ASIAN DEVELOPMENT BANK PCR: PAK 20021
PROJECT COMPLETION REPORT
ON THE
KHUSHAB SALINITY CONTROL AND RECLAMATION PROJECT (Loan 901-PAK[SF])
IN
PAKISTAN
July 2000 CURRENCY EQUIVALENTS
Currency Unit – Pakistan Rupee/s (PRe/PRs)
At Appraisal At Project Completion (July 1988) (April 1998)
PRe1.00 = $0.055 $0.018 $1.00 = PRs18.20 PRs54.5
ABBREVIATIONS
ADB – Asian Development Bank EA – executing agency EIRR – economic internal rate of return DAE – Directorate of Agricultural Extension DOA – Department of Agriculture, Punjab DOWM – Directorate of On-Farm Water Management FO – farmers’ organization IPD – Irrigation and Power Department, Punjab NDP – National Drainage Program O&M – operation and maintenance PCR – project completion report PVC – polyvinyl chloride SCARP – Salinity Control and Reclamation Project TA – technical assistance WAPDA – Water and Power Development Authority WUA – water users’ association
NOTES
(i) The fiscal year of the Government ends on 30 June. (ii) In this report, “$” refers to US dollars. CONTENTS
Page
BASIC DATA ii
MAPS viii
I. PROJECT DESCRIPTION 1
II. EVALUATION OF IMPLEMENTATION 2
A. Project Components 2 B. Implementation Arrangements 3 C. Project Costs and Financing 3 D. Project Schedule 4 E. Engagement of Consultants, and Procurement of Goods 4 and Services F. Performance of Consultants, Contractors, and Suppliers 5 G. Conditions and Covenants 5 H. Disbursements 6 I. Environmental and Social Impacts 6 J. Performance of the Borrower and the Executing Agencies 7 K. ADB’s Performance 8
III. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS 8
A. Initial Performance 8 B. Financial Performance 8 C. Economic Performance 9 D. Attainment of benefits 9
IV. CONCLUSIONS, LESSONS LEARNED, AND RECOMMENDATIONS 9
A. Conclusions 9 B. Lessons Learned 10 C. Recommendations 10
APPENDIXES ii
BASIC DATA
A. Loan Identification
1. Country Pakistan 2. Loan Number 901-PAK(SF) 3. Project Title Khushab Salinity Control and Reclamation Project 4. Borrower The Islamic Republic of Pakistan 5. Executing Agency Water and Power Development Authority Irrigation and Power Department, Punjab Directorate of On-Farm Water Management, Department of Agriculture, Punjab 6. Amount of Loan SDR40.915 million ($53.0 million) 7. PCR Number PAK 583
B. Loan Data
1. Fact-Finding – Date Started 5 February 1988 – Date Completed 18 February 1988
2. Appraisal – Date Started 10 March 1988 – Date Completed 23 March 1988
3. Loan Negotiations – Date Started 15 August 1988 – Date Completed 18 August 1988
4. Date of Board Approval 22 September 1988 5. Date of Loan Agreement 5 October 1988 6. Date of Loan Effectiveness – In Loan Agreement 3 January 1989 – Actual 7 February 1989 – Number of Extension 1
7. Closing Date – In Loan Agreement 31 December 1994 – Actual 5 March 1999 – Number of Extensions 2
8. Terms of Loan – Service Charge 1 percent per annum – Maturity 35 years – Grace Period 10 years iii
9. Disbursements
a. Dates
Initial Disbursement Final Disbursement Time Interval 1 December 1989 2 December 1998 9 years
Effective Date Original Closing Date Time Interval 7 February 1989 31 December 1994 5 years 11 months
Revised Closing Date Time Interval 30 April 1998 9 years 3 months
Actual Closing Date Time Interval 5 March 1999 10 years 1 month
b. Amount (SDR) Original Revised Disbursed No. Category Allocation Allocation Amount
1A Civil Works – Part A 25,125,000 28,232,000 23,397,143 1B Civil Works – Part B 2,573,000 3,456,000 3,127,379 2A Equipment, Vehicles, & 574,000 497,000 561,693 Materials – Parts A & B (excluding electrification) 2B Equipment, Vehicles, & 902,000 521,000 562,331 Materials – Parts A & B (electrification only) 2C Equipment, Vehicles, 2,342,000 913,000 911,990 & Materials – Part C 3 Consulting Services & 1,536,000 1,752,000 1,307,579 Training for Part A 4F Local Expend.- Consulting 401,000 422,000 402,404 Services & Training Part B 4G Local Expend.- Project 2,760,000 3,278,000 5,039,154 Implementation (Parts A & B) 4H Local Expend. – Project 443,000 220,000 219,622 Implementation (Part C) 5 Service Charge 987,000 1,010,000 919,349 6 Prior Technical Assistance 50,000 50,000 0 7 Unallocated 3,222,000 564,000 0
Total 40,915,000 40,915,000a 36,443,644
aAn unutilized amount of SDR4,471,356 was canceled on 5 March 1999. iv
c. Amount ($) Original Revised Disbursed No. Category Allocation Allocation Amount
1A Civil Works – Part A 32,546,137 40,152,284 33,547,628 1B Civil Works – Part B 3,332,983 5,028,978 4,573,234 2A Equipment, Vehicles, & 743,541 677,467 765,840 Materials – Parts A & B (excluding electrification) 2B Equipment, Vehicles, & 1,168,421 740,670 797,130 Materials – Parts A & B (electrification only) 2C Equipment, Vehicles, 3,033,752 1,246,356 1,244,976 & Materials – Part C 3 Consulting Services & 1,989,685 2,465,240 1,858,138 Training for Part A 4F Local Expend.- Consulting 519,442 602,486 575,718 Services & Training Part B 4G Local Expend.- Project 3,575,217 4,752,170 7,157,995 Implementation (Parts A & B) 4H Local Expend. – Project 573,847 296,614 296,098 Implementation (Part C) 5 Service Charge 1,278,529 1,425,685 1,301,851 6 Prior Technical Assistance 64,768 68,303 0 7 Unallocated 4,173,678 770,452 0
Total 53,000,000 58,226,705a 52,118,608
aAn unutilized amount of $6,108,097 was canceled on 5 March 1999.
10. Local Costs (ADB Financed)
Cost Appraisal Actual Estimate
Amount ($ million) 25.6 26.5 Percentage of Local Cost 66% 62% Percentage of Total Cost 39% 39% v
C. Project Data
1. Project Cost ($ million) Cost Appraisal Actual Estimate
Foreign Exchange Cost 27.400 25.655 Local Currency Cost 38.500 42.895 Total Cost 65.900 68.550
2. Financing Plan ($ million) Item Appraisal Estimate Actual Foreign Local Total Foreign Local Total Exchange Currency Cost Exchange Currency Cost
Implementation Costs ADB 26.056 25.600 51.656 24.353 26.463 50.816
Borrower 0.000 12.900 12.900 0.000 16.432 16.432
TA Recovery 0.065 0.000 0.065 0.000 0.000 0.000a
IDC Cost (ADB) 1.279 0.000 1.279 1.302 0.000 1.302
Total 27.400 38.500 65.900 25.655 42.895 68.550
ADB = Asian Development Bank, IDC = interest during construction, TA = technical assistance
a There was no amount charged against the loan for the TA recovery since the amount utilized was only $123,000 of the approved TA amount of $215,000. The loan agreement indicated that only the amount that exceeds the equivalent of $150,000 should be charged against the loan.
vi
3. Cost Breakdown by Project Components ($’000) Component Appraisal Estimate Actual Foreign Local Total Foreign Local Total Exchange Currency Cost Exchange Currency Cost
A. Civil Worksa 1. Part A. Drainage 17,224 18,852 36,076 17,326 26,832 44,158 2. Part B. Irrigation 1,169 2,373 3,542 2,362 2,644 5,006
B. Vehicles & Equipment 1. Parts A & B 635 337 972 765 583 1,348 2. Part C 87 2,318 2,405 1,245 105 1,350 3. Electrification 1,168 0 1,168 797 0 797
C. Consulting Services 1. Part A. Drainage 1,590 295 1,885 1,858 94 1,952 2. Part B. Irrigation 10 405 415 0 581 581
D. Administration 1. Parts A & B 0 3,404 3,404 0 9,909 9,909 2. Part C 0 606 606 0 1,244 1,244
E. Land Acquisition 0 1,000 1,000 0 903 903
F. Recovery of TA Cost 65 0 65 0 0 0
G. Service Charge 1,279 0 1,279 1,302 0 1,302
H. Unallocated 4,173 8,910 13,083 0 0 0
Total 27,400 38,500 65,900 25,655 42,895 68,550
a Beneficiary contribution was not reflected in the appraisal cost estimate. The Project Completion Review Mission estimates that the total contribution is equivalent to about $1.0 million.
4. Project Schedule
Date Appraisal Estimate Actual
a. Date of Contract with Consultants Drainage 2 Jun 1990 Irrigation 11 Jun 1990 b. Completion of Engineering Design Jul 1990 c. Civil Works Contract Date of Award Mar 1990 Jul 1993 Completion of Work Dec 1993 18 Nov 1997 d. Equipment and Supplies First Procurement Oct 1989 Last Procurement Apr 1998 e. Start of Operations of sumps Beginning of Start-Up 23 Feb 1997 Completion of Tests and Commissioning 4 Apr 1998 vii
Date Appraisal Estimate Actual
f. Other Milestones First Extension of Loan Effectiveness 3 Feb 1989 First Extension of Loan Closing Date 30 Apr 1997 Second Extension of Loan Closing Date 30 Apr 1998 Reallocation of Loan Proceeds 10 Jan 1996 Change in Project Scope 10 Jan 1996 Cancellation of Loan Proceeds First 26 Oct 1998 Second 5 Mar 1999
5. Benchmark Survey Dec 1988 Impact Evaluation Jul 1996/Mar 1997
D. Data on ADB Missions
Date No. of Person Specialization No. Name of Mission From To Persons -days of Members
1 Fact-Finding 5 Feb 88 18 Feb 88 3 42 Project Engineer Agronomist Project Economist 2 Appraisal 10 Mar 88 23 Mar 88 4 56 Project Engineer Agronomist, Counsel Project Economist 3 Special Review 27 Jun 89 4 Jul 89 1 8 Project Engineer 4 Inception 05 Mar 90 12 Mar 90 1 8 Project Engineer 5 Review 28 Apr 91 4 May 91 1 7 Project Engineer 6 Review 1 May 92 10 May 92 1 10 Project Engineer 7 Special Review 24 May 94 29 May 94 1 5 Rural Dev. Specialist 8 Review 3 Sep 94 22 Sep 94 2 40 Project Engineer Asst. Proj. Analyst 9 Midterm Review 30 Sep 95 12 Oct 95 2 26 Project Engineer Asst. Proj. Analyst 10 Review 30 May 96 11 Jun 96 2 26 Project Engineer Asst. Proj. Analyst 11 Portfolio Review 20 Aug 96 22 Aug 96 1 3 Project Engineer 12 Review 3 Apr 97 9 Apr 97 1 7 Project Engineer 13 Review 2 Dec 97 10 Dec 97 1 9 Project Engineer 14 Review 10 Jun 98 18 Jun 98 1 9 Project Engineer 15 Project Completion 20 Feb 2000 08 Mar 2000 3 46 Project Engineer Review Economist/Consultant Asst. Proj. Analyst viii ix I. PROJECT DESCRIPTION
1. Agriculture continues to be the most important sector in the Pakistan economy in respect of foreign exchange earning (70 percent) and employment opportunities (45 percent), and is a major contributor (25 percent) to the gross domestic product. Present average crop yields are generally low by international standards, the agriculture sector had and has considerable potential for growth.
2. The Project was designed to support the Seventh Five-Year Plan (1988/1989- 1992/1993), which aimed to reach self-sufficiency in basic commodities and improve the productivity of crops, livestock, fisheries, and forestry. The plan gave the highest priority to bridging the gap between actual and potential farm yields by removing constraints to reaching this goal. The direction of water resources management under the plan marked a break from the past strategy of relying on the construction of large dams. Emphasis was focused on better management and the conservation of water by relying on such programs as canal remodeling, rehabilitation, and lining; and on-farm water management. The control of waterlogging and salinity continues to be the focus of attention, receiving about 45 percent of the proposed allocation for water resources under the Plan.
3. The Indus River system is central to social and economic life in Pakistan. The areas served by the irrigation systems of the Indus Plain generate about 90 percent of Pakistan’s total agricultural income. Punjab Province, covering an area of about 21 million hectares (ha), mostly comprises alluvial plains of the Indus River systems. The total cultivable area is 10.7 million ha and the annual cropped area is 13.6 million ha. However, considerable portions of Punjab’s irrigated land are affected by waterlogging and salinity. Some 960,000 ha were classified as disaster areas, with water tables within 150 centimeters (cm) of the ground surface. 1
4. The project area is located at the foot of the Salt Range and covers about 42,500 ha adjacent to the north bank of the Jhelum River in Punjab Province. Because the project area suffers from severe waterlogging problems, soil salinization, and shortage of irrigation supplies, it presented a significant opportunity to provide effective drainage relief, improve irrigation efficiency, and establish a favorable salt balance in the area.
5. In response to the Government’s request in 1987, the Asian Development Bank (ADB) financed technical assistance (TA) to prepare a feasibility study for the Khushab Salinity Control and Reclamation Project (SCARP). The Project was formulated in detail, assessed during the study, and found to be technically feasible and economically viable. An appraisal mission visited Pakistan in March 1988, and reached an understanding with the Government on the scope, cost, financing, and implementation arrangements for the project. ADB approved the loan for SDR40.915 million (or $53.0 million equivalent) in October 1988; it became effective in February 1989.
6. The Project objectives are to increase agricultural production, employment opportunities, and farm income on 36,200 ha of cultivable land in the project area. This was to be accomplished primarily by providing subsurface drainage relief to 26,500 ha; and rehabilitating and extending the surface drainage network for about 175 kilometers
1 Loan 901-PAK(SF): Khushab Salinity Control and Reclamation Project, Appraisal Report, Aug 1988, para. 25. 2
(km), rehabilitating and lining 246 km of the irrigation distribution system, improving 220 watercourses and providing on-farm water management extension for the entire project area of 36,200 ha.
II. EVALUATION OF IMPLEMENTATION
A. Project Components
7. Essentially all components envisaged at appraisal were successfully completed despite a three-year and four-month delay in project completion (Appendix 1).
1. Subsurface Drainage
8. At appraisal, a horizontal drainage network for 26,500 ha was planned, including the installation of 3,200 km of corrugated polyvinyl chloride (PVC) laterals, 320 km of PVC collectors, 160 sumps, and 160 pumping plants. The Project installed 1,600 km of lateral drains, 324 km of collector drains, 56 sumps, and 118 pumps for 23,644 ha. To electrify sump pumps, transmission lines of 175 km and 56 transformers with 50 kilovolt- amperes were installed as compared with the 170 km of transmission line and 160 transformers with 15 kilovolt-amperes at appraisal. The changes in the physical facilities resulted from the detailed design of the facilities carried out after the Project was appraised. Despite the substantial reduction in the subsurface drainage network, drainage standards as envisaged during appraisal were realized.
9. The Project included both international and domestic training for staff of the Water and Power Development Authority (WAPDA) and Irrigation and the Power Department, Punjab (IPD) in the design, installation, and maintenance of the subsurface drainage system. Compared with the appraisal estimate providing international training to 22 people, only 16 received training. 2 The consultants provided two domestic training courses on construction supervision to project staff for 272 person-days.
2. Surface Drainage
10. At appraisal, it was planned to construct 80 km of new surface drains and to extend existing drains by 3 km. Rehabilitation and remodeling of 92 km of existing drains were planned, together with the construction of 255 structures such as culverts, bridges, aqueducts, watercourse crossings, and drainage inlets.
11. Compared with the appraisal provision, 122 km of new drains were constructed and 9 km of existing drains were extended. A total of 96 km of existing drains were rehabilitated or remodeled; 375 structures were constructed, and 181 km of maintenance roads were improved. During the detailed design, the total length of the surface drains was increased as the areas for the subsurface drains was decreased due to the topography of the project area.
2 The Government did not approve any international training program during the last three implementation years. 3
3. Irrigation
12. At appraisal, of the 146 km of branch and minor canals serving the project area, 46 km were to be rehabilitated and 100 km lined. Based on the actual field conditions, 42 km of canals were rehabilitated and 104 km lined. Many more structures were rehabilitated and new ones constructed than envisaged at appraisal. Instead of 112 structures, 317 were rehabilitated or newly constructed. The increase was mainly the result of farmers’ requests.
4. On-Farm Water Management
13. All works were completed as appraised. Two hundred and twenty water users associations (WUAs) carried out improvement of 220 watercourses and precision land leveling on 710 ha. Five demonstration farms and 280 demonstration centers were established. WUA members contributed their own labor for the earthworks to improve their watercourses. A total of 1,225 field staff of the Directorate of On-Farm Water Management (DOWM) and the Department of Agricultural Extension (DAE), Punjab, were trained in on-farm water management.
B. Implementation Arrangements
14. As envisaged at appraisal, WAPDA’s project office, with 217 staff, for the drainage component was located in Sargodha; a field office was established in Khushab. To implement the irrigation component, IPD posted 25 additional staff under the executive engineer, Khushab Division, who acted as project director for the IPD component. For the on-farm water management component, DOWM of the Department of Agriculture, Punjab, had its project office in Khushab with 80 staff. During the initial two years, delays in project implementation, unforeseen at appraisal, were caused by inadequate project management, planning, contracting, and supervision of project works because of delays in recruiting consultants. Once the consultants mobilized, this inadequacy was removed.
15. As envisaged at appraisal, the project steering and coordination committee and the project coordination committee were established at the provincial level and at project level, respectively. The steering and coordination committee, chaired by the general manager (Water, Central) from WAPDA, held meetings when required to resolve problems of the Executing Agencies (EAs). The first meeting was held in April 1990, and eight meetings were held during project implementation. The project coordination committee meetings, chaired by WAPDA’s chief engineer (Faisalabad), were held on a monthly basis. The last, the 83rd meeting, was held in September 1997.
C. Project Costs and Financing
16. At appraisal, the total project cost, including contingencies, was estimated at $65.9 million equivalent; the foreign exchange cost was $27.4 million (42 percent), including $1.28 million for service charges on the ADB loan during project implementation, and the local currency component was $38.5 million equivalent (58 4 percent). ADB was to provide a loan of $53.0 million to meet 80 percent of the total project cost.3
17. The actual expenditures in current prices amounted to $68.6 million equivalent, comprising $25.7 million of foreign exchange costs and $42.9 million equivalent of local currency costs. The total cost overrun is $2.7 million, or 4 percent, compared with the appraisal estimate (Appendix 2). The overrun resulted largely from additional administration expenses resulting from the extended project implementation period. Overall, ADB financed $52.1 million of the total project cost, or 76 percent compared with 80 per cent estimated at appraisal. The Government provided the remaining $16.5 million equivalent (24 percent) compared with 20 percent estimated at appraisal. Project beneficiaries contributed about $0.8 million equivalent in the form of labor for improving their watercourses. In addition, the beneficiaries shared 25 percent of the material costs for watercourse improvement equivalent to about $0.2 million.4
D. Project Schedule
18. The Project was scheduled to be completed over a six-year period from the beginning of 1989 to the end of 1994. While organizational arrangements were initiated on schedule in 1989, there was considerable delay in recruiting consultants. The consultants for the drainage and irrigation components were fielded in June 1990 after a 1.5-year delay. Project works and other activities were delayed accordingly. The contract for the subsurface drainage works was not awarded until July 1993. The inexperience of the contractor for the subsurface drainage works and the need to import trenchers contributed to further delays in project completion. All works were completed in April 1998, three years and four months after the originally envisaged completion date (Appendix 3).
E. Engagement of Consultants, and Procurement of Goods and Services
19. As per appraisal, two teams of consultants were recruited in accordance with the ADB’s Guidelines on the Use of Consultants to assist the EAs in implementing the Project. The recruitment of both consultant teams was delayed largely due to lengthy government procedures for the preparation of short lists and invitation documents, and the subsequent evaluation of consultants’ proposals. Because of a prolonged selection process, the internationally recruited consultants for the drainage component started work in June 1990 and completed their services in April 1998. The consultants’ inputs totaled 151 person-months as against the appraisal estimate of 146 person-months (Appendix 4). The domestic consultants recruited for the irrigation component were mobilized in June 1990 and completed their services in March 1997. Due to the extension of the implementation period, their input was increased to 162 person-months, from 120 person-months envisaged at appraisal.
20. As envisaged during appraisal, civil works associated with the subsurface drainage system were undertaken through international competitive bidding in accordance with the ADB’s Guidelines for Procurement. However, the procurement of
3 An amount of SDR36.44 million, or 89 percent of the loan, was disbursed in comparison with the original loan amount of SDR40.91 million. 4 At the time of the Project Completion Review mission, the beneficiaries had already paid PRs2.6 million or 30 per cent of the recovery target. 5 the civil work under the subsurface drainage component took exceptionally long. Applications for the prequalification of contractors were invited in July 1990. Seven prequalification applications were received; only two qualified. Consequently, the prequalification procedure had to be repeated. New invitations were sent out in December 1990. This time, 17 prequalification documents were evaluated and nine contractors were prequalified for tendering in March 1991. Three contractors submitted tenders. The tender evaluation report was not approved by ADB as the lowest bidder had extended the offer validity, with a request to be compensated for the potential effect of floods on the project area in 1992. The tender was accordingly canceled in October 1992, and the three bidders were asked to submit their revised bids; this was to reflect the past flood condition in the project area. Based on the evaluation of the bids, the contract was awarded in July 1993 to the lowest evaluated bidder, a local contractor.
21. Civil works for surface drainage and rehabilitation of irrigation canals were grouped into 17 and 29 packages, respectively (Appendix 5), and awarded as envisaged at appraisal to prequalified local contractors using local competitive bidding (LCB) procedures in accordance with government procedures acceptable to ADB. Civil works required for watercourse improvement were assigned to specific WUAs under the technical supervision by DOWM staff. Materials were procured by DOWM using LCB procedures.
22. As per appraisal, procurement of vehicles was carried out using LCB procedures, while major equipment was purchased using international shopping procedures in accordance with the ADB’s Guidelines for Procurement (Appendix 6)
F. Performance of Consultants, Contractors, and Suppliers
23. Both consultant teams performed satisfactorily. The consultants engaged for the subsurface drainage component were very effective in advising the contractor in the field about testing and controlling the materials used for installation, particularly the plastic pipes and gravel for the filter. The contractor’s equipment was adjusted in response to the advice of the consultants and the early checking of the standard of the executed work meant that project implementation could be expedited with the required quality. This was supported by the performance evaluation report prepared by the EAs.
24. The contractor for the subsurface drainage works had initial problems with nonavailability of construction materials, and delay in the procurement of trenchers; but its subsequent performance was satisfactory. The Project Completion Review Mission reviewed the quality of construction and noted that overall quality of the works under this contract is satisfactory. The performance of the other 17 contractors involved in civil works for the surface drainage system was generally satisfactory. Of the seven local contractors involved in the 29 contracts awarded by IPD, two contractors performed less-than satisfactory according to IPD, because of poor quality work and delayed completion.
25. The performance of the suppliers of equipment and vehicles for project implementation were rated as satisfactory. The suppliers of equipment and vehicles for operation and maintenance (O&M) also performed satisfactorily. 6
G. Conditions and Covenants
26. The Loan Agreement was signed on 5 October 1988 and became effective on 7 February 1989, about one month after the date originally envisaged. The Government and the EAs have generally complied with the loan covenants (Appendix 7). However, a major covenant not fully complied with relates to the recovery of O&M costs of the irrigation and drainage systems in Punjab. The Government was to recover the O&M costs through irrigation and drainage fees as per agreements reached under the Agriculture Inputs Program loans (Loans 825-PAK[SF] and 826-PAK). These agreements required full recovery of the costs related to the irrigation and surface drainage systems, and the subsurface drainage systems in saline groundwater areas.5 At the time of appraisal this requirement was met, but the recovery level dropped to about 75 percent in 1998. The 250 percent increase in the irrigation and drainage fees during the project implementation period did not compensate for the increases in O&M costs, explaining the decline in the level of cost recovery. To address the continuing problems faced by the irrigation and drainage sector in a comprehensive manner, the Government adopted a new strategy in 1997. This strategy, the implementation of which is supported through the National Drainage Program (NDP) launched in 1998,6 aims to redefine the role of the Government with the ultimate aim of (i) establishing autonomous management organizations for irrigation supply and drainage, (ii) transferring secondary- level irrigation and drainage services to farmer controlled organizations, and (iii) phasing out Government subsidies for O&M within 7-10 years.
H. Disbursements
27. Actual loan disbursements started in 1989 and were completed in 1998. The loan closing date was extended two times, first by two years and four months from 31 December 1994 to 30 April 1997, and then by one year from 30 April 1997 to 30 April 1998. The loan account was kept open until 5 March 1999 to enable the Government to refund unutilized deposits advanced to the IPD imprest account. Actual disbursement amounted to $52.1 million, 90 percent of the loan.
28. In 1991 imprest accounts were established for WAPDA and IPD to facilitate their disbursements. However, contract awards and disbursements remained low until 1993 because of delays in the commencement of subsurface drainage works. With the acceleration of construction activities, annual contract awards peaked in 1993 with total awards equivalent to $21.3 million. Annual disbursements in 1995 and 1996 came close to the annual disbursement level of $12.7 million envisaged during appraisal. In 1997 and 1998, disbursements dropped to $6.3 million, in line with the reduction in construction activities (Appendix 8).
I. Environmental and Social Impacts
29. As envisaged at appraisal, the project area environment of 36,200 ha has improved because of the decrease in soil salinity and lower level of groundwater, since
5 The costs associated with the public sector tubewells in the fresh groundwater zones are excluded because these tubewells are being phased out. The O&M costs for flood protection are also excluded because flood protection is treated as a public good. 6 NDP is supported by ADB through Loan 1413-PAK: National Drainage Sector Project, for SDR93.7 million, approved on 12 December 1995, as an integral part of the $785 million NDP, cofinanced by the World Bank and Japan Bank for International Cooperation. 7 the commissioning of the drainage system, (Appendix 9). Within a year of the commissioning of the subsurface drainage system the quality, of the drainage effluent had improved.7 By 1996 the waterlogged area was reduced to 51 percent, from 95 percent in 1987.8 WAPDA’s SCARP Monitoring Organization continues to monitor the groundwater levels and quality of drainage effluent.
30. The Project, provided that O&M of Project facilities is adequate, will continue to significantly reduce poverty among the nearly 8,000 farm households (88,000 people) within the project area.9 The Project has already increased average annual per capita income from PRs2,255 ($46) in 1991 to PRs5,233 ($107) (Appendix 10). By 2005, the Project is expected to raise average annual per capita income to PRs9,491 ($195), some 34 percent above the basic needs poverty line of PRs7,100 ($146) identified by the United Nations Development Programme in the poverty profile of rural inhabitants. Without the Project, average annual per capita income would have fallen by 2005 to PRs1,412 ($29), only 20 percent of the basic needs poverty line10.
31. Land rights for construction of project facilities were acquired under the Land Acquisition Act prior to construction. About 340 ha of land affecting about 700 farm families were acquired, and those affected received compensation payments equivalent to about PRs56,250 per ha in 1999 prices. The net agriculture income after the drainage improvement was about PRs6,200 per ha in 1999. The compensation payment therefore represents 9 years of lost income.
32. The impact of the Project on women is expected to be positive as a consequence of higher farm incomes, improvements in women’s health, and less house maintenance work. All the women interviewed saw the Project as bringing positive benefits including improved land quality, increased crop yields, and increased income. In addition many thought the Project would bring positive health benefits (through less risk of waterborne diseases and more money to spend on medical consultations and medicines) as well as less housing maintenance work for women as the damage to houses caused by land subsidence in waterlogged area is reduced
33. Women’s involvement in farming activities will not diminish as a result of the Project. Despite the observance of purdah by many in Pakistan, for most in the project area, farm incomes will remain insufficient to encourage widespread substitution of female family labor with hired labor. However, the Project will not by itself lead to greater participation by women in farm decision making or in communal activities such as farmer organizations. These traditionally have been the preserve of men and intervention by other modalities will be necessary to overcome traditional practices and attitudes.
J. Performance of the Borrower and the EAs
34. The Government provided sufficient counterpart funds as the extended project period required average annual disbursement less than that estimated at appraisal. As a result, no significant counterpart funding problems were experienced during project
7 WAPDA. 1998. Water Quality and Soil Monitoring Report. 8 Lands with groundwater tables within 150 cm from the surface during the summer season are classified as waterlogged. 9 The average farm size of 11 reflects the practice in the Khushab area of more than one family unit making up the household. 10 All amounts in constant 1999 dollars. Note: exchange of PRs48.7=$1 used as the average for 1999. 8 implementation. WAPDA, together with the Planning and Development Department, provided effective implementation guidance, while WAPDA’s project office satisfactorily monitored overall project implementation. Generally WAPDA, IPD, and DOWM performed satisfactorily in terms of project execution. However, due to delays in consultant recruitment, project planning and management were not fully satisfactory during the initial three years. In terms of O&M, IPD should have taken earlier action to secure funds for the postconstruction maintenance of the surface drains and make arrangements for the O&M for the subsurface drainage system.
K. ADB’s Performance
35. Overall, ADB’s performance in appraising and supervising project implementation was satisfactory. The initial delays during the first three years of the project implementation were beyond ADB’s control. The successive ADB missions provided necessary technical review and guidance, and ADB responded in a timely manner to the EAs’ requests for assistance with project implementation.
III. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS
A. Initial Performance
36. With the completion of the major component of the Project (the subsurface drainage) in December 1997, the watertable of the project area was lowered and waterlogged areas considerably reduced. Together with the other project components completed earlier, this has led to an increase in the project area’s cropping intensity from 107 percent in 1991 to 120 percent in 1999; a reduction in the area growing paddy; and an increase in the areas growing wheat and sugarcane. There has been a significant increase in crop yields, especially for paddy, wheat, and sugarcane. Significant increases in cropping intensity and crop yields are expected by 2005, when it is assumed that full agricultural development as a result of the Project will be reached.
37. However, the continued positive performance of the Project is contingent upon adequate O&M works being undertaken. The project facilities were handed over to IPD from WAPDA on 31 December 1999. It is intended that the subsurface drainage facilities will be maintained by IPD with the assistance of the private sector through O&M performance contracts in line with the NDP approach. The O&M performance contracts are planned to be awarded in 2001. IPD mobilized its own resources for O&M to bridge the period up to the time the O&M performance contract will be awarded.
B. Financial Performance
38. The Project has already yielded significant benefits to farmers in the project area in the form of increased net farm incomes. These financial benefits are expected to increase in the future as the cropping intensity and crop yields in the project area continue to increase up to 2005. Appendix 10 indicates that net farm income for the average-size farm (4.6 ha) has increased from PRs24,808 ($509) in 1991 to PRs57,560 ($1,182) in 1999; i.e., an increase of 132 percent. The estimate for 2005 indicates average income could increase to PRs104,406 ($2,144). Without the Project, average net farm income would have fallen to an estimated PRs15,530 ($319). Therefore the 9
Project will enable farm income to more than quadruple, instead of falling by 37 percent if the Project had not been implemented.11
39. For the Project’s on-farm employment impacts, compared with the without- project situation, the Project is estimated to have already led to the creation of around 1,900 permanent on-farm jobs. By 2005, this is expected to increase to around 4,000. The appraisal report forecasted 3,500 additional on-farm jobs as a result of the Project. In addition to these direct employment impacts, the Project will generate indirect off-farm employment benefits, for example, in the provision of transport and crop-processing industries (rice, sugar, and flour mills). Assuming a one to one ratio between on-farm and off-farm employment creation as was done for the appraisal analyses, the total employment impact of the Project can be estimated at 3,800 jobs by 1999 and 8,000 jobs by 2005.
C. Economic Performance
40. An economic internal rate of return (EIRR) of 13.4 percent has been estimated for the Project based upon its performance to date and expected future benefits. This compares with the EIRR of 16 percent estimated for the Project at appraisal. The lower EIRR now estimated reflects lower international prices for rice, cotton, wheat, and sugarcane; the extended project implementation period; a slight investment cost overrun; and farmers’ preference to grow sugarcane rather than cotton. To some extent these factors are offset by higher yields now assumed for wheat and sugarcane (Appendix 11).
D. Attainment of Benefits
41. Sensitivity analysis indicates that the Project will still yield satisfactory economic results even under more pessimistic assumptions about the level of agricultural net benefits, the time taken for full agricultural development to occur within the project area, and the level of future O&M costs for the Project. The robustness of the Project’s positive net economic benefits to substantially increased O&M costs highlights the desirability of ensuring that sufficient O&M resources are mobilized for the Project as soon as possible and that adequate O&M work is maintained throughout its anticipated 50-year life. Should this not occur then the EIRR for the Project will be reduced and in the absence of O&M altogether the EIRR will be lower (Appendix 11).
VI. CONCLUSIONS, LESSONS LEARNED, AND RECOMMENDATIONS
A. Conclusions
42. The Project aimed to increase agricultural production, employment opportunities, and farm income on 36,200 ha of cultivable land in the project area. This has been accomplished by providing subsurface drainage to 23,600 ha; rehabilitating and extending the surface drainage network of 222 km, rehabilitating and lining the 146 km irrigation distribution system, improving 220 watercourses, and improving on-farm water management techniques for the entire 32,600 ha project area. Despite the three-year and four-month delay in completing the work, the project objectives were substantially
11 All amounts in 1999 constant prices. 10 achieved. Follow-up activities involving performance contracts for O&M of the project facilities and the undertaking of deferred maintenance are expected to be implemented under the NDP. The experience with project implementation indicates that the improvements to drainage, irrigation, and on-farm water management have enhanced agricultural productivity and farmers’ income so that absolute poverty in the project area has been reduced. The overall project performance is assessed as generally successful according to ADB guidelines (Appendix 12).12
B. Lessons Learned
43. The Project has demonstrated that subsurface drainage using horizontal PVC systems is effective in improving soil productivity by reducing soil salinity and lowering the groundwater table. It is also efficient in that it requires limited land acquisition for sumps and access roads; 1.5 percent of the area improved by subsurface drainage was required for these uses.
44. The economic benefits of drainage projects in saline and waterlogged areas such as the project area are substantial and can justify relatively high capital costs. The experience with the Project suggests that the impact of drainage projects on poverty reduction is substantial. However, benefits can only be sustained if adequate O&M resources are in place following project completion. This requires a high degree of project ownership on the part of the agency responsible for postconstruction O&M prior to project completion, as well as the timely commitment of O&M resources.
45. When the Project was designed it was assumed that IPD would have sufficient resources and capability to operate the surface and subsurface drainage works including the relatively sophisticated sumps with automatic pumps. Given the difficulties IPD is currently encountering in mobilizing O&M resources, future subsurface drainage projects in Pakistan should be based on technology that is within the capabilities of farmer organizations (FOs) so that they can manage and perform the necessary O&M functions instead of IPD. This will facilitate the implementation of the NDP reforms of decentralizing the O&M of irrigation and drainage facilities to FOs.
C. Recommendations
1. Related to the Project
46. As yet, only limited use of drainage effluent water from the sumps has been available for irrigation purposes, but this is expected to increase as the salinity level of the drainage effluent reduces. It is recommended that water quality and groundwater levels continue to be monitored as part of the postconstruction benefit monitoring and evaluation by WAPDA’s SCARP Monitoring Organization. This was agreed during the Mission.
47. As per NDP policies, the O&M of the project facilities will eventually have to be carried out by FOs to be established at the distribution canal level. The 220 WUAs established by the Project could form the basis for the FOs. As each sump covers an area of 450 ha and about three WUAs, it is recommended that these WUAs be reorganized into sub-FOs per sump for O&M of the subsurface drainage facilities.
12 ADB. 1999. Guidelines for Preparation of Project Performance Audit Reports, 10-13. 11
48. As agreed during the Mission, IPD will immediately mobilize resources to take over O&M of the project surface and subsurface drainage facilities. High priority should be accorded to awarding a contract for desilting the Project’s surface drains, and performance contract(s) for O&M of the Project’s surface and subsurface drainage facilities. Initially the contracts will be awarded under the NDP through ADB’s NDP. At the same time, steps need to be taken to levying a drainage charge on the project farmer beneficiaries to finance the O&M cost, and thereby safeguard project sustainability. Revenues from the drainage charge should be dedicated to funding the drainage O&M and not be passed into general government revenues.
49. Subsurface drainage was not provided for about 4,450 ha of the land affected by waterlogging within the project area because the soils in the area exhibit low hydraulic conductivity. However, farmers in this area have expressed strong interest in obtaining support for laying a subsurface drainage system on their lands through the NDP. The Mission noted that these farmers were willing to establish an FO, a prerequisite for receiving NDP support. Priority therefore should be given to providing drainage facilities to this area through the NDP, provided that this is feasible.
50. It is expected that Project benefits will be fully realized by 2005. Therefore, it is recommended that a PPAR, if prepared, be conducted in or after 2003.
2. General
51. Based on the experience gained under the Project, it is recommended that the following lessons learned be reflected in the design of future ADB-assisted projects:
(i) During project preparation, a comprehensive assessment of the technical and managerial capacities of the government agencies and beneficiary groups, should be conducted and realistic measures that can effectively foster ownership of the project facilities, and build up staff capacity should be developed. To improve the sustainability of project facilities farmers’ participation should be sought during project formulation and design.
(ii) The Project preparation and appraisal should examine alternative options to ensure that appropriate technology is adopted to allow O&M of the project facilities to be carried out by beneficiary farmers. For projects that involve the installation of sophisticated equipment, a thorough analysis during project preparation is required to assess the capability of the organization responsible for O&M to undertake the O&M of this equipment. Different modalities for the O&M, such as in-house and outsourcing of O&M tasks need to be evaluated.
(iii) For projects that require a substantial increase in O&M liabilities for the organizations concerned, the implications of such liabilities on the organization’s overall financial resource situation need to be assessed during project preparation and implementation. Arrangements for managing O&M cost recovery need to be agreed to between the Government and the beneficiaries as part of the project preparation exercise. 12
(iv) To create project ownership within the agency to be ultimately responsible for project O&M, time bound handing over procedures should be prepared during the midterm review scheduled for 2000 and monitored by follow-on review missions. 13
APPENDIXES
Number Title Page Cited on page, para
1 Achievements of Project Components 14 2, 7
2 Project Costs and Financing 16 4, 17
3 Implementation Schedule 20 4, 18
4 Consulting Services 21 4, 19
5 Civil Works 22 5, 21
6 Procurement of Materials, Vehicles, and Equipment 27 5, 22
7 Compliance with Loan Covenants 28 5, 26
8 Actual Disbursements 35 6, 28
9 Summary of Environmental Impacts 37 6, 29
10 Project Impact on Poverty Reduction 38 7, 30
11 Economic Analysis 42 9, 40
12 Assessment of Overall Project Performance 58 10, 42 14 Appendix 1, page 1 ACHIEVEMENTS OF PROJECT COMPONENTS
Description Appraisal Actual Remarks
1. Drainage Facilities
a. Subsurface drainage
(i) Culturable command area (ha) 26,500 23,644 Change in scope resulted from detailed design that was approved by the Asian Development Bank on 10 Jan 1996. (ii) Lateral drain - Diameter (mm) 100 100 - Length (km) 3,200 1,600 Approved by ADB on 10 Jan 1996. (iii) Collector drain - Diameter (mm) 150 160- 380 - Length (km) 320 325 Approved by ADB on 10 Jan 1996. (iv) Drainage sump - No. of sumps 160 56 Approved by ADB on 10 Jan 1996. - No. of sump pumps 160 118
b. Electrification of sump pumps 11 kv transmission line (km) Transformer - Number (11 kv/110v) 170 175 Approved by ADB on 10 Jan 1996. - Capacity (kvA) 160 56
c. Surface drainage - New drain (km) 80 122 Approved by ADB on 10 Jan 1996. - Extension of existing drain (km) 3 9 Approved by ADB on 10 Jan 1996. - Rehabilitation of existing drain 67 80 Approved by ADB on 10 Jan (km) 1996.
- Remodeling of existing drain 25 16 (km) - Structures (no.) 255 375 Approved by ADB on 10 Jan 1996. - Gravel maintenance road 0 181 Approved by ADB on 10 Jan (km) 1996. 15 Appendix 1, page 2 Description Appraisal Actual Remarks
2. Canal Rehabilitation or Lining (Irrigation Facilities) Rehabilitation of distributary canal
- Length of lining (km) 100 1,004 Approved by ADB on 10 Jan 96. - Rehabilitation of channels without 146 42 Increase in lining reduced lining (km) the length of rehabilitation. - Rehabilitation of old structures 62 63 (no.) - Rehabilitation of outlets (no.) 0 56 - New outlets (no.) 0 174 - New structures (no.) 50 24
3. Watercourse Improvement a. Watercourse reconstruction - No. of watercourse 220 220 - Percent of lining length 20 10-30 - Water users association (no.) 220 220
b. Demonstration plot (no.) 280 280
c. Demonstration farms (no.) 0 5
d. Precision land – leveling area (ha) 700 710
e. Training of personnel 1,100 1,225
4. Vehicles and Equipment - Implementation/O&M vehicles 34 15 (no.) - Implementation equipment (lot) 6 7
5. Office and Residential Facilities 0 37 (no.)
6. Consulting Services a. Drainage component - International (pm) 96 63 Approved by ADB on 10 Jan 1996. - Local (for electrification) (pm) 50 88 Approved by ADB on 10 Jan 1996. b. Irrigation component - Local (pm) 120 162 Approved by ADB on 10 Jan 1996.
7. Training a. International training (no.) 22 16 b. Domestic training (no.) 0 26 ha=hectare, km=kilometer, kv=kilovolt, kvA=kilovolt-ampere, m=meter, mm=millimeter, O&M=operation and maintenance, pm=person-month, v=volt PROJECT COSTS AND FINANCING ($’000)
1989 1990 1991 ADB WAPDA IPD OWFM ADB WAPDA IPD OWFM ADB WAPDA IPD OWFM Component FX LC LC LC LC FX LC LC LC LC FX LC LC LC LC
A. Civil Works 1. Part A: Drainage 3 2 122 0 0 85 81 249 0 0 157 148 1,112 0 0 Facilities 2. Part B: Irrigation 0 0 0 0 0 0 0 0 4 0 200 188 0 34 0 Facilities B. Materials, Vehicles, & Equipment 1. Parts A & B 3 0 104 0 0 112 0 71 9 0 133 0 (29) 8 0 2. Part C 0 0 0 0 23 133 0 0 0 35 720 0 0 0 31 3. Electrification 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
C. Consulting Services 16 and Training 1. Part A: Drainage 0 0 0 0 0 262 0 25 0 0 92 0 43 0 0 2. Part B: Irrigation 0 0 0 0 0 0 0 0 0 0 0 176 0 1 0
D. Administration 1. Parts A & B 0 18 137 0 0 0 134 168 1 0 0 189 288 2 0 2. Part C 0 0 0 0 332 0 69 16 0 215 0 180 0 0 127 Appendix 2,page1 E. Land Acquisitiona 0 0 0 0 0 0 0 0 0 0 0 97 0 0
F. Service Charge 0 0 0 0 0 3 0 0 0 0 20 0 0 0 0
Total 6 20 363 0 355 595 284 529 14 250 1,322 881 1,511 45 158 a Land acquisition costs include the balance payable to farmers amounting to PRs29.241 million, equivalent to $0.650 million.
ADB = Asian Development Bank, FX = foreign exchange, IPD = Irrigation and Power Department, Punjab, LC = local currency, OFWM = On-Farm Water Management, WAPDA = Water and Power Development Authority 1992 1993 1994 ADB WAPDA IPD OWFM ADB WAPDA IPD OWFM ADB WAPDA IPD OWFM Component FX LC LC LC LC FX LC LC LC LC FX LC LC LC LC
A. Civil Works 1. Part A: Drainage 439 411 262 0 0 160 150 376 0 0 918 860 1,233 0 0 Facilities 2. Part B: Irrigation 285 267 0 90 0 774 724 0 90 0 163 153 0 76 0 Facilities B. Materials, Vehicles, & Equipment 1. Parts A & B 2 0 2 0 0 7 0 18 0 0 3 0 3 0 0 2. Part C 0 0 0 0 11 392 0 0 0 5 0 0 0 0 0 3. Electrification 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7Appendix2,page2 17
C. Consulting Services and Training 1. Part A: Drainage 179 0 32 0 0 205 0 49 0 0 68 0 10 0 0 2. Part B: Irrigation 0 49 0 2 0 0 124 0 2 0 0 0 0 1 0
D. Administration 1. Parts A & B 0 728 264 6 0 0 654 161 7 0 0 664 338 8 0 2. Part C 0 27 0 0 164 0 20 0 0 84 0 0 0 0 0
E. Land Acquisitiona 0 0 182 0 0 0 0 101 0 0 0 0 223 0 0
F. Service Charge 42 0 0 0 0 77 0 0 0 0 112 0 0 0 0
Total 947 1,482 742 98 175 1,615 1,672 705 99 89 1,264 1,677 1,807 85 0 1995 1996 1997 ADB WAPDA IPD OWFM ADB WAPDA IPD OWFM ADB WAPDA IPD OWFM Component FX LC LC LC LC FX LC LC LC LC FX LC LC LC LC
A. Civil Works 1. Part A: Drainage 4,398 4,117 1,736 0 0 4,906 4,593 1,408 0 0 3,413 2,943 (634) 0 0 Facilities 2. Part B: Irrigation 940 880 0 93 0 0 0 0 45 0 0 0 0 0 0 Facilities B. Materials, Vehicles, & Equipment 1. Parts A & B 29 0 26 0 0 95 0 22 4 0 45 0 (1) 4 0 2. Part C 0 0 0 0 0 0 0 0 0 5 0 0 0 0 0
3. Electrification 0 0 0 0 0 346 0 0 0 0 451 0 0 Appendix2,page3 0 0 18
C. Consulting Services and Training 1. Part A: Drainage 360 0 36 0 0 439 0 28 0 0 166 0 (80) 0 0 2. Part B: Irrigation 0 226 0 0 0 0 0 0 0 0 0 0 0 0 0
D. Administration 1. Parts A & B 0 1,336 391 6 0 0 1,473 473 10 0 0 1,394 50 7 0 2. Part C 0 0 0 0 0 0 0 10 0 0 0 0 0 0 0
E. Land Acquisitiona 0 0 27 0 0 0 0 57 0 0 0 0 54 0 0
F. Service Charge 196 0 0 0 0 282 0 0 0 0 366 0 0 0 0
Total 5,923 6,559 2,216 99 0 6,068 6,066 1,998 59 0 4,171 4,337 (611) 11 0 1998 Total ADB WAPDA IPD OWFM ADB WAPDA IPD OWFM Component FX LC LC LC LC FX LC LC LC LC Total
A. Civil Works 1. Part A: Drainage 3,117 2,917 4,746 0 0 17,326 16,222 10,610 0 0 44,158 Facilities 2. Part B: Irrigation 0 0 0 0 0 2,362 2,212 0 432 0 5,006 Facilities B. Materials, Vehicles, & Equipment 1. Parts A & B 336 0 342 0 0 765 0 558 25 0 1,348 2. Part C 0 0 0 0 0 1,245 0 0 0 105 1,350 19 3. Electrification 0 0 0 0 0 797 0 0 0 0 797
C. Consulting Services and Training 1. Part A: Drainage 87 0 (49) 0 0 1,858 0 94 0 0 1,952 2. Part B: Irrigation 0 0 0 0 0 0 575 0 6 0 581
D. Administration 1. Parts A & B 0 568 435 0 0 0 7,158 2,705 46 0 9,909 2. Part C 0 0 0 0 0 0 296 26 0 922 1,244 Appendix 2,page4
E. Land Acquisitiona 0 0 162 0 0 903 903
F. Service Charge 204 0 0 0 0 1,302 0 0 0 0 1,302
Total 3,744 3,485 5,636 0 0 25,655 26,463 14,896 509 1,027 68,550 IMPLEMENTATION SCHEDULE
1989 1990 1991 1992 1993 1994 1995 1996 1997 ACTIVITY IIIIIIIIIIIIIIIIIIIIIIIIIII
Surface Drainage 1. Field investigation survey
2. Preparation of Tender docments
3. Invite tender, review, and award
4. Earth work
5. Structures
Subsurface Drainage 1. Field investigation & survey
2. Prep. of tender documents 0Appendix3 20 3. Invite tender and award
4. Laying tile drains
5. Construction of structures
Electrification 1. Survey
2. Electrification
Canal Rehabilitation 1. Survey and investigation
2. Earth work and concrete lining
3. Structures
On-Farm Water Management
Planned Actual 21 Appendix 4
CONSULTING SERVICES (Person-Months)
Per Contract Per Original Variation Variation Variation Actual Expertise Appraisal Contract No. 1 No. 2 No. 3 Total Utilization
A. Drainage Consultants (WAPDA) 1. International Consultant Team Leader 14 2 M&E Specialist 1 Home Office Coordinator 1 Subtotal 96a 43 16 2.4 2 63.4 63
2. Domestic Consultant Construction Engineer 26 5 Office Engineer 22 Short-Term Specialist 3.87 1 1 Mechanical Specialist 1 1 Contract Specialist 1.25 Home Office Coordinator 0.9 0.5 Subtotal 50a 57 55.77 26.53 7.75 147.05 88.24b
Total 146 100 71.77 28.93 9.75 210.45 151.24 B. Irrigation Consultants (IPD) Team Leader 24.0 3.0 3.00 3.00 33.0 Principal Engineer 24.0 3.0 0.75 0.75 28.5 (Designs Specifications) Senior Engineer 24.0 3.0 0.75 0.75 28.5 (Designs Specifications) Principal Engineer 44.0 12.0 6.00 6.00 68.0 Constructions Designs 1.0 1.0 Gates 2.0 2.0 Constructions & Materials 1.0 1.0 Total 120a 120.0 21.0 10.50 10.50 162.0 162
aDetails were not given in the appraisal report. bDue to the delay in project implementation inputs of domestic consultants have been compressed
IPD=Irrigation Power Department, Punjab, M&E=monitoring and evaluation, WAPDA=Water and Power Department Authority. Table A5.1: CIVIL WORKS CONTRACTS (Amount in Million Rs.)
Amount Date Issuance Award Works Contract of Bid of Physical No. Description Contractor Estimate Contract Actual Invitation Contract Completion
A. Buildings KSU-01 Construction of residential buildings M.A. Aleem Khan & Sons, 7.725 11.163 11.163 22.12.88 12.04.89 11.04.90 and allied works Khushab colony Lahore
KSU-09 Earth filling along the roads in lawns Mushtaq & Company, 0.506 0.582 0.582 30.01.93 10.04.93 9.06.94 & parking grounds in Khushab Sargodha colony
KSU-12 Construction of Sub-Rest House Al-Hafeez, Farooqbad 0.750 0.862 0.862 22.03.94 14.03.95 14.09.95 & outhouses in Hadali colony at Khushab B. Surface Drains 22 KSU-02 Rehabilitation of Dhak, Khushab Main, M/s M.A. Aleem Khan 8.041 10.856 14.500 6.07.89 22.11.89 31.05.94 Branch Sub Branch, Kund, Bolah Main, & Sons, Lahore & Link and Ghag drains. Total length = 72.33 km
KSU-03 Remodeling of Bolah main and M/s Mir Hassan Khan 6.032 8.324 8.324 13.07.90 26.09.90 21.05.92 Ghag drain. Total length = 14.87 km & Sons, Lahore
KSU-04 Excavation of Rajar and Bolah branch M/s M.A. Aleem Khan 11.600 9.984 9.984 17.01.91 13.06.91 31.05.94 drains. Total length = 26.95 km & Sons, Lahore
KSU-05 Constn. of 8 nos link drains M/s Piran Ditta & Co. 8.712 7.574 7.574 27.01.91 11.05.91 31.12.92 Total length = 24.11 km R.Y. Khan Appendix 5,page1
KSU-06 Constn. of Sandral and Jauharabad M/s Saleem Trading 12.443 21.528 23.000 30.04.91 8.08.91 31.03.95 drains. Total length = 24.05 km Corp., Lahore
KSU-07 Extension of Bola main, Khushab main/ M/s Ch. Madar Ali 3.199 3.663 3.663 22.03.91 18.06.91 30.05.93 branch drains, 1-R Bola branch drain Contractor, Farooqabad Total length = 9.09 km Amount Date Issuance Award Works Contract of Bid of Physical No. Description Contractor Estimate Contract Actual Invitation Contract Completion KSU-08 Rehabilitation of rivercreek at the outfall M/s Qasi & Co. 0.802 0.918 0.918 25.04.91 18.08.91 31.03.93 of main drain. Total length = 3.17 km Dinga, Gujrat
KSU-11 Const. of Dhak drain extension and M/s Din Mubd & Bros. 1.636 1.881 1.881 22.03.93 8.06.93 14.05.94 appurtenant structures and Sargodha construction of VRC on Bolah main drain Total length = 1.16 km
KSU-13 Construction of Ghag - I & II branch M/s Khan & Sons Trading 5.817 6.688 6.688 12.05.94 14.03.95 14.04.96 drains and appurtenant structures Corp., Lahore
KSU-14 Remodelling/Rehabilitation of Chak M/s Friends Engineering 1.507 1.731 1.731 21.08.94 20.09.95 18.03.96 55 M.B and Chak 57 M.B drain Co., (Pvtb) Ltd., Lahore 23 KSU-17 Clearance of 9 No. syphons under M/s Aftab Ahm. Cheema 0.325 0.927 0.928 2.09.95 6.03.96 31.05.96 Nurewala & Mahajir branch & Co. Sargodha
C. Subsurface Drainage KSU/SSD/01 Construction of subsurface pipe Frontier Works Org., 1014 1014 684 31.10.92 16.08.93 31.12.98 drainage works Lahore
KSU-10 Construction of 5 samples M/s Ghulam Farid & Co. 0.053 0.066 0.066 13.07.92 19.01.93 18.03.93 gravel roads along 1-L Bola Minor Jhawarian Appendix 5,page2 KSU-18 Gravel surface roads of M/s Mustaq & Co. 6.253 5.315 5.315 27.12.95 9.04.96 10.03.97 20 Nos.sumps (Subsurface) Govt. contractor, Sargodha
KSU-19 Gravel surface roads of Rahim Engineers Con. 15.631 13.120 13.120 10.03.96 26.10.96 24.08.97 36 sumps (Subsurface) (Civil Mech., Faisalabad) Table A5.2: Civil Works - Irrigation Facilities (Amount in Million PRs.)
Amount Date Issuance Award Works Contract of Bid of Physical No. Description Contractor Estimate Contract Actual Invitation Contract Completion
A. Bolah System 1. Bolah Distributary Group - I Haji Atta Rasul & Co. 5.825 5.478 4.675 29.11.90 17.03.91 31.03.95 Rd 0 + 000 Rd 15 + 000
2. Bolah Distributary Group II Haji Atta Rasaul & Co. 4.625 4.376 4.311 29.11.90 17.03.91 13.05.93 Rd 15 + 000 to Rd 33 + 903
3. 1 - R Minor of Bolah Distributary Fair Deal & Co. 3.781 3.573 3.498 29.11.90 17.03.91 28.04.94 Group III -Rd 0+000 to Rd 15+875 4Appendix5,page3 24 4. 1 - L Minor of Bolah Distributary Fair Deal & Co. 4.953 4.717 4.621 29.11.90 17.03.91 18.03.92 Group IV - Rd0+20000
5. 1-L Minor of Bolah Distributary Ch. Engineering 2.656 2.529 2.495 29.11.90 17.03.91 18.03.92 Group V-Rd 20+000 to Rd 34+175
B. Shwala System 6. Shiwala Minor Group I Fair Deal & Co. 4.994 4.796 4.818 13.11.90 18.06.92 28.02.94 Rd 0 + 000 to Rd 14 - 000
7. Shiwala Minor Group II Fair Deal & Co. 5.796 5.600 5.680 13.11.90 01.07.92 12.03.94 Rd 14 + 000 Rd 32 + 200
8. Ghag Minor Group III Muhammad. Hanif Awan 4.248 4.046 4.021 13.11.90 01.06.92 22.98.93 Rd 0 + 000 to Rd 12 + 000
9. Ghag Minor Group IV Muhammad Hanif Awan 3.620 3.442 3.367 13.11.90 16.06.92 25.01.94 Rd 12 + 000 to Rd 26 + 150 Amount Date Issuance Award Works t of Bid of Physical Description Contractor Estimate Contract Actual Invitation Contract Completion Sandral Minor Group - V Haji Hidayat Ali 6.183 5.974 5.825 13.11.90 01.07.92 01.04.94 Rd 0 + 00 to Rd 25 +020
Dhak Rajar System Dhak Distributary Group - I Fair Deal & Co. 3.523 3.355 3.349 13.11.90 18.06.92 28.02.94 Rd 0 + 000 to Rd 16 + 000
Dhak Distributary Group - II Fair Deal & Co. 2.425 2.309 2.284 13.11.90 01.06.92 21.02.94 Rd 16 + 000 to Rd 34 + 320
Dhak Distributary Group - III Fair Deal & Co. 1.925 1.830 1.351 13.11.90 18.06.92 31.03.96 Rd 34 + 320 to Rd 93 + 230 5Appendix5,page4 25
Rajar Minor Group - IV Haji Hidayat Ali & Co. 4.385 4.176 3.975 13.11.90 01.06.92 20.08.93 Rd 0+000 to Rd 13+500
Rajar Minor Group - V Muhammad Hanif & Co. 4.112 3.912 3.785 13.11.90 01.06.92 16.08.93 Rd 13 + 500 to Rd 32 + 250
Khushab System Khushab Distributary Group - I Haji Atta Rasul & Co. 6.468 6.341 3.725 12.03.93 31.03.94 30.06.96 Rd 0+000 to Rd 2+500
Khushab Distributary Group - II Ch. Engineering 7.673 7.523 7.241 12.03.93 27.10.94 31.08.96 Rd 2 + 500 to Rd 5 + 847 Rd 13 + 000 to Rd 18 + 000
Khushab Distributary Group - III Ch. Engineering 7.467 7.321 7.342 12.03.93 31.03.94 30.06.96 Rd 18+000 to Rd 30+000
Khushab Distributary Group - IV Haji Atta Rasul & Co. 4.998 4.799 3.717 12.03.93 31.03.94 30.06.96 Rd 30+000 to Rd 44+420 Amount Date Issuance Award Works t of Bid of Physical Description Contractor Estimate Contract Actual Invitation Contract Completion I-R Khushab Minor Group - V Haji Atta Rasaul & Co. 7.410 7.265 3.628 12.03.93 31.03.94 30.06.96 Rd 0+000 to Rd 10+000
I-R Khushab Minor Group - IV Hadayat Ullah & Co. 7.055 6.850 6.535 12.03.93 14.07.94 31.08.96 Rd 10+000 to Rd 20+000
I-R Khushab Minor G - VII Ch. Engineering 6.923 6.794 6.458 12.03.93 31.03.94 28.02.96 Rd 20+000 to Rd 32+000
I-R Khushab Minor G - VIII Ch. Engineering 5.442 6.997 5.242 12.03.93 31.03.94 28.02.96 Rd 32+000 to Rd 46+000
1-L Khushab Minor G - IX Haji Atta Rasul & Co. 5.666 5.555 4.957 12.03.93 31.03.94 30.06.96 Rd 0+000 to Rd 8+000 26
I-L Khushab Minor G - X Hadayat Ullah & Co. 5.932 5.780 3.632 12.03.93 13.06.94 30.06.96 Rd 8+000 to Rd 16+000
I-L Khushab Minor G - XI Hadayat Ullah 6.080 5.960 4.965 12.03.93 13.06.94 30.06.96 Rd 16+000 to Rd 25+000
I-L Khushab Minor G - XII Umaid Ali & Co. 6.127 5.903 5.549 12.03.93 14.06.94 30.06.96 Rd 25+000 to Rd 35+000 Appendix 5,page5 I-L Khushab Minor G - XIII Haji Hadayat Ali 5.750 5.476 4.856 12.03.93 22.06.94 30.06.96 Rd 35+000 to Rd 50+300
Nurewala Distributary Ch. Engineering 2.175 2.175 2.087 01.03.95 01.11.96 30.06.96 Rd 0+000 to Rd 46+300 Construction of 7 no. escapes 27 Appendix 6
PROCUREMENT OF MATERIALS, VEHICLES, AND EQUIPMENT
Appraisal Actual Condition Present Mode of Item Unit Quantity Unit Quantity during PCR User Procurement
WAPDA 4 WD Station Wagon No. 1 No. 0 4 WD "Jeep-type" vehicle No. 11 No. 8 Working IPD LCB Pick-up Truck No. 7 No. 2 Working IPD LCB 4-Door Sedan (Double-cab No. 3 No. 1 Working IPD LCB pick-up) Van ("Hi-Ace Type") No. 1 No. 1 Need to IPD LCB repair Office Equipment and Lot 1 Lot 1 Working IPD LCB Furniture Survey Lot 1 Lot 1 Working IPD LCB Equipment
SCARP Monitoring Lab Lot 1 Lot 1 Working WAPDA LCB Equipment
Library Materials Lot 1 Lot 1 Working WAPDA LCB
IPD 4 WD "Jeep-type" vehicle No. 2 Pick-up Truck No. 2 Survey Equipment Lot 1 Office Equipment and Lot 1 Furniture 150 HP Dragline No. 1 No. 1 New WAPDA IS Tile Cleaning Machine No. 2 No. 2 New WAPDA IS Service Truck (4 WD) No. 1 0 0 IS Wheel-mounted Loader No. 1 No. 1 New WAPDA IS and Backhoe 10-20 ton Crane No. 1 No. 1 New WAPDA IS Fork Lifter 0 0 No. 1 New WAPDA IS
DOWM 4 WD Station Wagon No. 1 0 0 4 WD "Jeep-type" Vehicle No. 5 No. 3 2 Working WMS DP 1 out of order Motorcycle No. 21 No. 20 Good DP Bicycle No. 26 No. 11 Good DP Land Leveling Equipment Set 8 Set 8 Working WMC and DP condition WMS Survey Kits No. 23 No. 23 Working WMC and DP condition MWS Office Equipment and Set 4 No. 4 Working WMC and DP Furniture condition WMS
DOWM = Department of On-Farm Water Management, DP = direct purchase, IPD = Irrigation and Power Department, IS = international shopping, LCB = local competitive bidding; WMS = Water Management Specialist, WMC = Water Management Coordinator 28 Appendix 7, page 1
COMPLIANCE WITH LOAN COVENANTS
Reference Covenants Status of Compliance
L.A., Section 3.03 Except as the Borrower and the Asian Development Complied with. Bank (ADB) shall otherwise agree, all goods and services financed out of the proceeds of the loan will be procured in accordance with the provisions of Schedule 4 and Schedule 5 of this Loan Agreement.
L.A., Section 3.04 Except as the Borrower and ADB otherwise agree, Complied with. the Borrower will ensure all goods and services financed out of the proceeds of the loan are used exclusively in the carrying out the Project.
L.A., Section 3.05 Withdrawals from the loan account will be made Complied with. only on account of expenditures relating to goods and services that (a) are produced in, or are supplied from ADB member countries specified by ADB as eligible sources of procurement; and (b) meet other eligibility requirements specified by ADB.
L.A., Section 4.01 (a) The Borrower will ensure Water and Power Complied with. Development Authority (WAPDA) and the Punjab government carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental, agricultural, irrigation, drainage, and public utility practices.
(b) In the carrying out the Project and operating the project facilities, the Borrower will ensure all obligations set forth in Schedule 6 to this Loan Agreement are completed.
L.A., Section 4.02 The Borrower will ensure that WAPDA and the Complied with. Punjab government, promptly receive, as needed and on terms and conditions acceptable to ADB, the funds, facilities, services and other resources required, in addition to the proceeds of the loan, for the carrying out the Project and the operation and maintenance (O&M) of the project facilities.
L.A., Section 4.03 The Borrower will ensure that the activities of its Complied with. departments and agencies with respect to the carrying out the Project and operating the project facilities are conducted and coordinated in accordance with sound administrative policies and procedures. 29 Appendix 7, page 2
Reference Covenants Status of Compliance
L.A., Section The Borrower shall furnish, or cause to be Complied with. 4.04 furnished, to ADB, all such reports and information as ADB reasonably requests concerning (I) the loan, expenditure of the proceeds, and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the loan proceeds; (iii) the Project; (iv) to the extent relevant to the Project, the operations and financial condition of WAPDA, Irrigation and Power Department (IPD) and Directorate of On-Farm Water Management (DOWM) and any other agencies of Punjab and the Borrower responsible for the carrying out the project facilities; (v) financial and economic conditions in the territory of the Borrower and the international balance-of-payments position of the Borrower; and (vi) any other matters relating to the purposes of the loan.
L.A., Section 4.05 The Borrower shall enable ADB’s representatives to Complied with. inspect the Project, the goods financed out of the proceeds of the loan, and any relevant records and documents.
L.A., Section 4.06 The Borrower will take all action necessary on its Complied with. part to enable WAPDA and the Punjab government to perform their respective obligations under the Project Agreements, and will not take or permit any action that would interfere with the performance of such obligations.
L.A., Section 4.07 It is the mutual intention of the Borrower and ADB Complied with that no external debt owed a creditor other than ADB will have any priority over the loan by way of lien on the assets of the Borrower. To that end, the Borrower undertakes (i) that, except as ADB otherwise agrees, if any lien is created on any assets of the Borrower as security for any external debt, such lien will equally and ratably secure the payment of the principal of, and service charge any other charge on the loan; and (ii) that the Borrower, in creating or permitting the creation of any such lien, will make express provision to that effect.
General Implementation Arrangements
L.A., Schedule 6, The Project’s Executing Agencies (EA) will be Complied with. para.1 responsible for the overall supervision, control, and execution of the various parts of the Project as 30 Appendix 7, page 3
Reference Covenants Status of Compliance
follows: WAPDA for Part A; IPD, Punjab for Part B; DOWM for Part C.
L.A., Schedule 6, Within 30 days of the effective date, the Borrower Complied with. para. 2 will establish a project steering and coordinating committee and a project coordination committee to coordinate project activities.
L.A., Schedule 6, WAPDA will establish a project office with locations Complied with. para. 3 at Jauharabad and Sargodha.
L.A., Schedule 6, The WAPDA project office will be appropriately Complied with. para. 4 staffed with qualified and full-time administrative and technical staff.
L.A., Schedule 6, IPD will also post incremental staff to the WAPDA Complied with the para. 5 project office in conjunction with the execution of the appointment of canal rehabilitation and lining component included subengineers in in Part B of the project. addition to six regular subengineers.
L.A., Schedule 6, DOWM will establish a project office within the para. 6 project area; it will be headed by a project director under the direct supervision of DOWM's director (field) based in Lahore.
Specific Implementation Aspects
L.A., Schedule 6, The Project EAs will pay special regard to the Complied with. para. 7 phasing of construction activities related to canal rehabilitation and lining.
L.A., Schedule 6, With the exception of watercourses that are to be Not complied with. para. 8 improved in those parts of the project area not to be Construction of served by tile drainage, watercourse improvement watercourses was will be deferred until completion of tile installation. completed before completion of of subsurface drainage.
L.A., Schedule 6, Punjab will ensure that the necessary water Complied with. para. 9 management extension services will be provided to farmers in the project area by the agricultural officer and two field assistants on each DOWM field team.
L.A., Schedule 6, WAPDA will provide both international and domestic Complied with. para. 10 training for relevant WAPDA and IPD staff in the design, installation, and maintenance of subsurface agricultural drainage system. 31 Appendix 7, page 4
Reference Covenants Status of Compliance
L.A., Schedule 6, The Punjab government will ensure that (i) the Complied with. relevant staff of the DOWM field teams and other para. 11 involved teams receive appropriate orientation and refresher training at the Water Management Training Institute; (ii) Directorate of Agriculture Extension (DAE) subject matter specialists, agricultural officers, and field assistants receive basic water management training.
L.A., Schedule 6, Upon completion of watercourse improvement in the Not complied with. para. 12 project area, DAE staff will gradually assume responsibility for the on-farm irrigation extension tasks initially carried out by DOWM. In this regard, DAE field staff and DOWM field teams will coordinate their activities in accordance with the program designed by Department of Agriculture (DOA) under the ADB-financed Second On-Farm Water Management Project (Loan 871-PAK).
L.A., Schedule 6, The Borrower will take, or ensure WAPDA and the Generally complied para. 13 Punjab government to take, prior to construction of with. All major the relevant civil works, all action necessary to problems of land acquire all land and rights in land required for acquisition and right-of- project implementation. way have been resolved by WAPDA. Land has been acquired under the Land Acquisition Act.
L.A., Schedule 6, Beneficiary farmers will be required to contribute all Complied with. para. 14 the required unskilled labor and the cost of hiring skilled labor. In this regard, the Punjab government will ensure that prior to the installation of structures and lining of any main watercourse (sarkari khal) (i) DOWM will formally organize and register beneficiary farmers in each chak as water users’ associations (WUAs) under the WUA Ordinance, and (ii) each WUA will be required to complete the earth works for improvement of its sarkari kahl and the related communal farmers’ branches.
Operation and Maintenance (O & M)
L.A., Schedule 6, The O & M of the project facilities will be carried out Complied with. para. 15 by the Project’s EAs and various other concerned Systems were handed agencies as follows: (i) Surface and subsurface over to IPD on 31 drainage systems: the drainage systems, facilities, December 1999. vehicles, and equipment provided under Part A of the Project will be maintained by WAPDA during 32 Appendix 7, page 5
Reference Covenants Status of Compliance
project implementation and for not less than one year thereafter. Within a reasonable period of time after the expiry of all relevant contractor’s guarantees, a joint inspection by WAPDA and IPD to establish that the overall performance of the WAPDA facilities is satisfactory will be conducted. WAPDA will turn over the WAPDA facilities to IPD for sustained O&M within three months after such inspection.
(ii) Irrigation distribution system: irrigation canals to Complied with. be rehabilitated and lined under Part B of the Project will be operated and maintained by IPD during project implementation and thereafter.
(iii) Watercourses: watercourses to be improved Partially complied with. under Part C will be operated and maintained by the Watercourses usually concerned WUA, initially by DOWM and on a maintained through sustained basis by DAE. informal arrangements among the farmers. No guidance provided to WUAs by DAE.
(iv) Electrification works:-WAPDA's Salinity Control Complied with. and Rehabilitation projects (SCARPs) Electrification (North) will construct the electrification works under Part A (iii) of the Project and will hand the work to WAPDA's Power Wing for O&M.
L.A., Schedule 6, The Borrower will promptly provide, or cause to be Partially complied with. Para. 16 provided, all funds, staff, equipment required for the IPD did not adequately O&M of the Project facilities. plan for the assumption of the O&M responsibilities for the subsurface drainage system. However, IPD is making necessary arrangements for temporary O&M arrangements while preparing performance contracts to be financed under the National Drainage Project (NDP). Cost Recovery
L.A., Schedule 6, The Borrower will ensure that the Punjab Partially complied with. para. 17 government establishes and collects irrigation In 1998 irrigation and 33 Appendix 7, page 6
Reference Covenants Status of Compliance
and/or drainage service fees in such amounts and drainage fees in at levels adequate to recover the full costs of O&M Punjab covered about of all surface and subsurface drainage and irrigation 75 percent of the O&M systems in Punjab, whether or not located in the expenditures as project area, such O&M cost recovery will be in defined by the accordance with the program formulated by the provisions of the Loan Borrower and agreed by ADB pursuant to the Agreement of the provisions of the Loan Agreement of the Agriculture Agriculture Inputs inputs Program (Loan 825/826-PAK). Program.
L.A., Schedule 6, Except as ADB and the Borrower may otherwise Complied with. para. 18 agree, at least 25 percent of the cost of the materials provided for watercourse reconstruction under Part C of the Project will be recovered by the Punjab Board of Revenue from beneficiary farmers at no interest over a seven-year period including two years grace.
Monitoring and Evaluation
L.A., Schedule 6, The WAPDA project office will consolidate and Complied with. para. 19 prepare quarterly Progress reports on project implementation and submit these reports to ADB. In this regard, the IPD and DOWM project directors shall prepare quarterly progress summaries relating to the progress on irrigation and watercourse improvement, respectively, and provide these to the WAPDA project office. In preparation of the quarterly progress reports, WAPDA will incorporate the IPD and DOWM summaries in the document.
L.A., Schedule 6, The WAPDA project office will monitor overall Complied with. para. 20 project implementation progress; progress will be reflected in the quarterly progress reports referred to para. 19.
L.A., Schedule 6, WAPDA, through its SCARPS Monitoring Complied with. para. 21 Organization, will monitor the physical impact of the Project, especially impact on depth of the water table, shallow groundwater quality, effluent quantity and quality, river water quality, and soil salinity in the project area. In this regard, WAPDA will no later than 30 June 1989 submit to ADB a physical monitoring (system performance monitoring) plan for ADB's review and concurrence.
L.A., Schedule 6, Regular project benefit monitoring and evaluation Complied with. para. 22 (BME) will be carried out by WAPDA's SCARPS Baseline survey was Monitoring Organization, either directly or through a carried out in 34 Appendix 7, page 7
Reference Covenants Status of Compliance
suitable local institution as may be agreed with December 1998. ADB, in accordance with ADB's Guidelines for Socio-economic PBME for Agriculture, Irrigation and Rural surveys have been Development Projects. These activities will be completed on an carried out at specified times, including completion annual basis from crop- of the projected facilities, five years thereafter, and year 1990/91 to after full project development. When the Project is 1995/96. physically completed, WAPDA will prepare a provisional impact evaluation study prior to the visit of ADB's project completion review mission. A plan for BME, taking into account, the design of the baseline survey previously conducted, will be submitted to ADB no later than 30 June 1989.
P.A., Section 2.09 The EAs will establish and maintain separate Delayed complied with. accounts fro expenditure under the Project. These WAPDA submitted up accounts will be audited annually by an auditor to FY 1997/98. IPD acceptable to ADB. The EAs will submit copies of submitted up to audit reports in such detail as ADB may reasonably FY1996/97 as there request, together with certified copies of the were no more financial statements not later than nine months after expenditures after this the close of the fiscal year which they relate. period. DOWM submitted up to FY 1992/93. 35 Appendix 8, page 1
Table A8.1: Actual Disbursements ($ million)
Year Contract Awards Disbursements
Year-wise Cumulative Year-wise Cumulative
1989 0.241 0.241 0.026 0.026
1990 2.608 2.849 0.879 0.905
1991 2.072 4.921 2.203 3.108
1992 2.298 7.219 2.429 5.537
1993 21.261 28.480 3.287 8.824
1994 2.452 30.932 2.941 11.765
1995 4.591 35.523 13.318 25.083
1996 6.267 41.790 12.134 37.217
1997 5.043 46.833 8.508 45.725
1998 3.974 50.807 6.394 52.119
Source: ADB's Loan Financial Information System. Table A8.2: Annual Disbursements by Category ($'000)
Category1989 1990 1991 19921993 1994 1995 1996 1997 1998 Total No. Name FX LC FX LC FX LC FX LC FX LC FX LC FX LC FX LC FX LC FX LC FX LC Total
01A Civil Works - Part A 3 2 85 81 157 148 439 411 160 150 918 860 4,398 4,117 4,906 4,593 3,143 2,943 3,117 2,917 17,326 16,222 33,548 01BCivil Works - Part B 00002001882852677747241631539408800000002,362 2,212 4,574 02A Equipment, Vehicles 3 112 133 2 7 3 29 95 45 336 765 0 765 & Materials - Parts A & B (excluding electrification) 02B Equipment, Vehicles 0 0 0 0 0 0 0 346 451 0 797 0 797 & Materials - Parts A & B (electrification only) 02C Equipment, Vehicles 0 133 720 0 392 0 0 0 0 0 1,245 0 1,245 & Materials - Part C 03 Consulting Services 0 262 92 179 205 68 360 439 166 87 1,858 0 1,858 & Training for Part A 04F Local Expend. 0 0 176 49 124 0 226 0 0 0 0 575 575 Consulting Services & Training for Part B 36 04G Local Expend. 18 134 189 728 654 664 1,336 1,473 1,394 568 0 7,158 7,158 Project Implmentation Parts A & B 04H Local Expend. 0 69 180 27 20 0 0 0 0 0 0 296 296 Project Implmentation Part C 05 Service Charge 0 3 20 42 77 112 196 282 366 204 1,302 0 1,302 During Construction
06 Prior Technical 000Appendix 8page2 Assistance Cost 07 Unallocated 000 99I Imprest Account - IPD 135 0 0 (135) 0 0 0 99W Imprest Account - WAPDA 701 0 0 (700) 1 0 1 Total 6 20 595 284 1,322 881 947 1,482 1,615 1,672 1,152 1,677 6,759 6,559 6,068 6,066 4,171 4,337 2,909 3,485 25,544 26,463 52,007 Annual Disbursements 26 8792,203 2,429 3,287 2,829 13,318 12,134 8,508 6,394 FX = foreign exchange, LC = local currency, IPD = Irrigation and Power Department, WAPDA=Water and Power Development Authority
37 Appendix 9
SUMMARY OF ENVIRONMENTAL IMPACTS
1. To assess the performance and benefits of the Project, the Planning Directorate (Water, Central) of the Water and Power Development Authority conducted a survey of environmental impacts of the Project.
A. Salinity
2. To assess salinity, 67 piezometers were installed to measure the changes in groundwater quality. Usable water quality increased from 15 percent to 22 percent, while the percentage of marginal water remained unchanged.
Table A9.1: Groundwater Quality
1996 1998 Water Rating No. of Percent No. of Percent Piezometers Piezometers
Usable 10 15 15 23 Marginal 9 13 9 13 Hazardous 48 72 43 64
Total 67 100 67 100
B. Waterlogging
3. To collect data on waterlogging, 150 observation wells were installed to measure the fluctuation of groundwater table at a uniform grid of 280 ha in the project area. Biannual water depth observations during the months of June and October were made. The water-table maps were prepared, indicating depth of 0-0.9 m, 0.9-3.0 m, and below 3 m. The depth of the groundwater table indicated that the project area with water depth of 0.9 meters or less was reduced from 63 percent in 1991 to 38 percent in 1998.
Table A9.2: Groundwater Tables (% of the project area)
Depth 1991 1998
0 – 0.9 m 63 38 0.9 – 3.0 m 34 60 Below 3 m 3 2
Total 100 100 38 Appendix 10, page 1
PROJECT IMPACT ON POVERTY REDUCTION
A. Farm Incomes1
1. Farm incomes were estimated with and without the Project for the years 1991 (before project benefits commenced), 1999 (the most recent year for which information was available to the Project Completion Review Mission) and 2005 (the year by which full project benefits are assumed to occur). The farm incomes are for a representative average farm size of 4.6 hectares (ha), which is based upon data gathered in the most recent Agro-Socio- Economic Survey for the year 1996/97. The appraisal report assumed an average farm size of 6.6 ha. The Water and Power Development Authority (WAPDA) Project Planning Organization (Water) staff indicated that there is a trend of reducing average farm size over time as land is disaggregated among family members. On the other hand, an average farm family size of 11 suggests farm families frequently include more than two adults. To the extent that there has been any reduction in average farm size since project inception, there will have been a corresponding reducing effect on average farm net incomes. However, this effect is not project related and the calculated current and future incremental farm incomes (i.e., farm incomes with the Project minus farm incomes without the Project) are an appropriate indication of project impact.
2. The estimation of farm incomes with and without the Project assumes the same cropping pattern, cropping intensities, input usage, and crop yields, used in the economic analysis (Appendix 11). However, current (1999) local market and farm-gate prices for inputs and outputs are used, and the irrigation service charges are included as a farm expense item. (In the economic analysis, the irrigation service charges are transfer items and are excluded). Agricultural income tax is not deducted from gross farm incomes as farms smaller than 5.1 ha are exempt. Land Revenue Tax and Usher were discontinued in 1996.
3. Based on the latest Agro-Socio–Economic Survey, the split between family and hired labor is assumed to be 50:50. Family labor returns are included with the surpluses calculated to make up net farm incomes.
4. The results of the financial analysis show that the Project has already increased net farm income from PRs24,808 ($509) to PRs57,560 ($1,182); i.e., an increase of 132 percent. Without the Project, farm incomes would have fallen to PRs19,637 ($403), implying that the incremental benefit of the Project has been PRs37,923 ($779) for farmers’ average annual income. By 2005, it is estimated that the Project, by increasing the cropping intensity and crop yields, will enable farm incomes to increase to an average of PRs104,406 ($2,144) as compared with an estimated without-project, average net farm income in 2005 of only PRs15,530 ($319). Therefore as compared with incomes in 1991, the Project will
1 In the analysis of farm incomes, no account was taken of off-farm incomes or livestock production since the Project does not directly benefit these activities. At the time of project appraisal only 5 percent of farmers had immediate family members who earned off-farm income, although exchange labor between farms was a common practice (page 74, footnote 2 of the appraisal report). While the Project has led to a growth in off- farm employment opportunities, these are principally located in the two main centers adjacent to the project area – Khushab and Jahurabad. Therefore off-farm employment opportunities for farm family members within the project area remain limited. Livestock production benefits of the Project are in the first instance captured by the benefits calculated from fodder production and to this extent are included in the analysis. 39 Appendix 10, page 2 enable farm incomes to increase by more than 300 percent, instead of falling by 37 percent in the without-project situation.
5. These impacts on farm incomes are consistent with reported substantial increases in land values in the project area gathered from farmer interviews during the Mission. Land values in the project area were reported to have increased from around PRs25,000 to PRs50,000 per ha before the Project (i.e., PRs56,250 to PRs112,500 per ha in 1999 prices) to PRs250,000 per ha in February 2000.
6. A 1998 socio-economic impact evaluation of the Pakistan SCARP Mardan Project financed by the Canadian International Development Agency found that while the project resulted in (i) an increased supply of irrigation water, (ii) disappearance of water logging, (iii) increased cropping intensity, and (iv) increased crop yields, it has only led to modest gains in farm incomes. The study estimated only a 5 percentt real increase in farm incomes, as against a 32 percent reduction2 in farm incomes for farmers in nearby villages where there were no project inputs. The principal reasons given for the improved agricultural productivity not translating into more significant increases in farm incomes were the skewed distribution of asset (especially land) ownership; poor management and financial resources of the provincial irrigation department for the project operation and maintenance (O&M); and monopolistic manipulation by powerful buyers of farmers’ cash crops.
7. The future financial (and economic) benefits of the Khushab SCARP are also contingent upon adequate O&M funding and management. However, the project area does not appear to have a highly skewed distribution of land ownership. Only 6 percent of the project area is occupied by landowners with holdings greater than 10 ha. The farmers in the project area are also unlikely to be seriously disadvantaged by monopolistic manipulation by buyers of crops that are surplus to their own consumption requirements. In addition to a number of agro-processing units in, or adjacent to the project area, the farmers (and their agents) are able to access, by road and rail, major market centers to the north, east, and south. Only in the case of sugarcane, with its comparatively low value to volume ratio, do transport costs dictate the one sugar mill (located in Jauharabad) as the single logical outlet for sugarcane grown in the project area. However, the farmers have at least the potential to grow alternative crops to provide some restraint to monopolistic behavior by the sugarmill.
B. Poverty Reduction
8. On the basis of an average of 11 family members per farm (Agro-Socio-Economic Survey, 1996-97), average income per family member was PRs2,255 ($46) per annum in 1991, rising to PRs5,233 ($107) in 1999 with the Project. This compares to a basic-need poverty line per capita for rural areas of Pakistan of PRs7,109 ($146) per annum (based upon data taken from United Nations Development Programme’s Poverty Profile of Pakistan, updated to 1999 prices). By 2005, the Project is expected to raise the average farm income per capita to PRs9,491 ($195) per annum. Therefore, by 2005 the Project is expected to raise average per capita incomes to around 34 percent above the basic needs poverty line.
9. The financial analysis confirms that the Project is directed at farm families who without the Project would have remained significantly below the basic needs poverty line (average per capita income in 2005 without the Project would have fallen to PRs1,412, only
2 The fall in farm incomes in the Khushab project area without the Project is estimated to be 37 percent. 40 Appendix 10, page 3
20 percent of the basic needs poverty line). The Project will enable the majority of farm family members in the project area to rise above the basic-need poverty line. 3
C. Impact on Women
10. The agro-socio-economic surveys carried out annually over 1990/91 to 1996/97 by WAPDA’s Project Planning Organization (Water) did not include data collection on the impacts of the Project on women or their potential involvement in the Project. This was unfortunate, given the reasonable sample size (162 farms) and seven-years for which data was collected.
11. The report, Women and Drainage in Pakistan,4 includes an analysis of a case study survey conducted in the Bahawalnagar district, Punjab. Because that drainage project was not yet operational when the survey was conducted, the survey covers only the expectations of the interviewees about project impacts and the likely level of participation in the project by women.
12. All the women interviewed saw the drainage project as bringing positive benefits including improved land quality, increased crop yields, and increased income. In addition many thought the project would bring positive health benefits (through less risk of waterborne diseases and more money to spend on medicines and medical consultations) as well as less housing maintenance work since land subsidence would be reduced.
13. In the case study area the respondents did not foresee any reduction in women’s involvement in farming activities as a result of the project despite the observance of purdah by many in Pakistan. Even after the project, expectations were that farmers incomes would not be sufficient to encourage the substitution of female family labor with hired labor. Also, the existing level of off-farm employment by females in the project area was small, and therefore the project was not expected to reduce female income independence through women being required to give up off-farm employment for the increased workload on their family farm. Both male and female respondents to the survey did not expect women to play a role in the O&M of the project, other than indirectly through encouragement of their male spouses. Representation on farmers organizations was seen to be the preserve of men.
14. Because the project area would appear to contain farm families with similar socioeconomic profiles to those in the Bahawalnagar pilot study area, it is reasonable to conclude that the project impacts on women will be similarly positive. However, like the Bahawalnagar project, the Project itself is unlikely to bring about greater involvement of women in farm decision making or in communal roles such as farmer organizations. To overcome traditional practices and attitudes, interventions by other modalities will be necessary.
3 The latest (1996/97) agro-socio-economic survey indicates that the majority of farmers in the project area are owners of small holders. For 1996/97 the survey indicates that 69 percent of the surveyed farms were less than 5 ha, 25 percent were between 5 and 10 ha, and only 6 percent were greater than 10 ha). There is few landless people in the project area. 4 de Haan Alma, 1999. Women and Drainage in Pakistan. Lahore, Pakistan: International Waterlogging and Salinity Research Institute (IWASRI) 41 Appendix 10, page 4
D. Recovery of Drainage O& M Costs
15. The financial analysis indicates that the Project’s sustainability could be underpinned by the levying of a drainage service charge in addition to the existing water service charge. O&M costs for the drainage components of the Project were estimated to be around PRs30 million or PRs.830 per cultivable ha per annum. For an average farm size of 4.6 ha, this equates to PRs3,820 per annum or about 3.7 percent of net farm incomes in 2005. It is about 6.6 percent of current farm incomes because project benefits are still growing. The drainage service charge could be phased in over the next five years as farmers’ incomes increase significantly as a result of the Project. It would represent about 4.3 percent of the Project’s incremental benefits to farmer’s net incomes by 2005. 41 Appendix 10, page 4
D. Recovery of Drainage 0& M Costs
15. The financial analysis indicates that the Project's sustainability could be underpinned by the levying of a drainage service charge in addition to the existing water service charge. O&M costs for the drainage components of the Project were estimated to be around PRs30 million or PRs.830 per cultivable ha per annum. For an average farm size of 4.6 ha, this equates to PRs3,820 per annum or about 3.7 percent of net farm incomes in 2005. It is about 6.6 percent of current farm incomes because project benefits are still growing. The drainage service charge could be phased in over the next five years as farmers' incomes increase significantly as a result of the Project. It would represent about 4.3 percent of the Project's incremental benefits to farmer's net incomes by 2005. 42 Appendix 11 , page 1
ECONOMIC ANAL YSIS
A. Major Assumptions
1. A description of major assumptions for recalculating the economic internal rate of return (EIRR) for the Project follows.
1 Period of Analysis
2. For the purposes of this analysis, the economic life of the Project is taken to be 50 years from the end of construction of the subsurface drainage system (i.e., until the end of 2048). Salvage values are assumed to be zero at the end of the Project.
2. Development Benefits
3. On the basis of increased agricultural development thus far, full agricultural development benefits resulting from the Project are expected to be achieved by 2005, i.e., some seven years after physical completion of the subsurface drainage works. It is assumed that no project benefits were achieved until 1992.
3. Incremental Crop Production
4. Tables A 11.1 and A 11.2 set out the cropping pattern, cropping intensity and crop yield assumptions. For the years 1991 and 1995, data from the agro-socio-economic surveys have been used. For 1999 and 2005 with and without the Project, estimates have been made on the basis of the agro-socio-economic survey results for 1990/91 to 1996/97 and interviews with farmers and agricultural officers of Governmen1 agencies conducted during the Project Completion Review Mission.
5. Table A 11.1 provides a comparison of the current assumptions about the cropping pattern and intensity, and those assumptions made at the time of appraisal. The overall cropping intensity assumptions remain much the same. However, a major difference in the cropping pattern assumed is the comparative areas of cotton and sugarcane. Whereas the appraisal report assumed cotton would reach 17 percent (6,000 ha) of the Project's cultivable command area, this now seems unlikely for the foreseeable future. The farmers' preference is for sugarcane production over cotton, with an estimated 15 percent (5,430 ha) now grown in the project area. The other significant differences in the cropping pattern assumptions are that this project completion report (PCR) analysis is more conservative about the extent of wheat cultivation with and without the Project as compared with the appraisal report, and fodders are now assumed to have principally displaced "other crops" in the projected cropping patterns. This reflects the upsurge in livestock holdings on the farms in and adjacent to the project area.
6. As far as crop yield assumptions are concerned, the major differences between the appraisal report and this PCR analysis are the lower cotton yields, and higher wheat and sugarcane yields assumed in PCR analysis (Table A 11.2). The lower cotton yield reflects the reluctance of farmers at this time, at least, to grow significant areas of cotton because of unsuitable soil conditions. The higher yields for wheat and sugarcane as compared with yields at appraisal take into account the yields that have already been achieved within the project area. Even higher yields for these crops have been achieved on some farms within the project area, but conservative assumptions have been adopted due to the ongoing water supply limitations. While the appraisal report assumed 50 percent of the subsurface drainage water 43 Appendix 11 , page 2 could be reused for irrigation, at the present time the extent of drainage water reuse in the future remains uncertain.
4. Pricing of Inputs and Outputs
7. The prices used for the financial and economic analysis of the Project are summarized in Table A11.3. Economic prices of traded project outputs and inputs used in the economic analysis are derived from October 1999 the World Bank's commodity prices 1 and are expressed in constant 1999 prices with necessary adjustments for shipping, handling, and distribution costs, and use of the standard conversion factor for the domestic content of farm-gate economic prices. (Tables A 11.4 to A 11.9). Paddy and cotton are valued at export parity; wheat, sugarcane, and fertilizers at import parity. Prices and costs are converted to constant 1999 prices using the indices for Pakistan and international inflation shown in Table A 11.10.
8. Table A 11.3 highlights the distortion created by the much higher financial price paid for sugarcane to farmers as compared with the economic price based on import parity international prices. While soil salinity conditions in the project area may not yet be suited to growing cotton, with the passage of time it is expected that an increasing area could cultivate cotton. Not only would a switch away from sugarcane to cotton (and perhaps a Rabi crop) lead to higher economic returns, but it would also reduce pressure on the project area's limited irrigation water supply, which will be exacerbated by the forecast increase in the cropping intensity facilitated by the Project.
9. T able A 11.11 shows a comparison of the international prices used in the analysis and those used at appraisal for rice, cotton, wheat, and sugarcane. It indicates that actual and forecast prices for these major commodities are significantly lower than the projections made at appraisal. This will have a downward influence on the EIRR, irrespective of the implementation and ongoing performance of the project facilities themselves.
10. Current local market prices are used for nontraded commodities, such as fodder and inputs other than fertilizers, adjusted by the standard conversion factor (0.9) to reflect economic farm-gate values. Labor has not been further shadow priced because the extent of unemployment and underemployment within the project areas have not been quantified. While some probably exists now, demand for on- and off-farm labor will increase as a result of the Project.
5. Economic Costs and Benefits.
11. Total economic capital investment costs for the Project amount to $60 million in 1999 constant dollars. This compares to $59 million at appraisal, again in 1999 constant dollars. Replacement costs of drainage sump pumps and operation and maintenance (O&M) machinery are estimated at $0.4 million every 12 years. Annual incremental O&M costs for the Project are estimated at $0.6 million on the basis of data provided by Water and Power Development Authority and Irrigation and Power Department staff. The economic value of farmer-contributed labor and material inputs for watercourse rehabilitation and lining, not financed by the project loan or the Government of Pakistan, is estimated at $1 million, spread over 1989 to 1993.
12. The PRs.115 million ($2.4 million) identified in the current three-year rolling plans of the National Drainage Program project for remedial O&M work on the surface drains in the project
Projections were used for prices in 1999 and thereafter. Prior to 1999, actual prices were used 44 Appendix 11, page 3 area has been included as a project economic cost. Also a provision of $0.6 million has been included in the economic analysis for the on-farm development costs necessary to recultivate some 1 ,600 ha in the east of the project area served by sumps 2 to 10.
13 A standard conversion factor of 0.9 was applied to all local costs.
14. Only the direct quantifiable benefits of the Project, consisting of the net value of incremental crop production between the with-project and without-project situations have been included in the economic analysis. Incremental crop benefits are assumed to have begun in 1992 following the completion of some on-farm water management, off-farm irrigation, and surface drainage works, but the incremental benefits are expected to grow more substantially with the completion of the subsurface drainage works at the end of 1998. Net economic crop benefits from the Project are estimated to be $3.7 million in 1999. Full development benefits by 2005 are estimated to be $14.2 million.
B. Economic Internal Rate of Return Results
1. Economic Internal Rate of Return
15. Based upon the data and these assumptions, the Project is expected to yield an Economic Internal Rate of Return (EIRR) of 13.4 percent per annum as indicated in Table A 11.12. This compares with an estimated EIRR at appraisal of 16 percent per annum. The main causes for the lower EIRR are
lower actual and projected international prices for rice, cotton, wheat, and sugarcane; (i)
(ii) the extended project implementation period;
(iii) a cost overrun reflected in total economic capital investment costs being 2 percent higher than estimated at appraisal in 1999 constant dollar terms; and (iv) the preference of farmers to grow sugarcane instead of cotton.
To some extent, these factors are offset by the higher yields for wheat and sugarcane now assumed possible as a result of the Project.
2. Sensitivity Testing
16 Sensitivity analysis was undertaken (Table A 11.13)
Table A 11.13: Sensitivity Analysis
Sensitivity Analysis (%)%
Base Case 13.4 1. Net Crop Benefits reduced by 10 percent 12.28 2. Full Agricultural Development Delayed until 2010 instead of 2005 12.2 3. Project Incremental O&M Costs increased by 100 percent 12.8 4.1+2+3 10.8 5. No O&M, Project benefits assumed to decline to zero by 2010 ~o
EIRR = Economic Internal Rate of Return, O&M = operation an maintenance a If crop benefits reduced by 10 percent only from 2000 onward, the EIRR is 11.9 percent. Appendix 11, page 4 . 45 tc
The base case EIRR and this sensitivity analysis show that the Project remains economically beneficial under unfavorable assumptions about future parameters. The high economic importance of adequately maintaining the project facilities is highlighted by the EIRR only reducing from 13.4 percent to 12.8 percent if the project O&M costs are doubled from an assumed $0.6 million (PRs29.2 million) to $1.2 million (PRs58.4 million). Further, if no O&M occurs, it is predicted that Project benefits would decline to zero by 2010. Under this scenario, the EIRR for the Project is less than 0% (assumes zero O&M costs, no additional on-farm development costs, and no remedial O&M expenditure for surface drains).
c. Employment Creation
17. The on-farm employment impacts of the Project are summarized in Table A11.14. Compared with the without-project situation, the Project is estimated to have already led to the creation or saving of around 1 ,900 on-farm jobs. By 2005, this figu!e is expected to increase to around 4,000 on-farm jobs based on the cropping pattern and intensity in the project area. At appraisal report 3,500 additional on-farm jobs were forecast as a result of the Project.
18. In addition to these direct employment impacts, the Project will generate indirect off-farm employment benefits, for example, in the provision of transport and crop processing industries (rice, sugar, and flour mills). Assuming a 1: 1 ratio between on-farm and off-farm employment creation (Appraisal Report, para. 130) the total employment impact of the Project can be estimated at 3,800 jobs by 1999 and 8,000 jobs by 2005. Table A11.1: Cropping Pattern and Intensity (%)
Item 1991 a 1995 a 1999 b 2005 b, c Without Project 2005 b
Paddy 31.0 27.4 26.0 24.0 (18.0) 33.0 (28.0) Kariff Fodder 11.7 12.3 13.7 14.7 (7.0) 12.0 (11.0) Cotton 0.3 0.3 0.3 2.3 (17.0) 0 (0)d Other Kariff 0.0 0.1 0.0 0 (8.0) 0 (2.0) Wheat 39.0 44.0 44.0 46.0 (52.0) 39.0 (47.0) Rabi Fodder 17.6 19.3 20.0 21.0 (12.0) 18.0 (13.0) Other Rabi 1.3 0.4 1.0 1.0 (8.0) 1.0 (3.0)
Sugarcane 6.3 9.4 15.0 16.0 (5.0) 3.0 (3.0) 46
Cropping Intensity 107.2 113.2 120.0 125.0 (125.0) 106.0 (108.0)
Note: The latest available socioeconomic survey for 1996/97 shows a fall in the cropping intensity for that year because of the disruption caused by project works. a Appraisal Report Estimates Shown in Parenthesis for 2005 with and without Project. b From Agro-Socio-Economic Survey Report, March 1998 c Based on Agro-Socio-Economic Survey, the Appraisal Report and discussions with farmers during Project Completion Review Mission in February 2000. d Includes the bringing into cultivation of approximately 1600 ha, which is currently uncultivated due to extensive waterlogging. Appendix 11,page5 Table A11.2: Cropping Yields (kg/ha)a
Item 1991 1995 1999 2005 b Without Project 2005
Paddy 2,427 2,174 3,000 3,500 2,000 Kariff Fodder 12,570 19,970 8,000* 12,000* 5,000* Cotton 297 289 400 1,000 200 Wheat 1,172 1,359 2,000* 3,000* 900* Rabi Fodder 47,120 39,474 19,800 30,000 12,000 Suqarcane 34,938 37,229 50,000 80,000 20,000
*Note: Yields in 2005 assumed at appraisal were: Crop with project without project 47 paddy 3,500 2,850 cotton 1,200 0 wheat 2,530 1,165 sugarcane 53,400 33,000 a Except for fodder, 1999 onward which is PRs/ha. Constant 1999 prices. These are marked with an asterisk. b Higher yields could be achieved, but they are dependent upon increased water supply to the project area. Appendix 11,page6 48 Appendix 11, page 7
Table A11.3: Farm-gate Prices of Agricultural Outputs and Inputs Used for Financial and Economic Analysis (PRs Constant 1999 Prices)
Financial Economic Item Units 1999 1991 1995 1999 2005 2010 A. Outputs Paddy PRs/kg 5.7 5.7 4.7 4.1 4.6 4.4 Kariff Fodder PRs/ha 8,000 7,200 7,200 7,200 10,800 10,800 Cotton PRs/kg 21 25.6 27.8 18.4 21.8 21.8 Wheat PRs/kg 6 9.7 10.2 8.3 9.4 9 Rabi Fodder PRs/ha 19,800 11,880 11,880 17,820 27,000 27,000 Sugarcane PRs/mt 742 587 797 345 548 556
B. Inputs Seeds - Paddy PRs/kg 5 6.8 5.6 4.9 5.5 5.3 Kariff Fodder PRs/kg 12 10.8 10.8 10.8 10.8 10.8 Cotton PRs/kg 10.5 30.7 33.4 22.1 26.2 26.2 Wheat PRs/kg 10 11.6 12.2 10 11.3 10.8 Rabi Fodder PRs/kg 55 49.5 49.5 49.5 49.5 49.5 Sugarcane PRs/kg 0.8 0.7 1.0 0.4 0.7 0.7 Fertilizer Urea PRs/kg 7 12.6 13.1 7.9 9.6 9.7 DAP PRs/kg 13.5 12.5 13.1 12.8 12.6 11.8 Insecticide Paddy PRs/ha 865 780 780 780 780 780 Cotton PRs/ha 1,110 1,000 1,000 1,000 1,000 1,000 Sugarcane PRs/ha 1,605 1,445 1,445 1,445 1,445 1,445 Weedicide (wheat) PRs/ha 990 890 890 890 890 890 Labor PRs/pda 90 81 81 81 81 81 Draft Animal PRs/ppdb 120 108 108 108 108 108 Tractor Hire PRs/hr 155 140 140 140 140 140 Harvesting and Threshing c Paddy (10%) PRs/ha 1,710 1,245 1,115 1,539 1,796 1,796 Cotton PRs/ha 2,160 1,944 1,944 1,944 1,944 1,944 Wheat (20%) PRs/ha 2,400 1,266 1,468 2,160 3,240 3,240 Sugarcane (12.5%) PRs/ha 4,638 2,916 3,108 4,174 6,678 6,678
Note: In 2005 without project amounts in PRs/ha are 1,026, 972 and 1,670 for paddy, cotton, wheat, and sugarcane, respectively. a pd = person-day b ppd = animal pair person day c Based upon percentage rates and 1999 financial prices. Economic prices are multiplied by 0.9. Table A11.4: Export Parity Price for Paddy (Constant 1999 Prices)
Item 1991 1995 1999 2005 2010 Rice Pricea $/mt 319 279 250 273 264 Less Quality Differential 64 56 50 55 53 FOB Karachi $/mt 255 223 200 218 211 FOB Karachi PRs/mt 12,419 10,860 9,740 10,617 10,276 Port Charges, Handling, Storage, 1,000 1,000 1,000 1,000 1,000 Packing, Clearing, Losses RECP Costs 600 600 600 600 600 Transit Losses 30 30 30 30 30 Procurement and Bagging 560 560 560 560 560
Rail Transport to Karachi 345 345 345 345 345 49 Transport & Handling Mill Gate to Rail Head 75 75 75 75 75 Ex-Mill-Gate Value of Rice 9,809 8,250 7,130 8,007 7,666 Conversion Rate Paddy to Rice (60%) 5,885 4,950 4,278 4,804 4,600 Plus Value of Byproducts 500 500 500 500 500 Less Milling Costs 600 600 600 600 600 Value of Paddy into Mill 5,785 4,850 4,178 4,708 4,500 Less Transport and Handling, Farm to Mill 115 115 115 115 115 Appendix 11,page8 Export Parity Price at Farm-Gate PRs/mt 5,670 4,735 4,063 4,589 4,385 Financial Farm-Gate Price 5,700 Mt=metric ton, FOB=free on board, RECP=Rice Export Corporation, Pakistan aThai (White) milled, 5% broken, government standard, FOB Bangkok Table A11.5: Export Parity Price for Raw Cotton (Constant 1999 Prices)
Item 1991 1995 1999 2005 2010 Cotton Pricea $/mt 1,700 1,849 1,202 1,434 1,436 Quality Adjustment (90%) 1,530 1,664 1,082 1,291 1,292 Less Freight 110 110 110 110 110 Less Insurance 50 50 50 50 50 CIF Karachi $/mt 1,370 1,504 922 1,131 1,132 CIF Karachi PRs/mt 66,719 73,250 44,901 55,060 55,148 Less Port Charges 580 580 580 580 580 Less Transport 530 530 530 530 530 Less Ginnery Cost 1,490 1,490 1,490 1,490 1,490 50 Value at Ex-ginnery 64,119 70,650 42,301 52,460 52,549 Value of Lint (33% of raw cotton) 21,159 23,314 13,959 17,312 17,341 Plus Value of Seed Cotton 1,957 1,957 1,957 1,957 1,957 Plus Value of Cotton Cake 3,260 3,260 3,260 3,260 3,260 Value of Raw Cotton 26,376 28,531 19,176 22,529 22,558 Less Transport 210 210 210 210 210 Appendix 11,page9 Less Agent's Margin 530 530 530 530 530 Export Parity at Farm-Gate PRs/mt 25,636 27,791 18,436 21,789 21,818 Financial Farm-Gate Price 21,000 CIF = cost, insurance, freight included in the price a Cotton -1-3/32 inch CIF European ports. Table A11.6: Parity Prices for Import Wheat
(Constant 1999 Prices)
Item 1991 1995 1999 2005 2010
Wheat Pricea $/mt 145 154 115 139 130 Plus Freight 25 25 25 25 25 Plus Insurance 10 10 10 10 10 CIF Karachi $/mt 180 189 150 174 165 CIF Karachi PRs/mt 8,766 9,204 7,305 8,474 8,036
Plus Port Charges 370 370 370 370 370 51 Plus Transport 690 690 690 690 690 Value Project Area 9,826 10,264 8,365 9,534 9,096 Less Transport - Farm to Market 106 106 106 106 106 Import Parity at Farm-gate PRs/mt 9,720 10,158 8,259 9,428 8,990 Financial Farm-gate Price 6,000
CIF = Cost, insurance, freight included in the price Appendix 11,page10 a United States of America, hard red winter, export price delivered at Gulf port. Table A11. 7: Import Parity Price for Sugarcane (Constant 1999 Prices)
Item 1991 1995 1999 2005 2010
Sugar Pricea $/mt 200 254 138 190 192 Plus Freight 35 35 35 35 35 Plus Insurance 5 5 5 5 5 CIF Karachi $/mt 240 294 178 230 232 CIF Karachi PRs/mt 11,688 14,318 8,669 11,201 11,298 Plus Port Charges 370 370 370 370 370 Plus Storage loss 40 40 40 40 40
Plus Transport 950 950 950 950 950 52 Value at Sugar Mill 13,048 15,678 10,029 12,561 12,658 Less Processing 4,900 4,900 4,900 4,900 4,900 Value Raw Sugar 8,148 10,778 5,129 7,661 7,758 Value Sugarcane b 652 862 410 613 621 Less Transport 65 65 65 65 65 Import Parity Price at Fam-gate PRs/mt 587 797 345 548 556
Financial Farm-gate Price 742 Appendix 11,page11
CIF = Cost, insurance, freight included in the price, mt = metric ton
a United States of America daily , Free on Board greater Carribean ports
b Extraction rate 8.0% Table A11.8: Import Parity Price for Urea (Constant 1999 Prices)
Item 1991 1995 1999 2005 2010
Urea Pricea $/mt 174 184 78 113 115 Plus Freight 30 30 30 30 30 Plus Insurance 5 5 5 5 5 CIF Karachi $/mt 209 219 113 148 150 CIF Karachi PRs/mt 10,178 10,665 5,503 7,208 7,305 Plus Port Charges 370 370 370 370 370
Plus Bagging, etc 420 420 420 420 420 53 Plus Transport 950 950 950 950 950 Value Project Area 11,918 12,405 7,243 8,948 9,045 Plus Agent's Fee 580 580 580 580 580 Plus Transport 115 115 115 115 115 Import Parity at Farm-gate 12,613 13,100 7,938 9,643 9,740
Financial Farm-gate Price 7,000 Appendix 11,page12
CIF = Cost, insurance, freight included in the price, mt = metric ton
aUrea (Bulk), Free on Board NW European Ports Table A11.9: Import Parity Price for Diammonium Phospahte (Constant 1999 Prices)
Item 1991 1995 1999 2005 2010
DAP Price a $/mt 175 188 182 178 161 Plus Freight 35 35 35 35 35 Plus Insurance 5 5 5 5 5 CIF Karachi $/mt 215 228 222 218 201 CIF Karachi PRs/mt 10,471 11,104 10,811 10,617 9,789 Plus Port Charges 370 370 370 370 370 Plus Bagging etc 420 420 420 420 420 54 Plus Transport 530 530 530 530 530 Value Project Area 11,791 12,424 12,131 11,937 11,109 Plus Agent's Fee 580 580 580 580 580 Plus Transport 115 115 115 115 115 Import Parity at Farm-gate PRs/mt 12,486 13,119 12,826 12,632 11,804 Appendix 11,page13 Financial Farm-gate Price 13,500
CIF = Cost, insurance, freight included in the price, DAP = Diammonium Phosphate, mt = metric ton a DAP (Bulk), Free on Board United States of America gulf ports 55 Appendix 11, page 14
Table A11.10: Exchange and Inflation Rates
Year Exchange Ratea Pakistana G5 MUV PRs = $1 CPI Indexb
1987 17.37 78.20 88.85 1988 17.97 85.10 95.32 1989 20.51 91.70 94.65 1990 21.67 100.00 100.00 1991 23.76 111.80 102.23 1992 25.04 133.60 106.64 1993 28.06 147.00 104.22 1994 30.52 165.20 107.35 1995 31.59 185.00 108.99 1996 36.02 204.20 110.94 1997 41.04 227.50 108.38 1998 45.01 241.60 104.19 1999c 48.70 251.50 103.56
CPI = consumer price index, G5 MUV = unit value index in dollar terms of manufactures exported from the G-5 countries. Sources: a State Bank of Pakistan. Various years. Annual Reports. Islamabad. Pakistan. b The World Bank. Various years. Commodity Price Projections. Global Commodity Markets. Washington, DC. c Based upon incomplete actual data and projections Table A11.11: Economic Internal Rate of Return ($'000, 1999 Constant Prices)
Year Investment Costs Farmer Remedial O&M Additional Incremental Net Crop Net Cash FX LC Contributiona Surface Drains OFD Costs O&M Benefits Flow 1989 7 768 364 0 (1,139) 1990 613 1,085 251 0 (1,949) 1991 1,319 2,547 164 0 (4,030) 1992 879 2,135 152 400 (2,766) 1993 1,528 2,240 79 800 (3,047) 1994 1,111 3,029 1,200 (2,940) 1995 5,442 7,000 1,599 (10,843) 1996 5,401 6,628 2,294 (9,401) 1997 3,636 3,086 2,988 (3,698) 1998 3,518 7,767 b 3,683 (7,602) 1999 540 4,377 3,837 2000 531 540 6,018 4,947 2001 1063 270 540 7,658 5,785
2002 531 270 540 9,299 7,958 56 2003 540 10,940 10,400 2004 540 12,580 12,040 2005 540 14,221 13,681 2006 540 14178c 13,638 2007 540 14,135 13,595 2008 540 14,092 13,552 2009 540 14,048 13,508 2010 360 540 14,005 13,105 Appendix 11,page15 2011-2048 540 14,005 13,465 EIRR = 13.4% NPV @ 10% 16,871 EIRR = Economic internal rate of return, FX = Foreign Exchange, LC = Local currency, NPV = Net present value, OFD = On-Farm Development, O&M = operation and maintenance a Farmers contribution is in the form of materials, masonry labor, and own labor. The subsequent recovery of the Directorate of On-Farm Water Management costs from farmers via installments is a transfer and excluded from the economic analysis. b No significant incremental O&M expenditure as a consequence of the Project prior to 1999, other than that already included under private investment costs. c Benefits between 2005 to 2010 reduced due to lower World Bank's price forecasts for 2010 as compared with 2005. 57 Appendix 11, page 16
Table A11.12: On-Farm Employment Impacts (person-years)
Item 1991 1999 2005
With Project 4,647 6,273 8,143
Without Project 4,647 4,331 4,155
Incremental Jobs 0 1,942 3,988 ASSESSMENT OF OVERALL PROJECT PERFORMANCE
Project % Project Relevancea Efficacyb Efficiencyc Sustainabilityd Othere Average Overall Component Cost Rating Rating
Drainage 80 4 4 2 3 3 3.2 2.56 Irrigation 17 3 3 2 2 3 2.6 0.44 On-Farm Water 3 3 4 3 4 3 3.4 0.1 Management
Total 100 3.3 3.6 2.3 3 3 3.1 3.1
a Relevance refers to the consistency of project goals with (i) the country's overall developmental needs, (ii) Asian Development Bank’s (ADB’s) assistance strategy for Pakistan, and (iii) ADB's overarching strategy. b Efficacy is the extent to which the physical, financial, and institutional purpose and goals adopted at appraisal are achieved. c Efficiency refers to assessment of results in relation to inputs; it considers costs, cost-effectiveness, implementation period, and economic and financial rates of 58 return. d Sustainability refers to the capability of the capital assets, human resources, and organizational structure created or improved under the Project to remain intact and to provide full potential benefits throughout the Project’s expected economic life. e Other refers to socioeconomic and sociocultural impacts; environmental impacts, and impacts on gender, institutions, and policy. Appendix 12