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 model (PIMM). ADB has agreed with the Punjab Irrigation and Finance Departments assessment, that the separate imprest accounts for DOFWM and PIDA are not required. PIMM (PIDA revised rule 2010) allows existing PID field offices to assist FOs in operational management during a transitional period. Following the revised PIDA rules, a model irrigation management transfer (IMT) agreement has been developed and an agreement signed with the FOs. An interim cost sharing policy for Lower Bari Doab Canal (LBDC) is being prepared following Government of Punjab’s current policy. The EA has established a website http://irrigation.punjab.gov.pk that shows water accounts for 24 main canals regarding entitlements, deliveries & balance share as well as policy for sharing surpluses and shortages.

Resettlement. The resettlement plans (RP) for all civil works contracts were prepared following the resettlement framework (RF) under the MFF. The latter has been updated to comply with ADB’s Safeguard Policy Statement (2009). Punjab has allocated $6.9 million (PRs595.0 million) in the revised Planning Commission Proforma (PC1) and is providing funds in line with requirements. Final RPs for five civil works contracts under tranche 1 were completed and disclosed. The entitlements as specified in the RPs were provided to the affected persons (AP) prior to their relocation under ongoing contracts for the construction of Jandraka and 15L distributary canals. The same policy is being followed with respect to all other contracts. Grievance redress committees for ongoing contracts have been established. Internal monitoring reports are submitted to ADB on a monthly basis. An independent external monitor has been recruited and the first external monitoring report prepared. The results are positive.

Environment. All the civil works are being carried out in accordance with ADB’s Safeguards Policy Statement 2009 and the Environmental Assessment and Review Framework (revised 2011). An environmental management plan (EMP) has been prepared for each civil works contract and is incorporated in the applicable bidding document. All mitigation and monitoring measures identified in the final detailed design are incorporated into the EMP and are to be implemented during construction phase. All contract packages contain provisions dictating compliance with all environmental requirements.

Lessons Learned. Future works should be packaged into fewer and larger contracts rather than numerous small contracts to reduce implementation complexities and the administrative burden on the EA. The quality of the consultants was low. ADB worked together with the EA and the consultants rationalizing the consultancy packages and negotiating deployment of quality staff for the key positions. Qualifications for key staff will be carefully drafted and strictly adhered to in the future.

MFF projects preparation was slow lacking into project readiness (design, procurement, safeguards, local budgets and internal approvals) and limited oversight over new tranche investments. ADB conveyed the Punjab Government to cancelling the MFF, if subsequent tranches are not processed on time. It created a new momentum to turnaround the slow moving MFF. Against this, ADB retains a strong client relationship, skills to handle irrigation and the right blend of physical and nonphysical investments. Project preparation (readiness) is now geared up, which will lead to a faster conversion of finance into stand-alone transactions, contract awards and disbursements. These lessons are being applied in the context of the second PFR.

CPS/COBP PAK: Country Partnership Strategy 2009-2013 http://www.adb.org/Documents/CPSs/PAK/2009/CPS-PAK-2009- 2013.pdf

I. BACKGROUND

1. In December 2006, the Asian Development Bank (ADB) approved a $900.0 million1 multitranche financing facility (MFF) for the Punjab Irrigated Agriculture Investment Program (PIAIP) to co-finance investments in the irrigation sector in Punjab. Two loans for the first project totaling $227.8 million were approved on 13 December 2006 and became effective on 24 August 2007; $217.8 million equivalent from Ordinary Capital Resources (OCR) and $10 million equivalent from the ADB’s Special Fund (ADF) resources2. The MFF finances investments to improve century-old irrigation infrastructure and associated facilities. It also prompts institutional reform premised on eventual farmer management of the irrigation system to raise the effectiveness and efficiency of delivering irrigation service. The Design and Monitoring Framework (DMF), which accompanied the MFF, was updated after ADB revised its safeguards policies and procedures (Safeguards Policy Statement, 2009).

2. Punjab sought increased investment in its underperforming irrigated agriculture infrastructure and institutions. Irrigated agriculture accounts for 28% of Punjab’s GDP and employs over 50% of its labor force. Irrigated cultivable agriculture covers 8.4 million hectares (ha) with a cropping intensity of 122%. Fourteen barrages supply water through 22 main and link canals.3 Upgrading the irrigation system requires over $3 billion.

3. The Country’s Partnership Strategy (CPS) (2009-2013) prioritizes improving irrigation infrastructure. The water resources sector road map identifies improving infrastructure, institutions and agricultural productivity to drive sustained agricultural growth. The Medium-Term Development Framework (MTDF)4 estimated expenditure on the irrigation sector at a high 32% annually since 2005. ADB’s agriculture sector evaluation (2006) for Pakistan emphasizes rehabilitating water resources and irrigation in its lending portfolio. Punjab Irrigation Department’s (PID) asset management plan requires rehabilitation of seven barrages and five main canal systems.5 Punjab adheres to the sector road map and follows the reforms principles as in the MTDF. PID already transferred management of 1.5 million ha to the farmers’ organizations (FOs). The World Bank and Japan International Cooperation Agency (JICA) also supported the irrigation sector institutional reforms through development policy loans and the Punjab irrigation system improvement project6.

4. The Lower Bari Doab Canal Improvement Project (LBDCIP) financed under MFF tranche 1 is improving the Balloki Barrage on the Ravi River, the 200-km Lower Bari Doab Canal (LBDC), and about 1,500 kilometers (km) of distributary and minor canals that supply water to 700,000 ha. ADB has now received a second periodic financing request (PFR) for $270 million7

1 This amount comprised (i) up to $890.0 million equivalent form ADB’s ordinary capital resources and (ii) up to $10.0 million equivalent in Special Drawing Rights (SDR) from ADB’s Special Funds resources (Asian Development Fund [ADF]). On 15 December 2011, ADB’s Board of Directors approved an amendment to the MFF for PIAIP which (i) reduced the facility amount of the MFF to an amount not exceeding the equivalent of $700.0 million and (ii) increased the limit on the use of ADF resources for the MFF to an amount not exceeding the equivalent of $280.0 million. 2 Total project cost was estimated at $281.4 million 3 Total canals length is 37,643 kilometers including 6,429 km main canals and 31,214 km distributary and minor canals. 4 Originally, the MTDF covered a period from 2005 to 2010, but it was extended until 2011 and is likely to continue for 2012. 5 Taunsa, Balloki, Jinnah, Khanki, Suleimanki, Trimmu, Panjnad and Islam barrage and Lower Chenab, Lower Bari Doab, Pakpattan, Thal and Sidhnai canals systems. 6 The World Bank provided $123 million for Taunsa Barrage, $145 million for Jinnah Barrage and $100 million development policy loans. 7 Total project cost is estimated at $309 million 2

for the New Khanki Barrage Construction Project (NKBP) (see Appendix 1). It will supply water to the downstream Lower Chenab Canal (LCC) system, which irrigates 1.2 million ha and benefits 568,000 farming families.

II. ASSESSING MFF IMPLEMENTATION

5. Physical Progress. Six of nine civil works contracts for rehabilitating the main canal and the Balloki Barrage have been awarded. Bidding documents, and the prequalification process, for the remaining three contracts have been completed. The project management office is staffed and implementation and project preparation consultants recruited. A midterm review in May 2011 noted improved implementation. Cumulative contract awards and disbursements stand at around $110.80 million and $20 million, respectively. Physical progress is 35%, with an elapsed period of 50%. Achieving the remaining milestones is possible with the current progress rate.

6. Non-Physical Progress. Under Tranche 1 the Punjab Irrigation and Drainage Authority (PIDA) created 49 farmers organizations (FOs) and set up 3,576 Khal Panchayats8. These FOs will manage and operate the distributary and minor canals, and will select the officials for the area water boards (AWB) by December 2011. AWB will operate and maintain the main canal. FO’s capacity building is already in progress and covers technical aspects of canal operation and management, financial management, administration and on-farm water management as well as agricultural activities, planning, and oversight. A groundwater monitoring and management study is also underway as originally envisaged.

7. Project Management. PID established a project management office (PMO) and a project management unit (PMU) with three project implementation offices, and recruited the consultants. A project steering committee (PSC) is operational; it guides policy and oversees project implementation

8. Compliance. Thirty two of the 34 covenants are complied with. The two remaining 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 model (PIMM). ADB agreed with the Punjab Irrigation and Finance Departments assessment that the separate imprest accounts for DOFWM and PIDA are not required. PIMM (PIDA revised rule 2010) allows existing PID’s field offices to assist FOs in operational management during a transitional period. PID updates its website (http://irrigation.punjab.gov.pk), regularly9. The social and environmental safeguard staff was already appointed and all covenants on safeguards are being fully complied with. Details of covenant compliance status are in Supplementary Appendix.

9. Resettlement. The executing agency (EA) prepares resettlement plans (RPs) for the civil works contracts following the resettlement framework (RF) for MFF. The RF has been updated to comply with ADB’s Safeguard Policy Statement (SPS) (2009). Punjab allocated $6.9 million (PRs595.0 million) in the revised Planning Commission Proforma (PC1) and is providing required funds for resettlement activities. The EA finalized and disclosed five RPs under tranche 1 and provided entitlements to the affected persons (AP) prior to their relocation. The same procedures will be followed for contracts. Grievance redress committees for ongoing contracts

8 Synonymous to water user associations at water course level with the exception that Khal Phanchayats are recognized as legal entities under Punjab law 9 The PID website discloses and updates discharge data of 24 main canal systems. It also includes the progress of the on-going projects including the Japan financed LCC Project and LBDCIP.

were established. Internal monitoring reports are submitted to ADB every month. An independent external monitor was recruited and the first external monitoring report has been prepared. The results are satisfactory.

10. Environment. All the civil works are being carried out in accordance with ADB’s SPS (2009) and the Environmental Assessment and Review Framework (EARF) (revised 2011). The EA included an environmental management plan (EMP) for each civil works contract in the bidding documents. The EMPs incorporate mitigation and monitoring measures, which will be implemented during construction. All contract packages contain provisions entailing compliance with the environmental requirements. The compliance status with the environmental safeguards is in Supplementary Appendixes.

11. MFF Utilization. The MFF moved very slowly since its inception. ADB raised concerns with the authorities on the slow progress and informed them regarding possible cancellation of the facility, unless enough priority projects were prepared and submitted. ADB also reported on the slower than expected implementation progress of the works financed under tranche 1. Government of Punjab informed ADB of its intention to accelerate investments in the sector and confirmed the following investment plan for the next few years.

Tranche Loan amount Approval by ($ million) Tranche 2: New Khanki Barrage Construction Project 270 Dec 2011 Tranche 3: Suleimaki Barrage and Pakpattan Canal 90 May 2012 Tranche 4: Trimmu and Panjnad barrages 110 Jan 2013 Total 470

12. Major Challenges and the Lesson Learned. Fewer and larger contracts are preferred over numerous small contracts to reduce implementation complexity and lighten the administrative burden of the EA. The quality of the design and supervision consultants fielded for LBDCIP was less than satisfactory. ADB dialogue with the EA and their subsequent negotiation with the consultants resulted in deployment of quality staff for the key positions. This problem suggests strengthening of the consulting staff qualification requirements for future recruitment exercises. Subsequent MFF tranches preparation activities were slow and lacking in project readiness (design, procurement, safeguards, local budgets and internal approvals) and limited oversight by the relevant committee affected new tranche investments. ADB constructively dialogued with the Punjab Government and successfully resolved these problems. Project preparation (readiness) is now geared up, which will result in more timely contract awards and disbursements. These lessons are being applied in the subsequent tranches.

III. PERIODIC FINANCING REQUEST

A. Impact and Outcome

13. 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). The outcome will be the sustainable improved delivery of irrigation water for agriculture in the LCC command. Design and Monitoring Framework (DMF) for Tranche 2 and the Facility are in Appendix 2.

14. The NKBP will divert a 330 m3sec-1 (11,653 ft3sec-1) irrigation supply to the LCC serving about 1.2 million ha. JICA10 is financing $100 million LCC improvement project rehabilitating canals and implementing institutional reforms. The JICA project will be completed by December 2011.

B. Outputs

15. The project outputs will be (i) New Khanki Barrage completed on time and within the budget and (ii) EA’s improved project management capacity. The project outputs will be achieved through activities including recruitment of construction supervision consultants, construction of coffer dams, main weir and canal head regulator, installation of barrage gates and hoisting arrangements and construction of undersluices and two road bridges across the river and the canal.

16. The NKBP was not included in the indicative list of subsequent projects under the MFF. However, the Framework Financing Agreement (FFA) Schedule 4, Para 3 allows the Government of Punjab to modify the proposed sub-projects listing with the addition of priority sub-projects, which are in compliance with the project selection criteria. Construction of a new Khanki Barrage (NKB) at the upstream end will ensure reliable irrigation delivery to 1.2 million ha in the LCC command benefitting 568,000 farming families and reducing flooding risk across another 20,000 ha.

C. Investment and Financing Plans

17. The total project cost is $309 million. This includes base cost, contingencies, taxes and duties and interest during implementation (Table 1). Detailed cost estimates by expenditure category and by financier are given in the project administration manual (PAM) (Appendix 3).

Table 1: Tranche Investment Plan ($ million) Item Amounta A. Base Costb 1. New Khanki Barrage 238 2. Project Management 12 Subtotal (A) 250 B. Contingenciesc 52 C. Financing Charges During Implementationd 7 Total (A+B+C) 309 aIncludes taxes and duties of $36.4 million to be financed from government resources. bIn mid-2011 prices. The new Khanki Barrage comprises civil, electrical and mechanical works and project management includes costs of consultants and PMO staff and operating costs. cPhysical contingencies computed at 4.75% for civil works, mechanical and electrical works, consulting services, and PMO operating costs. Price contingencies computed at 1% on foreign exchange costs and 6.7% (2012), 7.5% (2013) 6.5% (2014, 2015 and 2016) dThe loan will have a term of 32 years, including a grace period of 8 years, and an interest charge of 1% per annum during the grace period and 1.5% per annum thereafter. Source: ADB due diligence report based on approved PC 1 by the Government of Pakistan.

10 The project was financed by Japan Bank for International Construction (JBIC) in 2007 before merging its overseas operation with JICA in October 2008.

18. The government has requested a loan in various currencies equivalent to SDR172,417,000 ($270 million) from ADB’s Special Funds resources to help finance the project. The loan will have a 32-year term, including a grace period of 8 years, an interest rate of 1.0% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions set forth in the draft loan and project agreements. NKBP is a non-revenue generating project with high direct poverty reduction content. The financing plan is prepared and is given in Table 2.

Table 2: Financing Plan ($ million) Source Total % ADB’s Special Funds (ADF) 270 87 Government of Punjab 39 13 Total 309 100 Source: ADB due diligence report based on approved PC 1 by the Government of Pakistan.

D. Implementation Arrangements 19. Executing Agency. The PID will be the EA. PID has successfully executed numerous ADB, JICA and World Bank financed projects. PID has completed three World Bank financed projects including Taunsa Barrage rehabilitation project (loan amount $123 million), irrigation system rehabilitation project (loan amount $200 million) and development policy loan (DPL) amounting $100 million supporting public finance reforms, strengthening devolution and service delivery, and improving fiduciary. PID is currently implementing the World Bank financed Jinnah Barrage rehabilitation project with a loan amount of $145 million, the JICA financed LCC improvement project with a loan amount of $100 million and the ADB financed Lower Bari Doab Improvement Project (LBDCIP) with a loan amount of $228 million and has ample technical, procurement and managerial capacity to oversee these investments, as well as the proposed NKBP under ADB financing.

20. Project Management: The existing Project Management Office (PMO) for barrages will be responsible for implementing the project for PID. The PMO teams will be strengthened providing additional staff for engineering, safeguards, procurement and financial management tasks. The implementation arrangements are summarized in Table 3 and described in the PAM.

Table 3: Implementation Arrangements Aspects Arrangements Implementation period From January 2012 to December 2016 Estimated project completion date 30 June 2016 Project management (i) Oversight body Project Steering Committee comprises Chairman Planning and Development Board, Punjab (Chair) and secretaries of Finance, Irrigation, Agriculture and Environment Departments and Member Engineering Planning and Development as committee members. (ii) Executing agency Punjab Irrigation Department (iii) Key implementing agencies Punjab Irrigation Department (iv) Project implementation unit PMO Barrages through a dedicated NKBP Unit of 11 staff Procurement International 1 contract $ 234,000,000 competitive bidding National competitive 1 contract $ 4,000,000 bidding Shopping 2 contracts $105,000

Consulting services QCBS (90:10) 1,478 person-months $ 9,500,000 Retroactive financing and/or The government requested advance contracting and agreed to advance contracting finance all the expenses incurred before the loan effectiveness as its contribution to the project. Disbursement Direct payment Civil works, goods and consultants Commitment Office and laboratory equipment procedure Imprest fund The ceiling shall not exceed the lower of (i) the estimated expenditure to be financed for the next six months or (ii) the equivalent of $1.5 million, whichever is less. Statement of Individual payments liquidated using SOE expenditure procedures shall not exceed $100,000 QCBS stands for quality- and cost-based selection. All procurements for services will follow ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time and for supplies and works will follow ADB’s Procurement Guidelines (2010, as amended from time to time). The loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time) and detailed arrangements agreed upon between the government and ADB. Source: Project team estimates.

21. Supervision consultants will assist the PMO in supervising the construction activities. The consultants will supervise the construction, verify the quantities and certify the interim payments for the project. The consultants will fill the role of ―the engineer‖ as defined in standard FIDIC contracts.11 The consultants will be selected internationally using quality- and cost-based selection method (QCBS; 90:10) following ADB Guidelines on the Use of Consultants, 2009, as amended time to time. The consultants will have a dual reporting function to the EA and ADB and will be required to field in-house staff for all core competencies. The tranche 1 consultants and the consultants who were involved in preparation of the engineering design of this project will be considered eligible to compete for tranche 2 supervision services; should they express interest in doing so. Their current activities do not grant them an unfair competitive advantage (see Para 1.12 of the ADB’s Guidelines on the Use of Consultants 2009).

E. Project Readiness 22. The ADB operation department has introduced tighter project readiness filters prior to the approval of tranches under MFFs and for stand-alone projects. The readiness requirements include final engineering design (if build-only contracts are anticipated), preliminary engineering design (if design and build contracts are envisaged), completion of the bidding process for supervision consultants and contractors (to match the bid price to the finance), completion of safeguards plans and completion of land acquisition and resettlement (at least for the first 24 months of land acquisition and resettlement needs), appropriate budget allocations for at least 24 months of works and completion of all internal approvals at the Government level. In this instance, the project has a full feasibility study and detailed engineering design. The engagement of supervision consultants is advanced, although not completed (short list completed and the bidding process is in place). The bidding process for the civil works contracts is well underway, with full roadshows having taken place in various capitals in the region and elsewhere. It is anticipated that the bidding will be near completion by year-end or during the first month of 2012. To make up for the lack of final data on price, ADB and the Government agreed to a substantial contingency on the construction cost. This should minimize the risk of

11 The engineer has final approval authority for technical matters, development of bidding materials, and sign-off on contracting supervision as defined in standard FIDIC general conditions of contract.

under-funding. Safeguards plans are all in place. Significant land acquisition or resettlement is not envisaged. All internal approvals have been obtained and local counterpart finance has been set aside. The full concurrence of the Government and the EA on the project scope has been obtained. Procurement plan is in Appendix 3. Details of the implementation plan, procurement plan and a fund flow mechanism are in PAM.

F. Advance Contracting and Retroactive Financing 23. The government has requested advance contracting and agreed to bear all the related expenses incurred before loan effectiveness as its contribution to the project. Therefore, no retroactive financing is required for this project. The EA and the government of Punjab were informed that agreement on advance actions does not commit ADB to provide financing through the MFF.

IV. DUE DILIGENCE

24. The PID submitted the project documents including feasibility report, detailed engineering design, initial environmental examination (IEE), updated environmental and resettlement framework (EARF) and draft resettlement plan (RP). The project team conducted extensive due diligence on the technology, investment plan and safeguard requirements. The project preparation is backed by a final design. The project team reviewed and found the final design acceptable.

A. Technical

25. The proposed new Khanki Barrage (NKB) will replace 100-year old existing Khanki headworks, which is at the brink of failure and may result in no water delivery to the LCC for several crop seasons. The NKB will be located at 275 meters downstream from the existing headworks and will reliably divert up to 330 m3sec-1 (11,653 ft3sec-1) of irrigation supplies to 1.2 million ha. It will increase safe flood capacity from 22,654 m3sec-1 (800,000 ft3sec-1) to 31,149 m3sec-1 (1,100,000 ft3sec-1) and eliminate the annual water leakages of 370 million cubic meters. NKB will reduce the flood risk from once in 50 years to once in 100 years. It will also provide a gate operating deck and a bridge facilitating road communication access across the river. The new barrage will feature pile foundations, independent undersluices and motor- operated radial gates. This technology is compatible to local conditions and PID is currently operating and maintaining similar barrages throughout Punjab.

26. Punjab has agreed to increase the annual operation and maintenance (O&M) budget for NKB from Rs38 million now to Rs50 million ($0.6 million) in normal year and up to Rs200 million ($2.4 million) in a flood-year.12 Punjab has ensured (i) an independent assessment and verification of the O&M works and (ii) an independent audit of the O&M expenditure. PID has experience of O&M of 14 similar barrages.

27. Rehabilitation of LCC system will be completed by 31 December 2011 under JICA funding. The institutional reforms are in place and management of most of the distributary and minor canals has already transferred to the FOs. Rehabilitated LCC system will translate benefits of reliable water supply from NKB into an improved and sustainable production system.

12 Based on data from 14 barrages in Punjab, a recent estimate shows an average annual O&M requirement for one barrage varies between Rs40 million and Rs50 million.

B. Economic

28. The direct beneficiaries are 568,000 farming families living in 7 districts within the LCC command area. This is equivalent to 3 million people, most of whom have very low incomes. The average farm size in the canal command is only 2.65 ha (6.5 acres). People other than those living in the LCC command will benefit from better road access across the river. Typical beneficiaries were consulted during the due diligence process.

29. The economic benefits are derived from two sources: (i) stable and reliable agricultural production; and (ii) traffic flow across the Chenab River over the new Khanki barrage. The estimated benefits are the income forgone and increased production costs that would occur, assuming barrage failure without the project. The key factor in measuring benefits is determining the year of failure of the barrage without replacement. Because of the unstable foundation conditions at the existing headworks, risk analysis associated with the barrage has been adopted - the year of failure being established as a high probability. Variation in capital costs is also included as a random variable. The analysis was simulated for 5,000 iterations and the results are presented in terms of probabilities. Sensitivity analysis is not required as variations to benefits and costs are implicitly included in the base analysis. The economic analysis reflects the benefits the society will gain from the project. Financial prices and costs are converted to economic values, and where possible externalities are measured and included. An O&M cost of Rs200 million a year was used in the analysis, which is the maximum requirement during flood year. The O&M requirement for a normal year is Rs50 million. This analysis is in accordance with ADB’s guidelines for economic analysis13 and risk analysis.14 The mean economic internal rate of return (EIRR) is 21% and the range goes from 11.80 (10th percentile) to 31.3% (90th percentile). The probability of the project exceeding the 12% EIRR threshold is 85%. Detailed calculations of economic analyses are in Appendix 4.

C. Governance

30. Anticorruption. ADB’s Anticorruption Policy (1998, as amended from time to time) was explained to and discussed with the Government of Punjab and PID. The specific policy requirements and supplementary measures are described in the PAM. ADB reserves the right to investigate, audit and examine the records and accounts of PID directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the investment program and/or the NKBP. To support these efforts, relevant provisions of ADB’s anticorruption policy are included in the loan regulations and the bidding documents for contracts under NKBP.

31. Financial Management. The project team evaluated the PID’s financial management, performance and procurement capacity specifically relating to NKBP requirements. The team is of the view that it satisfies ADB’s financial management and procurement requirements. The PID's current financial management system is capable of (i) recording the required financial transactions and balances; (ii) providing regular and reliable financial statements and monitoring reports during project implementation; (iii) safeguarding financial assets; and (iv) subjecting required financial documents to audit acceptable to ADB. The PMO is staffed with experienced personnel, who are familiar with ADB’s Handbook for Borrowers on the Financial Governance and Management of Investment Projects Financed by the ADB, August 2003. A dedicated

13 ADB, 1997. Guidelines for the Economic Analysis of Projects. Manila; ADB. 1999. Handbook for the Economic Analysis of Water Supply Projects. Manila. 14 ADB, 2002. Handbook for Integrating Risk Analysis in the Economic Analysis of Projects. Manila.

NKBP unit will further strengthen the capabilities to execute, manage, and monitor project implementation.15

32. Disbursement Arrangements: Loan disbursements for goods and services under major civil works and consultant’s contracts will be made using direct payment methods as outlined in the Loan Disbursement Handbook. Imprest account will be used for small payments, mainly for operating cost and affected persons dislocation.

33. Accounting, Auditing, and Reporting: The PID will maintain separate accounts and records for all expenditures incurred on the Project. The PMO will consolidate and review the accounts, and after auditing, will submit them to the PID, Department of Finance and ADB. Project accounts will be audited annually by the Auditor General of Pakistan. The audited accounts and audit report will be submitted to ADB no later than 6 months after closing the corresponding fiscal year. The audit report will include a statement verifying that funds disbursed by ADB against statements of expenditure have been used for the purpose for which they were provided. The PMO will submit quarterly financial and physical progress reports within one month following the end of the quarter to which they relate.16 Within 3 months of Project completion, the PMO will submit to ADB a project completion report quantifying physical progress and monitoring the utilization of loan funds.

34. Project Performance Monitoring and Evaluation: A project performance management system will be established in the PMO within 6 months of loan effectiveness. The system will be tailored to project-specific requirements and prepared in consultation with PID. A database of key benchmark indicators will be established by the PMO in consultation with ADB. This will become part of the project monitoring system and will be routinely updated and monitored at least twice a year, including prior to midterm review and project completion.

D. Poverty, Social and Gender Dimensions

35. Poverty Reduction. Pakistan’s two-third population lives in rural areas, where incidences of poverty and vulnerability are high (IFAD, 2010)17. Punjab’s irrigation system supplies water to 8.4 million ha, which is a major livelihood source of more than 40 million people. The project will directly benefit about 3 million people. Approximately 80% of the targeted beneficiaries are classified as poor including 50% vulnerable being at a lower band of the poverty. Women (50% of the beneficiaries) are the essential part of the family labor in agriculture and food related activities. Only less than 20% of the people in the project area have access to the public facilities. The project will provide new road link across the river facilitating the nearby population specifically women and children, access to better health and education facilities. A summary of poverty reduction and social strategy assessment is in Appendix 5.

E. Safeguards

36. Land Acquisition and Resettlement. The Project is categorized as category B for involuntary resettlement and category C for indigenous people impacts.18 Limited impacts on land because of the construction of the new Barrage have been identified. In any case, LARP

15 Existing PMO is headed by a full time project director and comprises technical, financial, procurement, social and environment, and administrative units. 16 In addition, PMO will prepare other such information and reports relating to the Project and its implementation as ADB may reasonably request. 17 IFAD’s Punjab Poverty Alleviation Project Report, October 2010. 18 ADB’s categorization (accessible from the list of linked documents in Appendix 7).

has been prepared in line with the country’s Land Acquisition Act 1894 and Resettlement Framework first prepared and agreed upon under the MFF. This work has been updated to comply with ADB's SPS (2009). A total of 69 households (414 persons) will be affected by the project. In total, 19 houses will be affected, which include 14 houses owned by the PID in its staff colony and 5 private houses. PID will build new houses in the colony to accommodate its 14 staff families. The private house owners will be compensated through replacement costs. The other damages include 24 fruit and 13 wood trees and loss of crops on acquired land during project implementation. The number of affected people – through dislocation or through 10% loss of their productive assets – represents less than 200. The resettlement cost is estimated at just under $500,000. Government of Punjab will purchase the necessary land to comply with the resettlement plan. Resettlement costs will be financed under the loan.

37. The project area does not include communities that may be defined as indigenous people under ADB’s SPS (2009). Consequentially, indigenous people impact classification for the project area is ―C‖.

38. Environment. The project is categorized as category B project for the environment.19 The due diligence work included site visits to the project area. The government conducted an IEE and submitted its report. ADB considered it inadequate and the due diligence team updated it so that it now meets the requirements of ADB’s SPS (2009). The major anticipated environmental impacts are (i) soil contamination around the contractor’s camp, (ii) dust, smoke and noise, (iii) compaction of soil, (iv) water leakage from temporary dikes and (v) damage to flora and fauna. The mitigation measures have been agreed and will be included in the contractor’s contractual obligation to the Government. The main provisions include (i) managing the camp’s waste properly, (ii) maintaining the roads and drainage ditches in proper order, (iii) using low noise machinery, (iv) monitoring and strengthening temporary dikes and (v) maintaining the borrow area leveled and useable at the completion of the contract.

F. Climate Impacts

39. Indus basin (NKBP is a part), is subject to relative risk from (i) lower water flows associated with glacial recession, and (ii) flash floods resulting from both heavy monsoon rainfall in the catchment and on rare occasions glacial blockage collapses in the upper catchments. While it is envisioned that climate-induced extreme events and variability may occur, the Khanki barrage is located at downstream of major structures, and is therefore significantly buffered by the upstream infrastructure. NKBP and its beneficiaries are therefore at low likelihood of vulnerability and risk from climate-induced upstream impacts; and introduction of climate risk management actions within the narrowly defined barrage project area is deemed unnecessary. Nevertheless, improved barrage flood capacity from once in 50 year return period to once in 100 year return period and water supply augmentation from the Mangla reservoir at river Jhelum to the Khanki Barrage at River Chenab during low flow periods accommodate risks of high and reduced river flows in the Chenab River.

G. Risks and Mitigating Measures

40. Major risks and mitigation measures are summarized in Table 4 below and described in detail in the risk assessment and the risk management plan.20

19 ADB’s categorization (accessible from the list of linked documents in Appendix 7). 20 Risk Assessment and Risk Management Plan (accessible from the list of linked documents in Appendix 7).

Table 4: Summary of Risks and Mitigation Measures Risks Mitigation Measures Extreme flood event delays The project design calls for constructing coffer dams to protect barrage construction. barrage works under construction from the river flows. Further, an appropriate construction methodology that allows completion of the Barrage foundation work (underwater parts of the structures) before the flooding season from July to September will be agreed with the successful bidder during contract negotiations. Climate-induced reduction in Climate change projections indicate likely decrease in river flows due water flows and availability for to decreased rainfall regimes. The Khanki Barrage receives water Punjab irrigated agriculture, or from the Mangala reservoir through UJC during low flows. The flow energy driven water releases augmentation from the Mangla reservoir provides water shortage from the reservoirs. make up arrangement during low river flows. Security conditions worsen to a NKBP area is relatively safe. Government will provide its land for the level that reduces interest of the contractor’s camp. The project area is small and the bidders will be international bidders in ICB requested to include the camp security cost in the bid. Roadshows bidding. conducted to attract the quality bidders from the region and elsewhere.

H. Risks Categorization

41. ADB has more than 30 years of experience of working in water sector in Pakistan. PID has implemented several irrigation and barrage projects with ADB, World Bank, JICA and other donors as an executing agency. Further, this project has no safeguard categorization of ―A‖. However, the project, due to its loan of more than $200 million, is categorized as complex. Contribution to ADB’s result framework is summarized in Appendix 6 and a list of the linked documents is presented in Appendix 7.

V. ASSURANCES

42. The government and the PID have assured ADB that the implementation of the project shall conform to all applicable ADB policies including anticorruption measures, safeguards, gender, procurement, consulting services and disbursement as described in detailed in the PAM and loan documents.

43. The government and the PID have agreed with ADB on certain covenants for the project, which are set forth in the loan agreement and the project agreement.

VI. RECOMMENDATION

44. On the basis of the approval by ADB’s Board of Directors for the provision of loans under the multitranche financing facility in an aggregate amount not exceeding the equivalent of $700,000,000 to the Islamic Republic of Pakistan for the Punjab Irrigated Agriculture Investment Program, it is recommended that the President approve the proposed tranche as described in paragraph 18 of this report and the draft loan agreement and project agreement for the proposed tranche substantially in the forms attached to this report.

12 Appendix 1

SECOND PERIODIC FINANCIAL REQUEST BY THE GOVERNMENT OF PAKISTAN

Appendix 1 13

Project 2 Description, Estimated Cost and Financing Plan

Project Description The project proposed for financing under the requested PFR is:

The new Khanki Barrage (NKB) will be constructed on River Chenab at 275 m downstream of the existing Khanki headworks. It will replace a 120 years old existing structure. Its main components are (i) Main weir and undersluices, (ii) Gates and hoisting arrangement, (iii) Operating deck and access road, and (iv) canal head regulator and lead channel. The NKB will divert 330 m3sec-1 (11,653 ft3sec-1) irrigation supplies to the Lower Chenab Canal (LCC) serving about 1.2 million ha agricultural land. The construction of NKB at the upstream end will ensure sustained irrigation delivery to the LCC command area and will contribute to the outcome of the MFF. The NKB will also increase the safe flood discharge capacity from the present 22,654 m3sec-1 (800,000 ft3sec-1), which is less than a one in fifty years flood event to 31,149 m3sec-1 (1,100,000 ft3sec-1) equivalent to one in 100 years flood event. Overall, 568,000 farming families (310,000 less than 2 ha and 190,000 between 2 to 6 ha) will be benefitted through reliable irrigation supplies.1 The Design and Monitoring Framework is in Annex A.

Cost Estimate and Total cost of the project is estimated at $306 million inclusive of taxes Financing Plan duties and interest and other charges on loan during construction. The detailed cost estimate and financing plan are in Annex B.

Table 1: Summary Investment Plan for Project 2 ($ million) Item Amounta A. Base Costb 1. New Khanki Barrage 238 2. Project Management 12 Subtotal (A) 250 B. Contingenciesc 52 C. Financing Charges During Implementationd 7 Total (A+B+C) 309 a Includes taxes and duties of $36.4 million to be financed from government resources. b In mid-2011 prices. c Physical contingencies computed at 4.75% for civil works, mechanical and electrical works, consulting services, and PMO costs. Price contingencies computed at 1% on foreign exchange costs and 6.7% (2012), 7.5% (2013) 6.5% (2014, 2015 and 2016), d The loan will have a term of 32 years, including a grace period of 8 years, and an interest charge of 1% per annum during the grace period and 1.5% per annum thereafter. Source: Government approved PC-I of New Khanki Barrage Project.

1 Japan Bank for International Cooperation is already financing the on-going project for improvement of the LCC infrastructure and implementation of non-physical component including institutional reforms. The project will be completed by 31 December 2011.

14 Appendix 1

Table 2: Summary Financing Plan for Project 2 ($ million) Source Total % ADB’s Special Funds (ASF) 270 87 Government of Punjab 39 13 Total 309 100

Loan Amount The request is for a loan amount of $270 million from the ADB’s and Terms Special Fund Resources of the Asian Development Bank (ADB). The loan will have a term of 32 years term, including a grace period of 8 years, an interest charge of 1% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions set forth in the draft loan agreement.

Period of Loan/ The project is expected to be completed by December 2016. No Guarantee disbursements from the loan account will be requested or made later Utilization than June 2017.

Advance Advance contracting is underway for procurement of civil works and Contracting services.

Retroactive Retroactive financing is requested for the eligible expenditures not Financing exceeding the amount $1.0 million incurred before loan effectiveness, but earlier than 12 months before the signing of the legal agreement.

Implementation The Executing Agency will be the Punjab Irrigation Department (PID). Arrangements The PID, being the EA, will have the overall responsibility of (i) implementation; (ii) reporting on both physical and financial progress; and (iii) assuming direct responsibility for NKBP. PID’s existing Project Management Office for Punjab Barrages (the PMO) will be responsible for the day to day administration and supervision of the project. The PMO has implementation experience of Taunsa Barrage and the ongoing Jinnah Barrage and has an implementation capacity. The PMO will be strengthened with dedicated key engineering, safeguard, procurement and financial management staff for NKBP. Construction supervision consultants will assist the PMO as the role of Engineer for the works.

Procurement and The Procurement Plan is attached as Annex C. Terms of reference for Consulting the engagement of advisors under the tranche are attached as Annex Services D.

Confirmation of The Government of Pakistan and the Government of Punjab confirm Continuing that the understandings set out in the FFA and project and loan Validity agreements under tranche 1 have been adhered, and remains true to- of and Adherence date. A report on the status of the covenants is attached as Annex E. to Provisions of FFA, Previous Agreements, and

Appendix 1 15

the Design and Monitoring Framework

Readiness of the The feasibility study and detailed engineering design were prepared Project for and an approved PC 1 is available for the proposed NKBP. Due Implementation diligence has been carried out to assess the technical, economic, and financial viability of the project. The concurrence of the Government and the EA on the project scope has been obtained. The land acquisition and resettlement framework (LARF) was updated and land acquisition and resettlement plan (LARP) has been prepared. The bidding documents for both NCB and ICB contracts have been prepared and bidding process initiated. Details of implementation plan, procurement plan and a fund flow mechanism are in PAM. A request for proposal for the construction supervision consultancy package under NKBP has been drafted and recruitment process started. Summaries of feasibility studies, engineering designs and economic and financial assessment are attached as Annex F.

Safeguards For first PFR. Status of compliance with ADB’s safeguard requirements for Project 1 is in Annex G. For Second PFR. Safeguard documents including IEE and Resettlement Framework were prepared and Resettlement Plan is being finalized.

The Annexes A to E to the Government request report are not attached to avoid duplication. These Annexes are available on request.

16 Appendix 2

DESIGN AND MONITORING FRAMEWORK TRANCHE 2

Design Summary Performance Data Sources/ Reporting Assumptions Targets/Indicators Mechanisms and Risks Impact Assumption Improved agricultural 10% increase in cropping Crop census data for Governments of Pakistan production and farm intensity over 50,000 ha districts by Agricultural and Punjab will continue to income in Lower Chenab over baseline (2011) by Census Organization, see the delivery of Canal (LCC) command 2020 Statistics Division, GoP. irrigation water critical to area (Gujranwala, 10% increase in average PPMS achieving economic growth Hafizabad, Sheikhupura, farm income of 25,000 in Punjab. Nankana Sahib, farming families over Faisalabad, Jhang and baseline (2011) by 2020 Toba Tek Singh districts).

Outcome The sustainable improved Designed water supplies Director Regulation, of Risks delivery of services for up to 326 m3s-1 diverted PID for barrage Climate-induced reduction irrigated agriculture and to the canal for at least operation data in water flows and overall better water management 90% of the year by 2017 reduced water availability in LCC command areas with no risk of failure for irrigation. , compared to high risk of failure now. Extreme flood event delays More climate-resilient barrage construction infrastructure through EA’s quarterly report strengthened flood design capacity from 1:50 return period event now to 1:100 years by 2017

Outputs Risks

1. New Khanki Barrage New barrage eliminated Director Regulation of Security conditions worsen completed on time the annual water leakage PID for barrage to a level that reduces and within the budget of 370 million cubic meter operation data interest of international by 2017 contractor in ICB bidding The flood capacity EA’s quarterly report increased from 22,654 m3s-1 in 2011 to 31,150 m3s-1 in 2017 Annual diversion to LCC Director Regulation of increased from max of PID for barrage 7991 million cubic meters operation data in 2011 to max of 8286 million cubic meters in 2017 3 contracts awarded EA’s quarterly report according to schedule All contracts are within ADB database (LFIS) contingencies limits

2. EA’s improved project EA’s quarterly report management capacity PMO’s 11 senior staff trained

Appendix 2 17

Activities with Milestones Inputs

1.1 Bid invitation, evaluation and award of NCB contract (Sep to ADB - $270 million Dec 2011) - works - $207.2 million 1.2 Bid invitation, evaluation and award of ICB contract (Sep 2011 - contingencies - $45.6 million to Mar 2012) - Project management cost (PMO, 1.3 Procurement of construction supervision consultants (Sep consultants, resettlement) - $10.4 2011 to Mar 2012) million 1.4 Resettlement plan implemented (Jun-Dec 2012) 1.5 Mobilization and establishing construction camps and Government - $39.1 million laboratory (Jun 2012 to Sep 2012) - Works - $30.97 million 1.6 Construction work in one half of the Barrage ( Oct 2012 to Oct - Contingencies - $6.8 million 2013) Project management cost (PMO, 1.7 Construction work in other half of the Barrage ( Oct 2013 to consultants, land acquisition)- $1.22 million Oct 2014) 1.8 Construction of canal head regulator and silt excluder ( Oct International consultants – 84 pm 2014 to Oct 2015) National consultants – 1394 pm 1.9 Lead channel and dismantling the existing headworks (Sep 2015 to Mar 2016) 1.10 Environmental management plan implementation continues during construction period 1.11 Commissioning and operation tests (Jun 2014 to Jun 2016)

2.1 Recruitment of PMO staff for NKB unit (March-June, 2012) 2.2 Preliminary training/mentoring by the PMO senior staff and management 2.3 On-the-job and special trainings in procurement, financial management and safeguards

EA = Executing Agency; GoP = Government of Pakistan; NKB = New Khanki Barrage; LCC = Lower Chenab Canal; PID = Punjab Irrigation Department; PMO = Project Management Office

DESIGN AND MONITORING FRAMEWORK MFF

Design Summary Performance Data Sources/ Reporting Assumptions Targets/Indicators Mechanisms and Risks Impact Increased agricultural 10% increased in cropping Department of (A) Government of production and farm intensity over 700,000 ha Agriculture statistics Pakistan and Punjab income in Punjab irrigated by 2017 and crop data continue to give priority to agriculture program areas the agriculture and natural 10% increase in average PPMS resources sector farm income of 275000 farming families by 2017

Outcome Punjab irrigated Design water supplies Director Regulation, of (A) Governments of agriculture program areas available in all program’s PID for barrage Pakistan and Punjab will receives a sustainably distributary and minor operation data continue to see the improved delivery of water canals throughout the delivery of irrigation water services and management year by 2017 critical to achieving economic growth in Tail outlets deliver design Punjab water supply throughout the year by 2017. PPMS (R) Reduced water availability for Punjab irrigated agriculture impacted by climate change effect or energy driven reservoirs releases

18 Appendix 2

Design Summary Performance Data Sources/ Reporting Assumptions Targets/Indicators Mechanisms and Risks Outputs (A) Government of Punjab remains committed to 1. Irrigation Rehabilitated barrages ( EA’s quarterly reports improve the irrigation infrastructure upgraded Balloki, Suleimanki, infrastructure for improved and rehabilitated Trimmu, Khanki and irrigation supplies Panjnad) are operational by 2017

Rehabilitated canals and EA’s quarterly reports distribution systems (LBDC, Pakpatten) are operational by 2017

2. Flood risks in the Flood capacity of 5 EA’s quarterly reports program area are reduced barrages on rivers Chenab, Ravi and Sutlej enhanced by 2017

3. Groundwater in the Government of Punjab EA’s quarterly reports program area is used endorsed groundwater sustainably use strategy and enforce groundwater regulation by 2017

4. Improved on-farm water Farmers use improved EA’s quarterly reports management and on-farm water agricultural support management practices by practices adopted in the 2017 program area

5. Water management AWB manages the main EA’s quarterly reports institutions improved and branch canals and FOs manage operation and maintenance of distributaries and minor canals by 2017

Activities with Milestones Inputs Tranche 1: 1. Implement canal rehabilitation component of the ADB - $227.8 million Tranche 1 by 2015, Tranche 2 and 3 by 2016 and ˉ consulting services - $38 million Tranche 4 and 5 by 2017. ˉ civil works - $176 million ˉ Mechanical works & equipment $1.7 million ˉ contingencies - $61 million 2. Implement Barrage component of the Tranche 1 by Government - $53.6 million 2015, Tranche 2 and 3 by 2016 and Tranche 4 by ˉ Civil works- $20 million 2017 ˉ Consultants $4 million ˉ Mechanical works & equipment $2.4 million ˉ PMO operating cost - $1.7 million 3. Implement groundwater component of the Tranche 1 ˉ Duties and taxes - $2.1 million by 2015 and Tranche 5 by 2017 Tranche 2: 4. Implement on-farm water management and ADB - $270 million agriculture support component of the Tranche 1 by ˉ consulting services - $9.1 million 2015 and Tranche 5 by 2017. ˉ civil and mechanical works - $238 million ˉ contingencies - $52 million 5. Implement institutional reform component of the Government - $39 million Tranche 1 by 2015 and Tranche 5 by 2017.

Appendix 2 19

Design Summary Performance Data Sources/ Reporting Assumptions Targets/Indicators Mechanisms and Risks Tranche 3: ADB - $90 million Government - $50 million.

Tranche 4: ADB - $110 million Government - $33 million.

EA = Executing Agency; GoP = Government of Pakistan; NKB = New Khanki Barrage; LCC = Lower Chenab Canal; PID = Punjab Irrigation Department; PMO = Project Management Office

20 Appendix 3

PROJECT ADMINISTRATION MANUAL

(PAM is Available as a separate volume)

PROCUREMENT PLAN Basic Data Project Name: New Khanki Barrage Project Loan Amount: $270 million Executing Agencies: Punjab Irrigation Department Date of first Procurement Plan: July 2011 Date of this Procurement Plan: July 2011

Procurement Thresholds, Goods, Works and Supply Procurement Method To be used above (Value $) International Competitive Bidding (ICB) Works $5.0 million and more ICB Goods $500.0 thousand and more National Competitive Bidding (NCB) Works Less than $5.0 million Limited International Bidding (LIB) Goods $100.0 thousand to 500.0 thousand Shopping Goods $100.0 thousand and less

Recruitment of Consulting Firm Type Prior / Post Comments

Quality- and Cost-Based Selection (QCBS) with FTP Prior 90:10

List of Contract Packages (Goods, Works and Consulting Services)

Ref Contract Estimated Cost Procurement Expected Date of Prior Description ($) Method Advertisement Review Y/N CW-1 Preliminary 4,000,000 NCB August 2011 Yes works for construction of New Khanki Barrage CW-2 Construction of 234,000,000 ICB Sep 2011 Yes New Khanki Barrage Sup-1 Vehicle sedans 70,000 Shopping January 2012 No 1300 cc (1) and 1000 cc (4) Sup-2 4x4 double cab 35,000 Shopping May 2012 No pickups (1) Conslts Construction 9,500,000 QCBS July 2011 Yes 1 supervision Note: ADB will review contract variations/modifications in accordance with procedures set forth in the loan agreement between the Borrowers and ADB.

Appendix 4 21

ECONOMIC ANALYSIS

A. Introduction

1. The economic analysis of Tranche 2 of the investment program was undertaken according to Asian Development Bank (ADB) guidelines, and describes the economic rationale for public intervention. The analysis quantifies the benefits and costs of the investment in new Khanki Barrage in financial and economic terms. The economic analysis measures the net worth of the project to the country. Financial values are converted to economic values by removing the effects of government intervention and market distortions. The analysis reports the key investment criteria economic internal rate of return (EIRR), and economic net present value (ENPV). An operation and maintenance (O&M) cost of PRs. 208 million a year was used in the analysis. The O&M cost is based on the current expenses of the similar Qadirabad Barrage with a future premium.

2. Two scenarios are compared to determine the economic net benefits of the investment program: without-project and with-project. The analysis assumes that without the project the barrage will fail at some future stage incurring agricultural losses over the following several years and an increase in capital and operating costs necessary to provide a temporary structure to restore irrigation supplies. The project will not increase agricultural production or productivity, the primary benefit being the elimination of the income foregone associated with a barrage failure. However, these benefits are dependent upon the year of failure (due to discounting), which is unknown.

3. A risk analysis framework is used which accounts for variability in the time to barrage failure without the project. The project capital costs are also treated as a random variable. A cumulative probability distribution is identified for the year of barrage failure being – year {5, 10, 15, 20, 25} and cumulative probability {5%, 15%, 50%, 90%, 100%}. A capital cost scalar is included using a triangular probability distribution based around a minimum, median and maximum {0.9, 1.0, 1.2}.

4. In the year following barrage failure, it is assumed that no water can be supplied to Rabi crops. However due to emergency measures, some water will be available to the following Kharif season crops. In subsequent years, more water will become available until full production is restored within 7 years (Table A8.1). However, barrage failure does not mean all crops will be affected as about 50% of the irrigable area uses groundwater. Future crop areas were assumed to be the same as current areas for Rabi season (1,985,909 acres), Kharif season (1,609,952 acres), and perennial and semi-perennial crops such as sugarcane and orchards (743,410 acres). Crop yields were assumed to remain at current levels. Financial and economic gross margins were derived for each crop type.

5. Barrage failure can occur naturally due to the high degree of erosion under the existing structure, or from a flood. If the failure is associated with a flood event then flooding losses of the Kharif crop area (20%) can be expected as well as some damage to downstream hydraulic structures (Rps500 million). The probability of failure of the barrage due to a flood event is assumed to be 70%.

22 Appendix 4

Table A3.1: Crop area scalar and emergency costs associated with barrage failure.

Year after barrage Rabi crop scalar Kharif crop scalar Barrage emergency failure repair costs (PRs million) 1 1.00 0.50 1,700 2 0.35 0.35 100 3 0.20 0.20 100 4 0.20 0.20 100 5 0.20 0.20 100 6 0.10 0.10 100 7 0.05 0.05 100

6. The life of the project is 30 years; a discount rate of 12 percent is used for the economic analysis. The analysis uses shadow pricing and standard conversion factors to convert the financial cost and benefits into economic terms. The analysis is undertaken in constant June 2011 prices.

7. Sensitivity analysis was not required as variability in key parameters was implicitly included in the risk analysis framework. The analysis was solved by monte carlo simulation (10,000 iterations), and the results are reported in terms of mean, standard deviation and percentiles.

B. Financial and Economic Values

Exchange rate: 8. The average exchange rate between $US and Pakistan PRs in January 2011 was 85.00.

Standard conversion factor (SCF): 9. The SCF is used to convert domestic prices to economic equivalent prices. It is approximated by the weighted average of import and export tariffs with subsidies excluded. An average SCF for the 5-year period 2004-05 to 2008-09 was obtained by the formula SCF = (M+X) / [(M+Tm)-(X-Tx)] where M is CIF value of imports, X is FOB value of exports, Tm is net value of taxes on imports, Tx is net value of taxes on exports. The calculated average SCF was 0.909.

Value of labor: 10. The economic analysis requires all inputs in the project to be charged at the opportunity cost. This applies to both skilled and un-skilled labor. A shadow wage rate (SWR) factor is required to account for the fact that market wages for unskilled labor may not reflect the true labor opportunity cost due to under-employment within the economy. An average SWR of 0.75 has been estimated from SWR values for period 1998 to 2009.

11. In Pakistan there is little under-employment of skilled workers. Therefore the market for skilled labor is likely to be in equilibrium and the opportunity cost is reflected by the domestic market skilled labor rate.

Specific conversion factor for cement: 12. Specific conversion factors are required for adjustment of various non-traded inputs required in project costs. A specific conversion factor for cement of 0.6 was used in this analysis in the calculation of investment costs.

Appendix 4 23

Border prices: 13. Border prices of tradable commodities (e.g. wheat, rice, cotton) were computed from latest available World Bank Commodity forecasts (June 2011). Border prices of major inputs (e.g. fertilizers, pesticides) were also derived on the same basis. All border prices were adjusted to account for transport and handling between port and market, and from market to farm-gate. Resulting values are expressed in terms of domestic currency. The financial and economic values used in the analyses are given in Table A3.2.

Table A3.2: Financial and Economic Values

Item Unit Financial value Economic value Crops: Cotton PRs./Kg. 82.61 148.22 Rice PRs./Kg. 33.76 59.33 Maize PRs./Kg. 24.35 22.14 Potatoes PRs./Kg. 17.39 15.81 Kharif Oilseeds PRs./Kg. 86.61 78.77 Kharif Pulses PRs./Kg. 49.35 44.88 Kharif Fodder PRs./Kg. 2.15 1.96 Wheat PRs./Kg. 22.76 44.62 Peas PRs./Kg. 48.33 43.95 Rabi Oilseeds PRs./Kg. 55.42 50.40 Rabi Fodder PRs./Kg. 2.07 1.88 Gram PRs./Kg. 57.97 52.72 Sugarcane PRs./Kg. 4.83 4.20 Orchard PRs./Kg. 24.18 24.18 Fertilizers: N--(UREA) PRs./Kg. 34.78 60.24 P--(DAP) PRs./Kg. 82.00 64.10 Potash PRs./Kg. 66.00 69.04

14. The project investment costs were estimated as follows: financial - PRs21,355 million ($248 million); economic – PRs20,326 million ($236 million). The annual maintenance costs are PRs214 million (financial) and PRs203 million (economic).

C. Economic Analysis

15. The economic analysis derived a mean EIRR of 21.0 (standard deviation 16.4), mean ENPV of PRs22,432 million (standard deviation 26,397), and mean expected cost to benefit ratio (EBCR) of 3.8 : 1 (standard deviation 2.7). These results suggest that the project is economically viable; however they do not reflect the full variability in the outcomes. The percentiles resulting from the model simulation in Table A3.3 indicate the probability of achieving certain values for the economic performance criteria. The EIRR ranges from 11.8 (10th percentile) to 31.3 (90th percentile). The threshold for the EIRR lies between the 10th and 20th percentiles, meaning that there is approximately an 85% probability that the project will exceed the 12% threshold.

24 Appendix 4

Table A3.3: Results of economic risk analysis

Percentile EIRR ENPV EBCR (%) (Rs million) 0% 8.66 -9,815 0.7 10% 11.90 -278 1.5 20% 13.28 4,135 2.0 30% 14.21 7,218 2.3 40% 15.22 10,483 2.6 50% 16.45 14,673 3.0 60% 18.04 19,759 3.6 70% 20.10 25,383 4.2 80% 22.88 34,817 5.1 90% 32.23 54,744 7.2 100% 133.44 140,645 17.4 EBCR = expected cost to benefit ratio, EIRR = economic internal rate of return, ENPV = economic net present value.

Appendix 5 25

SUMMARY OF POVERTY REDUCTION AND SOCIAL STRATEGY

Country: Pakistan Project Title: New Khanki Barrage Construction Project Lending/Financing Tranche 2 of the Department/ Division: Central and West Asia Modality: Multitranche Department/ Financing Facility Environment, Natural Resources and Agriculture Division

I. POVERTY ANALYSIS AND STRATEGY A. Links to the National Poverty Reduction Strategy and Country Partnership Strategy The medium-term development framework (MTDF) (2005-2010) focuses on economic growth and poverty reduction through 10 strategic pillars, including removing the infrastructure bottleneck. In the IMF Country report, the PRSP-II (2010) also emphasized the need for protecting the poor and the vulnerable people by increasing productivity and value addition in agriculture through removing the infrastructure bottlenecks, including the irrigation infrastructure in addition to other pillars of the strategy, such as macroeconomic stability, integrated energy development, industrial development, human, capital & finance development and good governance; and also empower the women and reduce gender disparities.

The ADB’s country partnership strategy (CPS) for Pakistan (2009-2013) links with the country’s poverty reduction strategy paper (PRSP) (2003) that includes: (i) accelerating economic growth; (ii) improving governance and devolution; (iii) investing in human capital; and (iv) targeting the poor and vulnerable. The Poverty Reduction Strategy Paper-II (PRSP-II) emphasizes on the provision of World class infrastructure, competitive advantage and harnessing potential of the people in the country’s poverty targeting strategy.

The tranche 2 of the Punjab Irrigated Agriculture is designed to decrease infrastructure bottlenecks related to deteriorating barrage systems and will improve reliability of irrigation supplies through upstream infrastructure improvements.

B. Poverty Analysis Targeting Classification: General intervention 1. Key issues. Poverty in Pakistan is predominantly a rural phenomenon and nearly two-thirds (65%) of the population lives in rural areas (IFAD, 2010).22 Not only is poverty higher among the rural population, so is vulnerability23. The incidence of food poverty is higher in rural areas (35 per cent), than in urban areas (26 per cent), both in terms of per capita incomes and consumption expenditures (IFAD, 2010). The main reason for rural poverty is the highly unequal distribution of assets particularly land and access to water. Pakistan’s country partnership strategy (CPS) (2009-2013) indicated that the proportion of population living below poverty line fell sharply from 34.5% in FY 2001 to 22.3% in FY2006. Despite being labeled the ―bread basket‖ of Pakistan, Punjab has a surprisingly high incidence of poverty at 32.4% of the rural and 26.5% of the urban population.24 While Punjab has districts producing the most food surplus in all of Pakistan, it also demonstrates high intensities of food insecurity, particularly in rural areas25. The population in Punjab is 70% rural, depending almost entirely on agriculture for its livelihood. Irrigated agriculture is vital to sustain the livelihood base, and surface water is an essential source, particularly in areas suffering from marginal quality groundwater. In Punjab, irrigated agriculture accounts for 28% of the province's GDP, employs over 50% of labor force and contributes a major share of rural livelihood. The province’s irrigation system provides irrigation water to 8.4 million ha; cropping intensity of about 122%, and is the largest in Pakistan, but due to deterioration caused by aging, neglect and inadequate resources, it requires rehabilitation or replacement of major hydraulic structures.

22 IFAD’s Southern Punjab Poverty Alleviation Project Report, October, 2010, p. 5. 23 Households are considered vulnerable if they do not have the means to smooth out their expenses in response to changes in income. 24 Poverty Reduction Strategy Paper, Government of Pakistan, 2003, p. 17 25 Food Insecurity in Rural Pakistan 2003, World Food Programme, Sustainable Development Policy Institute, 2005

26 Appendix 5

The project will replace the 120 years old existing headworks with a new Barrage on river Chenab. It will build a new structure on the river to divert river flows to the canal and pass flood at downstream in the river. The new structure will not change the design discharge or irrigated area. It will reduce the risk of failure of the existing old structure and consequentially loss of crops.

2. Design features. The project has effects on poverty reduction. It will provide more reliable upstream water supply, which will result in more reliable water availability at distributaries and farm levels. II. SOCIAL ANALYSIS AND STRATEGY A. Findings of Social Analysis Key issues. The direct beneficiaries of the project will be about 568,000 farming families—310,000 less than 2 ha and 190,000 between 2 to 6 ha, in the Lower Chenab Canal (LCC) command area through reliable water supplies and protected income. The average farm size in the canal command is 2.65 ha (6.5 acres). A total of 3.0 million people will be benefitted through reducing the risks and vulnerability in case of expected failure of the existing headworks. An impact assessment survey of the population around the project area was conducted for the preparation of land acquisition and resettlement plan (LARP). Analysis of a qualitative socioeconomic baseline survey (100 interviews including 40 women respondents), including collection of sex-disaggregated data, and poverty analysis of people located within the jurisdiction of the project area, was conducted for the poverty reduction and social strategy. The survey showed that (i) most of the people are engaged in agri-business; (ii) the literacy rate is 52% for males and 48% for females; (iii) employment rate is 74%; (iv) facilities include sewerage 16%, telephone 8%, public water supply 12%; and (v) 40% related to farming, 4% business, 12% labor, 13% employment, 4% private service and 27% unemployed. About 45% women had access to school, 35% to college and only 20% to university level education. About 30% of the women had access to lady health visitor, 32% consulted medical doctor, and 25% consulted private doctor, while the remaining 20% women visited the quacks in case of sickness/ailments.

Many factors, including unequal distribution of landholding, sub-division of land, inequitable access to infrastructure and social facilities, less household income, poor health/ nutrition, limited education facilities, poor living standard, limited alternatives of livelihood except agriculture/ farming and ultimately low level of living standard and gender inequity, affect poverty levels. This project has only indirect impact on poverty reduction by securing availability of irrigation water, which is crucial for agricultural production and as such, the livelihood of the communities in the project area.

B. Consultation and Participation 1. Stakeholders, beneficiaries, and people in the project area have been consulted, and will continue to be consulted during project implementation. A participatory and consultative methodology was adopted to undertake social analysis during the project preparation. It involved (i) initial field reconnaissance discussions with project stakeholders; (ii) focus group discussions with women in core subproject areas; (iii) detailed household survey with male respondents in core subproject areas; (iv) key informant interviews; and (v) detailed survey questionnaires of households directly affected by land acquisition and civil works. During project implementation, the participation of stakeholders will be supported and deepened with the assistance of key project staff and the consultants. Dedicated resettlement staff will be part of the project management office to ensure that resettlement activities are addressed according to ADB guidelines (SPS, 2009). 2. What level of C&P is envisaged during the project implementation and monitoring? Information sharing Consultation Collaborative decision making Empowerment26

26 Empowerment is when beneficiaries and other key groups initiate action and take control of development decisions and resources. See ADB. 2006. Strengthening Participation for Development Results: Staff Guide to Consultation and Participation. Manila.

Appendix 5 27

3. Was a C&P plan prepared for project implementation? Yes No C&P strategy is included in the resettlement plan and will be used during implementation of the resettlement plan. An amount of $300,000 has been allocated for the implementation of LARP and a dedicated safeguards unit in PMO with the assistance of the supervision consultants will be responsible for the implementation of LARP.

C. Gender and Development Gender Mainstreaming Category: Some Gender Benefits In Pakistan, about 80% of rural women are engaged in agriculture compared to 60% of rural men. It is worth mentioning that women's work is getting harder and more time-consuming due to ecological degradation and economic crisis. Women contribute to household income through farm and non-farm activities but women's work as family labor is grossly under-reported. Women participate in all operations related to crop production such as sowing, transplanting, weeding and harvesting, as well as in post- harvest operations such as threshing, winnowing, drying, grinding, husking, and storage (including making mud bins for storage). Construction of the new Khanki Barrage combined together with the improved LCC system will provide reliable irrigation supply, the consequent reliable harvests, and stabilized income from wage-labor or crop shares. The other benefits include reduced flooding risk and new road transport links to the nearest town. New road link across the river will provide the women access to the nearest town for better labor opportunities if they so wish, save their labor-time and access to better health and education facilities.

1. Key actions. No action for tranche 2 Gender action plan Other actions or measures No action or measure The gender specialist consultant based in PRM will be involved in review missions to monitor, if the women are provided with equal opportunities on the project activities and no wage discrimination as compared with men for the same activity are exercised during project implementation. However, the strong involvement and capacity development of the farmer’s organizations in Tranche 1, namely their active participation in O&M will continue to be implemented and further assessed, especially if women farmers were successfully included in the O&M and decision making of the farmers organizations. The gender specialist consultant will continue to assess the implementation progress of tranche 1 gender and social development features. III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS Plan or Other Measures Significant/Limited/ Strategy to Address Included in Design Issue No Impact Issue Involuntary Limited The LARP was prepared Resettlement plan Resettlement and disclosed to the AP’s. Resettlement framework A total of 69 households

(414 APs) have been identified. The APs will be compensated with cash on replacement cost and/or PID’s land for land, if available in the adjacent area and acceptable by the APs. Indigenous No impact No indigenous people in Peoples the project area Labor Provisions in the bidding Other action documents are made that Employment the contractors ensure (a)

28 Appendix 5

opportunities comply with applicable labor laws (b) do not

differentiate between men and women for payment for a work of equal value, (c) do not employ child labor, and (d) prefer local poor and disadvantage persons as unskilled labor. Affordability No impact The project will provide No action road communication links across the river and will improve the link roads, thus will enhance the affordability, access to basic needs and isolation. Other Risks The EA will ensure that Other action and/or NGOs disseminate Vulnerabilities information on risks of sexually transmitted HIV/AIDS infections, including Human HIV/AIDS, to the trafficking employees, workers and local communities in the Others (conflict, surrounding areas. political instability, etc.) IV. MONITORING AND EVALUATION Are social indicators included in the design and monitoring framework to facilitate monitoring of gender and social development activities and/or social impacts during project implementation? Yes No Sources: 1. Pakistan’s Country Partnership Strategy (CPS) (2009-2013). 2. Poverty Reduction Strategic Plan (PRSP-II) (2003). 3. Initial Social Assessment for New Khanki Barrage Construction Project (NKBP). 4. Draft Land Acquisition and Resettlement Plan (LARP).

Appendix 6 29

CONTRIBUTION TO ADB RESULTS FRAMEWORK

No. Results Framework Targets Method Used Indicators

1 Irrigation supplies 1,200,000 New Khanki Barrage and Lower Chenab Canal assured to the Head Regulator constructed to replace 120 years agricultural land (ha) old high risk headworks 2 Land area saved from 20,000 Flood passing capacity of the Barrage increased frequent flood hazards from the present 22,654 m3sec-1 (800,000 ft3sec-1) (ha) to 31,149 m3sec-1 (1,100,000 ft3sec-1). 3 Beneficiaries from the 3,000,000 Reliable irrigation supplies to 568,000 farming Barrage project families (310,000 less than 2 ha and 190,000 (persons) between 2 to 6 ha).

30 Appendix 7

LIST OF LINKED DOCUMENTS

(i) Risk Assessment and Risk Management Plan (ii) ADB’s Involuntary Resettlement and Indigenous People Categorization (iii) ADB’s Environment Categorization (iv) Updated EARF disclosed (http://www.adb.org/Documents/EARFs/PAK/37231-033-pak-earf.pdf) (v) Updated LARF disclosed (http://www.adb.org/Documents/Resettlement_Plans/PAK/37231/37231- 033-pak-rp-02.pdf) (vi) IEE disclosed (http://www.adb.org/Documents/IEES/PAK/37231/37231-033-pak-iee.pdf) (vii) LARP disclosed (http://www.adb.org/Documents/Resettlement_Plans/PAK/37231/37231-033-pak-rp- draft-01.pdf)