Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

FILE COPY Report No. 9806-PAK Report No . 9806-PAK Type: (S5AR) MOTHA, G. / X32265 / H-5243/ EMlAG

STAFF APPRAISAL REPORT Public Disclosure Authorized PAKISTAN

THIRD INCOME GENERATING PROJECT FOR REFUGEE AREAS Public Disclosure Authorized January 7, 1992 i

Appraised on behalf of the United Nations High Commissionerfor Refugees Public Disclosure Authorized by the World Bank AgricultureOperations Division South Asia Country Department 3

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank and United Nations High Commissionerfor Refugees authorization. ABBREVIATIONS AND ACRONYMS

ADP - Annual Development Plan AJK - Azad Jammu and Kashmir AZRI - Arid Zone Research Institute BKK - Bund Khushdil Khan CE - Chief Engineer CCF - Chief Conservator of Forests CF - Conservator of Forests C&W - Communications and Works DFO - Divisional Forest Officer DRIP - District Road Improvement Program ERR - Economic Rate of Return FATA - Federally Administered Tribal Areas GDP - Gross Domestic Product GOBAL - Government of Balochistan GONWFP - Government of North Western Frontier Province GOP - Government of Pakistan GOPUN - Government of Punjab GOProvince - Government of Province IDA - International Development Association IGPRA - Income Generating Project for Refugee Areas LG&RD - Local Government and Rural Development MSFP - Malakand Social Forestry Project NRC - Norwegian Refugee Council NWFP - North West Frontier Province PC - Planning Commission PCl - Planning Commission Proforma 1 PCU - Project Coordination Unit P&D - Planning and Development PE - Principal Engineer RDD - Rural Development Department RECO - Refugee Employment Coordination Officer SAFRON - States and Frontier Regions Division SOE - Statement of Expenditure SOP - Survey of Pakistan TMS - Technical Monitoring Specialist TST - Triple Surface Treatment UNHCR - United Nations High Commissioner for Refugees VDC - Village Development Committee FOR OFFICIAL USE ONLY PAKISTAN

THIRD INCOME GENERATING PROJECT FOR REFUGEE AREAS

Table of Contents

I. INTRODUCTION ...... 1

II. BACKGROUND ...... 1

A. General ...... 1 B. Refugee Situation ...... 2 C. Institutional Framework ...... 2 D. Project Area ...... 3 E. Project Related Subsectors ...... 5 F. Bank Involvement ...... 7 G. Project Origin ...... 7 H. Donor Involvement ...... 8 I. Performance of the IGPRA-I and IGPRA-II Projects ...... 9 J. Bridging Period between Second and Third Project ...... 10

III. THE PROJECT ...... 1

A. Objectives and Subproject Selection ...... 11 B. Main Features ...... 12 C. Detailed Features ...... 13 - Subprojects in NWFP ...... 13 - Subprojects in Balochistan ...... 20 - Subprojects in Punjab ...... 24 - Technical Assistance ...... 25 - Technical and Employment Monitoring ...... 26 - SAFRON Project Coordinating Unit ...... 27 D. Sustainability Considerations in Forestry Subprojects ... 28

IV. PROJECT COSTS, FINANCING AND COST RECOVERY ...... 30

A. Project Costs ...... 30 B. Financing ...... 32 C. Procurement ...... 34 D. Disbursements ...... 35 E. Flow of Funds ...... 36 F. Accounts and Audit ...... 36 G. Cost Recovery ...... 37

This report is based on the findings of an appraisal mission to Pakistan in April/May 1991. Mission members were G. Motha (Mission Leader), Ms. H. Lee and A. Qaiyum Sheikh (Bank), P. Economides and A. Penney (Bank Consultants), U. Schaffner (SDC Consultant), Ms. C. de Pater (Dutch Government Consultant), H. Monaghan (CIDA Consultant). Other Mission members were Ms. I. Huber (KfW), B. Strebel (SDC) and N. Ishak (UNHCR). Messrs. H. Hennes and H. Vahl (KfW) and S. Arif (Bank) assisted the mission part-time.

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank and United Nations High Commissioner for Refugees authorization. - ii -

V. ORGANIZATION AND IMPLEMENTATION ...... 38

A. Project Organization and Coordination ...... 38 B. Implementation ...... 38 C. Use of Contractors ...... 39 D. Maintenance ...... 40 E Monitoring, Supervision and Evaluation ...... 41

VI. BENEFITS, JUSTIFICATION AND RISKS ...... 43

A. Benefits ...... 43 B. Economic Analysis ...... 44 C. Employment and Income Effects ...... 45 D. Environmental Impact ...... 46 E. Project Risks ...... 49

VII. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS ...... 50

TABLES

Table 3.1 NWFP Forestry Subprojects Table 3.2 Summary of Irrigation Subprojects Table 3.3 Summary of Road Subprojects Table 4.1 Project Costs Summary Table 4.2 Project Financing Plan Table 4.3 Procurement Table 5.1 Government Contribution of Project Maintenance Costs Table 6.1 Economic Rates of Return and Sensitivity Analysis Table 6.2 Average Labor Content by Province and Subsector

ANNEXES

Annex I - Population of Registered Refugees on February 15, 1991 Annex II - Terms of Reference for Forestry and Watershed Management Specialist Annex III - Terms of Reference for Technical Monitoring Specialist Annex IV - Terms of Reference for Refugee Employment Coordination Officer Annex V - Reserved List of Subprojects Annex VI - Schedule of Disbursements Annex VII - Implementation Schedule Annex VIII - Economic Analysis PAKISTAN

THIRD INCOME GENERATING PROJECT FOR REFUGEE AREAS

I. INTRODUCTION

1.01 The project, the third of its type, is designed to create employment and income, principally for Afghan refugees,but also for local residents, and in the process develop economicallyviable assets for Pakistan. It will address some of the damage caused by the protracted presence in Pakistan of over three million Afghan refugees and their livestock. It will draw on the experience gained during the earlier two projects - First and Second Income Generating Projects for Refugee Areas (IGPRA I and IGPRA II) - in the implementationof numerous small-scale,labor-intensive subprojects. The project includes subprojectsprimarily of a public works nature, with emphasis on high labor intensity in order to provide direct income to Afghan refugees and the local residents. In the selection of subprojects,emphasis has been placed on restorationand/or improvementof the rural environmentand of physical infrastructureand is, therefore, consistent with the Bank's lending strategy.The subprojectsselected for implementationin various sectors in the provincial economies are in line with the overall development strategy of the Government of Pakistan (GOP). In this Third project, increased emphasis has been placed on training refugees in basic skills in anticipation of their return to their homeland, and on maintenance and sustainabilityof works completedunder the two earlier projects. The short implementation period, the simplicity of constructionand design, and the labor intensity of the selected subprojectswould ensure satisfactoryand timely completion,even if massive repatriationtook place in a short space of time.

II. BACKGROUND

A. General

2.01 The Islamic Republic of Pakistan covers about 217.0 M acres. Administratively,it is divided into four provinces, North West Frontier Province (NWFP), Balochistan,Punjab, and Sindh. In addition, there are the Federally AdministeredTribal Areas (FATA), Northern Areas, and the Islamabad Federal Area. NWFP, Balochistan,Punjab, and FATA contain areas affected by the Afghan refugees. The population of Pakistan is 113 million (January 1991) and growing at approximately3% per annum. About 70% of the population is rural. In addition, there are an estimated 3.24 million Afghan refugees. Agriculture accounts for 25% of GNP, followed by manufacturingwith 17%. During the 1980s, annual growth of GNP at constant prices was over 6%; in FY 1989, growth was estimated at 5%. The per capita GDP in 1989 was estimated to be only US$ 373. About one third of the population is estimated to have an income below the poverty level. Rural families were estimated to have an average annual income of Rs 8,265 (or about US$ 380) per capita in 1989-90. B. Refugee Situation

2.02 According to GOP records, the population of Afghan refugees as on February 15, 1991 was 3.24 million of which about 2.21 million were located in NWFP, 0.84 million in Balochistan,0.17 million in Punjab and 0.02 million in Sindh. To this, some 464,000 are added as "unregisteredrefugees", mainly in urban areas, or unsettled nomads. The registered refugees occupy 343 camps. The distributionof refugees by districts shows a heavy concentrationin Tribal Agencies and BalochistanDistricts close to Afghan border and this puts a heavy strain on the already fragile environmentand limited socio-economic infrastructurein these areas. Annex I provides a breakdown of refugee population by district.

2.03 The refugee population shows a high level of dependency:48% are children under age 15, 28% are adult females who do not participate in the work force and the remaining 24% are males over 15 years of age. The Afghans have establisheda reputation as honest hard workers. Over 85% lack employment skills and only 14% are literate.Under-employment and unemployment among the refugees is high.

2.04 To maintain minimum welfare conditions in the camps, the refugee population require an enormous input of resources of food, fuel, shelter, water supply, sanitation,health services, access roads, education and administration.In a limited way, these requirementsare now met by GOP, and several bilateral and voluntary agencies. Despite the efforts of GOP and other agencies, relief supplies are limited and are irregular. In themselves,the food rations do not meet all the needs of the family. Only a minority of the men have regular income from their own business or skills. The remainder are in the market for casual employment,usually of a manual nature such as road, canal and house constructionor canal cleaning.

2.05 Damage has occurred in areas close to the Afghan border, as a result of deliberate human intervention,leading to the accelerationof wear and tear to roads and canal channels and an increase in the rate of use of fuel and fodder resources. Perhaps the most serious damage from the refugee results from the need for fuel for cooking. In addition, as the camps are converted to mud villages, the demand for roofing timbers puts further pressure on woodland resources. Livestock is grazed in the vicinity of the camps and refugee flocks add to the already existing problem of overgrazing with its consequentialsoil erosion. Livestock seeking water as well as refugee camps along channels have caused damage to canals and patrol roads. In Balochistan,the degradationof rangelands by overgrazing and the removal of vegetation for fuel is posing a serious threat to the capacity of the environmentto recharge its groundwaterresources. The influx of refugees has added to the burden of the road network. Roads are suffering premature decay and road shoulders incurringheavy damage due to congestion.

C. InstitutionalFramework

2.06 Constitutionally,Pakistan is a federation.The Federal Government is responsible for the administrationof the country while the four provinces are governed by the Provincial Governmentswhich enjoy considerableautonomy, - 3 - but remain responsibleto the Federal Government.The Northern Areas and the NWFP tribal territories,which mostly border Afghanistan,are federally administered.Azad Jammu and Kashmir (AJK) enjoys a special status.

2.07 The institutionalbasis for developmentadministration in Pakistan comprises a developmentplanning system, line departments,autonomous agencies and local government institutions.The central planning agency is the Planning Commission and is the focal point of all planning and developmentactivities. At the provincial level, there are the provincial Planning and Development (P&D) Departmentswhich consult closely with the Planning Commission in formulatingprovincial plans and developmentprojects. The federal ministries and line departmentsprepare developmentproject proposals which after approval by the Planning Commission form part of the developmentplan. At the local level, project committees constitutedunder district councils, or union councils which represent 10-15 villages, formulate local projects for inclusion in the provincial programs. The States and Frontier Regions Division (SAFRON) of the Government of Pakistan is responsiblefor refugee administrationin Pakistan and also for development schemes in the refugee areas.

D. Proiect Area

2.08 The project would be implementedin the provinces of NWFP, Balochistanand Punjab. The subprojectsselected are in close proximity to refugee settlementsand local villages.

North West Frontier Province (NWFP)

2.09 The NWFP is the smallest province in the country, and borders Afghanistan in the north and west. Most of its 25.1 million acres area is mountainous and uninhabitable.The land rises from the southern plains to 26,000 feet in the mountainous zone in the north. The population is about 14.4 million (excludingrefugees) dwelling mainly in the cultivated areas, which are about 4.7 million acres and mostly confined to the valleys and lowland plains along the Indus, Kabul and Kurram rivers. The northern hill areas and alpine ranges offer summer grazing for a large number of sheep, goats and cattle from the lowlands which during winter return to low lying rangelands.

2.10 Fifteen percent of area in NWFP (about 3.8 million acres) is under the control of the provincial Forestry Department, of which 2.8 million acres are protection forests, 0.6 million acres are production forests and the remaining are rangelands.

2.11 The irrigatedareas of NWFP are located in two different ecological regions: the northern Kabul plain irrigatedby diversions from the Kabul and Swat rivers; and the Dera Ismail Khan area which receives water from the Indus river.

2.12 The road network extends over about 8000 miles, of which approximately2,700 miles is bitumen surfaced. The roads, especially near - 4 - refugee camps, have been subject to heavy wear and tear resulting in their rapid deterioration.About 1,400 miles of canal roads in the province have also been similarly damaged.

Balochistan

2.13 The province shares its border with Iran and Afghanistan in the west and the north. It is the largest of the provinces with an area of 85.8 million acres but the least developed and largely arid and barren. Balochistan'spopulation of about 5.7 million (excluding refugees) represents less than 7% of the national total. The people are predominantlytribal and nomadic, and 84% live in rural areas. The provincial average annual income per capita is merely half of the national average.

2.14 The average annual rainfall ranges from 5 to 10 inches and is characterizedby wide fluctuations.It is common that rainfall occurs in few heavy storms.

2.15 Despite the harsh environment,agriculture is the most important economic activity, employing about two-thirds of the work force and contributingabout 56% of the provincial CDP. Crops contribute about 70% in the agriculture'stotal production and livestock 28%. The province produces about 10% of Pakistan's fruit production and has about 25% of the country's herd of sheep and goats.

2.16 Increasing denudation of the watershed and rangeland areas and overusage of scarce groundwaterfor irrigationare the major contributing factors to the reduced aqu'fer levels. This is a consequence of uncontrolled grazing by increasingnumber of livestockand by tree felling for fuel wood. The arid environmentand budgetary constraintshave hampered the development of the forestry sector. There are no production forests given the fact that only 3% of the area in the province has been classified as forests. Most fuel wood requirementsand other wood products are brought in from other provinces.

2.17 Balochistanhas a relatively poorly developed road system with only 10% of the country's bitumen surfaced roads and 23% of Pakistan's total road network. The Communicationsand Works (C&W) Department has been concentratingits activities on widening and maintaining the existing roads and little new constructionhas been taking place in recent years.

Punjab

2.18 The province is mainly a plain through which flows the Indus and its four major tributaries.However, there are some mountainous and hilly areas in the north-west and the extreme south-west.There is also a desert belt in the southeasternpart of the province bordering India.

2.19 The project activitieswill only be confined to the Mianwali district on the NWFP border, where refugee settlementshave been located. The district covers some 3.4 million acres and has a population of 1.2 million. The district is significantlyarid and the climate is continentalwith marked seasonal and diurnal temperaturefluctuations. Most of the rainfall which is - 5 - only about 12 inches per year is received during the summer monsoon. Due to the aridity, productive forestry is limited to irrigated tree plantationsand areas where the roots can reach groundwater.

2.20 Infrastructuredevelopment in the Mianwali district has been limited and there is a lack of road developmentand few resources for road improvement.This situationhas been exacerbatedby the presence of over 170,000 refugees.

E. Proiect Related Subsectors

Forestry

2.21 The total forest area in Pakistan is around 10.5 million acres of which only 2.8 million acres is commerciallyproductive. The yield of production forests per unit area is low, mainly due to outmoded and inappropriatemanagement systems, lack of reinvestment,and the competition from livestock grazing. This has resulted in deteriorationof the forests over time. It is estimated that about 17,000 acres of forests are being destroyed annually in Pakistan. The production meets only about 18% of the demand for timber and provides only about 10% of the fuelwood consumed.The shortfall is met by imports and from farm land and nongovernmentwoodlands. With projected increasesof population and per capita income, it is expected that fuelwood consumptionwill roughly double by the year 2000.

2.22 The Pakistan Forest Policy and the Seventh Plan emphasize the need to increase forest production.The financialallocation for forestry and wildlife for the Plan period is Rs 1,450 million. Special emphasis is placed on afforestationusing fast growing species, intensificationof management of existing forests, participationof local farmers and communities in forest development,and strengtheningof forestry services and the forestry research and training institutions.

Watershed Management

2.23 Due to the realizationof the extent of environmentaldegradation in the upper watershed areas which over the past decade has been aggravated by the presence of refugees and their livestock, the importance of watershed management is now being recognized.

2.24 Over the last few years, the fragile ecological balance in the areas most affected by the influx of refugees has been severely threatened. In many of these areas, the limited forestry and range resources, have been vastly depleted in the past few years and there is rising friction between the establishedpopulations and refugees over livestockgrazing and forest product extraction.The general situationwas described as early as 1985 in a World Bank report1l -- which stresses the importance of a multi-disciplinary

EnvironmentalRehabilitation, Protection and Management Reconnaissance Mission Report, June 1985. - 6 - approach to watershed management and also points to the importance of treating each individual sub-watershedas a unit and in accordance with any wider master plan for the area. In the case of NWFP, some of the proposed subprojectsfall within the scope of such watershed management plans.

Irrigation.Drainage and Flood Control

2.25 Irrigation:About 75% of the total cultivated area of 50 million acres is irrigated.Of this, approximatelytwo-thirds are irrigated from surface water, mostly by the Indus river and its tributaries,and one-third by groundwater from public and private tubewellsand traditionalwells. In the three provinces associated with this project, existing canal systems have been deterioratingin recent years due to the lack of adequate supervisionand maintenance.As a consequence,the carrying capacity of the canals has been steadily reduced and water losses have considerablyincreased. An allocation of Rs 10,357 million has been made during the Seventh Five Year Plan for irrigation improvement (irrigation,new canals and reservoirs,and on-farm water management)with emphasis on curtailing losses and restoring the carrying capacity of the canals to the original state through remodelling and better maintenance.

2.26 Drainage: Surveys have shown that about 42% of the irrigated land in Pakistan has a water table within 10 feet and 34% within six feet of the surface just after the monsoon rains. A serious problem of water logging and salinity therefore exists. The actions taken by GOP to combat this problem are: (a) constructionof new drainage systems; (b) improvementof efficiency of existing drains by constructionof field drains; and (c) installationof tubewells for vertical drainage, with priority in areas of fresh groundwater in order to combine drainage with irrigationand/or domestic water supply. Under the Seventh Five Year Plan, programs to combat waterloggingas well as salinity have been proposed. In NWFP and Punjab, areas in immediateneed of drainage are estimated at 0.15 and 2.70 million acres respectively.In Balochistan,drainage is less of a problem.

2.27 Flood Control: Uncontrolledfloods pose a recurrent threat to the economy of Pakistan. Floods take a heavy toll on rural houses, agricultural land and infrastructure.In recent years, the situation has deteriorateddue to deforestation,range degradationand improper cropping methods in the catchment areas. In 1977, GOP constituteda Federal Flood Commission which took over the responsibilityfor flood protection.

2.28 In NWFP, Balochistanand the Mianwali District (Punjab) floods are a serious problem due to steep mountain slopes and rapid deforestationover the years. Water erosion and floods affect large areas of agriculturalland and many villages and infrastructureworks are at risk.

Roads

2.29 Pakistan has about 95,000 miles of roads of all types, with the main road network amounting to 58,000 miles (61%). Approximately,21,800 miles or 23% of these roads are bitumen surfaced. There are about 37,000 miles of earth roads providing access to rural areas predominantlyin the dry season. -7-

The road network provides access to nearly all cities and towns but only about 16% of the villages are situated on all weather roads. The quality of road constructionand maintenance is generallypoor. This adversely affects both passenger and freight transport as it results in unnecessarilyhigh road user costs.

2.30 GOP has had a program to improve transport in rural areas and in particular to open up the canal patrol roads to traffic. A program of rural road constructionwas launched under the Sixth Five Year Plan and continued into the Seventh Five Year Plan. This program provides for about 2,000 miles of new roads and 4,850 miles of upgrading existing roads. External donors are also assisting GOP in this effort. It is proposed under the project to upgrade one national highway, and several rural and canal patrol roads.

F. Bank Involvement

2.31 This project (IGPRA III) is the third of its type in Pakistan. IGPRA I included the provinces of NWFP and Balochistan.It became effective in January 1984 and was completed in September 1987. The project met all its objectives and was considered a model of its type. Because of the success of the first project, and the expectationof the continued presence of refugees in Pakistan, GOP requested a follow on project which was prepared by the Bank and became effective in October 1987 and was scheduled for completion in December 1990. IGPRA II, in addition to NWFP and Balochistan,included subprojectsin the Mianwali District of Punjab. Other related recent and ongoing projects by the InternationalDevelopment Association (IDA) in areas covered by the project are: BalochistanMinor IrrigationManagement Project (Cr.1243-PAK),SCARP Mardan (Cr.877-PAK),Agricultural Research Project II (Cr. 2154-PAK), BalochistanAgricultural Extension and Adaptive Research Project (Cr. 1533-PAK), and the National Oilseed Development Project (Cr. 1936-PAK).

G. Proiect Origin

2.32 A United Nations High Commissionerfor Refugees (UNHCR)mission to Pakistan in April/May 1981 underscoredthe importanceof self-reliance activities for Afghan refugees which would enable them to earn an income through work that would contribute to the economic developmentof the areas they are living in. Subsequently,UNHCR, which has no mandate for development activities,requested Bank assistance to prepare and execute a project which would generate income opportunitiesfor Afghan refugees,while contributingto Pakistan's economic development,particularly in areas affected by the refugees and their livestock.A Bank identificationmission followed in April 1982 and, as a result, UNHCR concludeda Memorandum of Understandingwith the Bank and also exchanged letters with GOP enabling the processing of such a project. The Bank fielded an appraisalmission in May/June 1983, negotiations among GOP, the Bank and UNHCR were concluded in November 1983, and the grant became effective in January 1984. The implementationof the project was successful and its objectiveswere fully met (paras 2.37-2.39).This resulted in a GOP request for a second project which started in October 1987 and continued to December 1990. - 8 -

2.33 At the Pakistan Consortium Meetings of 1989 and 1990. GOP requested for a third project due to the prolonged presence of Afghan refugees in Pakistan. The donor communityresponded positively and the Bank sent an identificationmission to Pakistan in September/October1990. Appraisal of the project, which was delayed due to the Gulf War, took place in April/May 1991.

H. Donor Involvement

2.34 The first and second projects were financed from grants from the following countries:

USS Eguivalent

IGPRA I IGPRA II

Canada 2,266,000 3,339,000 E.E.C 2,045,000 2,997,000 Federal Republic of Germany 6,319,000 14,481,000 Finland 108,000 - Netherlands 513,000 9,255,000 Norway 254,000 72,000 Sweden 216,000 998,000 Switzerland 2,302,000 6,898,000 United Kingdom 2,402,000 - United States 1,718,000 2,424,000

Sub-Total 18,143,000 40,464,000

Income on Investment 328,000 999,000

Total 18,471,000 41,463,000

2.35 A portion of the funds contributedby the donors were administered by the Bank out of a Trust Fund account, while the rest of the funds vere made available to GOP directly through deposits into the Project Account, upon the Bank's advice. The funds were advanced for expendituresto be made in respect of carrying out the projects in accordancewith the procedure described in the legal documents. The projects were implementedoutside the Federal and ProvincialADPs as the project funds were grants. The external grants financed total project costs excluding taxes and duties. The proposed project would also be funded through grants and implementedin line with the former procedures, although the Provinces are expected to meet an increasing share of the maintenance costs of completed subprojects. - 9 -

I. Performanceof the IGPRA I and IGPRA II Proiects

2.36 The first three-year grant (IGPRA I) became effective in January 1984 with a budget of US$18.1 million. The main objectives of the project were to create employment and income, principallyfor the Afghan refugees, but also for local workers and thereby develop economicallyviable assets for Pakistan in refugee areas. A number of labor intensivesubprojects located close to refugee areas were prepared by the provincial line departmentsof NWFP and Balochistan.

2.37 The subprojectswere required to be: technicallyviable, with an economic rate of return of over 10%; labor intensive;inclose proximity to refugee and local labor; and capable of completion within a three year period. The project initially comprised 40 subprojects,of which four covered reforestationor watershed management, nine upgraded 28 canal roads, three rebuilt secondary roads, and 24 provided protection to 47 flood threatened areas where villages, infrastructureor agriculturalland was at risk. During implementation,a further 12 subprojectswere added.

2.38 In spite of initial delays, virtually all physical targets were achieved. In forestry and watershed management, the physical achievements surpassed the appraisal targets and high standardsof work were generally achieved. In the afforestationprojects in NWFP, 43,000 acres were planted and tree survival rates were good. Soil conservationworks covering 19,000 acres were also well done. In Balochistan,2 million ft3 of rock check dams were built and 32.5 million ft3 of earthworks (trenches,ditches and bunds) were made over 10,000 acres. Grasses are regenerating,run-off has been reduced, and new springs have developed.

2.39 Forty-seven flood protection works such as spurs, bunds and retainingwalls were constructed to protect villages, farm land and infrastructure.Twenty-eight canal patrol roads totalling over 200 miles were rebuilt and shingled in NWFP. Thirty-eightmiles of three public roads, including two bridges were constructedin Balochistan.Despite a restricted constructionseason all three roads were completed to a satisfactorystandard.

2.40 The high performancehas been accompaniedby a satisfactorylevel of employment creation (5.5 million work-days by December 31, 1986). The target of 35% of total project expenditureaccruing to refugees was achieved, although the overall recorded labor content of the project was short of projections.To a large extent this was due to shortcomingsin record keeping as offsite and indirect labor were not reported until the later part of the project. For the project as a whole, the gross cost of employment generation was Rs 44.2 per work-day.

2.41 IGPRA II became effective on October 1, 1987 and was completed on December 31, 1990, except for some essential operations (such as completion of roads which were unavoidably delayed).The total project cost was US$ 43.5 million equivalent and the project period was three years. The project comprised 167 subprojectsspread over three provinces in the areas impacted by the refugees. The subprojectsare: 32 in forestry and watershed management; 84 for irrigation,drainage and flood control; 44 for rural roads; one for inland - 10 - fisheries;two for women in development;and four for establishmentof small coordinationcells within the provincial line departments.Of the 163 subprojects,149 have been completedand 14 were dropped (mainly in irrigation and roads) due to technical reasons.

2.42 The physical progress of various subprojectson forestry and watershed management, irrigation,drainage and flood control, rural roads, inland fisheries,and women in developmentwas generally satisfactoryand on schedule.The quality and standard of the works have been improved in light of the recommendationsmade by the mid term review in November/December1988 with the objective of creating durable economic assets for Pakistan. These improvementsmainly relate to the preparationof maps of the forestry project areas on a scale of 1:10,000; developmentof work schedules for road subprojectsindicating the quantities of work and the workdays of labor employed; and improvementof design and constructionof spurs/gabionwalls for flood protection schemes in the irrigationsector. The participatingline departmentshave also started developing schedules of maintenance for carrying out routine and periodic maintenance.

2.43 Total number of workdays employed till the end of December 1990 was 11.78 million against a total project target of 10 million workdays. The number of workdays accounted for by Afghan labor was 9.20 million (78%) and the refugee participationrate has been consistentlyhigher than the stipulated50% (74% in NWFP, 92% in Balochistanand 65% in Punjab). The income generation component of the project (comprisingwage labor and transportation cost involving labor) has been 58% of total costs. The wages accrued to refugees as direct income was 45% of the total expenditure incurred, (i.e. Rs 341.3 million out of Rs 762.9 million).

2.44 Lessons learnt: Experience with IGPRA I and II has shown that technicallyhigh quality work can be produced with labor intensivemethods and that when labor supply is abundant, simple and well designed works can be produced at cost levels which yield economicallyacceptable rates of return. Implementationof the earlier subprojectshas also shown that when employment generation is a major objective,the use of labor intensivemethods must be assured not only by appropriatecontracts, but also through close monitoring and supervision.Contractors frequently find it simpler, and for many tasks less expensive,to use heavy equipment instead of labor. For this project, once again a special system of employmentmonitoring which was developed under IGPRA I and II will apply to all subprojects.

J. Bridging Period between the Second and Third Proiect

2.45 IGPRA II project closed on December 31, 1990 and it was evident that a time gap would occur between the terminationof the second and the commencementof activities under the third project. GOP, UNHCR and the Bank realized that without the provision of finance for the bridging period, the overall activities would lose momentum and the economic and social impact of many subprojectswould be jeopardized.It was estimated that the bridging period would be six months. An approach was made to donors to advance the equivalent of US$ 3.3 million and US$ 3.1 million was pledged. Unfortunately, events in the Persian Gulf resulted in a delay in processing the third project - 11 - and the bridging period is nov expected to be much longer than originally expected.Minimal activity took place on the subprojectsduring the period January 1 to June 30, 1991 as funds vere received in April to June 1991. The funds are, therefore, now being utilized for essentialmaintenance operations which are primarily in the forestry sector and are expected to be sufficient to cover the period to December 31, 1991.

III. THE PROJECT

A. Obiectives and SubDroiect Selection

3.01 The mission reviewed the original project objectives which were framed for IGPRA I and II with GOP and concluded that, subject to some minor change in emphasis, these objectives should be pursued for this third project as well. The main objectives of the project are:

(a) to create employment and generate income for Afghan refugees and local residents, with emphasis on the former group who would account for at least one half of all labor required by the subprojects;

(b) to rehabilitatesome of the physical damage caused by the refugees and their livestock to the environmentand the infrastructure;and

(c) to create a range of durable economic assets for Pakistan by using labor intensive techniques.

3.02 While pursuing these objectives,in the selection and formulation of subprojects,emphasis was placed on: (i) ensuring that employment created would also provide a valuable training ground to Afghans to acquire basic skills and experience that could be applied immediatelyupon their return to their homeland in the rehabilitationwork; and (ii) ensuring a better control over maintenance and sustainabilityof the forests, roads and irrigationworks which were rehabilitatedand created under the two earlier projects.

3.03 Assurances were obtained from GOProvincesthat the criteria adopted for the selectionof subprojectswould be as follows:

(a) Subprojectsmust be technicallyviable and have an economic rate of return in excess of 10X. Subprojectswith heavy emphasis on environmentalbenefits, but not readily amenable to calculationof an economic rate of return, were neverthelessto be included;

(b) They must be labor intensivewith labor costs as a proportion of total subproject costs of at least 50X for the forestry subsector, and 30% for both irrigation and road subsectors;

(c) Subprojectsshould be in close proximity to the Afghan refugee camps so as to permit easy access to Afghan labor; - 12 -

(d) The works should be short term in nature so that they could be completed within the project period; and

(e) Subprojects should be technicallyand environmentallysound.

3.04 A total of 94 subprojectssubmitted by the Provincial line departmentswere reviewed at appraisal in the light of the above criteria. Considerationwas given to several other factors such as: (a) the capacity of the line departments to execute a program of work within a specifiedperiod of time; (b) the availabilityof trained and qualified staff in the line departments;(c) the access to equipment required for undertaking subprojects; and (d) the ready availabilityof contractorsto undertake construction activitiessuch as roads and irrigationworks. In addition, some degree of emphasis was placed on the utilizationof institutionalset-ups already in place and the experiencegained by the line departmentsduring IGPRA I and II, and on the need for consolidationof achievementsmade under the former two projects. The distributionof project funds among provinces was as far as possible determinedon the basis of the refugee population in these provinces.

3.05 A total of 69 subprojectscosting US$ 23.6 million were selected for inclusion.Of these, 20 relate to forestry and watershed management; 34 to irrigation,drainage and flood protection; 11 to roads; 3 to developmentof skills and training; and 1 to women's activities. In the case of one forestry subprojectnamely, Lower Tanawal, the labor intensity criterionwas not met, but other considerationsoutlined above justified its inclusion.The provincialbreakdown is: 51 subprojectsin NWFP, 13 in Balochistan,4 in Punjab and 1 in FATA. In addition, a further 27 subprojectsat a total cost of Rs 228.3 million (US$ 9.38 million) have been included in a reserved list and would be implemented if additionaldonor grant funds become available.

B. Main Features

3.06 Forestry. Forestry subprojectswould account for a large proportion of the sector activitiesunder the proposed project. The major emphasis would be to consolidatethe achievementsin this area over the past six years and to bring into place an establishedsystem of forestry management to ensure the sustainabilityof the expected benefits. In addition to the main aim of producing fuelwood and timber, all subprojectsin forestry are expected to contribute to watershed managementor fulfill other environmental protection functions.The multi-functionalobjectives as well as considerationsof traditionaland social conditionsrequire different approaches to be adopted for individualsubprojects in each province and ecological zone. In addition, sustainabilityaspects of the forests already developed as well as forestry managementare to be given increased emphasis under the project (Paras 3.55-3.62).

3.07 Watershed Management.All subprojects in the forestry/watershed management sector include watershed related activities.However, the emphasis and the approach may vary between subprojects.In NWFP, the main emphasis is on reforestationand erosion control while in Balochistanthe approach is more comprehensivewith emphasis on the control of surface run off, groundwater recharge and rangeland rehabilitation,and forestry playing a secondary role. - 13 -

3.08 Irrigation,Drainage and Flood Protection.Irrigation works include remodellingof main canals by constructingspurs, stone pitching and reinforcingbanks, rehabilitationof existing karezes (horizontaltunnels for water collection)by desilting and extending tunnels, and improving canal patrol roads. Drainage works consist of improvementof existing drainage systems by desilting and excavatingnew drains. Flood protection works include stone filled gabion retaining walls, spurs, and stone pitched earthen embankments.

3.09 Roads. The road subprojectsare varied. In Balochistan,the work involves improvementof an existing trunk route, while in NWFP the roads are much more of the farm-to-markettype and are designed to open up the rural areas. In Punjab, one dirt track of about 8 miles length would be widened and upgraded. In almost all cases, the roads selected have deterioratedbadly in recent years due to the presence of refugees.

3.10 Trainina. The third project is being designed to place a much greater emphasis on training and experience for Afghan refugees in basic skills which could be applied immediatelyupon their return to Afghanistan in the rehabilitationand developmentof the devastated areas. Programs have been incorporatedinto this project to fulfil this need. Provisionhas been made for refugees to acquire basic skills at training centers, through on the job training and through extensionmethods. Further details on training to be provided for refugees and local populationare outlined in paras 3.19, 3.28, 3.54, and 5.04(f).

3.11 Maintenance of completed project works. The durabilityof the physical assets created under this and earlier projects is largely dependent on the maintenanceprovided. One main objective of this project, therefore,is to consolidate the achievementsand put into place an established system of maintenance to ensure sustainabilityof expected benefits. The project, accordingly,provides limited maintenance funds to protect the assets through the project implementationperiod while the Provinceswould meet a progressivelyincreasing share of maintenance costs over the project period.

C. Detailed Features

Subproiects in NWFP

Forestry

3.12 The forestry program in NWFP consists of 17 subprojectsof which 11 would aim at afforestationwith work involvingerosion control, two concentratingon planting mazri (NannorrhopsRitchieana), a dwarf palm whose leaves are used in manufacturinghandicrafts by local women, and four relating to development of skills of women, extension and training and institution building. Accordingly,depending upon the type of work involved, these subprojects can be placed in five distinct categories: (a) afforestation in the high rainfall areas; (b) afforestationin the semi-arid areas; (c) mazri palm plantations; (d) irrigatedlinear plantations;and(d) training and extension;and (e) support program. All field activitiesare essentially - 14 - extensions of the existing subprojects,the objective being to emphasize the maintenance of the existing plantationsand add on to them the new ones.

3.13 Afforestationin the High Rainfall Areas. Seven subprojects, aiming to afforest 8,800 acres, fall in this category.Three - Lower Tanawal, Bareri Khaki, and Khanpur - are located in the eastern Hazara region at elevations ranging from 3,300 ft to 5,500 ft, and receiving an average annual precipitationof up to 45 inches,mainly during the monsoon season. Another three - Dir District, Bajaur, and Totalai - are located across the Indus, one centrally in Swat (Totalai)and two (Dir District and Bajaur) further north- westward. Their elevationsare about similar but they receive comparatively less rainfall, that is up to 35 inches. The Chitral subproject,situated in the extreme north, has average elevation of about 5,000 ft and it receives most of its precipitation,about 25 inches, in winter and in the form of snow. The detailed features of these subprojectsare given in Table 3.1.

3.14 The field activitieswould generally involve planting chir pine (Pinus roxburghii)on the higher slopes, Ailanthus altissima and Robinia pseud-acaciaon the middle slopes, and Phulai (Acaciamodesta) on the low dry sites. Eucalypts,mainly Eucalyptuscamaldulensis, will be planted at low altitudes but on comparativelydeeper soils. Checkdams and gabion walls will be constructedwhere appropriate.Roads and paths will be constructed to provide access to the areas. Existing plantationswill be restocked and protected by a combinationof fencing and watchmen. Forestry extension activitieswill take place in the Bareri Khaki, Bajaur and Dir District subprojects.

3.15 Afforestation in the Semi-AridAreas. The three subprojects, Kohat/Karak,Sheen Dhand, and Mohmand, falling in this category are situated in the west and south of NWFP. They aim at afforestinga denuded area of 3,175 acres situated in the natural zone of the dry subtropicalbroad-leaved forest at elevationsaveraging about 3,000 ft. The average annual rainfall in the area varies from 15 to 25 inches,most of which is received in the monsoon season. The detailed features of the subprojectsare also given in Table 3.1.

3.16 Plantationsin these areas will be establishedboth by planting seedlings and sowing. The species to be planted would include Ailanthus and Robinia on well-drainedwetter sites, Phulai on low-lying dry sites, and Eucalypts on comparativelymoist and deep soils. Checkdammingand gully plugging would be carried out at appropriateplaces to control erosion. Existing plantationswill be maintained.

3.17 Mazri Palm Plantations.Mazri palm leaves are used in manufacturingropes, mats, baskets, etc. by folk mostly. This resource was severely over-exploitedin the past and the situation was exacerbatedwith the influx of refugees. At two sites, Hangu and Kurram, mazri plantationswill be established by sowing in trenches of 5'xl'xl' size spaced at 15'xlO'. Existing plantations raised during the earlier two projects will be maintained. - 15 - TABLE 3.1: NWFP Forestry Subvroiects

Soil Maint. Subproiect Area Species Cons. Phase 2 Labor Total Cost ac. Name X ac. '000 ac. '000 md X Rs million

Afforestation in the High Rainfall Areas

Lower Tanaval 1,500 Chir Pine 60 900 3.5 169.8 41 17.987 Ailanthus 15 Eucalypt 10 Robinia 15 Bareri Khaki 1,125 Chir Pine 60 700 4.1 194.8 61 14.091 Ailanthus 20 Robinia 10 Eucalypt 10 Khanpur 1,300 Chir Pine 80 1,000 9.6 192.2 72 11.895 Ailanthus 10 Robinia 5 Eucalypt 5 Dir District 1,800 Chir Pine 25 1,000 5.7 228.8 71 14.142 Ailanthus 30 Robinia 25 Eucalypt 15 Walnut 5 Bajaur 1,125 Chir Pine 20 - 3.7 124.7 63 8.703 Ailanthus 20 Robinia 20 Eucalypt 40 Totalai 1,500 Chir Pine 20 1,000 3.3 198.0 71 12.527 Ailanthus 25 Robinia 25 Eucalypt 20 Phulai 10 Chitral 450 Chir Pine 20 300 1.5 49.7 51 4.327 Ailanthus 30 Robinia 30 Eucalypt 20

Afforestationin the Semi-Arid Areas

Kohat/Karak 1,500 Phulai 40 500 2.7 131.8 52 11.050 Kikar 30 Eucalypt 30 Sheen Dhand 1,125 Eucalypt 50 600 1.0 91.9 64 6.376 Phulai 25 Kikar 25 Mohmand 550 Phulai 10 250 1.5 76.7 54 6.265 Ailanthus 30 Robinia 10 Eucalypt 50

Chir Pine - Pinus roxburghii. Ailanthus - Ailanthus altissima. Eucalypt - Different species of eucalypt,mainly Eucalyptus camaldulensis. Robinia - Robinia pseud-acacia. Walnut - Juglans regia. Phulai - Acacia modesta. Kikar - Acacia nilotica. Labor md - mandays of labor expected to be generated. Labor X - Ratio between estimated total labor wages and baseline cost. - 16 -

Hangu Mazri (Rs 6.043 million). 21 New sowing would be done by the above describedmethod over an area of 1,500 acres, and the existing plantation over 2,000 acres maintained. Checkdamming would be done over an area of 600 acres. The subprojectwould generate about 91 thousand workdays of employment,representing about 68% of the base cost.

Kurram Mazri (Rs 10.690 million). 2/ Mazri plantationwould be establishedover an area of 2,300 acres and the IGPRA II plantations of over 3,000 acres would be maintained. Check damming would be carried out on 800 acres. Labor requirementhas been estimated at about 175 thousand workdays representingabout 71% of the base cost.

3.18 Irrigated Linear Plantations.The Chashma Command Area subproject (Rs 4.696 million) falling in this category would plant 50 avenue miles of small drains and canals near the Chashma Right Bank Canal and south of the Paharpur village. The climate is extremely arid and, therefore,plantation would have to be establishedwith the help of artificial irrigation.The main species would be Shisham (Dalbergiasissoo), Kikar (Acacia nilotica), and Eucalypts.The existing plantation over 390 avenue miles would be maintained. Labor requirement for the subprojectis estimated at 85 thousand workdays which represents about 81% of the base cost.

3.19 Training and Extension. The program consists of the following subprojects:

Forestry Extension and Training (Rs 14.152 million). The subprojectwould build on the experiencegained during the pilot subprojectimplemented during IGPRA II. Activities would be carried out in Mansehra, Bajaur and Dir, and would include the establishmentof village developmentcommittees and other extension activities such as demonstrationalnurseries and woodlots, documentaryfilm showings, school seminars, disseminationof informationmaterial and radio and television broadcasts.Links would be establishedwith other similar ongoing programs leading to a more social forestry oriented approach within the Forestry Department.

Women and Domestic Energy Saving (GTZ) (Rs 2.220 million). Under IGPRA II, the program developed approachesand materials for energy education courses in four districts.Work, including extension courses, exhibitions,distribution of information material, organizationof radio and televisionprograms, provision of saplings for courtyard planting, and the monitoring of the foregoing activities,would continue in these districts until June 1992.

3t Figures in a parenthesisare total subprojectcosts inclusive of contingencies. - 17 -

Nurseries by Women (Rs 5.070 million). This subproject is a continuationof the pilot project implementedduring IGPRA II by an NGO, the Norwegian Refugee Council. The objective is employment generation and training in seedling production for the poor segment of the Afghan refugee women in the camps around Peshawar. A total of 1.352 million seedlingswould be produced by Afghan women in their courtyards and sold to the Forestry Department.

CoordinationCell (Rs 6.064 million). The CoordinationCell establishedunder the NWFP Forestry Department under the second project would continue to function under this project. It would coordinate the planning and implementationof forestry subprojects in NWFP in consultationwith the Forestry and Watershed Management Specialist (para 3.46). The Cell would also assist in arranging foreign training for forestry officials as provided in the subproject (para 3.45). The Cell would also focus on organizing land users groups and/or village developmentcommittees with a view to involvingthe local people in the protection,maintenance and management of the afforested areas after project closing.

Irrigation.Drainage. Flood Protectionand Canal Patrol Roads

3.20 Two irrigation subprojectswould be implementedin NWFP. Both concern the rehabilitationof the Warsak Gravity Canal which serves an area of 5,000 acres. There is one drainage subprojectby which drainage conditions would be improved over an area of about 950 acres. The flood protection category would include 16 subprojectsby which 15 villages and about 1,800 acres of agriculturalland would be protected against erosion and floods. Six canal patrol roads, involving a total length of 75 km, would be upgraded to all-weathertriple-surface-treatment standard to enable better inspection and maintenance of canals and provide easy access to villages and markets. Designs would be similar to other road subprojects.One subproject relates to the continuationof the CoordinationCell in the NWFP Irrigation Department meant for coordinatingand monitoring the activities of the Irrigation Divisions involved in the execution of the project. The total number of subprojectsin the irrigation subsector (inclusiveof drainage,flood protection,and canal patrol roads) is 26.

3.21 These subprojectswould be implementedby the Irrigation Department of NWFP with one exceptionnamely, the Darazina flood protection subproject,which will be implementedby the FATA DevelopmentCorporation. Key details of the subprojectsare presented in Table 3.2. - 18 -

Table 3.2

PAKISTAN

THIRD INCOMEGENERATING PROJECT FOR REFUGEEAREAS

Irrigation Sector

Main Features of Selected Subnroiects

Distance Labor from Refugee Type of Comp. ERR Camp No. Subprojects Subproject Expected Benefits I X (Miles)

A. NWFP

1. Babu Garhi Flood Prot Protection of village 33 10 3.72 and, 60 acres of land 2. Chamkani " " Protectionof village, 33 18 6.20 road and 70 acres land 3. Mandoori " Protection of village 45 16 6.20 and 100 acres of land 4. Warsak Canal II Irrigation Improvementof irrigation 32 18 3.72 on 500 acres 5. Warsak Canal III " Improvementof irrigation 34 14 3.72 on 5,000 acres 6. Nusrat Khel Flood Prot Protection of village 50 13 3.72 and 100 acres of land 7. Babri Banda Drainage Improvementof drainage 51 13 1.86 on 790 acres 8. Tharkha Algada Flood Prot Protection of village 43 11 4.96

9. Babini " " Protection of village 42 11 6.20

10. Allah Dhand Dheri " Protection of village 44 20 4.96

11. Chamyarano " " Protection of village 43 19 9.92 and 40 acres of land 12. Tentage-Chakdara Protection of village 43 23 1.86 and 50 acres of land

13. Kog Battian ' Protectionof village 45 15 6.82 and 50 acres of land 14. Haroon Abad " Protectionof village 37 21 3.72

15. Jaghoor " Protectionof village 45 12 3.72 and 100 acres of land 16. Mulane Gole " Protectionof village 40 14 3.72 and 200 acres of land 17. Spur No. 9 " Protectionof village, 41 17 3.72 regaining 40 ac of land 18. Spur No. 10 " Protectionof village, 42 21 3.72 regaining 40 ac of land 19. Darazinda (FATA) Protection of village 43 11 3.10 and 100 acres of land 20. Kabul River Canal Patrol Rd (Facilitationof 35 21 0 (canal maintenance 21. Gandiali Disty (as well as 45 18 3.72 (transportation 22. Katchkot Canal (of agricultural 39 17 0 (productsto 23. Naurang Mamakhal Canal" (markets and mills 43 14 3.10

24. Paharpur Canal Patrol Rd 29 18 0

25. Civil Minor Canal " 31 15 0 26. CoordinationCell - 19 -

Distanca Labor from Refugee Type of Comp. ERR Camp No. Subprojects Subproject Expected Benefits X S Km

B. BALOCHISTAN

1. Karezes Arambi Irrigation Extensionof irri- 75 24 3.10 gation on 500 acres 2. Poti Mangalzai Flood Prot Protectionof 40 ac 47 11 6.20 orchards, regain 35 ac 3. Mamanika Protectionof 50 ac 45 17 8.68 orchards, regain 35 ac 4. Karezes Loralai Irrigation Extensionof irri- 86 22 4.96 gation on 200 ac 5. Smallan Sanjawi Flood Prot Protectionof village 50 11 12.40 and 450 ac of land 6. Saliaza " Protectionof 300 ac 50 11 4.96 of land

C. PUNJAB

1. ML Upper Thal Irrigation Improvementof irri- 64 13 6.20 gation on 1,000 ac 2. Turfing ML Upper Thal " Improvementof irri- 56 17 6.20 gation on 1,000 ac - 20 -

Roads

3.22 Presently,many district roads in NWFP are only fair weather dirt or shingle roads which frequentlybecome impassableduring the rainy season. Many of these roads have deteriorateddue to heavy refugee related traffic. The proposed project would improve the situationby reconstructingeight rural roads in five districts of NWFP (Dir, Bannu, Kohat, D.I. Khan, and Peshawar), involving a total length of 63 miles. The details are given in Table 3.3.

3.23 The project would be implementedthrough the District Road ImprovementProgram (DRIP) which would upgrade existing fair weather village access and link roads to triple surface treatment (TST) standard in order to permit year round traffic. The following uniform geometric and pavement design standardswould be applied to all road subprojectsunder the program:

- Formation width: 18 ft - Carriageway width: 12 ft - Shoulder width: 3 ft on both sides - Subbase Course: 13 ft. wide, 6 inches compacted - Base Course: 12 feet wide, 4 inches compacted

3.24 As under IGPRA II, the implementationwould be carried out by the Departmentof Local Governmentand Rural Development (LG&RD), which would designate the Director General as the Project Director. The Project Engineer (PE), already appointedunder IGPRA II would be in charge of the overall project implementationand would have technical responsibilityfor the project roads. He would have a nucleus staff financed under the project. The PE's duties would include worlkscheduling, supervision and cost accounting and control. Except for one subproject,the Telaband-Azakhel/Maryamzairoad, which would be executed through a project committee appointed by FATA Development Corporation,the works would be carried out by contractors.

3.25 The DRIP roads are expected to have a life of 10 years. Their constructionwould generate income in the form of wages of about Rs 25 million, the labor content being over 35%. The total cost of DRIP would be Rs 86 million with the cost of bitumen of Rs 10 million. An assurance was obtained that LG&RD would provide bitumen for blacktoppingof the roads subprojectsto be undertaken.3/ The engineeringfirm has already been selected and is currentlypreparing the design of the roads.

Subproiectsin Balochistan

Watershed Management

3.26 The watershed management subprojectsprimarily aim at reducing surface run-off and soil erosion, and increasinggroundwater recharge. These

V The cost of bitumen for blacktoppingwill be borne by the Provinces. - 21 -

Table 3.3

Main Features of Selected Projects

Roads Sector

Subproject IRR Labour Content Length Distance to Camp

(%) (% (MiLes) (Miles)

N.W.F.P.:

Sunderwalto Barawal Road 18 33 4.59 0.0 D.1. Khan to Kakki GambiLa Road 21 35 5.49 3.1 Sarai Naurang to Kurram Camp 18 37 2.73 0.0 Bannu to Sumari Bala Road 17 36 11.38 0.0 Kulachi to Sheikh PuLtan Road 14 32 16.65 3.1 Sharpur to Jabai Barow Road 15 36 7.41 3.1 Telaband to Azakhel Maryamjai Road 14 39 3.06 3.1 Naivela-Rashidto Musazai Road 14 35 11.16 6.2 Project Cell Unit

PUNJAB:

Turg Road to Mianwali Road 25 43 7.99 14.88

BALUCHISTAN:

Quetta-ChamanRoad 24 33 9.30 18.6 - 22 - objectivesare achieved through constructionof check dams and contour trenches. In the arid climate of the region, forestry takes the second place and is of minor concern. Planting is done at a few selected places where water is available.

3.27 Six subprojectshave been selected of which four are field - related and two constitutethe support program. Of the four field subprojects, only two provide for new work. All the four include maintenanceof the works completed under the second project. The support program includes two subprojects,namely CoordinationCell and Training and Research. The field subprojectsare described below:

Barshore (Rs 18.288 million). This subprojectsite is situated adjacent to the IGPRA II Bund Khushdil Khan (BKK) subprojectsite, both draining into the nearby lake. The new work would include checkdammingover 20,000 acres and contour trenching and fencing of 3,000 acres. Sowing of native tree and grass species as well as of Artemisia maritima and planting of saplings from the Pishin nursery would be done over 2,500 and 500 acres, respectively.The BKK works completedunder the second project would be maintained. Labor requirement is estimated at about 281 thousand workdays representinga labor content for the subprojectof 81 percent.

Quetta Valley (Aghberg) (Rs 19.646 million). The site in Aghberg is especiallyimportant for water collectionbecause of the presence of karezes and tubewells in the area. Under this subproject,checkdamming and contour trenching would be done over 15,000 and 4,500 acres, respectively.Sowing, predominantlyof Prunus eburnea, and planting, where water is available from karezes, of saplings from the Pishin nursery and of tamarix cuttings would be done in trenches over 3,000 and 250 acres, respectively.The works of the Quetta Valley subprojectunder the second project would be maintained. Labor requirement is estimated at about 262 thousand workdays, representinga labor content of 68 percent.

Ziarat (Rs 8.900 million). New checkdammingover 5,000 acres and a tube nursery of 1.4 acres are contemplated.Resowing in trenches over 600 acres and replantingwith willow, poplar and tamarix cuttings and nursery saplings behind checkdams over 1,360 acres would be done. Checkdamsover 17,000 acres completedunder the second project would be maintained.Labor requirement is estimated at about 131 thousand workdays, representing76% of the base cost.

Loralai (Rs 4.515 million). Two sites, namely Gadebar and Spinwar, would be maintainedunder this subproject.Checkdams would be repaired and maintainedand resowing with phulai and mesquite seed done over 8,000 acres at the two subprojectsites.

3.28 Training and Research (Rs 9.642 million). The training school at Quetta would be maintained. A total of 660 persons, including forest guards and Afghan refugees,would be trained during the project period. During - 23 - intervalsbetween the courses, field courses would be arranged for local land users with the object of setting up local management committees to develop sustainablemanagement of the areas developed during the two earlier projects.

3.29 Under the research component, two studies would be continued while six new ones would be initiated.The continuing studies are: (i) effect of water conservationtechniques on the establishmentof tree species at Hazarganji and Gadebar; and (ii) maintenance of weather stations at Karkhasa and Nawab Karez (Loralai).The new studies are: (i) evaluation of the efficiency of porous stone masonry or gabion checkdams for enhancing percolation in major stream beds; (ii) effect of watershed treatment on increasing the water flow in karezes in Aghberg (QuettaValley); (iii) water conservationtechniques for dry zone afforestationin Ziarat Valley; (iv) water conservationtechniques for dry zone afforestationin BKK; (v) sowing versus planting and season of planting of indigenous tree species at BKK; and (vi) establishmentof grasses and forage shrubs with water conservationand spreading techniques at Karkhasa and Hazarganji.The first seven studies would be carried out under the guidance of the Watershed Management Section of the Pakistan Forest Institute, Peshawar, and the last one in collaborationwith the Arid Zone Research Institute (AZRI), Quetta.

3.30 CoordinationCell (Rs 2.146 million). The existing Coordination Cell in the BalochistanForestry Departmentwould continue to function under this project, and be responsiblefor planning, implementation,monitoring and evaluation of the forestry subproject activities.The Cell would focus on organizinguser groups and/or village developmentcommittees with a view to involving the local people in the protection and maintenance of the treated areas and in the establishmentand implementationof sustainablemanagement plans after project closing.

Irrigation and Flood Protection

3.31 Two irrigation subprojectswould be carried out in Balochistanby the Irrigation Department.Both relate to the rehabilitationand extension of existing karezes. In total, 32 karezes will be rehabilitatedby which an additional area of 1,975 acres will be brought under irrigation.Four flood protection schemes which involve the constructionof walls, bunds, spurs, and gabion walls are also included.These groups of subprojectsare expected to protect a village and about 1,700 acres of land from erosion and floods. Details are presented in Table 3.2.

Roads

3.32 One major road is proposed to be undertaken under the project involvingwidening and improvementof a section of the Quetta-Chamanhighway. This is a national highway which connects Balochistanwith neighboring Afghanistanand mainly serves thru traffic. Refugee related traffic has substantiallycontributed to its deterioration.During execution of IGPRA I and II, 30 miles of this highway (mile 40-70) were reconstructed.The last section of 10 miles up to the Afghanistanborder is taken up under this project. - 24 -

3.33 The following geometric and pavement design standardswould be applied to this section. I

- Formation width: 32 ft. - Carriageway width (TST): 20 ft - Shoulder width: 6 ft on both sides - Subbase course: strengtheningto 10 inches compacted - Base course: strengtheningto 12 inches compacted

3.34 As in the second project, the subprojectwould be implementedby the Communicationsand Works Department (C&W) and the works will be carried out by local contractors.The total cost of the subproject is estimated at Rs 38.244 million including recurrent costs (Rs 0.547 million). An assurance was obtained that the C&W Departmentwould meet the cost of bitumen (Rs 3.782 million). Action has already been taken for the selection of the engineering firm for the preparation of the design of the road.

Subprojects in Puniab

Forestry

3.35 Kundian (Rs 10.453 million). The subprojectaims at establishinga nursery to produce a total of 625 thousand eucalypt (Eucalyptuscamaldulensis) saplings, planting of 500 acres of the state-ownedKundian Irrigated Plantationwith eucalyts, and maintaining the second project plantationsof Kundian (1,500 acres) and Chak Sarkar (900 acres). Three tubewells would be installed to augment the water supplies to the Kundian Plantation.Tubewells installed,under IGPRA II, in Kundian and Chak Sarkar would be maintained. The subprojectis estimated to generate about 162 thousand workdays of employment, amounting to a labor content of 73%.

Irrigation

3.36 Two irrigationrehabilitation subprojects have been selected for Punjab involving the rehabilitationof Main Line Upper Thal Canal. The subprojectswould secure water supply on the command area of the canal (about 2.3 million acres) and would reduce maintenance costs. The implementation would be carried out by the IrrigationDepartment of Punjab and the scheduled constructionperiod is 20 months. Further details of the project appear in Table 3.2.

Roads

3.37 One road subprojectwould be taken up under the project involving the widening and improvementof the existing 8 miles of earth road between Trug and Mianwali to triple surface treatment (TST) standard. The road branches off from the Mianvali- Bannu Arterial Road No.2 at Trug opening up the rural area on the west with a populationof about 40,000 people. As in IGPRA II, the subprojectwill be implementedby the Punjab Highway Department. Detailed engineering design would be done by the Punjab Highway Department and the works would be undertakenby contractors. - 25 -

3.38 The total cost of the subproject is Rs 7.2 million. An assurance was obtained that the Punjab Highway Departmentwould meet the cost of bitumen, at an estimated cost of Rs 1.2 million.

TechnicalAssistance

3.39 Experience with the IGPRA I and II points to the need for internationallyrecruited technical assistance in the areas of forestry and watershed management and road construction.Substantial afforestation and soil conservationwork has been carried out under the former two projects which now needs to be consolidatedwith the active participationof the local communities.On the other hand, the Provincial Forestry Departments lack expertise in community forestry. Similarly, expatriate technical assistance is deemed necessary first for ensuring quality in the constructionof new roads and second for preparing and implementinga plan of maintenance for the already constructedroads.

3.40 Forestry and Watershed Management Specialist.An internationally recruited consultant for the forestry subsectorwill be required to advise on afforestationprograms in NWFP and Punjab and undergroundwater recharge works in Balochistan.In NWFP, his main area of concern will be the consolidationof the work so far done and organizing the involvementof communities in the future management of plantations.As a secondary responsibilitythe consultant will assist in Balochistanon confirming the efficacy of water conservation structures for contributingto the undergroundwater recharge through experimentationand collectionof empirical evidence. The appointee would be based in Islamabad at the SAFRON PCU for the duration of the project. Costs involved are included in the detailed cost table for Technical Monitoring. The Forestry and Water Management Specialist'sdraft terms of reference are given in Annex II.

3.41 Field surveys are needed to prepare maps of the areas afforested and/or treated to improve their watershed values, determine the plant survival percentagesand species composition,and monitor community participation.Such surveys will be carried out twice, one mid-term and the other at project closing. About 8 staff months of local consultantwork will be required for this purpose. In addition, a four-months'consultancy to define strategies for communityparticipation in sustainablemanagement has been provided for. A total of 12 staff months of consultantwork has been included in the detailed cost table for 'SAFRON PCU' in the Project ImplementationVolume.

3.42 Irrigation.There will be need for local consultants to assist the NWFP Irrigation Department in supervisingthe implementationof two subprojects,namely Warsak Canal Restoration II and Warsak Canal Restoration III. A total of 4 staff months, two for each subproject,of local consultant work costing about Rs 0.2 million has been provided for in the relevant irrigation cost tables detailed in the Project ImplementationVolume.

3.43 Roads. Engineeringdesigns, including bills of quantities, cost estimation and preparation of tender documents, will need to be prepared for all road subprojects.This work will be carried out by the locally recruited - 26 - consultants.A total provision of Rs 2.4 million has been made for this purpose in the detailed cost estimatesof the various road subprojects.

3.44 General. A provision of 36 staff months of local consultantwork for carrying out baseline surveys, social and economic impact studies and other labor-relatedstudies has been made in the detailed cost table for UNHCR Monitoring. Furthermore,four staff months of local consultantwork has been included in the detailed cost estimates for SAFRON PCU to carry out twice, mid-term and at project closing, the reviews of project accounts.

Training

3.45 The project will provide for foreign training and field trips in social forestry (2 staff months), watershed management (2 staff months), nursery management (2 staff months), and managementplanning (2 staff months) for the forestry sector staff. This training will help equip the sector with the needed expertise to efficiently implementand maintain the various subprojects.The cost involved is Rs 0.8 million and is provided for in the detailed cost estimates of the NWFP Forestry CoordinationCell.

Technical and Emplovment Monitoring

3.46 Technical Monitoring.Under IGPRA II, two internationally recruited consultants,Technical MonitoringSpecialists (TMSs) with the required technical qualificationsand experience,effectively performed the role of imparting the much needed technicaladvice to the engineering line departments'personnel and contractors.It had a very beneficial effect on project quality and timely implementation.As part of the technical monitoring role, a Forestry and Watershed Management Specialistwas also recruited internationallyto assist the three forestry departmentsthrough advice on subprojectsrelating to reforestation,soil erosion control schemes, and watershed management.

3.47 The technical monitoring role by the TMSs and the forestry specialistwould be continued under the third project. However, as the number of subprojects is expected to be substantiallysmaller, (69 compared to the 167 under IGPRA II), only one internationallyrecruited TMS will assist the line agencies. The specialist (preferablywith a background in hydraulic engineering)will be assisted by a locally recruited engineer. The two specialistswould be in overall charge of the monitoring activities of the project. The TMS would advise the line agencies on subprojectengineering designs and surveys and in constructionmethods in order to maximize the labor utilizationand to ensure the quality standards and durability of the project works. He would discouragethe use of earth moving equipment and other labor saving devices, and would allow such use only when genuine emergencies justify it. The terms of reference for the TMS appear in Annex III. The TMS and forestry specialistwould monitor and pursue the flow of funds to the line agencies at the subproject level.

3.48 The TMS and forestry specialistwould be recruited by SAFRON internationallyunder technical assistancefor the duration of the project. They would be located in Islamabad and be provided with logistic and - 27 - secretarialsupport. They will be responsible to SAFRON and work closely with the Refugee Employment CoordinationOfficer (RECO) and exchange information with him.

3.49 Emplovment Monitoring.Monitoring of the labor employed on subprojects,particularly where it involved the utilization of labor by contractorson project works, was done by two UNHCR-recruitedMonitoring Officers during the First and Second Projects. Their task has been to check on employment,both Afghan and Pakistani, by making unannounced visits to subproject sites. The labor monitoring and recording system, which was reviewed from time to time, is well establishedand considered to be working satisfactorily.

3.50 Experience under the IGPRA I and II shows that the labor employed on subprojectshas been substantiallyhigher than the targets. The compilation of informationon labor employment for the purpose of progress reporting is now being done by the provincial line departmentsand SAFRON PCU. The UNHCR role under this project will, therefore,be limited to retaining the responsibilityfor verificationand spot checking, and having overall responsibilityfor the reporting and accuracy of the data provided to the donors and the Bank. The Monitoring Officers, who were recruited by UNHCR under IGPRA II, will be replaced by RECO at the start of the new project.

3.51 RECO will be stationed in Islamabad (attached to UNHCR) and be responsible,in addition to the overall employment and labor monitoring reporting system undertaken by the line agencies and the PCU, for reporting and advising on all refugee employmentmatters. Efforts by the RECO, assisted by a proposed 12 staff months per year of local consultancy,will be directed to studies and data gathering for facilitatingthe evaluation process or to respond to specific donor questions in the absence of substantivebaseline and trend data. Such data gatheringwould focus more on qualitative rather than just quantitativeaspects. Moreover, research into studies and surveys carried out by the UNHCR would be undertaken using these services, in order to compile relevant demographic,socio-economic and power structure data relating to the refugees in relation to the local population.Specific studies related to tracing the movements of refugees, the rationale for such movement and their importance in relation to the overall repatriationquestion will be examined to the extent feasible. The terms of reference for RECO appear in Annex IV.

SAFRON Proiect CoordinationUnit

3.52 The States and Frontier Regions Division (SAFRON) of the Government of Pakistan has the overall responsibilityfor the administration of Afghan refugees in Pakistan and for organizationand execution of developmentschemes in the refugee areas. It coordinated the activities of the IGPRA I and II through a Project CoordinationUnit (PCU), which arrangement would be maintained for this project. The PCU, headed by a Deputy Secretary, will continue to perform the duties of liaising with the World Bank and UNHCR, coordinatingand monitoring project activities,preparing quarterly progress reports, processing disbursementrequests, and channelling project funds to the provinces. The Deputy Secretary as Project Coordinatorwill be assisted in his work by a Section Officer for secretarialassistance, a - 28 -

Statisticianresponsible for collation of labor and employment data in respect of subproject activities and preparing quarterly progress reports, an Accounts Officer for compiling monthly accounts indicating receipts from the Trust Fund and their distributionto provincial departmentsand expendituresby the various subprojectsand monitoring the auditing of project accounts, and other complementarystaff. No new additional staff will be required. The two internationallyrecruited consultants (Para 3.46), one Forestry Specialist and one Technical Monitoring Specialist,will be based at PCU to help monitor subprojectactivities in the forestry, irrigationand roads sectors, and advise the provincial departmentson technicalmatters.

3.53 Some 200 subprojectshave been completedunder IGPRA I and II. The assets created are now in a post-implementationstage where sustainabilityof the benefits provided has become an important issue in relation to a project objective of producing durable assets. Consequently,in addition to the above requirements,the PCU would need to perform two new functions. The first is a reporting function which will record maintenance informationfor each of the completed subprojectsfrom previous phases as well as the status of maintenance funds requests for Phase III subprojects.For the second function, the PCU would work with the provincial coordinationcells and liaison officers in monitoring the process of institutionalizingthe requests for maintenance, in particular,ensure financial procedures are established for transfer of budgetary funds for maintenanceof completed subprojects.This function will be to ensure that the assets created under this project and outside the normal planning and budgeting system enter into that system.

3.54 Training of Afghan Refugees. Provision is also made under the PCU for training of Afghan refugees in the Bost Mason Training Institute which is run by an NGO, the GTZ. Under the program, Afghan youth will receive intensive training in a six month theoreticaland practical training course in brick, wall and dome construction.It is proposed that 15 Afghan refugees will be funded for each course and a total of 90 refugees will receive such training under the project period.

D. SustainabilityConsiderations in Forestry Subproiects

3.55 Sustainability.Sustainability in forestry is a concept of management of a forestry resource so as to produce a constant or increasing flow of benefit to the owners or the users in perpetuity. These can be forest products or other less tangible benefits such as soil conservation,water recharge or shelter. While producing such benefits, the capability or potential of the resource or the land on which it grows is not reduced. This concept applies to forests and to rangelands.

3.56 Between 1984 and 1990, under IGPRA I and II, afforestationand rangeland improvementcum afforestationworks have been carried out over a large area representinga total investmentof about Rs 440 million. These works have been carried out on public lands as well as various categoriesof private land, the latter under a variety of agreements between the Forestry Departmentsand the landholders.To date, the aftercare of the plantations has - 29 - been mainly the responsibilityof the Forest Departmentswhich have primarily concentratedon production and maintenance.

3.57 As the plantations develop, however, the need for long term management becomes more obvious. Forest plantationsneed to be managed on the basis of appropriatemanagement plans and rehabilitatedrangelands likewise require range management schemes in order to provide a sustainablequantity and quality of goods, and to ensure adequate and permanent protection of soil and water resources. The absence of institutionalmechanisms in Pakistan to ensure such management has been a matter of growing concern.

3.58 Although forest and range management have been the subject of a number of studies and projects in Pakistan, it has been recognized that the Forestry Departmentswill not have the manpower or the resources to achieve complete control over the management of the areas themselves.The need to involve the local population who actually use the land has become more and more evident. This concept, commonly categorizedunder the broad umbrella of social or community forestry, is presentlybeing developed in several projects in Pakistan, one of which is the Malakand Social Forestry Project (MSFP).

3.59. Although the IGPRA III is too short a term to intensivelydevelop management systems for all the treated areas, there is a pressing need expressedby the Forests Departmentsand the donors that a basis should be laid for future sustainedmanagement of the forests and rangelands.Under IGPRA III, the following actions are being taken to lay the basis for sustainablemanagement of the assets created:

- organizationof village developmentcommittees (VDCs) starting with those provided for under the forestry extension and training subproject in NWFP and encouragementof setting up of VDCs in other areas;

- training of village motivators as provided for in the expanded forestry extension and training subproject in NWFP;

- establishmentof agreements with landowners (collectiveand individual)which include stipulationsfor maintenance and participativemanagement planning. An outline of such agreements would be included in the PC-ls;

- continuationof forestry mapping activities;and

- continuationof forestry training subproject in Balochistan.

3.60 Forestry MaRRin&. For proper documentationof project activities (includingmaintenance) and furthermanagement, maps of adequate quality are required. This was emphasized by all Bank missions which resulted in the preparation of basic maps transparencies(1:10,000) by the Survey of Pakistan (SOP) for all IGPRA II forestry subprojectsup to mid-1989. In order to depict the current status of activities on these maps, the Divisional Forest Officers (DFOs) are required to fill in the following informationand update these maps: - 30 -

accurate documentationof all subproject activities;

clear definition of land ownership;

- monitoring of protection and maintenance;and

- future management with a view to obtaining optimum productivity.

3.61. In addition, the following informationneeds to be provided in tabular form on the map sheets:

- size of area treated as given in records (number and volume of check dams etc);

- number of trees planted/replantedper acre as found by site checks;

- survival rate of plantation and/or outcome of sowing;

- maintenancerequired/desired; and

- further management (if preplanned).

3.62. The above described SOP maps for all IGPRA II subproject sites must be completed and one copy of each sent to SAFRON for constant review by the Forestry Specialist.For sites for which maps were not prepared by SOP, the DFOs would need to prepare 1:10,000 maps through chain and compass survey.

IV. PROJECT COSTS. FINANCINGAND COST RECOVERY

A. Proiect Costs

4.01 The subprojectswere determined by: (a) the amount of grant funds anticipatedfrom donor governments;(b) subproject feasibility studies prepared by each province and their suitabilityto meet the overall objectives of the project; and (c) the implementingcapacity of the provincial line departments.The distributionof funds among provinces was based mainly on the correspondingproportions of the Afghan refugee distribution.

4.02 Because of unforeseen delays encountered in start of the bridging period and this project, actual work on the project commenced in July 1991. The project period will, therefore,be three years from July 1, 1991 with project completion date of June 30, 1994 and project closing date set at December 31, 1994. The equivalent of USD 3.1 million was made available as an advance by three donors by June 1991 for subproject activities of an essential nature such as maintenanceof nurseries, forestry plantations and consultant services and these funds were made available for subprojects in July, 1991. - 31 - Table 4.1

PROJECT COST SUMMARY

Foreign Foreign Base Foreign LocaL Exchange Total LocaL Exchange TotaL Cost Exchange

NWFP ...... (Rs M) ------(USS M) ------) )

Forestry 121.03 2.50 123.52 5.02 0.10 5.12 22.6 2.0 Irrigation 100.75 12.58 113.32 4.07 0.51 4.58 20.8 11.1 Roads 85.99 0.00 85.99 3.56 0.00 3.56 15.8 0.0

Subtotal: 307.76 15.07 322.84 12.65 0.61 13.26 59.2 4.6

BALUCHISTAN

WatershedManagement 48.63 0.91 49.54 2.00 0.04 2.03 9.1 1.8 Irrigation 33.20 5.03 38.23 1.37 0.21 1.58 7.0 13.2 Roads 38.24 0.00 38.24 1.56 0.00 1.56 7.0 0.0

Subtotal: 120.08 5.93 126.01 4.93 0.25 5.18 23.1 4.7

PUNJAB

Forestry 8.46 1.06 9.52 0.35 0.04 0.40 1.7 11.1 Irrigation 7.39 0.00 7.39 0.31 0.00 0.31 1.4 0.0 Roads 7.20 0.00 7.20 0.29 0.00 0.29 1.3 0.0

Subtotal: 23.05 1.06 24.11 0.95 0.04 1.00 4.4 4.4

OTHER

TechnicalMonitoring 7.83 25.77 33.60 0.32 1.05 1.37 6.2 76.7 UNHCR Monitoring 5.98 4.73 10.71 0.24 0.19 0.44 2.0 44.2 SAFRON Proj.Cord.Unit 10.43 0.42 10.85 0.43 0.02 0.45 2.0 3.9 Agency Overheads 0.72 16.80 17.52 0.03 0.70 0.73 3.2 95.9

Subtotal: 24.95 47.73 72.68 1.02 1.96 2.98 13.3 65.8

TOTAL BASE COST 475.85 69.79 545.64 19.56 2.86 22.42 100.0 12.8

Physical Contingencies 36.37 2.21 38.58 1.48 0.09 1.57 7.1 5.7 Price Contingencies 101.50 11.06 112.56 4.11 0.45 4.56 20.6 9.9

Subtotal: 137.87 13.27 151.138 5.59 0.54 6.13

TOTAL PROJECT COST 613.71 83.06 696.78 25.15 3.40 28.55 127.7 11.9

Taxes & Duties 8.96 0.37 - 32 -

4.03 The total project costs are estimated at Rs 696.8 million or US$ 28.55 million equivalent (inclusiveof contingencies,local taxes and duties). Bridging costs funds provided as an advance by donors is included in the above estimate of project costs as shown in Table 4.1. Of the project costs of Rs 696.8 million (USD 28.55), contingencies,both price and physical, amount to Rs 151.1 million (USD 6.13 million), and local taxes and duties to Rs 9.00 million (USD 0.37 million). The foreign exchange component of the project is Rs 83.0 million (USD 3.4 million). The total project costs includes base costs estimated at prices of July, 1991, which is Rs 545.6 million, price contingenciesof Rs 112.6 million, and physical contingenciesof Rs 38.7 million. The physical contingencieswere applied to the road components at a rate of 9%, while for forestry and irrigation subprojectsit is 10%. Price contingenciesare estimatedat Rs 112.6 million and are based on the projected domestic and foreign inflationrates as follows:

Exchange FY International Domestic Rate (% p.a.) (% p.a.) (Rs per $)

92 5.1 8.0 23.60 93 0.4 6.0 24.00 94 0.6 6.0 25.29 95 2.7 6.0 26.10

4.04 Although current estimates of donor contributionsare estimated at USD 26.0 million, fund raising efforts could result in additional contributionsabove this amount. To provide for this outcome, 27 additional subprojects,constituting a reserve list, were appraised and are included in Annex V. The Bank, in consultationwith donor representatives,will approve new projects from within this list. The total additional cost of these reserved subprojects is Rs 228.8 million, including contingencies.The priority is by subsectorand in the event additional grant funds become available, subprojectsfrom this reserve list will be placed on the active list for commencement.

B. Financing

4.05 The project is to be funded largely by donor country contributions.UNHCR has the responsibilityfor raising the funds for the project. A portion of the contributionswould be deposited into a Grant Account which has already been set up and is administeredby the Bank, and will be utilized under the terms and conditions of a Grant Agreement between the Bank, acting as Administratorof said portion of the contributions,and GOP, and a Project Agreement among the Bank, as Administrator,and the Provinces of North West Frontier, Balochistan,and Punjab. The remainder of the contributions,in accordance with specific procedures of some donors, would be deposited directly into a Government operated Project Account upon the advice of the Bank. Conditions of Grant Effectivenesswould include: (a) that the execution and delivery of the Grant Agreement on behalf of Pakistan shall have been duly authorized or ratified by all necessary government actions; and (b) that the execution and delivery of the Project Agreement on - 33 - behalf of the provinces shall have been duly authorized or ratified by all necessary governmentalaction.

4.06 The Bank would also sign, simultaneouslyto the signing of the Grant and Project Agreements, an AdministrationLetter accepting its designation as administratorof the agreed portion of the contributions.

4.07 Donors' funds would be provided on a grant basis. As this is expected to be the last project of this nature and with a view to ensuring better control over maintenance and sustainabilityof completed subprojects, GOProvinceswould assume an increasing share of the maintenance costs (including incremental staff costs) of completed project works in a progressive manner, starting in FY94. During negotiations,the GOProvinces will agree to appropriatefunds in the regular provincial budgets for FY94 and FY95 and as necessary thereafter to maintain the project works. A few projects involve capital intensive inputs desired by the provinces (e.g. roads), which though technically justified,would seriously reduce the proportion of total cost expended on labor. In such cases, the Provinces would make available the bitumen for blacktoppingout of their own funds.

4.08 Of the total project cost of Rs 696.8 million (US$ 28.6 million), the Provinces would provide about (US$ 2.6 million) for the cost of bitumen for blacktoppingof road subprojectsand for their share of cost for nursery establishmentand maintenance of project works in FY94 and FY95. The project financing plan is summarizedbelow:

Table 4.2 - Project Financing Plan (US$ M)

Grant (Donors) Provinces Total

Foreign 3.4 - 3.4 Local 22.6 2.6 25.2

Total Project 26.0 2.6 28.6 Percentage (%) 91% 9% 100%

4.09 All subprojectswill need to receive approval of the PCl forms, required under government regulationsfor establishingthe project budget and authorizing expenditure. Such forms are currently under preparation. An additional condition of Grant effectivenessis that the subprojectslisted in Table 3.2 (or such alternativesubprojects as the Bank may otherwise agree) shall have received all approvals required by the appropriate agencies of GOP and the Provinces to enable them to be carried out. A second additional condition of Grant effectivenessis that the equivalent of USD 26.0 million shall have been made available to GOP for purposes of the project in the following manner: the equivalent of at least USD 5.0 million (inclusive of advance for the bridging period) shall have been received by the Bank; the equivalent of at least USD 1.5 million shall have been deposited in the project account; the equivalent of USD 3.0 million pledged to be available to - 34 - the Bank by June 30, 1992 and USD 1.0 million to GOP by June 30, 1992; and additional financing shall have been pledged to be made available to GOP as follows: the equivalent of USD 3.0 million to be received by the Bank before December 31, 1992; the equivalent of USD 4.0 million to be otherwise made available to GOP before December 31, 1992; the equivalent of USD 3.0 million to be received by the Bank before December 31, 1993; and the equivalent of USD 5.5 million to be otherwise made available to GOP before December 31, 1993.

4.10 A Project Account will be opened by GOP and separate provincial accounts by the provinces as in the previous two projects. All of these will be operated as rupee accounts. Upon grant effectiveness,an initial deposit equal to six months expenditureswill be provided by transfer from the Grant account into the Project Account. The funds would then be transferred to the provincial accounts in the provinces. The provincial accounts would be established in the name of the head of each of the implementingdepartments within the provinces and withdrawalswill be on the signatures of authorized personnel.

C. Procurement

4.11 Table 4.2 summarizes the procurement arrangements,and the following paragraphs describe them in more detail.

Table 4.3 Procurement (US$ M)

Force LCB Account Others N.A. Total

CivilWorks 15.5 1.5 -- -- 17.0

PlantationEstablishment -- 2.4 -- -- 2.4

Machinery, Equipment & Motorcycles 0.2 ------0.2

Technical Assistance & TrainingA/ -- -- 2.5 -- 2.5

Plantation& Soil Maintenance -- 2.4 -- -- 2.4

Other Operating Costs.2I ------4.1 4.1 _2/

Total 15.7 6.3 2L 4.1 28.6

1/ Includes Technical Assistance,Training, Technical Monitoring and Labor Monitoring. 21 Includes Agency Overheads. 2/ Includes Government cost (US$ 2.6 million) for bitumen and maintenance. - 35 -

4.12 Civil Works. Civil works would include road construction,the constructionof flood protection, irrigation and drainage structures,and the soil conservationand watershed management structures.The works are scattered, small in size and simple in nature. They would, therefore, be undertaken, as in the two earlier projects, following the local competitive bidding (LCB) procedures acceptable to the Bank. Award of contractsvaluing Rs 3.5 million (US$ 0.14 million) or more would be subject to prior review by the Bank. All contractswould be subject to tender procedures and contain specificationsdetailed in para 5.4.

4.13 The prevalent practice in the forestry sector is to carry out its works by force account and procedures satisfactoryto the Bank would be followed under the project for all forestry subprojectsas under IGPRA I and II.

4.14 Plantation Establishmentand Maintenance.Subproject sites are situated in far flung areas, and the nature of work requires close supervision by the functionariesof the forestry departments.As such, plantation establishmentand plantation and soil conservation/watershedmanagement maintenance works, which constitute a sizeable part of the project would be executed by force account.

4.15 Goods. No vehicles, except a tractor, are to be procured under the project. Three vehicles, one each for the NWFP Forestry Lower Tanawal, NWFP Forestry Extension and Training, and BalochistanWatershed Management Barshore subprojects,are required but these would be provided by reallocationfrom the existing fleet of vehicles by the SAFRON PCU. Other goods include three motor cycles, 8 water pumps, three bicycles, three tubewells, one snow removing equipment, and one personal computer as well as small quantities of tools, tents, furniture. These would be procured through the prevalent departmental local competitivebidding procedures.Some of the above goods would be procured through UNHCR, and an assurance was obtained that these goods procured through UNHCR would be exempt from taxes and duties.

4.16 Consultant services and local studies would be procured according to the Bank guidelines,and overseas training arrangementswould be subject to Bank's approval.

D. Disbursements

4.17 Disbursementswould be made against Statements of Expenditures (SOE), and, for FY92 and FY93 cover lOOX of costs of civil works, goods, (includingtractors) and consultants'services, excluding the cost of bitumen for road surfacing. Taxes and duties, estimatedat approximately1X of total project costs would also be reimbursed mainly because of procedural difficultiesin identifyingand quantifyingthis component and also because it is such a minimal percentage of total project costs. For FY94 disbursements would cover lOOX of costs of civil works, goods and consultants'services, excluding the costs of bitumen for road subprojects,and 67X of the cost of establishmentof nurseries and maintenance costs of forestry, roads and irrigation subprojects. Thereafter,disbursements would cover 100% of costs of civil works, goods and consultant services, excluding the cost of bitumen - 36 - for road subprojects,and 33% of the cost of establishmentof nurseries and maintenance costs of forestry, roads and irrigationsubprojects. Disbursements shall not cover the cost of land. All documents relating to the expenditures, the disbursementsfor which are made on the basis of SOEs would be retained by the concerned line departmentsfor review by the Bank's supervisionmissions. Agency overheads, including the cost of RECO, would be paid directly out of the Grant Account.

4.18 The schedule of disbursementsis given in Annex VI. It is anticipated that disbursementswould be rapid because the subprojectswill be approved as condition of grant effectiveness (Para 4.09), and the line departmentshave gained sufficient experience in implementingsuch projects during the first two projects.

E. Flow of Funds

4.19 When the project is declared effective, the PCU will submit a withdrawal applicationto the Bank for releasing funds required by the various entities for the first six months of the project period. The Bank will release the requested amount from the Grant Account and request the State Bank of Pakistan to transfer, through the Ministry of Finance and SAFRON, these funds to the project account. The State Bank of Pakistan will advise the Ministry of Finance and SAFRON of the receipt of funds as soon as these are received. The Ministry of Finance will then authorize SAFRON to issue financial sanctions, and, in turn, SAFRON will issue these sanctions to the Accountant General of Pakistan Revenues and the various Personal Ledger Accounts (PLA) holders in the provinces. Finally, the Accountant General, Pakistan Revenues, will direct the Deputy Accountant Generals in Peshawar, Quetta and Lahore to credit the sanctioned amounts to the various provincial accounts maintained with treasury officers. The implementingofficers will draw advances from the provincial accounts on a monthly basis and render monthly accounts to them. The time for flow of funds from the State Bank of Pakistan to the implementingofficers should be the minimum possible and not exceed one month. At the end of each quarter, a consolidatedwithdrawal applicationwould be submittedby the PCU to the Bank requesting disbursementof an amount equivalent to the estimated expenditurefor the next six months minus the balance available. Every second disbursementapplication would be supportedby an audit report of the previous expenditures.

F. Accounts and Audit

4.20 Project entities will maintain separate cash books for their receipts and expendituresunder the project. The implementingofficers will submit monthly accounts for each subproject to their respective Heads of Departmentsby the middle of the month following the month to which the accounts relate and, in turn, the Heads of Departmentswill submit to the PCU by the end of the month following the month to which the accounts relate a consolidatedstatement of receipts and expendituresby subproject.The PCU will consolidatemonthly accounts for the project as a whole and keep them up to date. - 37 -

4.21 As in IGPRA II, audit of project and provincial accounts will be carried out by the federal and provincial offices of the Director General of Audit on a six monthly basis. The PCU will pay to the Director General of Audit, on an annual basis, a mutually agreed fee of up to 1.5% of project expenditurefor carrying out these audits. The Director General of Audit will conduct an audit of the PCU project account which receives the transfers from the Grant account and issue a separate opinion thereon. The Director General, Audit will ensure that the PCU receives the six-monthlyaudit reports on all provincial accounts by the end of the month following the end of each six month period, that is by January 31 and July 31 of each year. Certified copies of the audited accounts for each six-monthperiod would be submitted to the Bank within 45 days of the end of each six-monthperiod. The auditor's report would inter alia include a separate opinion that funds disbursed against SOEs had been used for the purposes for which they were provided. An additional opinion by such auditors as to whether SOEs submitted during such six month periods together with the procedures and internal controls involved in their preparation can be relied upon to support the related withdrawals would also be furnished.Related accounts and financial statements,with full documentation,would be made available during Bank review missions. An assurance was obtained that accounts of the resources and expendituresin respect of the Project, including the Project Account, would be maintained in a manner satisfactoryto the Bank and audited on a six-month basis by the Auditor General Pakistan,who ig an independentauditor acceptable to the Bank and that such reports are submitted to the Bank within 45 days of the end of each semester period.

G. Cost Recovery

4.22 The assets created under the roads sector would accelerate the economic developmentof the areas in which they are located. Increased vehicular traffic would also imply increasedgasoline and vehicle duty taxes. Consequently,more tax income will accrue to Government which can be construed as cost recovery. In the irrigation subsector,the usual water charges will apply as for all other irrigation subprojectsin the provinces. The flood protection works are largely designed to protect infrastructurein villages although some private land is also indirectly likely to benefit. Flood protection works are small, widely dispersed and do not lend themselves to easy recovery of cost from private landowners.

4.23 For the Punjab and Balochistanforestry subprojects,direct cost recoveries are either not required or are not possible. In the case of the former, the plantationswill be owned by Government requiring no cost recovery, and in the latter, the benefits in the shape of reduction in run- off and soil erosion and possible increase in the recharging of the undergroundaquifers being invisibleand not easily quantifiable,do not provide a sufficientbasis for imposing cost recovery.

4.24 In the case of NWFP forestry sector subprojects,however, regulationsexist for cost recoveries from the beneficiaries.The NWFP Hazara Forestry Act 1936 is applicable to three subprojects,namely Lower Tanawal, Bareri Khaki and Khanpur. Under Rule 12 (b) of the rules framed under Section 53 (1) of the NWFP Hazara Forestry Act 1936 and notified on September 12, - 38 -

1950, sales of forest produce from wastelands are subject to a levy of up to 20 percent to cover the departmentalcharges. Similarly, the produce sold from the Hangu and Kurram mazri subprojectswill be subject to a levy under the Kohat Mazri Act 1953. According to rule 26 of the rules framed under the above act and notified on September 8, 1955, the income from the sale of mazri will be distributedto right holders "after deducting 20 percent therefrom as departmentalcharges of the Forest Department".The remaining subprojectscome under the purview of the Pakistan Forest Act of 1927 according to which a duty is leviable on the sale and movement of timber and firewood. The duty varies from district to district. Regulationsof the District Councils impose a tax on the export of forest produce from their jurisdictions.It also varies from district to district and may average at about Rs 5 per cubic foot. Such duties and taxes, the earlier mentioned recoveries under the NWFP Hazara Forest Act and Kohat Mazri Control Act and the intangiblebenefits accruing in the form of soil and water conservationand ameliorationof the environmentwould amount to an acceptable level of cost recovery under the project.

V. ORGANIZATIONAND IMPLEMENTATION

A. Proiect Organizationand Coordination

5.01 The responsibilityfor project implementationas well as for the coordinationand monitoring of project activities in the respective provinces will reside with the Project CoordinationUnit (PCU) in SAFRON (as was the case under IGPRA I and IGPRA II). The Unit is to be headed by a Deputy Secretarywho will act as Project Coordinator.The unit will liaise with the Bank and UNHCR, and would be responsible for progress reporting, disbursement matters and the channellingof project funds to the provincial line departments.The PCU would also ensure that provincial accounts are audited in a timely manner. The unit would also have the monitoring officers who will be responsible for monitoring labor and employmenton the project sites. The PCU will also be responsiblefor finalizing contractswith consultantsfor the technicalmonitoring of projects and for the forestry specialist.An assurance was obtained that the PCU would be would be adequately staffed and a Project Coordinator,acceptable to the Bank, would be maintained at all times by GOP as head of the Project CoordinatingUnit.

B. Implementation

5.02 The subprojectswould be implementedby the provincial line departments.The heads of the line departmentswould review progress of the subprojectsand maintain contact with SAFRON and the provincial P&D Departments.The implementationschedule appears in Annex VII.

5.03 In each province, the following departmentswould be responsible for implementationof the proposed subprojects.

NWFP and BalochistanForestry Department.The Divisional Forest Officers (DFOs) would implement the subprojectsand report to the Chief Conservatorof Forests (CCF) through their immediate supervisors,Conservator of Forests (CFs). CoordinationCells - 39 -

establishedunder the second project in the office of the CCF vould continue to function. The head of the cell and staff would coordinate the activities of the DFOs, monitor project performance,check accounts,prepare progress reports and secure needed funds from SAFRON.

Punjab Forestry Department.The subprojectwould be implementedby the DFO, Mianwali, who would report to the CCF through immediate superiors. The CCF's office would be responsiblefor liaison with SAFRON, the Bank and UNHCR.

NWFP Irrigation Department.The subprojectswould be implemented by Executive Engineers under the supervisionof their respective SuperintendingEngineers (SEs). CoordinationCell, headed by an SE, which was establishedin the office of the Chief Engineer (CE) under IGPRA II, would continue. It would coordinate and monitor progress on the subprojects.

Balochistanand Punjab Irrigation Departments.The Executive Engineers would implementthe subprojectsunder the supervisionof their respective SEs. The CE has designated an officer under the second project to coordinatethe project activities and liaise with SAFRON, UNHCR and the Bank and this would continue.

NHFP Local Government and Rural DevelopmentDepartment. The responsibilityfor implementingthe rural road projects is that of the Project Engineer (PE) who was appointed under the second project and assigned to the office of the Director General (DG), LG(&)RD Department.The PE would continue to report directly to the DG/Secretary,LG(&)RD who in turn will liaise with SAFRON, UNHCR and the Bank.

Balochistanand Puniab C&W/ Highwal Department.All road subprojectswould be implementedby Executive Engineers who would be responsibleto the CE through their respective SEs. The CE would be responsible for monitoring projects and for coordination.

C. Use of Contractors

5.04 For civil works, contractorswould be required to adhere to certain guidelines.The following stipulationsin this regard would be incorporatedin the invitationsto tender and contracts for civil works:

(a) Invitationsto tender would require the tenderer to agree to the use of labor-intensivemethods in carrying out his work and would specify which machines could be used without the permission of the Bank;

(b) the departmentalitem unit rates would be based on the assumption that labor-intensivemethods would be used. Against each item of work, the line departmentswould mention the estimated number of workdays that would be required to complete the work; - 40 -

(c) a tentative time schedule for the completion of each item of work would be attached to the tender documents by the tenderer. In case he gets the contract,he would be expected to adhere to the deadlines mentioned by him in the tender documents;

(d) the tenderer would specify his proposed unit rates as percentage of the departmentalrates and indicate,as a result thereof,the workdays that would be required to complete the work;

(e) the tenderer would specify from where he intended to acquire the various road materials, such as boulders, shingle etc. The distance of these sites and the method of transportationwould be indicated to facilitatemonitoring later on; and

(f) the TMO is to discuss with the line departmentsand the successful bidder possible ways by which on the job training could be imparted to workers on work sites.

5.05 The contract for civil works would inter alia include the following provisions as was successfullyfollowed under IGPRA II:

(a) that labor-intensivemethods would be used to carry out the work and that the use of machinery would be restricted to that mentioned in the contracts;

(b) in case unauthorizedequipment is used, the contractorwould be liable to forfeitureof security deposit and blacklistingfor future contractingunder the project;

(c) labor payrolls would be kept up to date for daily inspection;and

(d) after completionof constructionworks, a provisional acceptance would be issued, the final acceptanceonly being made after one year. Until that time, the security money will be withheld and any repair of the works due to contractor'snegligence has to be completed before its release.

D. Maintenance

5.06 This is probably the last project of its kind to assist the Afghan refugees in income generation and the GOP in creating and/or rehabilitating economic assets in lieu of the damage caused by the Afghan refugees to the infrastructureand environment.During the first two projects, about 93,000 acres were afforested,26,000 acres planted to mazri, 97,000 acres treated for watershed management (trenchingand check-damming),425 miles of roads were constructedand/or rehabilitated,and 113 schemes were completed in the irrigationsector. These assets as well as those which will be created under this project need to be properly maintained and therefore a major focus of this project would be on sustainabilityof the assets already created. - 41 -

5.07 A large number of staff positions, particularly in the forestry sector, were created under the previous two phases. During this phase too, provision is made for continuationof an administrativestructure for maintenanceof the project works. The concerned line departmentsneed to prepare themselves to absorb these personnel in their regular cadres. Plant nurseries established during this phase will need to be maintained during the project period, and for about two years after project closing, to provide planting material for the replacementof plantation failures. The plantations, finally, are to be maintained and so managed that they exist in perpetuity. In the roads and irrigation sectors, similarly, the assets created will have to be maintained. Other recurrent expenditureson the maintenance of vehicles, machinery, and equipment will also have to be borne by Government after project closing. The impact of this on the GOProvinces'budget was examined and the administrativecosts over the three years was Rs 119.0 million. For the last two years of the project the recurrent cost is estimated at Rs 58.0 million. Staff salaries, a large part of which was for the employment of 154 forests guards and rangers accounted for a sizeable share of this total.

5.08 In order to ensure the sustainabilityof the assets created under the project and the two earlier projects, and ensure a progressive transfer of administrativecosts, GOP/GOProvinceswill meet one-third of the recurrent maintenance and nursery establishmentcosts in FY94 and two-thirds in FY95 which in total amounts to Rs 27.8 million. The breakdown of the costs by province and sector is given in Table 5.1. An assurancewas obtained that the above funds will be provided in a timely manner during the project period, and adequate funds will be provided for the sustainedmanagement of the assets after FY95.

E. Monitoring. SuRervisionand Evaluation

5.09 Implementingdepartments in all three provinces would appoint an officer who will be responsiblefor maintaining project records and adherence to establishedprocedures for monitoring financial and physical progress of project works as well as the employment generated. The officer would be responsible for ensuring that contractorsmaintain records of employment of both Afghan and local labor. The officer would also be responsible for preparationof the quarterly reports for SAFRON and the Bank. The monitoring activities will be coordinatedby the SAFRON PCU and a consolidatedreport prepared for distribution.RECO would assist the PCU in preparation of the consolidatedreport on the labor and employment generation aspects.

5.10 Refugee and local labor employed and wages earned from project financed work would be monitored by the implementingdepartments through spot checks on contractorsregisters. RECO would be responsible for carrying out spot checks for purposes of random verification.The technicalmonitoring of engineeringsubprojects in roads and irrigationwould be the responsibilityof the TMS and the consultant engineer who would review plans and designs and constructionwork. The TMS and the consultant engineer would make frequent visits to work sites to ensure high quality standardsof work and for checks on the use of unauthorizedmachinery. In the case of the forestry and watershed management subprojects,the Forestry Specialistwould make frequent visits to project sites to provide advise on technicalmatters. - 42 -

Table 5.1

PROVINCIALCONTRIBUTION TO PROJECT MAINTENANCECOST /1

(Rs '000)

FY 94 FY 95 Total

Total PROV Total PROV Total PROV NWFP

Forestry 24981.9 8327.3 10276.1 6850.7 35258.0 15178.0 Irrigation 1377.0 459.0 1822.6 1215.1 3199.7 1674.1 Roads 542.4 180.8 764.9 509.9 1307.3 690.7

Subtotal: 26901.3 8967.1 12863.6 8575.7 39764.9 17542.8

BaLochistan

Forestry/2 9288.6 3096.2 5882.7 3921.8 15171.3 8818.0 Irrigation 0.0 0.0 0.0 0.0 0.0 0.0 Roads 136.8 45.6 171.1 114.1 307.9 159.7

Subtotal: 9425.4 3141.8 6053.8 4035.9 15479.2 8977.7

Punjab

Forestry 1868.7 622.9 825.3 550.2 2694.0 1173.1 Irrigation 0.0 0.0 0.0 0.0 0.0 0.0 Roads 47.4 15.8 59.1 39.4 106.5 55.2

Subtotal: 1916.1 638.7 884.4 589.6 2800.5 1228.3

Grand Total: 38242.9 12747.6 19801.8 13201.2 58044.6 27748.8

/1 - ExcLudingcost of bitumen and taxes and duties. /2 - IncludingRs 1.8 M aLready committed. - 43 -

5.11 The Bank would undertake six monthly reviews of the technical, financial and income generating aspects of the project and visit project sites to evaluate progress. The Bank would also provide UNHCR with six monthly progress reports. In addition, consultantswould review the financial performanceof the project and an audit of project accounts would be undertaken every six months. A socioeconomicevaluation of the project would be undertaken by the Bank at project completion in order to determine the way in which employment opportunitiesand income generated by the project have affected the welfare of refugees and the local population. As is usual under Bank procedure, a project completion report would be undertaken immediately following project closing.

VI. BENEFITS. JUSTIFICATIONAND RISKS

A. Benefits

6.01 The various components included under the project would have the following benefits: ComDRonent Benefit

(a) Forestry - increase production of fuelwood, timber and mazri; - reduce water run-off and erosion; - produce forage grasses;

(b) Watershed management - reduce water run-off and increase aquifer recharge, thereby reducing flood damage and increasing groundwater supplies; - reduce soil erosion and reservoir siltation; - improve grazing and livestock carrying capacity;

(c) Irrigation and Drainage - increase agriculturaloutput through increased availabilityof water and improved drainage;

(d) Flood Protection - protect villages, refugee camps, agriculturalland, and infrastructure from destructionand damage by river bank erosion;

Ce) Road constructionand improvement - provide all-weatheraccess to villages and refugee camps;

- open up remote agriculturalareas and induce higher agricultural production; - reduce vehicle operating costs. - 44 -

(f) Training of Refugees - enhance skills of refugees and income earning capacity.

6.02 The benefits expected under the project would offset some of the damage caused to the environmentby the presence of refugees. Through afforestationon 22,525 acres, the project investmentswould increase fuelwood and timber production and thereby moderate the rising prices of fuelvood. Watershed management activities on 53,750 acres would help reduce erosion and water run-off. The project activities would also rehabilitateor upgrade 7 irrigationand drainage subprojectsto benefit 8,990 acres of agricultural land, 20 flood protection works to protect 17 villages, 1,690 acres of cultivated land and several infrastructureworks. Project activities also include the constructionof 180 kilometers of roads of which 15 kilometers are part of a national highway to the Afghan border. The road improvementprogram would improve access to refugee camps villages and towns and provide all weather access and provide incentives for increased agriculturalproduction through greater access to markets and greater availabilityof purchased inputs.

6.03 Training would be provided under the project in forestry, energy education, seedling production,masonry, forest guards, and construction workers on subproject sites. Afghan women will be trained and would produce 1.4 million seedlings for sale to the Forestry Department.About 660 forest guards, mainly Afghans, would receive training under the forestry training program. Further, 90 masons would be trained at the Bost Masonry Institute and approximately12,000 refugees would receive on the job training in varied constructionskills on project sites. In addition, mass education in energy education and energy conservationand extension would be carried out under the project.

B. Economic Analysis

6.04 As a satisfactoryeconomic rate of return (ERR) was one of the criteria for the selection of subprojects,economic analysis was carried out on individual subproject in the irrigation,roads and forestry sectors. In the case of the other subprojectssuch as training, extension, and women's developmentno economic analysis was undertaken mainly due to the lack of reliable data.

6.05 The economic analysis of the Balochistanwatershed management subprojectswas not carried out mainly because the benefits do not lend themselves to ready quantification.Since the subprojectswould be implemented in heavily grazed areas substantialenvironmental benefits are expected to be realized. Experience from subprojectswhich were commenced in 1984 under the first project and were monitored regularlyuntil now indicate a considerable reduction in soil erosion, water run-off and an increase in pasture and shrub growth as well as evidence of aquifer recharge.

Overall Rroiect viability

6.06 The ERRs have been calculated for each subproject (excludingwater management in Balochistan,extension and training, and women's development), for the subsectors in each province. The ERR was computed over a 25 year - 45 - period for forestry subprojects,20 year period for irrigationand drainage subprojects,10 years for roads, and 15 years for canal patrol roads. For calculatingnet present values, the opportunity cost of capital of 10% has been used as the discount rate. A note on the methodology employed for the economic analysis appears in Annex VIII.

6.07 All subprojectsvere evaluated individuallyto enable a determinationof each for inclusion in the project in line with the criteria that the ERR is at least 10%. The forestry group shows an ERR of 20%. The ERRs for the irrigationand roads subsectoralso show satisfactoryrates of return at 21% and 19%, respectively.To test the sensitivityof project's economic returns to possible adverse outcomes, an analysis of switchingvalues 4/ of key variables was carried out. The results indicate that if benefits decline by 20%, the ERRs for all subsectors in all provinces decline to at most 15%, which is satisfactory. In the case of the irrigation subsector in Balochistan and the roads subsector in NWFP, the ERR declines to 11% which is also higher than the opportunitycost of capital of 10%. A 20% increase in costs also provide acceptable results with the ERR in all subsectors in all provinces falling to not below 12%. The details of the ERRs and sensitivity analysis by sector and province are presented in Table 6.1.

C. EmRloyment and Income Effects

6.08 As income generationhas been primary criteria in the context of the overall project objectives, emphasis was placed in the design and formulationand selectionof subprojectson the impact of the subprojectson employment creation. In the selection of the subprojects,an attempt was thereforemade to ensure that the labor intensityof the subprojectswere at least 50% for forestry, and 30% for both irrigation and road subprojects.In addition, this emphasis would be reinforcedby including clauses in contracts specifying limitationson the use of heavy machinery backed up by close monitoring and supervisionof project works.

6.09 The average labor contentwas estimated for each subproject and the summary table by province and subsector is as follows:

41 Switchingvalue is the percentage change of the variable tested for which the project's net present value is zero, or for which the project's rate of return is equal to the discount rate (the opportunitycost of capital). - 46 -

Table 6.2 -Average Labor Content by Province and Sub-Sector

Province/Subsector Average (x) NWFP Forestry 63 Irrigation 35 Roads 34

Balochistan Forestry 72 Irrigation 55 Roads 33

Puniab Forestry 74 Irrigation 60 Roads 43

6.10 The average labor content for the forestry subsector is high for all provinces, with an average of 69X. The irrigation subsector is about 50X: in particular, the labor content for NWFP is only 35X due to the large number of flood protection works included in that province where the cost of gabion wire accounts for a high proportion of total costs. The roads subsector averages 37X despite the exclusion of the cost of bitumen for blacktopping. Approximately,Rs 289.4 million is expected to be utilized for labor on subproject sites or 42X of subproject costs. This is expected to generate about 6.4 million workdays of employment.Proximity of project sites to the refugee camps, shortage of local labor in some areas, and experience gained by the refugees in the two earlier projects suggest that the refugees would be employed for over 50X of the employment created under the project. An assurance was obtained that GOP shall continue to maintain arrangements satisfactoryto the Bank designed to ensure that at least 50X of the total labor employed in each subproject shall be provided by refugees.

6.11 The income effects of the project would be significantas there are very few job opportunitiesfor Afghan refugees except for seasonal agriculturaland constructionworks in some areas. It is also expected that local labor would also benefit substantiallyfrom the project. In IGPRA II project, Afghan labor accounted for 78X of all the labor employed on the project. If this is used as a guide for this project, the total wages bill accruing to the Afghan refugees from the project activities is expected to be approximatelyRs 225.7 million or 5.0 million work-days of work for the refugees.

D. EnvironmentalImpact

6.12 The proposed project has been reviewed under the provisions of the operationaldirective 4.00 Annex A (EnvironmentalAssessment) and placed in environmentalcategory "B". An environmentalscreening and analysis was performed on a representativesample of ten subprojects in Balochistanand NWFP in order to assess the significanceof the subprojects'environmental - 47 - effects in evaluating the need for mitigating and monitoring these effects. A checklist for environmentalconsideration was prepared for each subproject during the appraisalmission field visits.

6.13 The environmentalaspects of the different subprojectsgrouped under the four subproject components- irrigation/drainage,flood protection, reforestationand roads - are discussed below.

6.14 The irrigationand drainage subprojectswere found to have a positive impact on the environment.Most of the subprojectswill rehabilitate the existing canals with constructionof foundation and building of spurs for minimizing waste pollution. Roads across the canals were built to periodically maintain the canals and prevent environmentaldamage. The problems of salinity and erosion are likely to decrease.Any increase in sedimentationwill be removed by annually cleaning the canals and avoid clogging of sediments. There is, however, the need for monitoring the stream discharge above and below the irrigatedareas. This will be carried out by the irrigation departments in the two provinces.

6.15 The flood protection subprojectshave major environmentalimpacts, both positive and negative. Balochistanand NWFP are exposed to flooding resulting in severe ecological consequencesof change in land pattern and erosion. In order to avoid flooding, gabion walls, spurs and levees will be built as flood control measures. Such measures have potential environmental benefits because they will protect cultivated lands as well as population, livestock,and villages located on the banks. However, the measures may provoke a number of negative environmentalimpacts; the change in the flow of the river may increase as a result of the banks' protection,therefore, the increasing erosive capacity of the water may result in increased erosion and sedimentationin areas situated downstream.In order to mitigate these negative impacts, the department of irrigationagreed to study prior to construction,the quantity, intensityand water distributionin the area of the structures.This will allow careful selection from engineering options for avoiding further downstream damage created by the flooding control in the subproject sites.

6.16 The plantation developmentand reforestationprojects provide a range of environmentalbenefits. In Balochistan,the watershed improvement project in the Aghberg village will include a small plantation of indigenous species, which will be irrigatedby undergroundwater tunnel, "karez". Water will be retained by dams and trenches, grazing will be controlled,and downstreamwater supply and quality will not be affected. Training and extension service in forestry and watershed management will be provided to the local and Afghan workers. The Sheen Dhand subproject is an example of both plantation and conservationof both native and exotic species, the latter were tested in nurseries before being introduced.A total of 1,000 acres will be irrigatedwith water transportedby trucks. The reforested areas will be protectedby fences and no grazing will be allowed. In the present context, there appears no ground to assume but a beneficial impact. - 48 -

Table 6.1

Economic Rates of Return and SensitivityAnalysis By Sector

SwitchingVaLues (X) Benefits Costs

ERR (X) Benefits Costs -10X -20X +10X +20X Forestry ------.------.--

NWFP 20 -64 +181 19 18 19 18 Punjab 17 -59 +143 16 15 16 15 All Roads SUbprojects 20 -64 +177 19 17 19 18

Irrigation

NWFP 21 -41 +70 18 16 is 17 Punjab 41 -75 +303 38 34 38 36 Batochistan 15 -26 +34 13 11 14 12 ALL IrrigationSubprojects 21 -42 +73 18 16 19 17

Roads

NWFP 16 -25 +33 13 11 14 12 Punjab 25 -45 +83 22 19 23 20 Balochistan 24 -21 +20 21 18 47 88 ALL Roads Subprojects 19 -34 +52 16 14 16 15

-- --.------49 -

6.17 The road constructionsubprojects have both negative and beneficial impacts. All road subprojectsare rehabilitationof existing roads and will provide improved access to the market and increase the transfer of goods and services. Potential negative impacts are the erosion of lands below the road bed in hilly area due to concentratedoutflow carried by open drains. This will be mitigated by releasing water only where natural water courses already exist and by erosion protection structureswhere necessary. Furthermore,end covered side drainage will be installedbefore and after the villages. The line department agreed to monitor the safety and working practice of the road contractors;this will include prohibiting the employment of children, preventing elderly workers to be constantly exposed to dust and adhering to basic health and safety measures for the contract workers. Such measures will be included in the road contract.

E. Proiect Risks

6.18 ImplementationCapability. The number of subprojects included in this project is much less than in the second project. In addition, the works are generally small and are technicallysimple. Similar works are regularly undertaken by the implementingdepartments although the standard of the works could be improved. Experiencewith these programs indicates that close technicalmonitoring ensures that work of high technical standards could be produced. The technicalmonitoring staff would ensure that the roads and irrigation subprojectsare carried out maintaining high technical standards both in design and construction.Similarly, the Forestry Specialist would ensure proper forest and watershed management practices are introduced and followed by the implementingdepartments during the project which would lay the basis for its continuationafter project completion.

6.19 Refugee Presence and Labor Availability.The prolonged presence of the refugees in Pakistan and the reduction in relief assistance enhances the likelihood of return of refugees to Afghanistan.This raises questions on the continued availabilityof refugee labor for the labor intensive project activities and the overall project objective of employment creation and income generation.The total labor requirementsfor the proposed project works account for only a small proportion of availableAfghan labor. Surveys of refugee labor indicate that there exists an available and willing labor force prepared to travel great distances to seek employment.An average of 30% of all men living in refugee camps in the vicinity of work sites are seeking daily work locally and a few find more than 10-15 days of work a month. Even if massive and quick repatriationoccurs, there would still be adequate Afghan labor to undertake project works. Furthermore,the project is designed to create durable assets for Pakistan to rectify the damage caused by the Afghan refugee presence. In the unlikely event that massive repatriationtakes place within a short period of time, the project works could be completed utilizing the local labor.

6.20 Project Viability. Economic returns to the subprojects are satisfactory.A high level of maintenance funds have been provided in the project to ensure sustainabilityof the completed project works. For forestry, it is unlikely that the benefits of reforestationwould not be realized. Technical assistancehas been included to improve the implementationof the reforestationprogram. Adequate provision is made for forestry management - 50 - practices, for agreements with private land owners prior to planting, forestry mapping and arrangementsto ensure implementationof forestry management plans. In roads, adequate maintenance funds would be made available by the Provinces. For all completedworks, agreementhas been sought that government would bear an increasing share of maintenance expenditure towards the later years of the project through budgetary appropriation.

VII. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS

7.01 Evidence was provided to the Bank at appraisal that action has been taken for the selection of engineeringfirms for the preparation of the design of the roads in NWFP and Balochistan (Paras 3.25 & 3.34);

7.02 During Negotiations,agreements were reached with GOP and GOProvinceson the following:

(a) the criteria adopted for the selectionof subprojects shall include the following: (i) an economic rate of return in excess of 10%, except in the case of activities where calculation is not possible and there is a heavy emphasis on environmentalbenefits; (ii) labor costs as a proportion of total project costs account for at least 50% in forestry subprojectsand at least 30% in roads and irrigation subprojects;(iii) close proximity to refugees' camps; (iv) a completion period not longer than the project period; and (v) technical and environmentalsoundness (Para 3.03);

(b) GOProvinceswould fund or provide bitumen for blacktoppingof the road subprojectsto be udertaken (Paras 3.25, 3.34 & 3.38);

(c) imported goods procured through UNHCR would be exempted from all taxes and duties (Para 4.15);

(d) project account and provincial accounts would be maintained in a manner satisfactoryto the Bank and audited every six months (Para 4.21);

(e) a Project Coordinator,acceptable to the Bank, would be maintained at all times to head the SAFRON Project CoordinationUnit and that the PCU would be adequately staffed (Para 5.01);

(f) GOProvincesare to meet maintenance costs of subproject works amounting to one-third of agreed and identified cost in FY94 and two-thirds in FY95. GOProvinceswould take appropriatebudgetary action to ensure financialprocedures are establishedto facilitate timely availabilityof funds and that adequate funds would be provided for project for project maintenance after project closing (Para 5.08); and

(g) GOP would continue to maintain arrangementssatisfactory to the Bank designed to ensure that at least 50% of the total labor - 51 -

employed in each subproject shall be provided by refugees (Para 6.10).

7.03 Conditions of Grant Effectivenessare that evidence, satisfactory to the Bank, shall have been furnished that:

(a) the executionand delivery of the Grant Agreement on behalf of the GOP have been duly authorized or ratified by all necessary governmentalaction and the execution and delivery of the Project Agreement on behalf of the Provinceshave been duly authorized or ratified by all necessary governmentalaction (Para 4.05);

(b) the equivalentof USD 26.0 million shall have been made available to GOP for purposes of the project in the following manner: the equivalent of at least USD 5.0 million (inclusiveof advance for the bridging period) shall have been received by the Bank; the equivalent of at least USD 1.5 million shall have been deposited in the Project Account; the equivalent of USD 3.0 million pledged to be available to the Bank by June 30, 1992 and USD 1.0 million to GOP by June 30, 1992; and additional financing shall have been pledged to be made available to GOP as follows: the equivalent of USD 3.0 million to be received by the Bank before December 31, 1992; the equivalent of USD 4.0 million to be otherwise made available to Pakistan before December 31, 1992; the equivalent of USD 3.0 million to be received by the Bank before December 31, 1993; and the equivalent of USD 5.5 million to be otherwise made available to Pakistan before December 31, 1993 (Para 4.09); and

(c) the appropriateagencies of Pakistan and the Provinces shall have issued all the approvals required for the subprojectsto be financed under the project to be implemented.(Para 4.09).

7.04 With the above assurances and conditions, the project would be suitable for a grant equivalent to US$ 26.0 million to the Islamic Republic of Pakistan. - 52 -

ANNEX 1

PAKISTAN

Third Income Generating Proliect for Refugee Areas

Population of Registered Refugees on February 15. 1991

Total Total No. of Population Families Male Female Children Cap

FROTIER PROVINCES (MIFP)

Settled Districts Abbotabad 18 141,328 23,412 21,524 31,841 87,963 Bannu 7 72,162 10,374 15,493 18,111 38,558 Chitral 3 36,259 6,152 8,173 15,581 16,505 Dir 10 42,157 87,269 17,967 27,145 D.I. Khan 11 86,864 12,770 17,816 24,086 44,962 Kohat 18 231,340 32,077 58,314 65,674 107,352 Mansehra 9 71,162 10,093 8,875 14,098 48,189 Mardan 17 102,949 17,193 21,090 26,583 55,276 Peshawar-I 33 297,061 60,182 81,162 75,372 140,527 Peshawar-II 29 225,469 41,736 55,366 55,646 114,457 Swat 2 13,793 2,483 2,374 4,153 7,266

Sub-Total 157 136,565 231,700 308,154 35,290 703,212

Tribal Agencies Bajaur 25 195,893 28,025 46,172 58,122 91,599 Kurram 34 347,781 50,703 93,000 99,704 155,077 Malakand 3 51,850 7,306 7,010 13,548 31,292 N/Waziristan 24 176,682 24,704 46,021 42,921 88,640 Orakazi 2 13,417 1,983 2,692 4,943 5,782 S/Wazirstan 6 58,208 9,215 12,551 14,811 39,846

Sub-Total 94 843,831 121,936 207,446 233,149 403,236

Total NWFP 251 2,209,487 353,636 515,600 587,439 1,106,448

BALUCHISTAN Chagai 19 170,325 28,148 39,175 45,988 85,162 Gulistan 14 181,882 27,726 41,833 49,108 09,941 Loralai 11 104,167 16,729 23,958 28,125 52,084 Pishin 14 166,095 25,070 38,202 44,846 83,047 Quetta 7 123,061 20,340 28,304 33,226 61,531 Zhob 5 55,370 8,128 12,735 14,949 27,686 Chaman Sub Div 5 38,593 5,607 8,876 10,420 19,297

Total Balochistan 75 839,493 132,748 193,083 226,662 419,748

PUIJAB Kot Chandna 16 173,404 29,956 27,346 38,662 107,396

SDD Karachi 1 18,674 2,997 4,481 5,229 8,964

TOTAL PAKISTAN 343 3,241,058 516,340 740,510 857,992 1,642,556

Note: Approximately 464,000 unregistered refugees. - 53 -

ANNEX II Page 1 of 2

PAKISTAN

THIRD INCOME GENERATING PROJECT FOR REFUGEE AREAS

Terms of Reference

Forestry and Watershed Management Specialist

ScoRe of Work

1. The Third Income Generating Project for Refugee Areas would be implementedby the Government of Pakistan under the administrationof the World Bank. The forestry and watershed management component of the project would involve subprojectsof the following types:

(a) Reforestationand erosion control schemes in NWFP; (b) Watershed management schemes in Balochistan; (c) Mazri palm plantations in NWFP; (d) Linear plantation in NWFP; (e) Irrigatedplantation in Punjab; (f) Forestry Extension and Training in NWFP; and (g) Watershed Management Training and Research in Balochistan.

2. Afforestationactivities will take place in a wide range of climatic zones and thus would require selection of appropriatespecies and application of different plantation establishmenttechniques. Follow-up maintenanceand management needs to be carried out for the third project as well as for afforestationsof two previous projects.

3. Watershed management activitieswould consist of both engineeringand vegetative measures. The former would mainly consist of loose rock checkdams to control gully development.Vegetative measures would comprise establishment of trees, shrubs or grass cover and the temporaryprevention of grazing. In semi-aridand arid areas special site preparation,mainly by constructionof contour trenches,would be necessary to conserve moisture and reduce surface run-off.

4. Forestry extensionwith the aim of ensuring sustainabilityof establishedplantations by involvinglocal users - both men and women - in afforestationmanagement would consist of setting up village organizations, training in management techniques,motivational activities, in NWFP and of pilot training and visit activities in Balochistan.In Balochistan,a training school for forest guards and selected Afghan refugees would be run as well as a small research program to study the effects of the structures created on groundwaterinfiltration and vegetation recovery. Linkages with other organizationsand projects in the field of social forestry would be maintained. - 54 -

ANNEX II Page 2 of 2

Duties

5. The consultantwould assist the Forestry Departments in NWFP, Balochistan,and Punjab in implementingthe forestry, watershed management, and extension/trainingsubprojects. The incumbentwill have the technical responsibilityfor preparing location-specificdetailed implementation programs for these projects, and for monitoring and encouragingthem. Specific duties will be:

(a) Advising on selection of desired species for quality seed, seed collection,and storage; (b) Advising on site/speciesmatching, plant size, planting time, and planting techniques; (c) Advising on soil and water conservationtreatments; (d) Reviewing maps of the two earlier projects prepared by local consultants and advising on mapping and evaluationof project sites as a basis for management; (e) Assisting with the maintenance of monitoring systems to record physical progress and, in Balochistan,the establishmentof systems of recording changes in rangeland vegetation in present and past subprojects; (f) Advising on detailed land selectionwith the involvementof village communitiesin NWFP, and on agreements to be made with land owners/usersof areas for afforestation; (g) Advising on the project's forestry extension and training activities in NWFP, in close consultationwith both the NWFP Forestry Department and the Netherlands-aidedMalakand Social Forestry Project or the follow-upphase of this project; and (h) Supervisingand follow-upadvising on the short-term consultancy on sustainablemanagement strategies,and in close consultation with the respectiveForestry Departments,outlining a program for the realizationof sustainablemanagement after project closure.

6. The consultantwould be responsible to the Deputy Secretary, SAFRON and would provide reports, plans, and financialestimates as may be reasonably required.

Oualificationsand Experience

7. The Forestry and Watershed ManagementSpecialist should have an advanced degree in forestry/watershedmanagement (or equivalent),be proficient in the English language, and should possess at least seven years experience in sylviculture,preferably in both hilly areas with relatively high rainfall and in semi-arid conditions, in soil and water conservationtechniques, forest and range management, and social/communityforestry or other participative approaches to these techniques.He/she should be prepared to frequently travel to project sites.

Duty Station and Duration

8. Islamabad,forty-two months. - 55 -

ANNEX III Page 1 of 2

PAKISTAN

THIRD INCOME GENERATING PROJECT FOR REFUGEE AREAS

Terms of Reference

Technical Monitoring Specialist

Duties

1. Under the World Bank executed Third Income Generating Project for Refugee Areas, the incumbentwould be responsible for monitoring the implementationof subprojectswith the objectives of attaining timely and satisfactorycompletion of the works and ensuring that labor intensivemethods are used in their execution, with at least 50% of the labor being provided by Afghan refugees.

2. The incumbentwould work closely with UNHCR-employedRefugee Employment CoordinationOfficer, and the line departmentswho would be involved in recording labor utilization.He would be responsible to the Chief of the SAFRON PCU.

Scope of Work

3. The incumbentwould concentratemainly, but not exclusively,on the monitoring of civil engineeringworks undertaken by contractors, interactingwith the supervisingengineers of the respective responsible provincial line departmentsand with the contractors'representatives to promote: punctual executionof the works; the use of sound construction techniques and material of appropriatequality; and the maximum use of labor.

4. In pursuit of the latter objective he would: ensure that labor intensive constructionmethods are used; assist the contractors in predicting short-term labor requirements;and ensure that only equipment approved in the contracts or departmentalinstructions is used, by preventing the use of unauthorized earth-movingequipment.

5. He would alert contractorsand departmentaland provincial government officials at appropriatelevel when technical problems of subproject execution are detected and, on request, would provide technical advice to assist subproject execution and to enhance the quality of the work being done. He would also advise and encourage on the job training of Afghan refugees. The TMS would also, in consultationwith the provincial authorities, - 56 -

ANNEX III Page 2 of 2 under exceptional circumstances,make specific authorizationin writing for the use of prohibited equipment.

6. The TMS would monitor the flow of project funds to the provinces and hence to the individual subprojects,alerting SAFRON in the event of any delay.

7. He would report through SAFRON to the Bank at monthly, quarterly, and half-yearly intervals.

Oualificationsand ExRerience

8. The TMS should be proficient in the English language and have a university degree in civil, agriculturalor rural engineering.He should have at least 8 years' professionalexperience, including experience of several years' duration in developing countries in an engineeringor similar post concernedwith several of the following aspects of small-scaleengineering and hydraulics: design; constructionand maintenance of rural roads; including feeder roads; small irrigation schemes; small dams; river training; flood control; watershed protection;and building constructionin rural areas. He should also have practical experience in the organizationand operation of labor intensiveworks in rural areas.

Place of Duty

9. Islamabad, Pakistan.

Duration of Contract

10. Thirty-six months. - 57 -

NNXIV Page 1 of 2

PAKISTAN

THIRD INCOME GENERATING PROJECT FOR REFUGEE AREAS

Terms of Reference

Refugee EmDloyment CoordinationOfficer

Scope of Work

1. UNHCR's role with regard to refugees is derived from its role to protect and assist refugees. As stated in the Memorandum of Understanding between the Bank and UNHCR signed on September 13, 1990, UNHCR is responsible for all aspects pertaining to the employmentof refugees under the project. It will therefore continue to assume the labor monitoring role under the third project, although its direct involvementin this activity is to be reduced. The UNHCR role will be limited to retaining the responsibilityfor verificationand spot checking, examining cases of non-conformityand having overall responsibilityfor reporting and advising and accuracy of data.

2. An officer titled Refugee Employment CoordinationOfficer (RECO) is to be stationed at UNHCR office in Islamabad and will act as the focal point for advising on all refugee employment related matters and have overall responsibilityfor labor monitoring system under the project.

Duties

3. The incumbentwill be responsible for the following:

(a) Analyze the collection of informationrelating to the labor employed under the project and prepare regular reports on the achievementsin project employment and income generation objectives.This would include reporting on compositionof labor (gender, refugees, local and registered),employment patterns and conditions (includinghealth and safety), living conditions, self sufficiencyand integrationissues, the acquisition of skills and the relevance of such skills to durable solutions for refugees;

(b) Undertake limited socio-economicstudies through analysis of available informationor systematic interviews,coordinate and assist in undertaking socio economic surveys which may be required under the project;

(c) Monitor the social impact of the project during implementationand advise on measures to improve the socio economic impact of the project; - 58 -

ANNEX IV Page 2 of 2

(d) Report on any changes in employment trends which may occur as a result of refugee movements or repatriationmovements, and make recommendationson ways to respond to such changes;

(e) Assume overall responsibilityfor the employment and labor monitoring reporting system undertaken by the line agencies and PCU, includingverification and spot checking; and

(f) RECO will also be responsiblefor assessing donor information needs. RECO will be assisted by 12 staff-monthsof local consultancydirected to specific identified studies. - 59 - ANNEXV

Reserved List of Subprojects/1

Contingencies ------Total Labor Distance From Base Cost Phy. Price Cost ERR Content Refugee Camp SUB-SECTOR/SUBPROJECT ------, ------(Rs M) ------() () (Miles)

1. FORESTRY

Kurram Mazri 4.5 0.5 0.9 5.9 8 71 0.62 - 3.10 Khanpur 3.2 0.3 0.6 4.2 16 72 18.60 - 24.80 Bareri Khaki 6.4 0.6 1.3 8.3 16 61 6.20 - 12.40 Totalai 5.6 0.6 1.1 7.3 15 71 0.62 - 3.10 Dir 2.8 0.3 0.6 3.6 12 71 0.62 - 3.10 Duki 5.1 0.5 1.0 6.6 15 70 0.62 - 3.10

Sub-total: 27.6 2.8 5.5 35.9

2. IRRIGATION

Darsamand 1.03 0.1 0.2 1.3 25 35 1.24 Karezes Muslim Bach 2.5 0.3 0.5 3.3 20 85 1.24 Gandian 0.77 0.1 0.2 1.0 31 30 2.48 Sarki 2.38 0.2 0.5 3.1 21 40 4.34 Third Lora Canal Patrol Road 6.6 0.7 1.3 8.6 24 39 3.10 Timrak Dam 4.0 0.4 0.8 5.2 18 30 1.86 MiLward Dam (FATA) 7.25 0.7 1.5 9.4 18 30 7.44 Warsak Lift Canal Patrol Road 10.7 1.1 2.1 13.9 26 37 1.24 Karezes Chaman 3.5 0.4 0.7 4.6 20 85 3.72 Shinkiari 0.89 0.1 0.2 1.2 36 38 3.10 Shahkot Minor Canal Road 5.2 0.5 1.0 6.8 27 30 1.24 Loridaman 3.0 0.3 0.6 3.9 18 45 2.48 Toru Ext. 0.98 0.1 0.2 1.3 27 49 3.72 Warsak CanaL IV 10.0 1.0 2.0 13.0 28 30 1.24 Warsak Gravity Canal Patrol Road 2.7 0.3 0.5 3.5 28 33 0.00 Bakka Khet (FATA) 6.87 0.7 1.4 8.9 14 43 6.20

Sub-total: 68.4 6.8 13.7 88.9

3. ROADS

Nasriwalato Chapri 8.2 0.8 1.6 10.7 18 34 4.96 Piran Rangmala to Dheri Juligram 7.5 0.8 1.5 9.8 16 30 6.20 Pishin to Saranan 18.6 1.9 3.7 24.2 15 32 0.00 Tank D.I.Khan to Gomal Kalan 4.1 0.4 0.8 5.3 16 29 3.10 D.I.Khan Bannu to Kech 3.8 0.4 0.8 4.9 15 30 3.10

Sub-total: 42.2 4.2 8.4 54.9

Grand total: 200.0 113.6 123.2 228.8

/1 - Prioritizedby sub-sectors. - 60 -

ANNEX VI

PAKISTAN

THIRD INCOME GENERATING PROJECT FOR REFUGEE AREAS

Schedule of Disbursements' (US$ Millions)

x OQuarter Amount Cumulative

92 1st 1.0 2nd 1.3 2.3 3rd 1.5 3.8 4th 1.5 5.3

93 1st 2.4 7.7 2nd 2.8 10.5 3rd 2.8 13.3 4th 2.8 16.1

94 1st 2.5 18.6 2nd 2.0 20.6 3rd 2.0 22.6 4th 0.5 23.1

952 1st 0.5 23.6 2nd 0.4 24.0

Disbursementsto Project Account only, i.e. excluding direct payments to consultantsand agency overheads. Disbursementsin first half of FY92 representsbridging finance.

2 Disbursementson actuals and reconciliationof accounts. Closing date for submissionof applicationsfor withdrawals from Grant Account is December 31, 1994. - 61, - ANNEX VII

.PAKISTAN THIRD INCOMEGENERATING PROJECT FOR REFUGEEAREAS ImplementationSchedule IMPLEMENTATION1991 1992 1 1993 1994 ______PERIOO(MONTS) 1 2 3 4 1 2 3 4 1 2 3 4 1L..2L.3..4 A. FORESTRYAND WATERSHEDMANAGEMENT Site mapping Phase 3 -0 Nurseries -42 PlantationEstablishment 4 6 ii Conservation Work~s -______42__ MaintenancePhase 3 Sites -3 MaintenancePhase 2 Sites -4 Trg.& Ext. (3 locations) -4 ConsultancyMgt. Strategies -0 Training (Balochistan) -____42_____-_ Research(Balokistan) 42- Nursenesby Women (MOPP) 42- women and Energy GTZ (MOFP) 1 Bl. ROADSECTOR NWFP" Sunderwal-Barawal -2 01K Roaa-KhartnGambila Rd. -2 Sarai Naurang-KurramCamp 2 Kohat/BannuRd.-Sumarn Bala -2 Kulach:-SheikhSultan -2 Shahpur-JabaiBarow -2 Telaband-Azakhel/MaryaniZaild 2 Naivela/RashidRd. Gara Niraiam 28 ------BALOCHISTAN2 Ouetta-Chaman 3 PUNJAB' Trug-Mianwala 3 riDetaileddesign in NWFP should start on September1, 1991. 2/Detaileddesign in Balochistanshould start on October 1, 1991. 11Detauleddesign in Punjab should start on November 1, 1991. C. IRRIGATIONSECTOR ~ NWFP BabuGarthi (FP) 12 Chamkani(FP) 12- Mandoorn(FP) 21- Warsak Canal II (I R 12______-__ WarsakCanal Ill (IR) 2 Nusrat Khel (FP) 27______-__ Babri Banda (OR) 2 Tharkha AlgadJa(FP) 21 Bibini (FP), 27 Allah Dhand Dheri (FP) 12- -II

18 DaaZinda(PAA)(FP) 12- Kabul River Cana (PR) 30 Ganclall ODlsy(PR), 24 KatchkotCanal (PR) 2 NaurangMamakhel Canal (PR) 2 PaharpurCanal (PR)-3 Civil Minor Canal (PR) 3 BALOCHISTAN KarezezArambi (IR) 2 Poll Mang zal (FP) 3

KarezegLoralal (JR 18 - SamlallaniSa,-aw.( 27-I Sallaza 27P)2 PUNJAB ML Upper Thal (IR) __ _ _ _ 21- - - Turfing ML Upper Thal (IR) 2 -vPFlood ProtectIon IR a Irtigation PR a Patrol Road OR aOrainage. L______------~~~~~~~~~~~~sads\w49559 - 62 -

ANNEX VIII Page 1 of 2

PAKISTAN

THIRD INCOMEGENERATING PROJECT FOR REFUGEEAREAS

Economic Analysis

1. Economic analysis was carried out individuallyfor all subprojects by computing the economic costs and benefits,net incrementaleconomic benefits, and the ERR. The economic analysis was not attempted for the Baluchistanwatershed management subprojectsas the benefits were difficult to quantify. The economic analysis was also not undertaken for project implementingand coordinationcells and three activities relating to training and women in development.Details on the methodologyfor the economic analysis follows:

Forestry

2. For all forestry subprojects,the basis for calculation of the incrementalbenefits was the assumptionthat sheep grazing is the "without project" alternative to forestry plantations.Based on the carrying capacity of sheep per acre, which was assumed at 0.1 to 0.2 sheep per acre, the annual net return per sheep was estimatedat Rs 400. No alternativeswere assumed for Kurram Mazri and Hangu Mazri subprojectsas there is no forage production in the "without project" situation.Similarly, there are no grass production and no grazing on those areas assigned for linear avenues and irrigatedplantation and no opportunity costs were assumed due to the non-utilizationof uncultivatedfallow land in the "without project" situation. For the linear avenue plantations,these lands were off limits to cattle and residents. A two to three year establishmentperiod was assumed for all subprojects.The main benefits of forestry subprojectswas the production of mazri, fuelwood, and timber. A rotation period model was used for each specie to estimate the output which also took account of final cut and thinnings, and the overall yields and profile were based on actual recent data obtained from the Forestry Departments.The benefit stream was calculatedover a twenty five year period.

3. Using these assumptions,the ERRs were calculated for the forestry subprojectsand also for the net cost and benefit streams aggregated by province. The ERRs of subprojectsrange from 16X to 25X. The ERR for the total forestry subproject investmentsis 20X, and the switchingvalues for benefits and costs are 64X and 177X, respectively.

Irrigation.Drainage and Flood Protection.

4. It is assumed that crop production would increase as a result of irrigation subprojects.Irrigation subprojectsare designed to rehabilitateor upgrade deterioratedirrigation systems by repairing or raising the banks and restoring intake and control structures.As a result, more assured and timely availabilityof water would increase agriculturalproduction. - 63 -

ANNEX VIII Page 2 of 2

5. The benefits of increased crop production were calculated on the basis of the major crops (wheat, maize and apples) grown in the project area. It was assumed that full yield increments would be realized one year after completion of construction. With the project, an 8% increase in crop yields is expected. A project life of twenty-three years has been taken for the economic analysis.

6. Benefits from drainage subprojects derive from prevention of damage to crops due to water logging and salinity. The approach taken to carry out the economic analysis is similar to that of the irrigation subprojects. The benefits have been calculated on an incremental yield basis. The estimated ERRs for irrigation and drainage subprojects range from 12% to 42%, with an average of 20%. The switching values are 39% for the benefits and 65% for the costs.

7. Flood Protection schemes would protect river banks, agricultural land and other fixed assets such as buildings in villages threatened by floods. Due to insufficient data concerning the magnitude and frequency of the floods, the net benefits for flood protection subprojects were evaluated on the basis of assets protected as a result of project works. Such benefits were the prevention of erosion of cultivated land, houses, crop losses and public assets such as community centers, post offices, etc.

Roads

8. For the roads subprojects, the benefits are based on net savings derived from reduced vehicle operating costs (VOC) due to improvement in project roads. Road user savings were calculated for each subproject from operating costs for various types of vehicles as published by the National Transport Research Center. For each road, average daily traffic is based on traffic counts of the line departments. In addition, based on records of representative roads in the project area and historical growth within the respective districts, the volume of traffic was assumed to increase at an annual rate of 8% for roads and 5% for canal patrol roads after project completion.

9. To estimate annual benefits for the "with" and "without" project cases, the average daily traffic was multiplied by incremental traffic volume per year, the road length and the VOC. Based on construction standards, a project life of 10 years was assumed roads and fifteen years for canal patrol roads. Although traffic volume is expected to increase under the project, no benefit is assumed during the three year construction period. In addition, both annual maintenance and resurfacing costs (five year cycle) are included in the cost stream after project completion; and only annual routine maintenance cost for canal patrol roads.

10. The ERR for the roads sector is 19%, and the ERR for individual subprojects range from 14% to 25%. The switching values are 37% for benefits and 27% for costs.

IBRD23106

-8./ F- -320 640

P A K I S T A N / N.W.F.P. THIRDINCOME GENERATINGPROJECT FOR REFUGEEAREAS BALOCHISTAN

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