – Initial environmental examination JICA – Japan International Cooperation Agency LARF – land acquisition and resettlement framework LARP – land acquisition and resettlement plan LBDC – Lower Bari Doab Canal LBDCIP – Lower Bari Doab Canal Improvement Project LCC – Lower Chenab Canal MFF – multitranche financing facility NCB – national competitive bidding NKBP – New Khanki Barrage Construction Project O&M – operation and maintenance PFR – periodic financing request PIAIP – Punjab Irrigated Agriculture Investment Program PIAPPF – Punjab Irrigated Agriculture Project Preparation Facility PIDA – Punjab Irrigation and Drainage Authority PID – Punjab Irrigation Department PMO – Project Management Office PMU – Project Management Unit PSC – Project Steering Committee RF – resettlement framework RP – resettlement plan WEIGHTS AND MEASURES cusec – Cubic feet per second km – kilometer ha – hectare Mha – million hectares mm – millimeter GLOSSARY abiana – irrigation service fee conjunctive use – combined use of surface and ground waters rabi – crops grown during the period from about December to May kharif – crops grown during the period from about June to November NOTES The fiscal year (FY) of the Islamic Republic of Pakistan ends on 30 June. In this report, "$" refers to US dollars. Vice President X. Zhao, Operations 1 Director General J. Miranda, Central and West Asia Department (CWRD) Director M. Ojiro, Environment, Natural Resources and Agriculture Division, CWRD Team leader A. Ali, Water Resources Specialist, CWRD Team members Z. Abbas, Environment Specialist, CWRD C. Cabrales, Operations Assistant, CWRD R. Farrukh, Senior Project Officer, Pakistan Resident Mission (PRM) R. Jones, Natural Resources and Agriculture Economist, CWRD A. Khokhar, Senior Safeguards Officer, PRM D. Perkins, Counsel, Office of the General Counsel (OGC) S. Roth, Social Development Specialist (Gender and Development), CWRD Peer reviewers M. Katagami, Natural Resources and Agriculture Specialist, Regional and Sustainable Development Department (RSDD) and member Agriculture, Rural Development, and Food Security CoP T. Panella, Principal Water Resources Specialist, Southeast Asia Department (SERD) and member Water CoP In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. CONTENTS Description TRANCHE AT A GLANCE I. BACKGROUND 1 II. ASSESSMENT OF MFF IMPLEMENTATION 2 III. PROPOSED PERIODIC FINANCING REQUEST 3 A. Impact and Outcome 3 B. Outputs 4 C. Investment and Financing Plans 4 D. Implementation Arrangements 5 E. Project Readiness 6 F. Advance Contracting and Retroactive Financing 7 IV. DUE DILIGENCE 7 A. Technical 7 B. Economic 8 C. Governance 8 D. Poverty, Social and Gender Dimensions 9 E. Safeguards 9 F. Climate Impacts 10 G. Risks and Mitigating Measures 10 H. Risks Categorization 11 V. ASSURANCES 11 VI. RECOMMENDATION 11 APPENDIXES: 1. PFR from the Government 12 2. Tranche Design and Monitoring Framework 16 3. Project Administration Manual 20 4. Economic Analysis (Tranche investments) 21 5. Updated Summary of Poverty Reduction and Social Strategy 25 6. Contribution to the ADB Results Framework 29 7. List of Linked Documents 30 SUPPLEMENTARY APPENDIXES (available on request) A. Client Feasibility Studies and Engineering Designs B. Loan and Project Agreements C. Compliance Status with Framework Financing Agreement and Loan Covenants of the Project 1 D. Due Diligence Report TRANCHE AT A GLANCE Project Name MFF Punjab Irrigated Agriculture Investment Program PFR No. 2 – Tranche 2 (New Khanki Barrage Construction Project No 37231-033 Project; NKBP) Country Pakistan, Islamic Republic of Department CWRD Date of Receipt by ADB of PFR Request 12 September, 2011 Division CWER Project Data Sheet http://pid.adb.org/pid/LoanView.htm?projNo=37231&s eqNo=03&typeCd=3 Tranche Summary (as requested by the government in PFR) Impact: The impact of the proposed project will be the improved agricultural production and farm income in Lower Chenab Canal (LCC) command area (Gujranwala, Hafizabad, Sheikhupura, Nankana Sahib, Faisalabad, Jhang and Toba Tek Singh districts). Outcome: The outcome will be the sustainable improved delivery of services for irrigated agriculture and better water management in LCC command area. Outputs: The project outputs will be (i) New Khanki Barrage completed on time and within the budget and (ii) EA’s improved project management capacity. Implementation Arrangements: Punjab Irrigation Department (PID) will be the executing agency (EA) and will implement the project through its existing project management office (PMO) for barrages. Project Readiness. The key readiness requirements are met: preliminary and final design; advance actions on contractor and consultant recruitment (with process completes early in 2012); safeguards action plans and financing plans (disclosed and funding in place); provincial and federal level approvals (through the planning commissions) and local counterpart financing for other project components. All other standard due diligence work has been completed (technical, commercial, economic, financial, procurement, etc). The project is categorized as B for resettlement and environment and C for indigenous people. The original MFF land acquisition and resettlement framework (LARF) was updated and has been disclosed. A land acquisition and resettlement plan (LARP) was prepared. The terms of reference (TOR) for construction supervision consultants have been prepared and the consultant short listing is complete. The EA received bid for a national competitive bidding (NCB) contract on 22 September 2011. This is being evaluated. The international competitive bidding (ICB) contract process is underway. Tranche Sector Classification Sector: Agriculture and Natural Resources Subsectors: Irrigation and flood management Tranche Thematic Classification Theme: Economic growth Subthemes: Climate Change Impact Adaptation Yes Mitigation No Gender Mainstreaming Gender equity theme Effective gender mainstreaming Some gender benefits √ No gender elements Targeting Classification General Intervention √ Targeted Intervention (i) Geographic dimensions of inclusive growth (ii) Millennium Development Goals (iii) Income poverty at household level Location Impact Rural High National Low Urban Regional High Tranche Risk Categorization Low Risk Complex √ Safeguard Categorization (Refer to ADB. 2010. Safeguards Policy Statement. Operations Manual, OM F1. Manila.) Category Required Document Disclosure Date (i) Environment B IEE 30 Sep. 2011 Weblink: http://www.adb.org/Documents/IEES/PAK/37231/37231-033-pak-iee.pdf (ii) Involuntary resettlement B Updated LARF 11 Oct. 2011 Weblink: http://www.adb.org/Documents/Resettlement_Plans/PAK/37231/37231-033-pak- rp-02.pdf (iii) Indigenous peoples C NA Weblink: Financing Requested Modality Source Amount ($ million) from ADB Project Loan Asian Development 270.0 Fund Total: 270.0 Source Amount ($ million) Cofinancing No Cofinancing Available Counterpart Financing Government of Punjab 39.0 Aid Effectiveness Parallel project implementation unit No Program-based approach No Significant Developments in the MFF and Tranche 1 Physical Progress. Tranche 1 Project has awarded six out of nine civil works contracts and six consultancy mandates. Prequalification and bidding documents for the remaining three civil works contracts (total amount $102 million) have been completed and bids for two of the contracts invited. As of 31 August 2011, the cumulative contract awards and disbursements are $110.81 million and $26.02 million, respectively. Physical progress is 35% with an elapsed period of 50%. Implementation is moving in the right direction, although there remains some catching up to do, especially with the remaining contracts. Non-Physical Progress. The Project Management Unit and all associated operating units envisaged under the Project have been established and are functioning satisfactorily. Tranche 1 provided funds to prepare a new generation of projects. The MFF also provided financing the institutional reforms. The reform package is inclusive of outreach and training at all levels. To date 49 farmer organizations have been established for the operation and management of the distribution canals and preparatory work to set up the Area Water Board for operation and management of the main canal is complete. Compliance. Thirty two covenants out of 34 are presently being complied with. The two problem covenants relate to (i) establishing separate imprest accounts for Directorate of On-Farm Water Management (DOFWM) and PIDA and (ii) developing a participatory irrigation management
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