Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No: 41761-PK

PROJECT APPRAISAL DOCUMENT

ON A Public Disclosure Authorized

PROPOSED CREDIT

IN THE AMOUNT OF SDR 15.8 MILLION (US$25 MILLION EQUIVALENT)

TO THE

ISLAMIC REPUBLIC OF PAKISTAN

FOR THE Public Disclosure Authorized BALOCHISTAN SMALL-SCALE IRRIGATION PROJECT (BSSIP)

January 23,2008

Sustainable Development Department Agriculture and Rural Development Unit Pakistan Country Management Unit South Asia Region Public Disclosure Authorized

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 authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective December 5,2007)

PKR 61 1.04 = US$l

PAKISTAN-GOVERNMENT FISCAL YEAR July 1-June 30

WEIGHTS AND MEASURES (Metric System)

1 meter (m) = 3.280 feet 1 hectare (ha) = 2.470 acres 1 Kilometer (km) = 0.620 miles 1 cubic meter (m) = 35.3 10 cubic feet

ABBREVIATIONS AND ACRONYMS

ACS Additional Chief Secretary IPM Integrated Pest Management BCIAP Balochistan Community Irrigation & IPSNM Integrated Plant and Soil Nutrient Agriculture Project Management BEPA Balochistan Environmental Protection IPTRID International Program for Technology and Agency Research in Irrigation and Drainage BIDA Balochistan Irrigation Drainage IUCN International Union for Conservation of Authority Nature BKK Bund Khushdil %an IWRM Integrated Water Resource Management BRMP Balochistan Resource Management JBIC Japan Bank for International Cooperation Program OFWM On-Farm Water Management BSSIP Balochistan Small-scale Irrigation O&M Operation and Maintenance Project PD Project Director CAS Country Assistance Strategy PIF Policy and Institutional Framework CIFO Community Irrigation Farmer PIU Project Implementation Unit Organization PLB Pishin Lora Basin CISU Community Irrigation Services Unit PPF Project Preparation Facility co Community Organization PRSP Poverty Reduction Strategy Paper CSG Community Support Group PSC Project Steering Committee DAOs District Accounts Offices RAP Resettlement Action Plan DSC Design and Supervision Consultant SIL Specific Investment Lending ESA Environmental & Social Assessment SOP Standard Operating Procedure FO Farmer Organization SSIS Small-scale Irrigation Schemes GOB Government ofBalochistan uc Union Council HEIS High Efficiency Irrigation system VWC Village Watershed Management ICB International Competitive Bidding Committees IDA International Development Association WGs Women’s Groups IPD Irrigation and Power Department

Vice President: Praful C. Pate1 Country Director: Yusupha B. Crookes Sector Director/Sector Manager: Constance A. BernardAdolfo Brizzi Task Team Leader: Manuel Contijoch

2 FOR OFFICIAL USE ONLY PAKISTAN Balochistan Small-scale Irrigation Project (BSSIP)

TABLE OF CONTENTS

A . STRATEGIC CONTEXT AND RATIONALE ...... 9 1. Country and Sector Issues ...... 9 2 . Rationale for Bank Involvement ...... 11 3 . Higher level objectives to which the project contributes ...... 11 B. PROJECT DESCRIPTION ...... 11 1. Lending instrument ...... 11 2 . Project Development Objective and Key Indicators...... 12 3 . Project components ...... 12 Component A: Partial Restoration ofWater Storage Capacity ofthe Bund Khushdil Khan Reservoir - US$ 10.80 million...... 12 Component B: Small-scale Irrigation Schemes -US$ 9.66 million ...... 13 Component C: Institutional Capacity Building, Further Studies and Preparation of the Next Phase - US$ 4.54 million...... 13 4 . Lessons Learned and Reflected in the Project Design ...... 13 5 . Alternatives Considered and Reasons for Rejection...... 14 C. IMPLEMENTATION ...... 15 1. Partnership arrangements ...... 15 2 . Institution and implementation arrangements ...... 15 3 Monitoring and Evaluation ofOutcomes/Results ...... 17 . ... 4 . Sustainability...... 18 5 . Critical risks and possible controversial aspects ...... 19 6 . Credit conditions and covenants ...... 20 D. APPRAISAL SUMMARY ...... 20 1. Economic and financial analyses ...... 20 2 . Technical ...... 23 3 . Fiduciary ...... 25 4 . Social...... 26 5 . Environment...... 28 6 . Safeguard policies ...... 29 7 . Policy Exceptions and Readiness ...... 30

TECHNICAL ANNEX

Annex 1: Country and Sector Background ...... 32 Annex 2: Major Related Projects Financed by the Bank and/or Other Agencies ...... 37 Annex 3 : Results Framework and Monitoring...... 41 Annex 4: Detailed Project Description ...... 44 Annex 5: Groundwater Management Action Plan...... 68 Annex 6: Project Costs ...... 74 Annex 7: Implementation Arrangements ...... 82

This document has a restricted distribution and may be used by recipients only in the performance of their official duties . Its contents may not be otherwise disclosed without World Bank authorization . Annex 8: Social Characteristics ofthe Project Area ...... 87 Annex 9: Economic and Financial Analyses ...... 95 Annex 10: Procurement ...... 110 Annex 11 : Financial and Disbursement Arrangements ...... 116 Annex 12: Safeguard Policy Issues...... 123 Annex 13: Project Preparation and Supervision ...... 129 Annex 14: Selected Documents in the Project File ...... 131 Annex 15: Statement of Loans and Credits ...... 133 Annex 16: Country at a Glance ...... 136

MAP # IBRD 35842

TABLES

Table.1: Summary ofBSSP Beneficiaries and Areas ...... 21 Table 2: Project Cost for BKK and Small Schemes by components ...... 22 Table. 3: Summary ofEconomic and Financial Analysis ...... 22 Table A 4 . 1: Participating Settlements and Population ofthe PLB ...... 44 Table A 4 . 2: Details of Watershed Management and Rangeland Rehabilitation Beneficiaries ...... 51 Table A 4 . 3: Unit Cots for OFWM Improvements ...... 51 Table A 4 . 4: Details of SSIS (for 6 identified) ...... 56 Table A 4 . 5: Proposed Beneficiary Contributions to SSIS ...... 58 Table A 4 . 6: Beneficiary Contributions for Khushab PIS ...... 59 Table A 5 . 1: Groundwater Balance in Selected Basins in Balochistan ...... 68 Table A 6 . 1: Abstract ofCost for Augmentation ofBund Khushdil Khan ...... 74 Table A 6 . 2: Unit Costs for Watershed and Range Land Rehabilitation - Rsha...... 75 Table A 6 . 3: Cost for Watershed Rangeland Rehabilitation ...... 75 Table A 6 . 4: Cost estimation for OFWM and HEIS...... 76 Table A 6 . 5: Resettlement costs ...... 77 Table A 6 . 6: Showing Owners & their Trees likely to be affected with Age ...... 78 Table A 6 . 7: Equipment Costs ...... 79 Table A 6 . 8: Operating Costs (2007 constant) ...... 79 Table A 6 . 9: Capacity Building ...... 80 Table A 6 . 10: Project Cost for BKK and Small Schemes by components ...... 80 Table A 6 . 11 : Capital requirements in different Years ...... 81 Table A 9 . 1: Input/ Output Prices ...... 96 Table A 9. 2: Command area and Discharge ofSmall Schemes ...... 98 Table A 9 . 3: Presently Irrigated area in BKK Command ...... 98 Table A 9.4: Type and Area under various crops grown in Pishin Lora Basin ...... 99 Table A 9.5: Crop Yields per Hectare - kgs ...... 99 Table A 9.6: Cropping Patterns and Intensities considered by PDC (percent) ...... 101 Table A 9.7: Crop Water Requirements for Selected Cropping Pattern...... 102 Table A 9.8: Optimal yields - kg/ ha...... 103 Table A 9.9: Labor Generated due to Watershed and Rangeland activities ...... 105 Table A 9.10: Economic Analysis for Pishin Lora Basin...... 105

4 Table A 9.1 1: Scheme wise Results of Economic Analysis ...... 106 Table A 9.12: Scheme with Results ofFinancia1 Analysis ...... 107 Table A 9.1 3: Derivation of Economic Price...... 109

FIGURES

Figure A 5.1 : Figure 1 Growth ofTubewells in Balochistan ...... 69 Figure A 7 . 1: Overview of BSSIP Institutional Arrangements ...... 83 Figure A 7 . 2: BSSIP Social Institutions ...... 86 Figure A 10. 1: PD-Centralized Financial Management ...... 119

5

PAKISTAN

BALOCHISTAN SMALL-SCALE IRRIGATIONPROJECT

PROJECT APPRAISAL DOCUMENT

SOUTH ASIA

SASDA

Date: January 23,2008 Team Leader: Manuel Contijoch Country Director: Yusupha B. Crookes Sectors: Irrigation and drainage (1 00%) Sector Director/Sector Manager: Constance A. Bernard Adolfo Brizzi Themes: Water resource management (P);Rural services and infrastructure (S) Project ID: PO89378 Environmental screening category: Partial Assessment Lending Instrument: Specific Investment Loan ___.______-- Project Financing-___- Data [ 3 Loan [XI Credit [ ] Grant [ 3 Guarantee [ ] Other:

For Loans/Credits/Others: IDA Total Bank financing (uS$m.): 25.00 Proposed terms: Standard IDA terms, with a maturity of 35 (thirty-five) years including a grace penod of 10 (ten) years. I____I______- ~- ._ .- Financing'i Plan (US$m) j Local __ __ - . Source .__ .-__- Foreign Total BORROWERRECIPIENT T- 0.00 0.00 0.00 INTERNATIONAL 25.00 0.00 25.00 DEVELOPMENT ASSOCIATION Total: 25.00 0.00 25.00

Borrower: Government of Pakistan - Government of Balochistan

Responsible Agency: Irrigation and Power Department - Government of Balochistan Sariab Road, Quetta, Pakistan Tel. # 081-9211600: Fax # 081-9211601 ______lll.__l_- ______

Estimated disbursements (Bank FY/US$m)~ ______;Y I 2007 I 2008 I 2009 I 2010 I 2011 1 2012 1 2013 I hual 1 0.6 3.0 4.0 6.0 6.0 3.0 2.4 3umulative 1 0.6 3.6 7.6 13.6 19.6 22.6 25.0 Project implementation period: Start July 1,2008 End: June 30,2013 ExDected effectiveness date: March 3 1- 2008

6 I Expected closing date: December 3 1,201 3 Does the project depart from the CAS in content or other significant [ ]Yes [XI No respects? Does the project require any exceptions from Bank policies? [ ]Yes [XI No Have these been approved by Bank management? [ ]Yes [ XI No Is approval for any policy exception sought from the Board? [ ]Yes [XI No

Does the project include any critical risks rated “substantial” or “high”? [XJYes [ ] No Does the project meet the Regional criteria for readiness for [XlYes [ ] No implementation? Project development objective:

The Balochistan Small-scale Irrigation Project (BSSIP) will support efforts by the Government ofBalochistan (GOB) to improve the management ofscarce water resources in the Pishin Lora Basin (PLB) by reducing the overall impact ofthe present water crisis. Project activities are designed to recognize the importance ofdirect participation ofwater users and other stakeholders. Key indicators include (i)increased surface water availability and reduced groundwater depletion; (ii)increased water productivity through a combination of engineering, management, and agricultural measures; and (iii)expanded local capacity and participation of farmers to implement similar schemes and formulate plans for sustainable water resources development and watershed management.

Project description: The project will initially focus the Pishin Lora Basin (PLB) in the northern part of Balochistan. The project will have the following three components: (a) Partial restoration ofthe water storage capacity ofthe Bund Khushdil Khan (BKK) Reservoir. Restoring the hydrological balance Bund Khushdil Khan in the subbasin by partially restoring the lost storage capacity of the BKK, facilitating the recharge ofthe aquifer and appropriate management of its water, and improving the conveyance efficiency and management ofwater application at the farm level; (b) Developing small-scale irrigation schemes in the PLB. GOBhas embarked on an aggressive state-wide program to enhance the use of highly-variable rainfall, and the project will develop small-scale irrigation schemes (SSIS) through a community participation approach in support ofthat effort; and (c) Strengthening and building the capacity of the Irrigation and Power Department (PD), water management institutions, and farmer and community organizations, and implementing studies and preparation activities for the next phase. The project can contribute to strengthening provincial water management capabilities and, in coordination with other ongoing initiatives,’ steer IPD toward its role as a planner, an essential requirement for implementation of the provincial integrated water resources management (NVRM) policy.

’ Under the SPRM funded by Royal Government ofthe Netherlands (part of the ADB’s Balochistan Resource Management Program), the IPD’s Directorate for Water Resources, Planning, Monitoring and Drilling will be reorganized to function more efficiently as a planning institution.

7 Whch safeguard policies are triggered, if any?

The project area, in the Pishin Lora basin in the northwest of Balochistan, has been severely impacted by drought since 1997, and this has exacerbated underlying water management problems. The surface water availability decreased resulting in increased dependency on limited groundwater resources, rangelands have degraded, agricultural activities have significantly reduced, and economic activities have been severely curtailed. Groundwater is being used to augment the surface water and uncontrolled installation of public and private tube wells has resulted in groundwater mining. This unsustainable use of groundwater has affected kareze flows.2 The poor and marginalized sections of society have been most severely affected, resulting in increased urban migration.

The basin faces various types ofbio-environmental degradation problems-deforestation, loss ofvegetative cover, and overgrazing-and drought during the last 7-8 drought years has exacerbated the problem, resulting in increased soil erosion, water scarcity, and increased vulnerability to wildlife from these changes.

There are many existing environmental concerns in the Basin and it must be stressed that the project is trying to help address these as a first stage in what must be a long and sustained effort.

Significant, non-standard conditions, if any, for:

None

Board presentation: None

Loadcredit effectiveness: None

Covenants applicable to project implementation: Reference Section 6 below.

A kareze is a tunnel or underground channel tapping an aquifer or a spring.

8

A. STRATEGIC CONTEXT AND RATIONALE

1. Country and Sector Issues

1. Balochistan is the largest of Pakistan’s four provinces, covering 44 percent of the country’s area, but it has the lowest population density in the country with a population of only 7.8 million. Balochistan is Pakistan’s least developed province, with 47 percent ofthe population estimated to live below the official poverty line, compared to 32 percent for the nation. As in greater Pakistan, agriculture is the mainstay of Balochistan’s economy, accounting for some 60 percent of the province’s GDP and employing around 67 percent of the labor force. Both crops and livestock are critical to rural livelihoods, and they contribute about 62 percent and 38 percent of gross farm income, respectively. The most important products are millet, wheat, apples, vegetables, grapes, milk and meat.

2. Balochistan is unique in terms of the different types of irrigated agriculture being practiced and the issues related to sustainable use of scare water resources (annual average rainfall is less than 200 mm). Until 1997, the irrigated area in Balochistan was about 1.7 million ha (about 5 percent ofthe total land area of 350,000 square kilometers), of which 0.83 million ha (50 percent) was irrigated by perennial irrigation, and the balance by either flood diversion or spate irrigation (sazlaba) or by water harvesting (kushkhaba) systems. During the drought period (1998-2004) the irrigated area shrank by more than 50 percent, which negatively impacted livelihood patterns, earning activities, and the natural resource base. Thus, better management ofthese scarce resources remains a critical issue for rural development and poverty reduction in Balochistan.

3. The Pishin Lora Basin (PLB) is a major river basin in Balochistan (16,928 sq. km with 10 subbasins) spread over five districts-Pishin, Killa, Abdullah, Quetta, Mastung, and Kalat-with a total population of about 1.2 million. Like the rest of the province, drought has taken its toll on the livelihood patterns ofthe local population due to drying up of the irrigation and potable water resources - surface and ground - degradation of range lands, reduction in agriculture production, and devastation of economic activities as a whole.

4. A number ofissues underpinning the present water crisis will be addressed by this project:

0 Extended Drought and its Impact on the Natural Resource Base. Balochistan has been under severe drought conditions since 1998. The long dry spell has taken its toll on the livelihood patterns of local population as irrigation and potable water resources have dried up. Water availability in the Bund Khushdil Khan (BKK) reservoir (the major reservoir in the region) was drastically reduced during the drought. In 1954-61, the peak season, 2000 hectares in the BKK command area were under surface irrigation. That amount has dwindled to about 350 hectares now. The surface and groundwater availability decreased, rangelands degraded, agricultural activities significantly reduced, and economic activities

9 were severely curtailed. The poor and marginalized sections of the society were affected the most.

0 Poor Watershed Management. Local communities urgently need to change their pattern ofland and associated resource use to improve the long-term sustainability of the environment and their livelihoods. All watersheds are in a very poor state and are mostly degraded. The government departments have made some efforts in the basin to improve conditions, but due to the isolated nature of the activities, appreciable impact has not been observed. These efforts need continuity and a longer-term vision. Intensive activities are needed in the area to rehabilitate the watersheds in close collaboration with the Agriculture, Irrigation, and Forest departments and local communities. Moreover, some of the existing irrigation systems are affected by silting and erosion.

Inefficient Use of Water by Agriculture. Irrigation practices followed in the province are inefficient. Orchards in particular are irrigated by flooding entire fields, which reduces water use efficiency to below 30 percent. The water conveyance channels from source to the farms are mostly unlined causing seepage losses of up to 45-50 percent. Data collected by the International Union for Conservation of Nature (WCN) from a bubbler irrigation demonstration project installed on two hectares ofland near Quetta estimated the water use efficiency of farmers’ flood irrigation practices to be below 20 percent. Bubbler irrigation increased the efficiency to 90 percent.

0 Depleting Groundwater Tables. In the absence of assured surface water supplies, people depend heavily on the groundwater to meet their requirements. According to recent studies (2006) under the Balochistan Resource Management Program (BRMF),3 the number oftubewells swelled from 8,063 in 1985 to 3 1,770 in 2002-03. The continued over-pumping of groundwater has depleted freshwater resources in many areas. This problem has become more acute in the recent years due to the extended drought. The most affected areas lie in the upland Balochistan and are particularly concentrated in the Pishin Lora Basin (PLB). It is estimated that the depletion of groundwater is taking place at rates exceeding three meters per year in many places. Nevertheless, the winter rains of 2004-05 and recently 2006-07 have led to considerably rapid localized recovery of some of these systems that depend on shallow alluvial aquifers.

0 Institutional Weakness and Lack of Community Involvement. Poor governance, low institutional capacity, and lack ofpolitical will and commitment by the public sector to address the water crisis in a planned and systematic way are common water issues in Balochistan. GOB departments lack well-qualified,

3 The Technical Assistance Project entitled, “Supporting Public Resource Management in Balochistan”, is being implemented by the ADB with the support ofthe Government of Balochistan under the ADB funded, Balochistan Resource Management Programme. The TA is financed by the Royal Govement of the Netherlands.

10 trained, and experienced personnel, and existing staff are occupied with the operation and maintenance of current schemes. Thus, little capacity exists to conduct technical surveys and holistically plan and design new projects. Moreover, irrigation service delivery is handled in isolation between the agriculture and irrigation sectors At the community level, there is little interaction or information exchange among communities and the government on the options available to them to increase water productivity in a long term basis..

2. RationaIe for Bank Involvement

5. The Bank can use its global knowledge and experience in the water resources sector to assist GOBin its efforts to properly manage its water and land resources and build capacity among its farmers and water professionals. The technical assistance support is particularly important for watershed restoration and on farm development. To manage the scarce water resources a conjunctive use of surface and groundwater is needed. The Bank’s experience implementing similar projects in Balochistan-such as the Balochistan Community Irrigation and Agriculture Project @CIA€’)--provided valuable experiences and it was satisfactory at its completion.. This places the Bank in a prime position to help GOBachieve its objectives.

3. Higher level objectives to which the project contributes

6. The GOB’SPoverty Reduction Strategy Paper (PRSP) and the World Bank’s Country Assistance Strategy (CAS) for Pakistan both emphasize broad-based economic growth and improving governance. The Balochistan Small-scale Irrigation Project (BSSP) will use community-managed implementation arrangements and capacity development to help improve governance and service delivery in the agriculture sector and rural economy. This project is also included in Pakistan’s Water CAS (2005-2008) and represents a major commitment from the Bank to support GOBefforts to re-establish control over the vital water resources sector.

B. PROJECT DESCRIPTION

1. Lending instrument

7. Given the strong linkages between rural poverty and agricultural development, the project will be financed by a US$25 million credit from the International Development Association (IDA). The Bank will use a Specific Investment Lending (SIL) credit instrument, which will allow IDA to pursue specific investments while providing implementation support and capacity building during implementation.

8. A Project Preparation Facility (PPF) advance of $0.607 million was provided to the GOB in January 2006. This enabled the government to establish the project implementation unit (PIU), procure goods and equipment, and recruit consulting services for project preparation and the following outputs: (i)detailed design of BKK and tender

11 documents; (ii)screening reports, detailed design, and tender documents for 6 small-scale irrigation schemes (SSIS); (iii)commencement of social mobilization and establishment of farmer organizations (FOs) at 6 SSISs; and (iv) completion of a resettlement action plan (RAP) and signing a memorandum of Understanding (MoU) with the adjacent communities of the BKK (Annex 8). These activities have been completed by the PIU, and GOBis preparing to sign an MoUwith one community

2. Project Development Objective and Key Indicators

9. The Balochistan Small-scale Irrigation Project (BSSIP) will support efforts by the GOB to improve the management of scarce water resources in the Pishin Lora Basin (PLB). Project activities are designed to recognize the importance of direct participation ofwater users and other stakeholders. Key indicators include: (i)increased surface water availability and reduced groundwater depletion; (ii)increased water productivity through a combination ofengineering, management, and agricultural measures; and (iii)expanded local capacity and participation of farmers to implement similar schemes and formulate plans for sustainable water resources development and watershed management.

3. Project components

10. The project will initially focus in the PLB in the northern part ofBalochistan, and it will have three components: (a) partial restoration ofwater storage capacity in the Bund Khushdil Khan (BKK); (b) development of small-scale irrigation schemes in the PLB; and (c) institutional strengthening and capacity building of the Irrigation and Power Department (IPD), water management institutions, and farmer and community organizations and further studies and preparation activities for the next phase. Improved watershed and rangeland management and on-farm water management, including introduction ofhigh efficiency irrigation systems, will be integral components.

Component A: Partial Restoration of Water Storage Capacity of the Bund Khushdil Khan Reservoir - US$ 10.80 million

11. This component aims to help in restoring the hydrological balance in the basin by partially restoring the storage capacity of the BKK reservoir, facilitating the recharge of the aquifer, and improving conveyance efficiency and water management efficiency at the farm level. It will raise the BKK level, construct a protective “encroacher’s bund”, remodel the feeder canals, repair the headworks, repair the outlet channel, and initiate on- farm water management (OFWM) activities in the BKK command area. Alternatives to improving conveyance and on-farm introduction of new technologies will be offered to farmers (estimated 400 ha of high efficiency irrigation systems). The BKK watershed will also be the pilot watershed basin for planning, implementing, and monitoring the different structural and non-structural measures to heIp rehabilitate the watershed and rangelands. A total of 8,165 ha are to be treated. This component will generate on-farm and off-farm employment opportunities in the command areas ofthe BKK. Component B: Small-scate Irrigation Schemes -US$9.66 miIlion

12. This component will improve the present operation of approximately 15 small- scale irrigation schemes (SSIS) in the Pishin Lora Basin. Activities will include improving existing karezes, providing flood protection, lining irrigation channels, and providing associated structures such as flow division and small storage tanks. These schemes are similar to those undertaken in previous Bank projects, where farmers have demonstrated that they can take full control and maintain these systems. This component will also provide greater focus on farmer participation through on-the-job training to develop skills for SSIS operation and maintenance. Finally, this component will include watershed and rangeland activities and introduce on-farm water management (OFWM) in the project areas and beyond. OFTNM practices will focus on introducing and propagating high efficiency irrigation systems and helping farmers conserve precious groundwater through proper conveyance systems and efficient use. The project will require that beneficiaries contribute 10 percent to the capital costs4 of the identified SSIS and 100 percent to the operation and maintenance (O&M) costs ofall development works.

Component C: Institutional Capacity Building, Further Studies and Preparation of the Next Phase - US$4.54 million

13. This component will enhance the technical, administrative, and managerial capacity of the Irrigation and Power Department (IPD) and other water management affiliated departments through training, technical advisory services, and appropriate study tours on water management. The project will also support formation and capacity building of Farmers Organizations (FO) and Community Organizations (CO) to ensure they are participatory, inclusive, and well-governed, and that they are trained in activities such as restoration and management of watersheds and rangelands and in the implementation and operation and maintenance of irrigation schemes.. Finally, this component will examine the potential for similar activities to be undertaken in other basins-such as, the Nara, Porali and Rakshan river basins-and prepare a feasibility report documenting key findings and costs. Lessons learned during implementation ofthe project will be reflected in the studies of future interventions in other basins in Balochistan.

4. Lessons Learned and Reflected in the Project Design

14. The Bank’s main lessons learned in irrigation development from previous experiences are that: (a) sustainability of interventions in the irrigation and drainage sector warrants intensive participation of farmers and development of partnerships with irrigation service providers5 for technical backstopping; (b) a phased and progressive approach to policy reforms is more likely to build ownership and ensure sustainability;

Cash contributions will be equal to 2 percent of the capital cost of scheme and labour contributions will be 8 percent of the capital cost of scheme. 5 These include the public sector and private sector NGOs and private limited companies.

13 and (c) a clear incentive structure should be established for farmer participation to reward commitment and prevent potential moral hazard.

15. The proposed project has incorporated these lessons in designing the overall project content. First, the project strongly supports the participation of farmers in the construction, operation and maintenance of the irrigation schemes supported by the project. Second, the strategy envisaged under the project is not conceived as a pilot, as it will initially cover a significant basin in Balochistan and move gradually to other basins. Thirdly, the farmers will actively participate in the watershed management activities and on-farm development to guarantee ownership. Strong technical support component will assist the introduction of modern agriculture technology and practices.

16. The lessons learned from the implementation of the BCIAP have also been reflected in the project design. The proposed project emphasizes community mobilization early in the project implementation so that the communities become more confident and are able to continue the envisaged activities beyond the project period. Moreover, cost- sharing arrangements like the ones used in BCIAP have also been made to ensure ownership. Selection ofthe schemes and the detailed studies required for implementation have been carried out for the first project year.

17. The Bank’s main lessons learned in effective management of groundwater resources are that: (a) economic incentives and energy pricing are fundamental; (b) sustainability is dependent on strong stakeholder participation; (c) the introduction of support programs and modern irrigation methods are necessary to support farm incomes and employment to reduce reliance on groundwater aquifers; (d) good governance through legal and regulatory institutions and enforcement of legislation are needed; and e) approaching groundwater management in a phased approach after experimenting and replicating what works. The proposed project will incorporate these lessons through the implementation of a groundwater management action plan with the close involvement of FO/COs and the IPD.

5. Alternatives Considered and Reasons for Rejection

17. Since the initial PCN, the project has been simplified considerably in two regards from an initial US$ 50 million project to a US $25 million project, . First, the project will only consider the Pishin Lora Basin. Even though it is clear that there is a need for a broader intervention in the water sector in the Province, the need to look at the available institutional capacity and conduct feasibility and other studies of subprojects in other basins will take considerable time. Nevertheless the project will provide for the preparation ofthese studies. Second, contrary to what was initially proposed, the project will only focus on the rehabilitation ofexisting structures.

Additional alternatives considered include:

a) No project. The status quo is not acceptable. The BKK reservoir will continue to silt and there will be more loss of storage capacity. Similarly, if the spillway

14 remodeling is not undertaken, the dam structures will continue to deteriorate, ultimately necessitating dismantling of the BKK. By not fully using the water resources potentially available, continued over exploitation of groundwater reserves will have serious social and environmental impacts. Moreover, degradation of watershed and rangelands will continue and farmers will use irrigation water in an inefficient manner. Finally, without capacity building of IPD staff, FOs, and COS, new concepts-such as, high efficiency irrigation methods cannot be operationalized.

b) Construction of a new dam in place of the present BKK. This option is not economically feasible and is likely to have adverse effects on protected wetlands. Hydrological studies have indicated that the reservoir would not carry the fill storage capacity in most ofthe years due to unavailability ofwater.

c) Total restoration of the initial capacity of the BKK. This option is not economically and socially feasible because it requires construction ofnew intake structures and will likely cause dissent with existing encroachers (an estimated 122 farmers with 150 hectares oforchards) in the vicinity ofthe Bund.

C. IMPLEMENTATION

1. Partnership arrangements

19. The Asian Development Bank, with finding from the Royal Government of the Netherlands, is implementing a project called “Supporting Public Resource Management” (SPRM) in Balochistan with the PD under the Balochistan Resource Management Programme. SPRM will support the implementation of the Integrated Water Resource Management (TWRM) Policy recently prepared by GOB. In particular, the SPRM will support fiather research and data analysis in key areas such as preparing management plans, cropping patterns in irrigated and non-irrigated areas, the potential for recharging the groundwater aquifers using techniques-such as delayed action dams, etc. The project will work in conjunction with these initiatives and maintain close coordination.

2. Institution and implementation arrangements

20. The Balochistan Irrigation and Power Department (PD) will implement the BSSP with one project implementation unit (PIU) for the Pishin Lora Basin, which will be located within the PD. The PTU is responsible for promoting (a) strong community participation in planning, implementation and operation of all project activities and (b) efficient project implementation and sustainability after project completion.

21. Provincial Level Arrangements. An inter-departmental Project Steering Committee (PSC) for the Pishin Lora Basin has been established and will provide policy guidance and inter-agency coordination at the highest level. The Secretaries of PD, Agriculture, Forest and Wildlife, Planning and Development, and Finance, representation from IUCN, and the Project Director (PD) will be invited to participate. The PD will be responsible for convening PSC meetings with the Additional Chief Secretary

15 (Development) serving as Chairperson. The PSC will, inter alia, (i)approve policies aimed at realizing full project benefits; (ii)coordinate inputs from other govemment departments; (iii)approve annual work plans; (iv) approve key project outputs including all screening reports; and (v) monitor the project implementation progress. The PSC will meet at least once every three months.

22. Project Implementation Unit. The Project PC-1, including staff and operating cost of a fully established PIU, was approved by the National Committee ofthe Working Party in January 2007. A full-time Project Director (PD) ofthe PKJ, also the Secretary of the PSC, is a technical person from the IPD,6 who is responsible for overall coordination, monitoring, and management of the project. The PD will perform the functions of Secretary ofthe Steering Committee ofthe project.

23. The PD will be assisted by design and supervision consultants (DSC) who will have expertise and operational staff with skills in irrigation systems design and construction supervision, reservoir management, social mobilization, watershed and rangeland management, community development, groundwater management, irrigation and agronomy, cash crop agronomy (apples or grapes), environmental expertise, agricultural economics (monitoring and evaluation) and gender development. The consultants will prepare basic guidelines for project implementation, provide technical support to the professionals carrying out the work, and prepare plans for the new basin. The design and supervision consultants should be mobilized shortly after project e~ectiveness.~

24. Institutional Arrangements for Community Participation Early social mobilization and strengthening of appropriate institutions will be critical in ensuring success. The basic building block is the Community Organization (CO). The development of small-scale irrigation schemes will be a central theme for the CO, which will represent all the scheme beneficiaries who have agreed to participate in the development process. This will be referred to as the Farmer Organization (FO). For watershed and range management interventions, communities will form Village Watershed Management Committees (VWMC) for effective community participation. The project will build capacity at the local level to ensure that COIFONWMCs are participatory, inclusive, equitable and well governed, and that they will promote social cohesion and collective action. It is expected that they will carry out planning according to local needs; better share resources, especially water; reduce delivery costs, and ensure sustainable operations and maintenance with technical backstopping where required.

25. Community Support Groups (CSG), part of the design and supervision consultants, will reach out to communities to help them mobilize themselves and build

6 The Project Director was approved by the Chief Minister (Balochistan) in March 2007 and is ofBasic Pay Scale (BPS) Grade 19. 7 Short-listing of Expresion ofInterest received from the consultants’ firms was completed in March2007 and submitted to the Bank for no objection; subsequently technical and financial proposals ofshortlisted firms have been invited for evaIuation.

16 social capital. Staffing would primarily comprise male and female social mobilizers with limited assistance from social development staff in the Community Irrigation Services Unit (CISU).* CISU has been strengthened during the preparation phase ofBSSIP, and it has been actively engaged in preparation of the Resetlement Action Plan, community awareness-raising, signing of Memoranda of Understanding with beneficiaries, and monitoring, FOs on SSIS.

26. The DSC will continue to work closely with CISU to facilitate and coordinate FO strengthening activities including information dissemination on better water management and agricultural practices to the community. The DSC will also be responsible for ongoing internal monitoring and evaluation of the social mobilization and participation component ofthe project.

3. Monitoring and Evaluation of Outcomes/ResuIts

27. The project will create an effective external monitoring and evaluation system to monitor project operational efficiency and effectiveness and to indicate when design adjustments or policy refinements are needed. The proposed monitoring and evaluation system will involve not only monitoring physical implementation, environmental, and other parameters as part of baseline and regular monitoring studies, but it will also develop a system ofbenchmarking from a performance viewpoint. The focus will be on qualitative social outcomes of participation in decision-making, equity, and improved livelihoods. These parameters would be monitored closely and reported in a usable and transparent manner.

28. A comprehensive socio-economic baseline was established during project preparation based on reconnaissance within the BKK command area and SSIS. Random sampling was undertaken ofapproximately 10 percent ofresident households in the BKK command.’ The total number of households sampled was 279. For SSIS, which have a smaller population, every resident household was included in the survey. Subsequent project impacts will be monitored against this socio-economic baseline.

29. The report will present the status and results of program implementation, achievements and constraints. The main result indicators for this project will be:

This unit was established in 1999 as the social mobilization arm of the IPD. Its tasks include registering Farmer Organizations under the Balochistan Community Irrigation Farmer Organization (CIFO) Regulations (under the BIDA Act of April 2000). The Unit has regulated and monitored FO performance under the BCIAP; however, since the closure of the project in 2002 and due to shortage of funds, the Unit lost some of its capacity with eight professional and seven support staff, but little else in terms of logistical support. 9 The technique allows selection of a sample from population with equal interval. It was decided to consider every house as a sampling mt. The IOpercent sample size means selection of one house in a sample after regular interval of 10 houses. In all villages a substantial number of households are temporary settlers mainly tenant farmers or laborers. They are not permanent settlers ofvillages and are not landowners. They usually live for shorter periods and work as tenants at will and were excluded from the baseline as non representative ofthe entire population.

17 Crop areas and yields; Water productivity statistics (e.g. water losses); Improved irrigation efficiency; Groundwater table levels; Income and employment; FOE0participation and inclusion; Reduced soil erosion and runoff from watershed; Improved ecological conditions ofrangelands;

30. The PIU, with assistance from CISU social development staff, will monitor and evaluate safeguard policies, particularly resettlement compensation to determine if the prescribed procedures have been followed and whether the affected persons are at least no worse off than before the project.

31. Communities will actively participate in monitoring project activities, and a benchmarking system for FOs will be started. This will compare the basic indicators from the Benchmarking of Irrigation Systems developed by the International Program for Technology and Research in Irrigation and Drainage (IPTRID) and the WB. A consulting firm will carry out an independent third party impact evaluation prior to project closure. This will analyze the impact ofproject implementation and assess the adequacy ofdesign and implementation methodologies.

4. Sustainability

32. Borrower commitment is evident from their willingness to: (a) finance feasibility studies ofthe BKK and SSIS; (b) initiate desilting works around the outlet structure with an initial investment of Rs. 4.0 million; (c) auhorize a project preparation facility in January 2006 to carry out the necessary design of the BKK and related works on other subprojects; (d) sign a Memorandum of Understanding with BKK beneficiaries and prepare a Resettlement Action Plan (RAP); and (e) start the bidding process for civil works ofBKK and consulting services for project implementation (both ICB).

33. The project will support the creation and strengthening of institutions necessary for supporting comprehensive water management and continued adoption of improved management practices. Improving farmer managed water distribution networks and introducing timely and reliable water supplies for ensuring long-term improvements in water productivity.

34. The project will pilot modem technical and management approaches (e.g., intensification and diversification) which should yield benefits in terms of replicable expansion ofthese efforts in a learning framework. Continued extension services coupled with appropriate agriculture development policies will be critical to sustaining the benefits ofagricultural intensification and diversification. 35. The development of rangelands as community resources wilI help improve, in a sustainable manner, the living standards of the poorer sections. The environmental and social benefits from adopting water saving management and improved cropping practices are expected to be significant and sustainable.

36. Community mobilization, training, and capacity building should yield direct and indirect long-term benefits to the communities. Developing linkages with local institutions capable of providing technical backstopping will assist communities as they evolve and strengthen.

37. The knowledge-base created should improve awareness, mainstream environmental and social development objectives, and create an enabling environment for sustained development.

5. Critical risks and possible controversial aspects

Risk Rating after Risks Risk Mitigation Mitigation

Cyclical drought Watershed management in the catchments and use of high efficiency irrigation M technology will help in groundwater use and management. Development of information and awareness campaign will support the active partnership of all stakeholders in the PLB and improve preparedness for future events. Poor security situation Build in flexibility in the project design to allow project works to move between sub- H within the Province, basins or project areas depending on the security conditions. Screen out schemes where near Afghan border potential participants are involved in intractable disputes, but also provide transparent methods for dispute resolution, based on traditional dispute solving mechanisms. IPD to take preemptive measures and ensure office, goods and equipment and staff security. Failure of IPD to Project Steering Committee at the provincial level meets regularly to sort out the M coordinate well with problems early. Lean PSC, dispersed activities, and empowered communities with other departments and linkages with local service providers. stakeholders Weak financial Recruitment of incremental FM staff at competitive rates from the market, development H management capacity of a FM Manual, and quarterly internal audit (equivalent to about 3 person-months per of government staff annum) by an independent firm of auditors are among the recommendations to mitigate the risks confronted. Community managed funds will increase transparency and accountability. Weak Procurement IPD has deputed a full time PD and one more procurement staff in the PIU. Procurement H Capacity of IPD Staff training shall be given to the procurement staff, as well as the engineering staff as soon resulting in delays, and as the latter are appointed. IPD has to ensure minimum turnaround of the PIU staff. A transparency in Standard Operating Procedure (SOP) has been drafted for processing all procurements. procurements A11 related information will be displayed on the IPD website

To Components Results

Ineffective FOs and Build FOs and COS on tradihonal village organizations, institute linkages wth M cos tradihonal village leaders and involve them wth FOKO leadership, train FO/CO office- bearers in organizattonal management, and try to ensure the members to have sufficient, appromate.. . incenhves to loin and stay in FOiCOs Develop linkages- wlth local imgahon - service providers for future technical backstopping Clear terms of partnerships. Weak contractors A small group of fairly proficient contractors, who were trained under BMIAD and M worked in BCIAP, are available to work on small imgahon schemes However, PMU must adhere to stnct qualification cntena and selection procedures and ngorously monitor contract implementabon in the case of large (KK Bund) and small contractors and the small schemes wll be implemented by community themselves Beneficianes donot Beneficianes would pay IO percent of their share upfront GoBalochistan will transfer N :ontnbute their share ownership of the infrastructure after full contnbutions have been made Overall Risk Rating !3

19 6. Credit conditions and covenants

(i) Government of Balochistan shall ensure that the Project Steering Committee, Project Implementation Unit, Project supervision and design consultants are maintained with appropriate term ofreference, and staffing agreeable to the Association, until project completion.

(ii) Government of Balochistan shall ensure that Project Implementation Unit maintain a financial management system for the Project, maintained by qualified staff comprising and updated financial manual and a computerized Project Accounting and Management Information System until completion ofthe project.

(iii) Consultants for supervision and design and evaluation and management of the Project will be contracted by January 31, 2008 with qualifications and experience satisfactory to the Association, and maintained thereafter unti project completion.

(iv) Government of Balochistan will maintain its website and ensure that procurement documentation and record keeping systems will be available in the website.

(v) Project Implementation Unit will monitor the physical and financial progress of the project, implementation of the overall as well as subproject level environmental performance indicators on a regular basis and prepare and submit quarterly and annual progress reports by March 31 each year, and annual work plan for the following year. The annual work program for the following year will be finalized in agreement with the Association no later than May 3 1 each project year.

(vi) Government of Balochistan will finalize the negotiations with the Tora Shah and reach agreement before initiating the construction of the protection bund and other civil works presently under discussion with the community.

(vii) The Mid-term review ofthe Project would be undertaken by March 3 1,201 0.

D. APPRAISAL SUMMARY

1. Economic and financial analyses

38. An economic and financial analysis has been carried out for this project. The financial analysis is carried out from the individual or entity point of view. Economic analysis is carried out from the point of view of the economy as a whole and provides alternative decision making criteria aimed at maximizing national economic objectives under given constraints. For the economic analysis, externalities are included, transfer payments like taxes, subsidies etc; are adjusted, shadow prices are used and project integrated with national objectives.

39. Project cost components include: i) staffing, operating, and capacity building, ii)execution of civil works, iii) watershed management and rangeland rehabilitation

20 activities, iv) on-farm water management activities, v) resettlement costs, vi) consulting services for project, vii) implementation, procurement, and operating costs, and viii) research consultancy contracts.

40. The project benefits include increased water storage, enhanced reservoir and perennial irrigation schemes life by reduced sedimentation, and improved water use efficiency through physical interventions in on-farm water management works (OFWM) and high efficiency irrigation systems (HEIS). The OFWEISactivities in the BKK command areas and small scheme irrigation areas will lead to reduced water losses and consequently higher cropping intensities, better yields, and economic returns. In addition, watershed management and range land rehabilitation will lead to increased livestock productivity and reduced erosion. In the long run, substitution ofgroundwater by surface supplies from the BKK will result in recharging the depleting aquifer and will ensure sustained surface water availability for approximately 4,000 ha. The energy costs and costs ofadditional boring will also be saved.

41. Total estimated beneficiaries and areas from the project are given in the table 2 below:

Table.1: Summary of BSSIP Beneficiaries and Areas SSIS Area BKK Command SSIs (6 identified) (9 to be identiJed)’ Total Total Beneficiaries’ 34,185 7,168 10,752 52,105 Total Cost ($ mllion) 13.1 3.9 5.8 22.8 Cropped Area -ha 1,800 825 1,238 3,863 Watershed’RLR area -ha 6,365 2,830 4,245 13,440 Total area impacted - ha 8,165 3,655 5,483 17,303 Cost’ per beneficiary - $ 383 539 539 437 Total Cost per impacted ha -$ 1,605 1057 1057 1,316

1 - Population based on 1998 Population Census for BKK and actual data collected for 6 SSIS 2 - Resettlement cost of $0.25 rml for BKK not included in the cost. 3 - For 9 SSIS to be identified, figures denved on the basis of 6 identified SSISs.

42. The total cost ofthe entire project is $25 million to be spent over a period of five years. The annual returns are $3.6 (25 million x 14.41 percent, the FJRR for the entire project) million (Rs 216 million) at current rates. There is little involvement of foreign exchange. Economic cost is derived by multiplying financial values with SCF/SWR. The SWR used for unskilled labor is 0.8 and is taken at par for skilled labor. Based on the share of various components, the weighted average factor to convert financial costs to economic costs works out to 0.87. Parity prices are used for tradable items. The import parity price is calculated for wheat and chemical fertilizers. For non-tradables, border price is arrived at using a SCF of 0.9, to account for distortions in local currency, taxes, or subsidies.

21 Table 2: Proiect Cost for BKK and Small Schemes bv comtmnents

Bund Khushdil Khan 513.85 72.3 1 46.95 15.00 648.11 10.80 1 1 AdoKareze 24.29 4.55 10.94 39.78 0.66 2 Khushab 23.89 8.02 7.95 39.86 0.66 3 KhaniBaba 24.89 7.36 8.61 40.86 0.68 Ranj & Wali 4 Hud 26.48 I.46 4.60 32.54 0.54 Sahibzada 5 Kareze 24.31 2.88 10.62 37.81 0.63 I 6 I AbadKareze 1 27.42 1 7.89 I 5.63 40.93 0.68 1 7-15 1 Additional 9 I 226.93 48.23 1 72.52 I 347.68 I 5.79 Equipment cost 43.12 0.72 Staff, travel and operating costs 139.67 2.33 Capacity Building 38.28 0.64 Project Preparation Phase 36.42 0.61 Research Studies 14.28 0.24 Total I 892.06 I 152.69 I 167.82 1 15.00 1499.34 24.99

43. The economic rate of return is calculated at 15.7 percent for the project as a whole. For the SSIS, EIRR is high due to less unit area costs and high returns attributed to sustained perennial supplies of water. Sensitivity analysis carried out with 10 percent rise in costs with 10 percent reduced benefits indicates the EJRR to be still robust at 13.2 percent for the adverse scenario of increased cost and decreased benefits, above the prevailing cut off rate of 12 percent.

Summary of Economic and Financial Analysis

1 Indicators Economic Financial NPV at 12 percent 279 200 NPV at 12 percent (+lo 198 108 percent Costs) NPV at 12 percent (-10 278 199 percent Benefits) NPV at 12 percent (+/- 10 90 (4) percent) B:C at 12 Dercent (Base Case) 1.46 1.51

22 2. Technical

Bund Khushdil Khan

44. The BKK reservoir is located about 14 km northeast ofPishin town in the Pishin district of Balochistan. The reservoir originally commissioned in 1890 and enlarged in 1914, has lost most of its storage from an original capacity of 29.4 million meters3 to currently estimated less than 5 million meters3. The reservoir operates off stream and is supplied from the Tormorgha diversion structures located on the Barshore Lora and the Surkhab diversion structure located on the Surkhab Lora. It also receives run off from its direct catchment (about 282 sq. km. of the total BKK watershed of 1,514 sq. km). The rivers carry high silt loads and as a result, the reservoir has suffered a progressive decline in its operating volume.

45. The command area ofthe reservoir is about 2,000 ha irrigating mainly Rabi crops. Originally, the irrigation systems within the reservoir command area were unlined. In 1932, lined irrigation channels were constructed along unlined channels to reduce seepage losses and convey the reservoir water at a further distance, in particular, the Haikalzai Canal was extended southwards over the Surkhab Lora and connected into the Shebo Canal system. The system is now only capable of providing surface irrigation to about 350 ha ofland that is situated close to the BKK. Due to drought conditions, most of the irrigation taking place within the command area is through tubewells.

46. Appraisal and design reports conclude that rehabilitation of the BKK and increasing the reservoir capacity by raising the level by about 2.77 m giving about 18.50 MCMis technically and economically feasible. This is the maximum raising that can be achieved without reconstruction of the headworks. A peripheral protection bund will be provided along the perimeter of the reservoir to prevent inundation of the adjacent areas and encroachments. A surface drain adjacent to the toe of the embankment will also be built for localized drainage. The larger direct drainages emanating from the local catchment and currently discharging in to the reservoir have also been accommodated by providing drainage inlets through the protection embankment. The total financial cost (including watershed rangeland and rehabilitation activities and on-farm water management activities but excluding the resettlement cost) will be about Rs 633 million (excluding resettlement cost) at 2007 prices and the EIRR of about 14.1 percent. Furthermore, hydrological studies have been carried out for inflow to reservoir and outflow through spillway. These have verified that the spillway width needs to be increased to 130 feet from the existing 110 feet in order to safely discharge the 1 in 1000 flood. The studies have also been used to check capacity of the existing downstream culvert which will be extended by additional bays. Standard design criteria, coefficients, and constants, design codes, and stability criteria have been adopted for all components ofthe proposed project.

23 Small-scale Imnation Schemes (SSIS)

47. The main objective of promoting small-scale irrigation schemes is to encourage the use of surface water resources and thus to encourage farming communities to use groundwater more judicially and increase overall water productivity. Based on the experiences of previous irrigation sector development projects, farmer contributions to scheme development, in terms of financial contributions, farmer consultations during preparation and design, and farmer involvement during construction, through command area development and other works after construction, are viable options for implementing a participatory approach. Indications to date suggest that these approaches help to convey the concept of ownership. This project will develop SSIS with a community participative approach and will require beneficiaries to contribute towards scheme capital costs by undertaking a proportion of construction works. Total number of direct beneficiaries is 17,920 (including 10,752 beneficiaries for the 9 un-identified Schemes based on the average of6 identified schemes).

48. Subsequent scheme selection will be based on reconnaissance visits and pre- feasibility studies to determine technical, social, economic, and environmental viability in accordance with sub-project selection criteria. In addition, equitable geographic distribution of selected sites is preferable. Civil works for SSIS will be designed and constructed in accordance with appropriate international and national standards and using experience gained during implementation ofpredecessor projects in Balochistan.

49. Perennial Irrigation Schemes (PIS) The majority of minor irrigation sources within the Pishin Lora Basin are karezes and wells. The project will focus on rehabilitating and improving perennial (kaueze) irrigation schemes. Construction costs for individual schemes vary between $0.54 million and $0.68 million. Discharges vary between 49 and 95 litres per second and cultivated areas range between 72 (Ranj Wali Haud) and 357 (Ado Kareze) hectares. Cropping is predominantly orchard and winter wheat. Distribution of land and water shares on the schemes is relatively equitable, providing a highly conducive environment for community participative activities. Beneficiary communities are small ranging between 62 and 139 households for the selected schemes. Conveyance losses within these under developed systems are high, estimated to be 50 percent or greater due to distances (up to 2 km) between the kareze source and irrigable area. In addition limited financial resources prevent further development of the source to enhance flow potential. Typical civil works on PIS comprise kareze rehabilitation and extension, main and secondary channel lining (rectangular stone masonry or concrete), (earthen stone pitched) flood protection, permanent off takes and ancillary structures including siphons, washing structures and animal drinking points.

Watershed and Rangeland Management and OFWM Activities

50. Associated community managed watershed improvement, rangeland rehabilitation and OFWM interventions will also be undertaken as an integral part ofSSIS development and as part of the overall development works to be undertaken at the BKK watershed.

24 High-efficiency irrigation systems (HEIS) (e.g. drip irrigation, bubbler irrigation) for instance have successfully been applied in Pakistan and will be considered on those schemes where supplemental tubewell irrigation is evident. Introduction ofgreen houses is also envisaged. Interventions will be distributed according to gradient and degree of degradation of the watershed and rangelands and according to the needs identified by local communities. Watershed management improvement will entail soil and water conservation measures including gulley plugging, contour ditching, improvement of check structures and level dykes. Improvement of communal woodlots will be focused within Iowland fan areas. A major focus will be community mobilization for planning, design and management of rehabilitation activities to ensure sustainability of protected areas.

3. Fiduciary

51. Weak financial management capacity of the staff in government departments, difficulty in attracting adequately qualified accountants fi-om the local market are some of the key risks associated with the project. Recruitment of incremental FM staff at competitive rates from the market, development ofthe FM Manual, and quarterly internal audit by an independent firm of auditors are the key recommendations to mitigate the risks confronted. The selection and recruitment ofthe key financial management staff as part ofthe design and supervision consultants will be pursued further so that the financial management arrangements can be properly monitored.

52. The project will adopt report-based disbursements for withdrawal ofIDA funds as advance into the Designated Account. The project shall benefit fi-om Country Financing Parameters agreed between the Bank and GoP whereby IDA shall finance 100 percent of all eligible expenditures. Disbursements and accounting would be centralized in the PIU which is also centrally located in the project area. The Auditor-General will perform the external audit ofthe project.

53. Procurement capacity of the PlU is weak. It is however expected that after the design and supervision consultants are on board, the PIU will have a constant support in procurement. Full time presence of proficient procurement staff within the PIU without turnaround, is essential. The Project Director assisted by a procurement staff (a Civil Engineer) are responsible for procurement. Procurement planning, monitoring and timely internal processing will be the responsibility of the procurement staff. Streamlining ofthe procurement processing within the PIUiPD is done through Standard Operating Procedures (SOP), which allocate the responsibilities of the IPDPIU for various procurements ofgoods, works and consultancy services. IPD/PIU is authorized to process and award works and goods contracts, whereas, for consultancy services, a higher intra secretarial committee is the approving authority. PIU has drafted the SOP, which shall be finalized during negotiations.

54. In order to make procurement procedures more transparent, disclosure of procurement actions will be ensured through a procurement website. The preparation phase consultants hired through PPF prepared a website, which is operated by the PIU.

25 The procurement plan, all invitation notices, summaries of bid evaluations and status of award will be displayed on this website. The department will also post all complaints and the actions taken, on the website. Other measures to be taken for ensuring equal opportunity and transparency in procurements are described in Annex 10 and for financial management in Annex 11.

4. Social

Social Structure

55. The social structure in the project area is predominantly tribal. Two major ethnic groups, the Pashtun and Brahvi inhabit the area and have their distinctive social customs and power structures based on strong patriarchal kinship. The social organization is mainly structured along tribal lines each tribe further divided into clans and sub-clans. The Pashtun tribes do not have a strict hierarchy or centralized leadership and therefore are more egalitarian. The Jirga system provides a mechanism for collective decision- making and mediation of disputes within the community. The tribal system of the Brahvi’s is based on the same patriarchal kinship organization, however, with more pronounced hierarchy of leadership and a stronger central tribal chief. The leadership structure in most cases is a major hindrance in the way of people’s participation and equitable distribution of resources. However, with the passage of time, the tribal system has been heavily influenced by religion and the state and the influence ofthe tribal leader especially in the Pashtun and even Brahvi has eroded and gwen way to the mullah. The Pashtun and Brahvi inhabit separate parts of the project area and there is very little inter- ethnic rivalry between them. For instance the BKK is inhabited entirely by Pashtuns primarily ofthe Tarin, Kakar and Syed tribes.

Status ofWomen

56. The patriarchal tribal structure together with so-called religious injunctions against women has resulted in very low social and economic status of women in the project area as is the case in the rest of the province. Women have very limited access to social services resulting in extremely low literacy levels and high prevalence of disease, maternal mortality and malnutrition and few opportunities for employment or income generation.

Water Rights

57. Water rights in the project area are determined by customary tribal laws and derive to a large extent from customary land rights. UnIike farmlands, generally water sources are collectively owned by the community, and specific water use rights are allotted to individual holdings. Land and water rights are well established in the command area of the BKK and legally endorsed by records and cadastral maps available at the district headquarters. This clarity of rights has in most parts prevented any major conflict in the BKK. Similarly, the other project interventions are mainly rehabilitation of

26 irrigation systems presently under operation with established social contracts and clear water rights among the beneficiaries.

Community Participation and Project Benefits

58. The social assessment of the project finds that the rehabilitation of the BKJS and other small-scale irrigation schemes is expected to bring positive change in the lives of the people in the PLB by increasing incomes from improved agricultural production and increasing employment generation. The community participation strategy of the project will mobilize people to organize them to plan, implement, and manage water resources better.

59. Lessons have been learned from other similar projects on the transfer of operation and maintenance activities to scheme beneficiaries. FOs have demonstrated their ability to successfully construct technically less challenging components of irrigation infrastructure. Fund collection and the ability to use these for procurement of materials, equipment and technical services have also been demonstrated. Post project maintenance is where the multi facetted role of an FO becomes critical. Examples from previous projects suggest that despite FO funds for O&M, schemes fall into disrepair due to: (i)the FO remains a ffedgling organization that has been unable to develop into a fully functional, multi dimensional institution; and (ii)the FO is unable to access irrigation service providers that can continue to provide technical backstopping and aftercare support.

60. Assisting beneficiary communities in forming and strengthening linkages with locally based irrigation service providers is an essential requirement for future technical backstopping in scheme maintenance. This strategy will also build social capital through the formation of effective, equitable, participatory, empowered and inclusive organizations. Community mobilization, training and capacity building initiatives of key stakeholders are expected to yield direct and indirect benefits to the communities. This component will benefit community and farmer organizations by building on indigenous knowledge systems and through knowledge transfer use of highly efficient modem irrigation systems, soil and water management techniques, and their involvement in participatory planning, construction, and maintenance of community-managed irrigation schemes.

61. The knowledge-base created is expected to improve awareness, mainstream environmental and social development objectives and create an enabling environment towards adopting a coherent basin wise integrated water resource management approach to be followed in the planning and design of future self-managed irrigation systems development.

62. The project will include lessons learnt from previous projects to improve cost recovery for operation and maintenance and will work closely with communities to better equip them. The following actions will be incorporated in social mobilization: (i)capacity building of communities and strengthening in key areas of simple book

27 keeping, technical training for implementation of FO/CQ Works, continued training in role ofFO; (ii)a post construction strategy will be developed to ensure reinvigoration of FO/CO and to provide aftercare support; (iii)FO/CO will be provided intensive support on use of funds and continuing collection mechanisms; (iv) linkages will be developed during the post construction stage with locally based irrigation service providers.

63. Inclusion of women will be predominantly through mainstreaming which is particularly appropriate within the social confines of Balochistan. A limited number of gender targeted interventions will be implemented which will link closely with the role of women in irrigated agriculture and as managers of domestic water. Women will be encouraged to participate in this process and it is expected that women groups will also be formed to benefit from these interventions. In this regard the mobilization effort will draw from the great reservoir ofIslamic spirituality that protects the rights ofwomen and gives them the right to inherit and owland and property.

Compensation Mechanism for Affected Farmers

64. The social assessment also identifies a limited effect on the encroached state land following the rehabilitation of the BKK. However, to ensure that this issue is addressed thoroughly a Policy and Institutional Framework (PLF) and a Resettlement Action Plan (RAP) have been prepared to provide policy guidelines and procedures to address possible impacts arising from the loss of livelihood. The PIF outlines the legal, policy, institutional and implementation framework to guide the compensation for lost assets, livelihoods, community property, and resettlement and rehabilitation of project-affected people, whereas the RAP prepared is the resettlement instrument specific to the BKK area. Integral to the RAP is a Memorandum ofUnderstanding that has been developed in conjunction with scheme beneficiaries to provide a detailed description of key (BKK) development components. The MoUforms part ofthe legal documentation recording the agreement of all stakeholder groups to fully participate in Project activities and endorse the engineering design for rehabilitation of BKK. The MoU has been agreed with beneficiaries and a cadastral map of encroached area, clearly depicting affected area, cropping, and details of cultivators, has been completed. These instruments will be followed to ensure that necessary compensation is made to project affectees. The Resettlement Compensation Cell for the Project, headed by the Project Director will comprise Executive Engineer (Pishin), Executive District Officers for Revenue and Agriculture (Extension), and a further representative of the PIU. In addition, a representative ofthe design and supervision consultants will be an independent observer.

5. Environment

Environment Category: B

65. Balochistan Irrigation and Power Department has prepared and provided the Bank with the Environmental & Social Assessment Report (ESA) prepared by the consultants. The environmental objective of the project is: (i)to ensure environmental restoration of

28 watershed and rangelands, (ii)to reduce groundwater mining, and (ii)to integrate environmental assessment and management in the screening and implementation of irrigation schemes in the Pishin Lora Basin in Balochistan. A series of public and stakeholders’ consultation were done during the course of the study with the project beneficiaries as well as project affected people. IPD obtained the NOC from the Balochistan EPA (in February 2006) as required under the national law. The results ofthe ESA find that the BSSIP is unlikely to cause any negative significant, lasting impact on the social, physical, and biological environment to the area.

66. The key environmental issues relate to civil works ofthe BKK - partial restoration and minor upgrading of existing (100 year old) structures. There will be the typical impacts during construction, which will be managed by good practice approaches. There is also the possibility that increased agricultural productivity will result in increased use of pesticides and this can be addressed as part of an IPM program being developed by UNDP in the basin. The BKK reservoir has been established as a wildlife sanctuary, since it is the only body of open water in the area. The project will increase the seasonal area and shoreline of the reservoir and so enhance its attraction as a stopping point for migratory birds.

67. The EMF developed under the study will help the borrower in environmental management during the construction and operation of the project by minimizing the adverse environmental effects, and enhancing the project benefits.

6. Safeguard policies

Policies Applicability Environmental Assessment (OP 4.01, BP 4.01, GP 4.01 Yes Natural Habitat (OP 4.04, BP 4.04, GP 4.04) No Forestry (OP 4.36, GP 4.36) No Pest Management (OP 4.09) No Cultural Property (OPN 11.03) No Indigenous People (OD 4.20) No

Involuntarv Resettlement (OP 4.12, BP 4.12)/\ (OD 4.30) Yes I Safetv ofDams (OP 4.37. BP 4.37) I No t Projects in International Waters (OP 7.50, BP 7.50) Yes Projects in Disputed Areas (OP 7.60, BP 7.60) No

(i) Environmental Assessment (EA). The project is rated category B. ISEA has been prepared by the Government. Details are provided in Annex 12.

(ii) Project in International Waters. The project team has assessed the project components in the context of OP 7.50 and concluded that OP 7.50 applies to the project, as the project site is located on the Pishin Lora river which is an international waterway as described in paragraph 1 (a) ofOP 7.50. However, the project involves only the partial restoration of the lost storage capacity of the BKK reservoir and makes it safe and more efficient to operate by remodeling the feeder canals and improving other associated

29 structures. The project also involves only the rehabilitation of some small irrigation schemes. It does not involve works and activities that would exceed the capacity of the original scheme, change its nature, or alter or expand its scope and extent. The project’s works are minor compared to the original scheme and are meant to support the rehabilitation of the original scheme, and are not expected to impact other riparians. Similar repair and improvement work has been carried out as part ofthe normal operation and maintenance over the years. The rehabilitation work will not result in any expansion in the original water diversion from the Pishin Lora River. Given the nature of works envisaged under the proposed project, it is believed that: (a) the project will not adversely affect the quality or quantity of water flows to other riparian; and (b) it will not be adversely affected by other riparian’ water use either. Therefore, the project team has concluded that the project falls within the exception to the notification requirement under paragraph 7 (a) ofOP 7.50.

(iii) Safty of Dams. In accordance with OP 4.37 the Bank distinguishes “large dams” as those that are 15 meters or more in height; BKK constructed in 1890 was found after the detail investigations that it is 21.33m high. For large dams, the Bank requires reviews by independent experts ofthe investigation, design, and construction ofthe dam and the start of operations. Given the nature of the works in consultation with the Lead Bank Dam Safty safeguards, an independent technical and hydraulic review was done for the main embankment ofBKK and the peripheral protection bund to ensure it complies with safety requirements of OP4.37. The final report incorporating observations and recommendations was prepared. The conclusion of the review confirms the safety ofthe dam, the soundness of the geotechnical studies and the selection of the materials to be used for partially restoring the storage capacity of the KK Bund.

7. Policy Exceptions and Readiness

68. The project is ready for implementation and to start its first year’s activities. The implementation of the PPF has provided all the necessary inputs to initiate project activities.

69. The project meets all regional guidelines for readiness. First year programs have been screened and evaluated for their technical and economic viability, as well as social and environmental aspects. The procurement plan for civil works, consultancies, and goods has been developed. The procurement process for BKK civil works and design and supervision consultants has already commenced. GPN for civil works has been published on UNDB, Qualification Documents for BKK civil works have been issued by the Bank and SPN for BKK and has already been published in national newspapers and on UNDB. For consultancy services, EOIs were received in mid March 2007 and six firms shortlisted. RFP has been issued and technical and financial proposals were submitted. Final decision is awaiting confirmation of project funding. PD has requested the Bank to finalize the negotiations of the project and will continue the dialogue with Tora Shah Villagers to obtain their agreement to initiate the construction of the protection bund around the lake of the BKK and the compensation of the afectees. The other nine

30 communities located in the BKK have already agreed to the implementation of the project.

70. The Government ofBalochistan has obtained approval of Project PC-1 from both the Provincial and Central Development Working Party and recently on the 22nd of October, 2007 by the Executive Committee for National Economic Council (ECNEC) for an amount ofUS $25.0 million equivalent.

71. With the help of a PPAF, the project implementation unit has been established and is already fully functional and key project staff have been recruited. Other key project staff have been notified by other line departments (e.g., Apculture and Forestry). Contracts for consultancy services and for the improvement ofBKK were received by the Bank on December 3, 2007. Six Small Irrigation Schemes biding documents will be received at the end of December 2007 and the evaluation report will be ready in March 2008.

31 Annex 1: Country and Sector Background

Balochistan Small-Scale Irrigation Project (BSSIP)

Balochistan is the largest ofPakistan’s four Provinces (44 percent of the country’s area) but is the least developed. The North of the Province borders Afghanistan and has been directly affected by the present conflict. Balochistan is an extremely dry area with water being the limiting factor in development. Rainfall has been below normal in 24 out of26 districts in the last four years.

Agriculture is the mainstay ofBalochistan’s economy, accounting for some 60 percent of provincial gross domestic product, and employing around 67 percent of the labor force. Crops contribute about 62 percent of commodity gross farm income and livestock 38 percent. The most important products are: millet, wheat, apples, vegetables, grapes, milk and meat. Extended family farms with landholding less than 10 ha own over 86 percent of farm area. Most farmlands are cultivated using family labor. The main contributing sub-sectors are livestock (40 percent), fruit crops (30 percent), vegetables (12 percent), field crops (17 percent) and fisheries (1 percent). Major cereal crops grown in Balochistan are: wheat with an annual production of 654,700 tons; rice 467,000 tons and barley 25,000 tons (2002/03). Fodder production was 1,150,000 tons which shows that there is a good integration of livestock in the farming systems. Production of cotton, sugarcane and tobacco was 66,500 tons, 40,600 tons and 1,900 tones respectively. The horticulture sector has grown and accounts for 27 percent of provincial GDP. Annual production of fruits was 910,000 tons in 2002/03, while annual production of vegetables was 1,040,000 tons. Balochistan is capable of growing almost any temperate to sub- tropical fruit, vegetable and other arable crop. Due to varying altitude and the marked seasonal changes, planting and harvesting times ofthe same crops vary widely within the Province.

Balochistan irrigation systems (1.5 million ha) consist of two different type of systems: perennial (37 percent) and partially irrigated (63 percent). The perennial system can be grouped also in two major systems: the Indus gravity fed which irrigates annually around 230,000 ha and the small-scale irrigation systems 320,000 ha. The small-scale irrigation systems include: units supplied from karezes or infiltration galleries, bunds (small dams) and weirs in rivers and tubewells or open wells.

Balochistan’s annual surface water allocation by the National Water Accord is about 5 BCM. Groundwater is being used to augment the surface water. Uncontrolled installation of public and private tube wells has resulted in groundwater mining. This unsustainable use of groundwater has affected kareze flows (tunnel or underground channel tapping an aquifer or a spring)

The Pishin Lora Basin is selected for its urgent need to restore the hydrological balance. A primary component of the project is the partial restoration of the Bund Kushdil Khan, located in the Pishin district north of Quetta. This off-the-river reservoir was constructed in 1890. The embankment is 1.128 Km long across the Tirkha Nullah site where it cuts

32 though a low range ofhills. The embankment was raised to hold 29.345 Mm3to cater for about 4,400 ha ofwhich about 2,000 ha were irrigated from 1954-61. Over the years, the reservoir has lost its capacity due to siltation and the residual storage today is estimated at 6.25 Mm3. The area currently irrigated in rotation is about 350 ha under wheat, barley, apples, grapes, tobacco and vegetables mostly supplemented by private ground water development. The farmers are organized in a Water User Association to receive the irrigation service provided by the IPD district Pishin. The groundwater development which is fundamental to provide the crop water requirements in a timely manner is managed directly by the farmers, with little technical assistance and applying basically flooded irrigation techniques.

BKK area was declared a wildlife sanctuary in 1982 under the Balochistan Wildlife Protection Act, 1974. It used to be the only large water body around Quetta prior to the extended drought period during which the reservoir remained dry over a number ofyears. It was a staging and winter ground for birds migrating from Siberia to warmer climates in the south. Rehabilitation ofthe Bund is likely to restore the lake as wintering ground for the birds.

The project supports the CAS goal of reducing poverty through pro-poor growth interventions such as improving water productivity, employment ofrural labor force and diversifying the agricultural production. This project will support the efforts of the farmers to better manage the scarce water resources in this extreme dry land based on agricultural production.

Government Strategy

Through a number of statutes dealing with different aspects of water use, water administration, and water rights, the Provincial Government of Balochistan has been trying to address the water sector management issues. The statutes include: the Balochistan Canal and Drainage Ordinance (Ordinance XX of 1980), the Balochistan Water Users’ Associations Ordinance (Ordinance V of 198 l),the fairly recent Balochistan Irrigation and Drainage Authority Act, 1997, the Land Revenue Act, 1967 (which deals with agricultural lands and, inter alia, provides for record-of-rights, and the Balochistan Groundwater Rghts Administration Ordinance (Ordinance IX of 1978). The two main statutes dealing with electricity laws pertaining to water are the Electricity Act, 1910 and the West Pakistan Water and Power Development Act, 1958.

The Poverty Reduction Strategy Paper of Balochistan (June 30, 2003) recognizes water as a scarce and threatened resource in the province. Among the key pillars identified in the PRSP (engendering growth, managing scarce water resources, governance reforms, improving human development; and addressing vulnerability to shocks), management of water resources has been given due prominence. Major issues recognized are the groundwater mining and the inefficient use of the resource. The strategy calls for management of groundwater on a sustainable-use basis recognizing the need for a great deal ofplanning. The strategy also calls for evaluating current practices, such as the use of delay action dams. As agriculture places heaviest demand on the resource, the

33 government strategy is to develop a clear vision for the future of irrigated agriculture in the province for the next 5 to 25 years.

Sector issues to be addressed by the Project and strategic choices

In order to implement the GoBalochistan strategy and reform program, there is a strong need to initiate reforms on integrated water resources management with active participation ofthe farmers and communities, and to resolve key sub-sector issues such as depletion ofnatural resources, poverty and uncertainty in water availability. The severe groundwater probIems will be gradually addressed by the project. The project seeks to focus on (i)Water availability and potential for development through improving storage capacity, service delivery and catchments, (ii)Groundwater resources assessment, monitoring and proposing a tested strategy for intervention, (iii)Cost effectiveness of water interventions, (iv) Fostering community participation, (v) Institutional building and strengthening, and (vi) Introducing high efficiency irrigation systems. The key strategic choice made in the project is to formulate it as a part of a long-term programmatic framework (12-15 yr) which would allow it to enforce and support adoption of basin approach for sustainable planning, development and management ofwater resources for agriculture. This compliments ongoing initiatives within the Province following approval by the Provincial Cabinet ofa comprehensive IWRM Policy. The BSSIP, the first project in this program, would be for a 5-year period and will be first implemented in the Pishin Lora Basin. Subsequent program phases (in Nari, Rakhsan and Porali basins) will be triggered by achievement ofobjectives stated in the PDO.

Key policy and institutional reforms supported by the project

The project supports holistic management of surface and groundwater resources in the province. The project also supports GoBalochistan’s ongoing efforts to define a sound strategy to cope with groundwater depletion in a socially acceptable manner and with a view towards long term solution.

The Project in general aims at improving the livelihoods ofthe farming community. The cultivated area in the commands of BKK and Small Schemes is small and so is the average farm size - less than 2 ha. It is barely enough to sustain a family. Off-farm income is meager for an average family due to little economic activity taking place in the province, especially in rural areadsmall towns. Landless population is also dependent on income generated fiom the farming sector as daily wagers or from seasonal employment in picking, packing or grading offmits planted intensively in areas irrigated by tubewells. Livestock rising is an integral part of the farming system as well as that of the landless population.

The Project will generate on-farm and off-farm employment opportunities in the command areas of BKK and small irrigation schemes. It will increase forage and fuel wood availability in the watershedrange lands. Crop diversification will lead to employment generation in favor oflabor-intensive orchards.

34 The Project would initiate conversion of 700 ha of uninigated to the area irrigated by tubewells in the BKK command to irrigated cropping in addition to bringing 1000 ha of new land under surface irrigation. The estimated cropped area in Small Scheme areas will increase to about 2,400 ha against presently cropped area of 1,500 ha in the commands of Small Schemes. The cropping intensity as well as productivity will increase for all crops. The net income from crops will also increase in these command areas. The increase in income in BKK command at present is estimated as Rs 43 million which is likely to increase to Rs 182 million at maturity, with the rehabilitation ofthe reservoir.

The implementation of this project will facilitate changng the source of irrigation from groundwater to surface water in the BKK command. Enhanced imgation coverage and better water management will increase production of all crops. The project would positively impact over 5,000 families, moving them above the poverty line. Annual increase per hectare of area will be Rs. 0.077 million annually, or Rs 11,137 per capita taking the average family size as 7 individuals. The project will help in generating additional employment opportunities at farm level, quantified at 3.8 million (862 ha orchards x 300 days a year x 12.5 persons per ha per year + 2,486 ha other crops x 200 days a year x 1.25 persons per ha) person days or some 10,500 rural farm jobs per year. In addition, the employment generation attributed to the activities undertaken in Watershed and Range rehabilitation, are estimated as 0.58 million.

Most ofthe farm job demand will be met from hired labor. It, therefore, has the potential of enhancing the employment and income opportunities for the landless people in and around the project area. Actual impact on employment will be higher in view ofoff-farm employment likely to be generated in marketing and agro-processing through diversified farming activities. The increase in local supplies of fmits, vegetable, and mutton/ milk would enable low income families to diversify their diet.

The stakeholders will be involved in the project design and implementation through a significant consultation process which has commenced at an early stage of project preparation. Consultation has commenced with beneficiaries on overall project design, in particular that of BKK which has been formalized in a Memorandum of Understanding between the community and the IPD. Water releases from BKK reservoir will be made in the light of improved infrastructure and in consultation with shareholding communities. An operational plan for water distribution has also been prepared. This will change the paradigm of irrigation management in these areas to be more participatory and community driven.

The training and capacity building aspect would ensure the attitudinal and mindset change required by IPD and other government staff in outreach and encouragement of participatory management approaches, as well as capacity building required by the village stakeholders in becoming more self-reliant and being able to adopt new processes and techniques to improve their livelihoods. Particular emphasis will be given to developing linkages between beneficiaries and locally based irrigation service providers for future technical backstopping.

35 The borrower has indicated its commitment to the project by: a) Financing the feasibility studies of the BKK and small irrigation schemes, b) initiating the desiIting works around the outlet structure with an investment ofRs 4.0 million, c) by using the PPF to establish a PlU and carry out the necessary design and related works on BKK and d) commencing the procurement process for civil works, design and implementation of consultancy.

36 Annex 2: Major Related Projects Financed by the Bank and/or Other Agencies

Balochistan Small-scale Irrigation Project (BSSIP)

Bank-financed projects (completed and on-going)

Sector Issue Proiect Latest Supervision Ratings Implementation Development Progress (P) Objective(D0) Community participation, Balochistan Community S S improvements in irrigation Irrigation and Agriculture Project facilities and O&M

Control ofwater-logging and National Drainage Program U U salinity, institutional reform in the irrigation sector

Increase in water delivery hgation Systems Rehabilitation efficiency Projects Iand I1

Improve efficiency ofwater &-Farm Water Management (I, S S use and capital cost recovery IJ and 111) and Command Water Management

Rationalization ofpublic Fordwah Eastern Sadiqia (South) expenditures on O&M, Project community participation and improve water conveyance efficiency

Improve efficiency in water NWFP OFWM Project S S conveyance system, distribution and use

Improve irrigation service Sindh OFWM Project S S delivery, better water management ofwater at the farms

HS HS Improve fiscal management Punj ab DPLs and service delivery within irrigation sector

Emergency works to prevent Taunsa Barrage Emergency S S failure ofTaunsa Barrage and Rehabilitation & Modernization prepare for similar steps for Project other barrages in Puniab

37 1 BCIAP. This was a small program funded primarily by the World Bank and the government ofthe Netherlands, designed to benefit 7000 families farming 1942 hectares of land. The objectives were to (i)redefine government’s role in minor irrigation deveIopment and provide assistance to facilitate change, (ii)develop sustainable farmer organizations, (iii)develop self-sustaining irrigation systems and increase FO participation in their planning and construction, (iv) increase beneficiaries’ incomes and alleviate poverty, and (v) increase the recovery of public expenditures on irrigation infrastructure.

2 National Drainage Program. This nationwide project is under implementation since 1997-98 with the key objective of institutional reforms in the irrigation sector, control ofwater logging and salinity, and improved water management. The IDA Credit for NDP closed in December 2004; however the other co-financiers ADB and JBIC extended the closing date to December 2006. This allowed completion of limited downstream works at BKK. The performance rating of Development Objective and Implementation Progress (DO/IP) is unsatisfactory, mainly due to stalled progress in the institutional reforms in other provinces, however Sindh’s overall achievements both on reforms and investments under NDP are commendable and it has been the leading province in Pakistan on both accounts.

3 Irrigation Systems Rehabilitation Projects I and II. These projects were implemented during the 80s and early 90s on a nationwide basis to rehabilitate irrigation systems and improvements in their O&M. The projects resulted in water delivery efficiency in the secondary channels (main and branch canals and distributaries and minors), which improved the availability of water at the watercourse head. Improvements in water rates were gradually effected both as unit rates and collection rates. Better O&M budgets and expenditure levels were also achieved.

4 On-Farm Water Management (I,11 and II7) and Command Water Management Projects. These projects were implemented during the past three decades on a nationwide basis with the key objective of improving efficiency of water use and capital cost recovery. These projects have been instrumental in improving over 20,000 watercourses. Various impact evaluation studies indicate that water losses in the improved channels are reduced by 28 percent, which is an indicator of improved water delivery efficiency. Starting from a totally subsidized regime, these projects have achieved about 25 percent of the capital cost recovery for watercourse improvement works in the mid-90s. The cropping intensities of the command areas of improved watercourses have generally improved from 10-15 percent. The OED rating for this group of projects has been satisfactory.

5 Fordwah Eastern Sadiqia (South) Project. This project was implemented in the Southeastern part of Punjab. Key issues addressed were rationalization of public expenditures on O&M, community participation in irrigation management, and improving water conveyance efficiency ofthe Fordwah Eastern Sadiqia canal system by rebabilitation and drainage works in the secondary channels and on-fam water management in the tertiary channels.

38 6 NWFP OFWM Project. This is an on-going project confined to the North West Frontier Province to address the key issues ofimproving efficiency ofwater conveyance, distribution and use among the irrigators. It also aims at deepening institutional reforms in the irrigation sector and enhancing farm productivity. The project’s DO and IP rating is satisfactory.

7 Sindh OFWlMProject. This is an on-going IDA financed project confined to the Sindh Province, which aims at farmers improving irrigation service delivery, better manage water at the fmsand increase agricultural productivity in the Sindh province. The Project includes (a) improvement of about 4,000 watercourses; (b) construction of approximately 200 water storage tanks in the rain-fed areas; (c) improvement of about 100 distributary canals managed by FOs; (d) improvement/rehabilitation of 25 branch canals supplying water to the distributary canals on which FOs are established; (e) Productivity Enhancement Program, comprising precise leveling of40,000 ha of farm land using laser guided equipment; establishment of some 100 demonstration centers to disseminate a full range of improved water management and irrigation agronomy practices/techniques; integrated pest management (IPM), Integrated Plant and Soil Nutrient Management (IPSNM), information systems, market/marketing, etc. An information system would be introduced within SIDA, AWBs and FOs, including establishment of3 pilot information kiosks.

8 Punjab DPLs . This is an on-going BRD funded project which is a programatic series ofthree Irrigation Sector Development Policy Loans to support the Government of Punjab’s medium term irrigation sector reform program. The key elements ofthe reform program are: (a) public finance reforms to increase public spending and its efficiency for key public sectors; (b) reforms that strengthen devolution and service delivery and (c)reforms that improve fiduciary and governance environment. GoP is focusing in the irrigation sector reforms along four pillars: (a) institutiona1 and policy reforms; (b) water resources management reforms; (c) irrigation sector delivery reforms and (d) improve water use efficiency and on farm productivity.

9 Taunsa Barrage Emergency Rehabilitation & Modernization Project. This is an ongoing IBRD funded project with the main objectives to (a) take urgent steps to prevent the failure of Taunsa Barrage and (b) to prepare for similar steps with other existing barrages in Punjab. The objectives are being achieved through rehabilitation of the barrage and associates structures; (b) renovation of gates and hoist mechanisms; (c) improve O&M capability and (d) rehabilitation and design studies with other barrages in Punjab.

Other Development Agencies

10 Asian Development Bank (ADB), OECF (now Japan Bank for International Cooperation, or JBIC) co financed the NDP with the Bank Group continued financing up to December 2006. ADB has in the last decade financed the rehabilitation of the Kotri Barrage in Sindh jointly with Overseas Development Agency (ODA) of UK and Pat Feeder Canal Rehabilitation and Improvement Project in Balochistan whereas IFAD financed the Pat Feeder Command Area Development Project. ADB, JBIC, Swiss

39 Development Corporation, and IFAD supported area development projects mainly in the NWFP and Punjab whereby OFWM has been a principal component. JBIC also supported a nation wide OFWM project in parallel with the Bank supported OFWM-I11 project. ADB in the last decade supported the Flood Protection Sector IProject and is now supporting the Flood Protection Sector 11 Project. ADB has currently two rural development projects under implementation in Southern Punjab and a Coastal Management Plan in Sindh. Within Balochistan the ADB is financing the Balochistan Resource Management Program which is assisting in public sector reforms. Component 3 of the Program is Technical Assistance for “Supporting Public Resource Management”, funded by the Royal Government of the Netherlands which is undertaking research and studies for integrated water resources management. ADB is also supporting the Agriculture Sector Program I1 (ASPL) under which a pilot project will be introducing high efficiency irrigation systems in the province.

Government Interventions

11 The Revamping/Rehabilitation of Irrigation and Drainage System Project has been started recently through federal funding to take care of the deferred maintenance. The Project would cost Rs 13 billion and will be completed in 62 months. Another project for improvement of watercourses has been started on a country wide basis for improving all the remaining un-improved watercourses. The two main initiatives include the “National Program for Watercourse Lining” and “Provision of Safe Drinking Water”. The Prime Minister has recently approved a 5 year National Programme for “Introduction of High Efficiency Irrigation Systems to Improve Water Productivity”. This includes a share offederal funding for Balochistan to introduce HEIS.

40 Annex 3: Results Framework and Monitoring

Balochistan Small-Scale Irrigation Project (BSSIP)

_____--.. llse of Project Outcome Inlorma~on-

The development objective of Increase in surface water availability and YR1-2 Validate the existing the proposed project is to approach restoration ofhydrological balance base line information with project support efforts by the GOB and in the PLB by reducing groundwater studies and designs. local FOiCOs to improve water depletion. resources management in the Pishin Lora Basin by reducing in of the overall impacts of the Improvement productivity irrigated YR3 Determine if strategy current water crisis agriculture needs to be changed

Improvement in institutional capacity and YR5 Feed into strategy for knowledge among government and FOsiCOs mainstreaming program and to manage water resources evaluation.

Outcome I: Outcome 1: Outcome 1: Partial restoration ofstorage percent increase in surface water YR1-5 Assess acceptance from capacity ofBKK Reservoir availability for irrigated agriculture in the farmers ofmodem irrigation with watershed and project area and in the vicinity of the BKK. systems and strategy for watershed rangeland management and percent increase in productivity of and groundwater management. on-farm systems in place. delivered water to irrigated areas in the YR5 Assess changes in use of vicinity ofthe BKK. tubewell sources. percent reduction in dependency on groundwater sources Outcome 2: Outcome 2: Outcome 2: 15 identified small-scale percent increase in productivity of YR1-5 Assess participation of irrigation subprojects in the delivered water to irrigated areas in the the communities to evaluate PLB completed subproject areas and vicinity of the SSIS. delivery strategy. satisfactorily and watershed percent irrigated cropping intensity and YR1-5 Assess acceptance and management and on-farm crop yields increased adoption by farmers of modem practices in place. percent increase in carrying capacity in the irrigation systems and strategy for range areas covered by the project groundwater and watershed percent increase in income and management employment YR5 Will inform development percent reduction in conjunctive use of ofpolicy and possible expansion of water the project to other basins. YR5 Assess positive modifications in conjunctive use of water

Outcome 3: Outcome 3: Outcome 3: Improved provincial # ofFOs/COs formed and trained YRl Determine PNproperly capacity both at the percent ofFOs/COs aware ofthe overuse staffed and operational. government and FO/CO ofthe groundwater aquifer in the PLB YR2 Determine awareness levels to implement and percent of FOs/COs aware ofnew campaign effectiveness and reach. sustain innovative projects. agriculture practices such as high efficiency YR3-5 Review ofthe strategy irrigation and integrated pest management and studies to expand the project to percent ofFOs/COs aware of locally other basins in Balochistan. based irrigation service providers for technical YR4-5 Assess capacity of backstopping in future maintenance FOsiCOs to access services to assist in future maintenance

41 Ea Ea $ 3 z z

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I I , , , I corn rn 0 +r- r. cu Annex 4: Detailed Project Description

Balochistan Small-scale Irrigation Project (BSSIP)

1. During the recent severe drought" incomes from agriculture declined. Agriculture accounted for over 60 percent of provincial GDP" and employs some 67 percent of the labor force, declined. An estimated 47 percentI2 of the population now lives below the official poverty line, compared to 32 percent in Pakistan as a whole, and 35.5 percent in 1994 in Balochistan. The provincial population of about 7.8 million13 (data for PLB provided in Table A 4.1) is growing at about the national average of 2.1 percent and, along with the influx of 1.5 million Afghan refugees in the 198Osl4, increases pressure on scarce natural resources. Groundwater used to irrigate high value, orchard and vegetable, crops far exceeds recharge in most areas, and benefits only those able to instaIl tubewells. Government subsidies for tubewells provide disincentives to farmers to improve water use efficiencies. Due to increased population and livestock pressures and as communities turned to higher value groundwater irrigated agriculture, grazing practices have changed, contributing to the degradation of the rangeland, plant community and soil resources. This has led to accelerated soil erosion and downstream sediment delivery.

Table A 4.1: Participating Settlements and Population of the PLB PLB Districts Number of Population Projected Settlements 1998 Population 2005 Pishm 337 367,163 498,321 Killa Abdullah 80 218,415 296,437 Quetta' 36 12 1,045 160,686 Mastung 248 164,645 180,349 Kalat 145 117,808 124,220 Total 846 989,076 1,260,013 Source: District Census Reports ofBalochistan, Government of Pakistan, 2000

PROJECT COMPONENTS

Component A -US$ 10.80 million - BKK Reservoir

2. Rationale and Justification Bund Khushdil Khan (BKK) reservoir, constructed in 1890 and enlarged in 1914, has lost most of its storage fiom an original capacity of 29.4MCM to currently estimated less than 5 MCM. This is only sufficient to partly fulfill the imgation water needs of about 350 hectares16 against the original irrigated area of about 2,000 hectares based on wheat, barley and fodder cultivation. The reduction in

lo 1998 to 2004 was marked by particularly unreliable rainfall with 50 percent oflong term average rainfall through out Balochistan during this period. 11 The main contributing sub-sectors are livestock (40 percent), fruit crops (30 percent), vegetables (12 percent), field crops (17 percent) and fisheries (1 percent). 12 Balochistan Poverty Reduction Strategy Paper (PRSP), June 2003. 13 Source: Social Policy & Development Center f2003), based on Population Census & Pakistan Demographic Surveys of the Federal Bureau of Statistics. 14 It is not known how many refugees have returned to Afghanistan in recent years 15 Quetta city and periphery are excluded as no project interventions are foreseen l6 Data from 2003-04 season

44 irrigation water has led to a progressive decline in agricultural livelihoods and out- migration particularly evident during the recent drought. It has also co increased exploitation of groundwater in an area already heavily over mined17 and a magnification of social inequities, increasing the economic dominance of those who can afford to install deep tubewells. Increasing reservoir storage capacity will lead to greater water availability for local irrigators, encourage reliance on surface rather than groundwater resources and facilitate aquifer recharge.

3. Declining capacity of the Bund Khushdil Khan Reservoir and subsequent development of relatively level areas around the reservoir perimeter has led to illegal encroachment within the storage area for high value orchard, wheat and vegetable cropping. A peripheral protection bund, associated drain on the upstream face (diverting flows towards the spillway) and drainage inlets for major channels emanating from the local catchment will be provided to prevent inundation of existing encroached area. To the extent possible, the project will consider alternative engineering designs to minimize adverse social impacts and land acquisition. Where social screening indicates that land acquisition and or loss of assets are unavoidable, affected persons will be assisted and adequately compensated in accordance with the project RAP.

4. The general catchment and watershed areas of PLB have been subjected to land degradation ranging from slight to severe conditions due to lack of watershed management measures, overgrazing, cutting and uprooting of trees, shrubs and grasses for fuel and forages. The situation has been further aggravated by cyclic periods of drought, most notably the recent severe event which was responsible for the reduction or loss ofalmost 75 percent ofthe plant species from the PLB.

5. Rangelands have traditionally been rested at intervals. This placed a restriction on grazing of any one area for a period, typically 1-3 years. Rangelands were reasonably well conserved with livestock numbers commensurate with rangeland productivity. This management practice broke down about two decades ago, at the same time as settled communities turned to higher value intensive agriculture using tubewells. The loss of interest in the community rangelands, which were left for nomadic pastoralists to use in return for labor assistance, is understood to be one reason why much of the provinces rangeland deteriorated, even prior to the recent 7-year drought'*. Community managed watershed improvement and rangeland rehabilitation is essential for environmental sustainability, including increased groundwater recharge, and for optimizing benefits of irrigation infrastructure.

6. Groundwater use has been through a massive increasekgsince electrification ofthe province in the 1980s and more pertinently due to a subsidized monthly flat rate of Rs 4,00020. The continuous pumping of groundwater is a recurrent observation within the PLB in addition to closely located2' individual tubewells. Consequently, there is

Balochistan Groundwater Resource Reassessment TA no 2125-PAK (1996) which estimated the rate of groundwater decline to be 1.52m/year and recommended an immedrate ban on tubewell development in the PLB Other reasons include the large influx ofrefhgees / nomads from Afghanistan in the 1980. 19 Average annual growth rate estimated to be 7 2o Estimates for actual billing related to electricity consumption are more than Rs 40,000 per month Minimum intervals observed within the Pishin Lora Basin range between lOOm to 150m.

4.5 indiscriminate use of groundwater despite a ban on tubewell development. Groundwater exploitation is a heavily politicized and emotive issue and despite the approval of an IWRM Policy by the Provincial Cabinet, lack of political will has prevented the growth in tubewell numbers despite fixing of the upper limit of the electricity subsidy to $12 million (2003 level).

7. The power subsidy is provided to only 2.4 percent of crop farmers and the rest are deprived from the benefits of the public-sector subsidy. If the livestock farmers are added, the number of farmers owning electric operated tubewelIs is almost a fraction. Thus, there are serious concerns regarding equity in distribution of public-sector resources to the rural population. The BKK upstream and command areas are dominated by electric tubewells mainly due to the depth to the water table, which prevents the use of diesel operated pumps. This further hinders the adoption of HEIS for improved system efficiency. Continued mining of groundwater has major ramifications for the future sustainability of the PLB, including the provincial capital and agrarian based economies within the rural context.

Intensified groundwater use has been an important contributor to agricultural growth in Pakistan in the last thirty years. However, in the absence of assured surface water supplies, people depend heavily on groundwater to meet their irrigation requirements. The uncontrolled expansion of tubewell irrigation due to a flat rate subsidy concomitant with severe drought has resulted in significant overdrawn and deficit conditions in the Pishin Lora Basin. To reduce the impact on groundwater resources, a multi-component action plan that incorporates social, financial, technical, and institutional interventions will be formulated to compliment Components A and B.

The Ground Water Management Advisiori Team (GWMATE)” assisted GoBalochistan in developing a draft Groundwater Management Plan. The hydrogeological and socioeconomic differences among subbasins and within subbasins recognize the need to characterize the aquifers and sub-aquifers of PLB as part of the GWMAP, and to approach groundwater management through successive pilot projects instead of trying to cover simultaneously the entire PLB

The main recommendation is to start participative desigdimplementation of groundwater management in Quetta basin, where intense competition between highly profitable irrigated agriculture and urban demands for water supply, are putting in risk the underlying aquifer sustainability. Under the GWMAP emphasis is placed on the opportunity to opt for a parallel approach when implementing the strategy, i.e., to go ahead using the information available and implementing the existing legal and institutional framework, while undertaking the necessary improvements in a phased manner and with the participation ofstakeholders.

Specific components include: Characterization ofeach sub basin with available information Groundwater inventory, social validation, and monitoring systems

22 GWMATE Mission visited Balochistan in March 2007 to consult with GoBalochistan and other stakeholders.

46 Groundwater modeling and basin-wide water allocation systems Social awareness campaigns Strengthening and coordination ofinstitutions Reform oflegal and regulatory fiameworks Enforcingmechanisms Water and energy pricing and metering Incentive programs to promote improved irrigation practices Municipal wastewater reuse in irrigated agriculture using low-cost technology Groundwater quality monitoring

8. Farmers traditionally practice flood irrigation particularly of orchards reducing water use efficiency to little over 50 percent and have yet to readily adopt improved land management and agronomic practices. Command area channels are commonly unlined resulting in 40 - 50 percent conveyance losses coupled with limited provision of storage tanks to encourage more efficient use. Although conveyance losses are highly dependent on local conditions, according to one estimate, this could be as much as 89,400 m3 of water per year over a length of300m ofchannel.

9. High efficiency irrigation such as bubbler and trickle systems are extensively used in many water scarce counties. Concerted efforts23 have been made over the past 20 years to introduce High Efficiency Irrigation Systems (HEIS) in Balochistan. Successfkl uptake of new technologies has traditionally been highly limited most pertinently due to the electricity subsidy for tubewells which acts as a disincentive for adopting an efficient alternative, initially high capital investment costs, limited technical backstopping and limited availability of spare parts. The water productivity of deciduous fruits and vegetables is low, which can be increased by 2-3 folds through better water management and production practices. .The need to popularize affordable and readily available HEIS and other water saving and conservation irrigation methods is imperative to encourage efficient use of scarce water resources within the PLB.

10. Infrastructure Improvements The main infrastructure improvement to Bund Khushdil Khan (BKK) is to partially restore the lost storage and provide additional irrigation water with minimal conveyance losses to beneficiaries. The detailed design works have been reviewed during the project preparation and improve the recommendations and findings of the feasibility study24undertaken by PDC Consultants in 2004 are:

(i)Rehabilitation ofExisting Reservoir In order to replenish the lost storage the existing reservoir embankment (central core earth fill) will be raised by 2.77m to an elevation of 1548.81111, increasing the storage capacity to 18.50MCM. The upstream face will have a 3H:IV slope and downstream face, 2H:lV. Earth fill for bund rising will be excavated fi-om the

23 Various agencies including FA0 in collaboration with the Provincial Agriculture Department, the Agricultural Development Bank of Pakistan (ADBP), and the Pakistan Council of Research in Water Resources (PCRWR) have undertaken trickle irrigation projects

24 Feasibhty and Design Report Augmentation of Storage Capacity of Bund Khushdil Khan, March 2005 (under the National Drainage Programme)

47 reservoir; silt deposits sampled from various locations have been tested as highly suitable for embankment rising. Compaction of earth material will be done in layers of 0.15m thickness at 95 percent of modified AASHTO dry density. Top width ofthe bund will be 7.6m over a length of 16OOm. A 0.3m thick stone spawl filter (in two layers) and 0.3m hand packed rip rap protection will be provided on the upstream face of the embankment. An estimated 1 11,275 cubic metres of earthwork and 6,650 cubic metres ofstone pitching will be required

(ii)Raising ofOutlet Well This will be undertaken using stone masonry; top level will be 1548.81m to coincide with the increased main embankment height. The existing approach slab will be dismantled and a new RCC slab, width 1.22m over a length of 8m, provided along with the abutment. The top level of the approach slab will coincide with the top level ofthe outlet well. Rehabilitation works for mechanicaf installations including corrosion protection, lubrication of moveable parts and replacement of operating equipment, will also be undertaken.

(iii)Spillwav Modification and Fall Structure The spillway requires marginal modification from its existing width of 33.53m to 42.70m (clear width of watenvay).The spillway with a design2’ inflow of 973 cumecs and design outflow of 173 cumecs will be a sloping baffled apron, constructed at the existing spillway site. The conservation elevation is I546.25m. A stone apron will be provided upstream and downstream ofthe spillway for bed protection. The fall structure has been combined with the spillway structure and an access bridge has been provided overhead (as an alternative to existing causeway) to allow safe passage of vehicles. There will be minor rehabilitation works to the downstream associated channel in terms of reshaping and bank and bed protection. There is also a slight modification in the existing alignment which is expected to have minimal effect. Similarly, the existing road (causeway) downstream ofthe spillway will be replaced with a road bridge over the combined spillway/fall structure. The downstream road culvert has been checked for capacity and is currently undersized for safely discharging the I in 1000 year flood. An additional 2 bays (rectangular box culverts) will be provided to the existing 3 bay culvert.

(iv) Construction ofPeripheral Protection Bund In order to avoid the risk of flooding of encroached land developed on the outer periphery ofthe reservoir, a flood protection bund (homogeneous earthfill) will be constructed on the northern and eastern boundary. The bund will be 8,415m in length with a 3.65m top width and maximum height of 6m along its length. The crest elevation will be 1548.81 to coincide with that ofthe main embankment and upstream and downstream slopes of2H:lV. Hand packed rip rap (0.3m thickness) and associated filter (0.15m) will be provided on the downstream face to protect against wave action. An estimated 417,526 cubic metres of earthwork and 24,501 cubic metres of stone pitching will be required. An associated drainage channel will be provided on the upstream face of the protection bund to allow safe

’’ The spillway design has been developed using a range of comparative methods including percent Runoff, HEC MS, and previous other studies. The spillway is designed on the 1 In 1000 year flood.

48 channeling of any localized seepages. Larger drainages emanating from the catchment will be formally channelized as they approach the reservoir periphery and suitable inlet arrangements provided directly in to the reservoir. The bund and drainage channels will provide significant protection to the otherwise highly vulnerable encroached land.

Three ofthe natural direct drainages have been identified for further modification to safely accommodate the 1 in 50 year flood (in the catchment). Both channels have been significantly encroached resulting in minimal waterway width (in some cases oniy 2-5m as the channel reaches the reservoir periphery).

Timrak Nullah will be widened to 18m (form current 2-5m) over a length of 2,250m to safely discharge 155 cumecs. The channel will be formalized in reaches with provision of mass concrete retaining walls to give a rectangular section. To achieve this there will be a need to widen the existing encroached channeI which will result in the removal of 302 mature and 46 immature apple trees. Compensation rates and affectees are documented in the project RAP.

Jigda Nullah has adequate capacity to discharge 70.8 cumecs but will require formalization ofchannel section (width of 5.6m) over a length of 1,230m.

Surkhab River will also be modified in width (5.6m) and channel section over a length of 918m.

(v) Rehabilitation ofTor Murnha and Surkhab Headworks The present Tor Murgha headworks were constructed in 1914 to divert the flows from the river to Bund Khushdil Khan reservoir. These head works include a gated head regulator with ten bays each 3m wide, gated under sluices with six bays each 3m wide and an over flow weir approximately 26m long. The present condition of under sluices and over flow weir including their downstream stilling basins suggest that extensive remodeling and rehabilitation of these head works had already been undertaken in the past. However, the head regulator including its gates has not been rehabilitated.

The existing Tor Murgha headworks will require minor modifications to incorporate the new changes which will originate due to the higher crest level of the rehabilitated bund. The existing crest of the head regulator bays will be maintained. The existing stilling basin is considered adequate for the remodeled channel; the existing non functional (ten) wooden gates will be removed and replaced with modem steel sliding gates with hoisting arrangement. Minor rectification will be made to the (six) existing steel gates of the under sluices to bring them back in the operational state.

The approach channel of Barshore Lora upstream of Tor Murgha diversion structure will not require significant improvement. Similarly the embankments of Tor Murgha feeder canal from the head works to the reservoir will also be raised by approximately 1.5m (to an elevation of 1548.81m) to prevent flooding of the adjoining areas.Remodelling works to optimize channel section will be taken within the waterway to mitigate land acquisition and compensation for Ioss of orchards lying adjacent to the canal embankment.

49 Works will be undertaken for the existing Surkhab headworks coniprising weir, under sluice and canal head regulator. Key improvements are:(a) Repair for damaged concrete floor of under sluice, weir, canal head regulator;(b) Repair for damaged stonebrick masonry of piers and abutments walls(c) Provision oftipped rock scour protection for canal head regulator (d) Replacement of 5 regulator gates and repair of 3 sluice gates (e) Rehabilitation of breast wall for sluices over a length of 12.5m

(vi) Road bridge will be provided across the Tor Murgha Feeder Canal at RD2+100 to provide access for the metalled road across the channel. The 2 span bridge will be 7.32m in width and 30m length.

11. Technical Standards and Specifications Rehabilitation and improvement works for BKK has being design in accordance with international and national standards for civil works. All components will undergo quality assurance checks to ensure compliance with adopted standards and fulfillment of quality control requirements as detailed in the construction contract specification.

12. Implementation Arrangements IPD will award the civil and mechanical works contract for rehabilitation and improvement works using International Competitive Bidding (ICB) as a single contract with provision for specialist mechanical works in accordance with World Bank procedures? “Procurement under IBRD Loans and IDA Credits ”, May 2004 updated October 2006. The procurement process has commenced with publishing of General Procurement Notice for civil works on UNDB in March and Bank’s approval of Pre Qualification Documents for BKK. The Specific Procurement Notice for BKK has also been published in national newspapers and published on UNDB in April.

13. Community Managed Watershed Improvement and Rangeland Rehabilitation The need for a greater focus on watershed management is an essential component for increasing the sustainability of investments to be made in irrigation infrastructure at BKK. These activities will form an integral component of the overalI development works to be undertaken at Bund Khushdil Khan (and at SSIS and neighboring local watersheds) to ensure a holistic approach to integrated water resources management. Improved grazing management practices will be complimented by essential structural practices that will accelerate improvement of overall hydrologic conditions of the watershed. Conservation practice alternatives include gully plugs, contour furrowing (or ditches) and check structures. Planning of structural measures site selection will be based on topography, degree of degradation and in accordance to need as identified by local communities. Improvement of communal woodlots will be focused within lowland fan areas.

14. Community managed rehabilitation of rangeland will focus on improved ecological conditions throughout the watershed and using biological solutions through planting and reseeding of indigenous shmb varieties to compliment soil and water conservation interventions. A major focus will be community mobilization for planning, design, decision-making and management of rehabilitation activities to ensure sustainability of treatment areas. There will be a greater emphasis on watershed

50 management and rangeland rehabilitation within the BKK area; it is estimated that 34,185 will directly benefit from sub project interventions.

15. A number of specific treatment sites have been identified within the vicinity of BKK; Surkhab, Malikyar, Barshore and areas associated to the direct drainage channels emanating &om the local catchmentt. Area treated for watershed and rangeland rehabilitation in Pishin Lora Basin is 4,515 ha and 4,680 ha, respectively. Implementation details are outlined in paragraph 52. An overall breakdown of target beneficiaries and associated costs for watershed management and rangeland rehabilitation interventions within the BKK area and the small-scale irrigation schemes are provided in Table A 4.2. Estimated average cost per beneficiary and per hectare is $49 and $147 respectively.

Table A 4.2: Details of Watershed Management and Rangeland Rehabilitation Beneficiaries

1 - Population based on 1998 Population Census for BKK and actual data collected for 6 SSIS 2 - For 9 SSIS to be identified, figures derived on the basis of 6 identified SSISs

16. On Farm Water Management and Introduction of HEIS Falling water tables, cyclic drought, over mining of groundwater aquifer and the flat rate tariff for tubewells has led to inefficient use of available water resources. There is a need to use irrigation water judiciously and improve conveyance and application efficiencies with the active participation ofirrigating communities. The project will undertake a range ofneeds based interventions within the BKK and SSIS command areas including: (a) improved land preparation techniques; (b) construction of water storage tanks; (c) watercourse lining; (d) provision of permanent offtakes (pacca naccas) and introduction of high efficiency irrigation such as tickle and bubbler systems under a Turnkey contract. Estimated coverage for individual schemes and beneficiaries is provided in Table 3.

Table A 4.3: Unit Cots for OFWM Improvements Scheme I Cost - US$ I Area to I Cost 1 Beneficiaries 1 Costper I million) I Benefit 1 per ha 1 - # I Beneficiary 1 I (Ha) 1 -$ 1 (US$) BKK 0.78 I 1,800 1 435 1 34,185 I 23

51 17. For high efficiency irrigation system, areas under individually and communally owned tubewells will be targeted, particularly where conjunctive use of water is practiced. Technical support will be provided during the planning stage by specialist staff who will identify problems and constraints currently faced by water users within the BKK and on approved SSIS, which affect water availability (surface and groundwater) including aspects of water use and water productivity. Analysis of options available for enhancing water productivity including the use of innovative water conservation technologies (such as field layout, furrow-bed, pressurized irrigation systems etc.) will be prepared. Design, implementation and O&M stages will be provided under a turn-key contract (best suited to an international firm) in which a single contractor26 will be responsible for all aspects associated with the introduction of HEIS including technical training for farmers. It is anticipated that PIU field staff will facilitate the community mobilization process associated with this component and will also be responsible for strengthening linkages between the community and contractor

18. Experience of previous trickle irrigation projects within the province suggests a slow uptake and highly limited success due to compounding factors, perhaps most significantly the flat rate tubewell tariff which allows farmers to flood irrigate orchards rather than maximize efficiency. Although owners of diesel operated tubewells for whom water is a “priced” commodity are likely to be a more responsive group, use of diesel pumps is negligible in PLB due to the depth to groundwater. An incentives methodology will therefore be implemented in which the construction of a storage tank will be provided (as a grant under the project) in return for the installation of HEIS over the maximum productive command area. Farmers will also be encouraged to allow installation of water meters to demonstrate water saving with no depletion in growth rates or yields. The project will undertake complimentary HEIS interventions to those under other ongoing initiatives.

19. To convey a sense of ownership for future operation and maintenance of these systems, and other OFWM improvements the following approach will be adopted:

1. Needs assessment to clearly ascertain community receptiveness and determine viability for introducing HEIS; .. 11. Project investment is demand led but subsidized investment is only available where (a) scheme is technically feasible, (b) investment has an acceptable economic rate of return, and (c) tentative agreement to installation of a water meter in tubewell ... irrigated areas-these three elements are to constitute a systematic screening process; 111. Community consultation and active participation in planning and design of OFWM interventions in conjunction with the contractors; iv. Upfront cash contribution amounting to 10 percent of the capital costs and 100 percent ofO&M; V. Farmers to assume full management and financial responsibilities for the O&M of OFWM interventions. Advisory services, technical backstopping and sourcing of spare parts to be provided by the project; and

26 There are a number of internationally based (including those located within South Asia) companies and providing turn-key projects in drip and bubbler irrigation. Semces offered are wide ranging and include comprehensive planning for crop water requirements, proviston of matenals and equipment, expertise on installation and aftercare advice

52 vi. An ‘after care’ extension service is provided to beneficiaries covering agriculture and maintenance advice, support to management ofthe FO and water issues.

20. Compensation of Reservoir Encroachers To the extent possible, the project has considered alternative engineering designs to minimize adverse social impacts and land acquisition. Where social screening indicates that land acquisition and/or loss ofassets is unavoidable, a Resettlement Action Plan (RAP) has been prepared for which the Resettlement Framework provides overarching guidance on principles and procedures. The project will implement a number ofmitigation measures to reduce impacts including: (a) provision of a peripheral flood protection bund around the northern and eastern boundary to protect encroached productive land; (b) construction ofa modified spillway with greater capacity to safely discharge excess flows; (c) cash compensation for orchards and standing crops located within reservoir which cannot be protected be peripheral bund in compliance with OP 4.12. Although no resettlement of households will be required, component (c) will constitute the basic principle of the resettlement framework.

21. Significant progress was made in the consultation process as a pre- requisite to the development and implementation of the RAP and as a response to apprehensions raised early in the project preparation by beneficiary communities. The key preparatory activities included: Public Hearing in compliance with BEPA requirements for issuance ofNOC; development ofcommunication strategy for dissemination of information, group consultation with upstream beneficiaries of BKK and other stakeholders; preparation of comprehensive cadastral map highlighting affected crops, names of cultivators and details of cropping, notification of “cut off date” and signing of a Memorandum of Understanding (MoU) between beneficiaries and LPD. The MoU is integral to the RAP and documents beneficiaries’ acceptance of the project design and their subsequent role and responsibilities.

22. The RAP provides comprehensive socio economic data (of affecters), census (providing gender disaggregated data) and asset inventory to establish compensation parameters and ascertain degree of impact. Particular emphasis has been given to documenting vulnerable groups, in this case tenants and farm labor. Resettlement planning and implementation by PKJ will require specialized expertise which will be provided by the design and supervision consultants (Sociologist), CISU social staff and further support from district Revenue and Agriculture Extension personnel. A Compensation Cell comprising these staff and headed by the Project Director will administer claims and payments for compensation.

23. Overall mitigation of impacts will be achieved by compensating losses in livelihood. The project meets conditions specified in OP 4.12 for cash compensation based on market prices. Estimated total cost of compensation is $0.25 million. Affected beneficiaries will be informed through a series of awareness campaigns and group and individual based dialogues undertaken by CSG. A Beneficiary Information Centre will be established at the BKK Rest House to provide a locally accessible source of project information and to access technical staff for further assistance. Affectees consent will be sought through formal agreement with IPD prior to final commitment of compensation. The project will ensure that poor and vulnerable groups receive adequate compensation and additional assistance when needed to restore their social and economic well-being to at least its level prior to project implementation.

53 Component B -US$9.66 million - Small-scale Irrigation Schemes (SSIS)

24. Rationale and Justification Overall water sources in the province are scarce. Springs and perennial stream flows are small and spate runoffs are often unpredictable. Many ofthe nullahs (ravine or gulley) and mandas (low land spate channels) remain dry for large periods of the year. The total water availability for BalochistanZ7is estimated to be 27200 MCMper annum of which 26130 MCM(96 percent) is contributed by surface water. Approximately 60 percent of surface water flows are from floods and runoff and form the greatest proportion of available water in Balochistan. Annual availability of groundwater for the entire province is 107 MCM, representing only 4 percent ofavailable water. In the PLB, the annual surface outflow was estimated to be 101 MCM prior to the onset of drought (1998). Contrastingly, 99 percent of the cropped area within the PLB is under tubewell irrigation; this is in a basin already heavily over mined where the groundwater table is rapidly declining. Encouraging use of surface water resources and maximising efficiency of traditional sources will encourage farming communities to reduce dependency on tubewell irrigated agriculture.

24. Based on the experiences of previous irrigation sector development projects, farmer contributions to scheme development, in terms of farmer consultations during preparation and design, farmer involvement during construction, through command area development and other works after construction, and in cash, are successful tools for implementing a participatory approach. Indications to date suggest that these helped convey the concept of ownership. The project will develop SSIS with a communiq participative approach and will require beneficiaries to contribute towards scheme capital costs by undertaking aproportion of construction works. These will typically be low cost and technically less challenging components such as channel lining and earthen flood protection embankments.

25. Perennial Irrigation Schemes (PIS) The majority of minor irrigation sources within the Pishin Lora Basin are karezes28 and wells. The project will focus on rehabilitating and improving 6 perennial (kareze) irrigation schemes identified during the preparation stage of project development in addition to a further 9 selected from the overall portfolio ofschemes provided by IPD. Construction costs for individual identified schemes vary between $0.53 and $0.66 million (see Annex 6 for cost summary). Discharges vary between 49 and 95 litres per second and cultivated areas range between 17 (Khushab) and 138 (Sahibzada Kareze) hectares.. Cropping is predominantly orchard and winter wheat. Distribution of land and water shares on the schemes is relatively equitable, providing a highly conducive environment for community participative activities. Beneficiary communities range from 62 to 139 households; total number of direct beneficiaries2’ is 17,920. Conveyance losses within these under developed systems

This IS based on Balochistan Irrigation and Power Department records (2004) and BaEochistan Conservation Strategy (2000). Gently sloping tunnel to tap groundwater table in the funs at the bottom of the mountains; water in gravels beneath a nuhh bed, or spnngs in the mountainside VerticaI shafts are dug at intervals along the kirreze to provide access for removal of the excavated material and air for ventilation, dunng construction and maintenance This is based on the average number of 1,841 beneficlanes per scheme determined for 6 schemes visited during the preparation stage socio economic surveys The overall number of primary beneficianes for remaining schemes IS based on the average number ofbeneficiaries per scheme.

54 are high, estimated to be 50 percent or greater due to distances (up to 2km) between the kareze source and irrigable area. In addition limited financial resources prevent further development ofthe source to enhance flow potential.

26. Typical civil works on PIS comprise kareze rehabilitation and extension, main and secondary channel lining (rectangular stone masonry or concrete), (earthen stone pitched) flood protection, permanent off takes and ancillary structures including siphons, washing pads and animal drinking points.

27. Associated community managed watershed improvement, rangeland rehabilitation and OFWM interventions will be undertaken as an integral part of SSIS development. The majority of PIS Introduction of HEIS will also be considered on those schemes where supplemental tubewell irrigation is evident.

28. Value Engineering. Civil works for SSIS will be designed and constructed in accordance with appropriate international and national standards and using experience gained during implementation of predecessor small-scale irrigation projects in Balochi~tan~’.Emphasis will be placed on the concept of value engineering to achieve a compromise between cost and risk by: e determining the exposure conditions under which each structure is expected to operate; identifying the low risk (preferred) engineering option that would provide a high level of serviceability, with a design life of at least 30 years under the estimated exposure conditions. The low risk option is likely to be expensive; rn identifying alternative options for construction which offer cost savings but which mean that lower serviceability levels and hence higher risks must be accepted; and comparing the risks and the costs of options to identify the option which would provid the best value for the money.

29. Targets for SSIS. The Project will initially undertake small-scale irrigation sub projects at 15 sites comprising PIS. Selection of 6 sub projects has been finalized during project preparation; the remaining 9 will be selected from IPD’s portfolio during project implementation. Target number of beneficiaries for 6 pre identified sub projects is 7,168 (581 HHs) benefitting a cropped area of 825 ha in addition to 1,390 ha of rangeland and 1,440 ha of the watershed. The average cost per beneficiary and per hectare developed is $539 and $1,057 respectively. Details for individual schemes are provided in Table A 4.4. Watershed treatment, rangeland rehabilitation and OFWM (including introduction of HEIS) will form an integral part of all small-scale imgation sub projects. Total area to be treated (for 15 schemes) is estimated to be about 3,655 hectares including watershedhangeland rehabilitation and cropped area.

30 Scheme design manuals were prepared under BCIAP mainly using the design criteria developed under the predecessor project, Balochistan Minor Irrigation and Agriculture Development Project (BMIADP). The BMIADP design manuals covered the design of weirs, infiltration galleries, conveyance systems for perennial imgation schemes and flood estimation. The BMIADP manuals provide for robust structures, with (usually) 30-year design lives, but were criticized by some for being rather expensive This led to an on-going discussion under BCIAP on ways to improve “value for money” and subsequent revision of a11 design manuals

55 ~~

30. Selection Criteria The Project PIU will screen all sites proposed for entering the project according to social, technical, environmental and economic criteria. Major selection criteria include: (a) scheme source or catchment area to be located within the PLB; (b) no major unresolved disputes within the scheme area; (c) top quartile of water right holders and land owners should not own more than 70 percent of total water rights or own more than 70 percent of total land available, respectively; (d) schemes must have

56 a potential for increasing agricultural production; (e) minor perennial irrigation schemes must have an assured minimum supply of 14 litres/second; (f) scheme development must have a 12.5 percent or higher estimated EIRR; (8) beneficiaries must establish a formal FO which would open local FO bank accounts, be involved in scheme planning, design and construction and responsible for operation and maintenance, (h) beneficiaries must contribute 10 percent of total scheme capital costs in real terms3‘ and 100 percent of operation and maintenance cost.

31. PIU screening procedures include a short reconnaissance visit to assess scheme potential, based on which a more detailed study will be undertaken to determine feasibility. These studies cover social, technical and agricultural aspects, project concepts can be discussed with the community during the course ofthe study. If the scheme meets all project criteria and the community agrees to the development, then PIU staff request beneficiaries to establish a formal FO based on existing informal organizations. The project would assist irrigators to adapt from a traditional water user group to a formal, multi functional FO.

32. Cost Sharing Arrangements The project will require beneficiaries to contribute to the capital costs of SSIS and to the operation and maintenance (O&M) costs of all development works. Whilst beneficiaries would contribute 100 percent of all O&M costs, they would contribute 10 percent towards scheme costs, comprising cash equivalent to 2 percent of the capital cost, contribution in the form of labor at 8 percent of the capital cost, which is equivaIent to a deduction of 32 percent from the FO contract. The FO Contract will be overall 25 percent (value) of the capital cost.Overal1, this will be equivalent to 25 percent ofthe scheme development costs.

33. This is based on the lessons learnt from BCIAP which implemented 34 SSIS on a cost sharing basis for which FO contributions3* were 15 percent or 30 percent of overall capital costs and were unacceptable to many communities. The mode and timing of payments developed under BCIAP although well designed and acceptable to communities, did result in poor recovery since 8 percent -15 percent for of the overall contribution was to be collected following completion of construction works. Since this coincided with project completion in a number of cases, full recovery was not achieved. The project will therefore, require all contributions to be collected during the construction period, although a flexible approach will be adopted allowing contributions in cash, materials, labour or a combination.

34. Upfront cash contributions (of Rs 10,000) will be linked to specific milestones in the planning and implementation process so that project management could halt development should beneficiaries fail to fulfill their obligations. For example PIU will not commence scheme detailed design unti1 beneficiaries have deposited the required

Farmer’s contnbution includes cash equivalent to 2 percent of the capital cost In add~tlon,farmers will contribute in the form of labor at 8 percent of the capital cost, which IS equivalent to a deduction of 32 percent from the FO contract. The FO Contract will be overall 25 percent (value) of the capital cost.

On BCIAP the criteria set for scheme contnbutions was based on the scheme area under mature apple and cherry orchard. Where this was greater than 5 percent of overall cropped area, the scheme was categonzed as ‘‘Normal’’ income and communities were required to contribute 30 percent of capital costs For other “Low” income schemes, the contribution was 15 percent

57 contribution in to the FO bank account. During design and construction, beneficiaries will make an overall 10 percent contribution using a flexible payment method

35. When beneficiaries contribute their labor to project costs, they will work under a formal contract with PIU and will be paid for works implemented under the FO contract. The contribution during construction will be made by paying beneficiaries 32 percent below the bill item rates determined in the Engineer’s Estimate33. FOs would collect all cash capital cost payments and repayments and deposit them in to the FO account (see table A4.5). Upfront cash payments could be used to initially finance the FO contract, subsequent repayments will assist in implementation and could be used for hrther development works such as watershed management and OFWM interventions. As beneficiaries would contribute 100 percent of all irrigation O&M costs, GOB would exempt them from paying abiana (existing water charges) on their lands within scheme service areas.

Table A 4.5: Proposed Beneficiary Contributions to SSIS

Cash or Labour percent Capital cost Preparation Phase Cash 1 percent Cash 1 percent Construction Phase Labour 8 percent

Total: 10 percent

33 This is based on experience gained under BCIAP in which FO contnbutions (dunng construction) were made using rates set 25 percent below the contractor’s rates. In many cases communities found it dificuIt to make contributions and finance works as often contractors rate were very low due to ‘‘front loading”, with the contractor having large upfront sums for mobilization and provision of guarantees and insurances

58 Table A 4.6: Beneficiary Contributions for Khushab PIS

Base Cost: Rs.16,925,318 Physical Contingencies 7.2 percent Rs1,216,955

Capital Cost: Rs. 18,142,273 Farmer’s Contribution: Ks 14,51,381.84 Payment Schedule 1 Allocation Cash/I,abour percent of Account Allocation Ca cost Preparation Phase

Identificahon Cash Lump sum 10,000 The amount will be used to finance FO Pre-detail design Cash 0.5 percent 80,711 36 contract (minus Pre-tender Cash Rs. 10,000) 90,711.36

ConstructionPhase Scheme development Labour Contributions Labour 8 percent 14,5 E ,38 I.84 cost

On 50 percent completion of Work Cash 0.5 percent 1 90,711.36 Scheme 0 M cost On 100 percent Completion of work Cash 0.5 percent I 90,711.36 Scheme 0 M cost Total I Farmer Construction.Contract Percentage Bill Item Description Quantity ConstructionCost Contribution

1 Flood Protection works 350 fi 13,91,715 2 Main Conveyance Channel 3850 ft 3 1,49,539

Total Construchon Cost 45,41,254

FO Contract as percent of Dev. Cost 25 percent

36. Status of Engineering During initial preparation studies, lPD provided 15 pre- identified schemes for possible funding under the project. Following reconnaissance visits to each and their assessment in terms of technical, social and economic criteria a total of 6 were selected for inclusion in the project. Detailed screening studies have been prepared for these “priority” schemes. An additional 9 SSIS will be identified in conjunction with IPD for which outline socio economic and technical details will be collected. IPD has provided its portfolio of SSIS in the PLB from which the remaining schemes will be determined following reconnaissance surveys and collection of socio economic data during project implementation.

37. There are a number oflessons learnt from other similar projects on the transfer of operation and maintenance activities to scheme beneficiaries. FOs have demonstrated their ability to successfully construct technically less challenging components of irrigation infrastructure. Fund collection and the ability to use these for procurement of materials, equipment and technical services have also been demonstrated. It is often following completion of infrastructure that the FO is unable to fblly take on its role other than that for construction. Post project maintenance is where the multi facetted role of an FO becomes critical. Examples from previous projects suggest that despite FO funds for O&M, schemes fall into disrepair. These can be attributed to two factors: (i)the FO remains a fledgling organization that has been unable to develop into a fully functional,

59 multi dimensional institution; and (ii)the FO is unable to access irrigation service providers that can continue to provide technical backstopping and aftercare support.

38. The project will focus strongly on improving scheme sustainability by incorporating lessons learnt from previous small-scale irrigation projects. Also, by ensuring an intensive social mobilization process in Year I of the project, thereby enabling beneficiaries to better understand their long term role as an FO/CO. More importantly, the project will work closely with communities to better equip them for future scheme operation and maintenance. The following actions will be incorporated in social mobilization: (i)capacity building of communities and strengthening in key areas of simple book keeping, technical training for implementation of FO/CO Works, continued training in role of FO; (ii)a post construction strategy will be developed to ensure reinvigoration of FO/CO and to provide aftercare support; (iii)FO/CO will be provided intensive support on use of funds and continuing collection mechanisms; and (iv) linkages will be developed during the post construction stage with locally based irrigation service providers. These may be NGOs or profitable organizations which can provide services such as technical assistance, continued capacity building and micro credit.

39. The aim will be to attain a degree of self reliance prior to scheme operation and maintenance transfer to beneficiary communities. The project may also consider it valuable to ascertain the degree of linkages formed with a local irrigation service provider. All FOs will be registered under Community Irrigation Farmer Organisations (CIFO) Regulations, which were notified under the BIDA Act in April 2000. The main role of the Community Irrigation Service Unit will be to regulate, interact and monitor FOs. The regular monitoring ofFOs will form an integral part of CISU’s role and would also provide grounds for assessing their sustainability. .

Component C -US$4.53 Million - Institutional and Capacity Building

40. Institutional Strenehening Based on the experience of previous institutional strengthening and reform initiati~es~~which were broad based and ambitious, the project will limit the scope of activities to those realistically achievable within the given time frame. IPD’s long term objective to change its role from a constructor of irrigation schemes to a provider of technical services to FOs has been largely unsuccessful. This may be attributed to the design of the institution which lacks the organizational strengths and technical capabilities to fully undertake basin level planning and service provision. The project can however contribute to strengthening capabilities and in coordination with other ongoing initiatives35 steer IPD to take on board its role as a planner, an essential requirement for implementation ofthe provincial IWRM policy.

34 A number of initiatives were undertaken for institutional reform of IPD The major reform process was to be implemented under the IR component of National Drainage Program, BCIAP’s institutional strengthening component was to be implemented in parallel to provide a dove tailed approach to transforming role of IPD. The overall reform process was unsatisfactory and following closure of NDP, it is unlikely that further initiatives will be undertaken

35 Under the SPRM funded by Royal Government ofthe Netherlands (part ofthe ADB’s Balochistan Resource Management Program), the IPD’s Directorate for Water Resources, Planning, Monitoring and Drilling will be reorganized to function more efficiently as a planning institution Similarly, the

60 A three pronged approach will be adopted; (a) improving IPD staff technical abilities and enhancing knowledge; (b) providing “on the job” training to directly involve IPD staff in the community participative approach; and (c) through the O&M transfer of SSIS to communities with prior development of linkages with locally based irrigation service providers to provide technical backstopping.

41. In doing this the project would provide resources to: (a) develop a training strategy for selected IPD staff to enhance their technical knowledge and increase their awareness of the benefits of community participation in integrated water resources management; (b) implement a series of in-house workshops for PIU (and selected IPD) staff; (c) send a limited number of staff (selected on merit) on international academic studies to countries which have successfully encouraged integrated water resources management, community participation and client orientation in water resources development; (d) undertake hands on training of IPD staff through their inclusion in PlU particularly at Division and (e) participation in the initial development of 15 SSIS and rehabilitation of BKK through a community participative approach. IPD and IDA would undertake a joint mid term review to review and assess the achievements made with this approach and propose further measures to strengthen IPD’s capabilities to work with communities.

42. Role of CISU The Community Irrigation Services Unit was developed under BCIAP with the primary aim of replicating a participatory approach through IPD. The project, together with CISU, also developed an O&M management transfer strategy whereby all schemes owned by BIDA could be registered under CIFO Regulations and transferred to farmers. CISU has yet to be fully used; the major constraint is limited operational budget and only one vehicle which is unsuitable for field work. The project will strengthen CISU’s operating facilities with the provision of vehicles and office equipment in order to revitalize the unit’s functionality for registering FOs. The Assistant Registrar and sociologist will assess existing FOs developed under BCIAP and provide assistance and support in reinvigorating these organizations including inter alia; checking account records, organizing FO re elections, guidance on using FO funds etc. Similarly, the community agriculture adviser will provide extension services to existing FOs and those to be established under BSSIP.

43. Strengthening Project Implementation To ensure strong implementing management with multidisciplinary skills, the project would support the establishment of a PIU within IPD to implement the project. This would be headed by the full time Project Director (seconded from IPD and at least Basic Pay Scale Grade 19). The PIU’s main objective would be to timely implement the project while ensuring strong community involvement in project planning, implementation and operation. To provide expertise in extension services (agricultural, rangeland and watershed and OFWM) and community development, IPD will add to PKJ a separate community support group (CSG) which

establishment of the Balochistan Water Resources Management Authority, an apex body for regulation and pIanning is expected to commence within the next year 36 The project wll implement activities through Irrigation Divisions at Pishin (which include KiIa Abdullah) and Quetta (which will also cover Mastung and Kalat) Each ID is headed by an Executive Engineer dedicated to manage project activities at Division level Project teams will be located in Quetta and within the ID Pishin to provide technical assistancehpport in implementation

61 would include two field offices; at existing Irrigation Division office in Pishin and at Quetta. PIU would have two other main groups directIy under the Project Director; an Administration Group and Engineering Group.

44. Three PIU groups would have the following respective responsibilities: (a) administration group; (i)project administration and accounting including paying for services the project requires; (ii)monitoring and reporting on project implementation, environmental management, implementation of RAP and impact; (b) engineering group: (i)in conjunction with CSG, scheme identification, planning, assist in procurement, detailed design and tender documents and (ii)construction supervision; and (c) CSG: (i)to assist beneficiaries in forming and developing sustainable FOs and providing associated training; (ii)providing FOs with water management advice, detailed design and construction supervision for implementing watershed management works and rangeland rehabilitation; (iii)advice and training on irrigation construction and O&M; and (iv) providing agricultural (including HEIS) and natural resources management advice and training.

45. PIU would either second staff from IPD, DoA and Forestry Department and recruit a consulting firm (or consortium) for design and supervision who would mainly staff the Planning and Design Section (comprising engineering design and construction supervision staff) and Community Support Group. The latter would comprise mainly social staff such as male and female community organizers, watershed management advisers, agricultural extension staff and OFWM engineers to assist in training and development of FO/CO/VWCs. CSG staff and PDS staff would be located in (existing IPD division) field offices at Pishin and in a central PIU office at Quetta. To assist PIU in undertaking its implementation responsibilities, the project would provide office furniture and field equipment, computers, printers, photocopiers and vehicles.

46. Design ofremaining subprojects and Civil Works Supervision Consultants: To assist IPD in project implementation, GoBal through its PIU would nationally recruit a single consultants firm or consortium offirms to supply specialist services and those unavailable within IPD and other relevant government departments. The total requirement is 1,996 staff months at a (staffing) cost of $2.42 million, for the 5-year project. The required consulting inputs are summarized as follows:

(a) For community mobilization and support services: (i)Social and Communication Specialist to assist social mobilizers implement their program of selecting suitable communities, establishing and developing sustainable FOs/COs, implementing GMAP awareness campaign and providing an interface for other support services (total 696 sm including provision for male and female social mobilizers); (ii)Agriculture Specialist to plan and implement agricultural extension, farmer training and applied research programs through deputed Department of Agriculture field staff (1 2 sm); (iii)Watershed and Range Management Specialist to plan and implement watershed management and rangeland rehabilitation interventions, farmer training and applied research programs in association with Department ofForest field staff (36 sm);

62 (iv) OFWM Specialist to undertake evaluation, development and implementation of command area improvement interventions and introduce HEIS to improve water use (18 sm); (v) Groundwater Specialist to assist in hydrology requirements. Review existing data pertaining to surface and groundwater resources and contribute to the development and implementation of the groundwater management plan and strategy. Also to assist in preparation ofsub project designs. (36 sm); and (vi) Community Support Group Coordinator to provide holistic and well coordinated approach to project implementation (36 sm)

(b) For PIU’s administration group: (i)Monitoring and Evaluation Team including Agricultural Economist to assist design appropriate monitoring and evaluation systems for all project components and a field team (including Information Specialist for GIs) to establish baseline and collect impact data (144 sm);

(c) For PIU’s engineering group: (i) Team Leader (Irrigation Engineer) The Team Leader w11 have overall responsibility for the organization, conduct and delivery of consultancy services. He will work directly, and manage relations, with the Client. He will also be a member of the bid evaluation committee for award of civil works and will manage the planning and design section. The TL will be responsible for detailed design of 9 SSIS, assist with preparation of scheme screening reports and refining the program to introduce an integrated water resources management approach in PLB. Also, to assist in preparing the screening and other studies (including management plans for subsequent basins), undertaking detailed design and advising and assisting with project implementation (54 sm); (ii) Dams and Reservoir Specialist. (24 sm) to undertake review of feasibility stage design, undertake site investigation and using these results finalize BKK design. Also, to provide ongoing specialist advise during project implementation and civil works ofBKK; (iii) Design Team for detailed design and preparation ofbidding documents for 9 SSIS comprising, Junior Design Engineers (48sm), and Senior Surveyor (54 sm); (iv) Construction Supervision Team to provide advice to PIU in quality control, contract management and construction supervision during implementation of civil works (including Main and Farmer Organization Works) of BKK and 15 SSIS, Construction Management Engineer will be the Project Manager (48sm), Resident Engineers (48sm), Site Supervision Engineers (120sm); and (v) Specialist Staff including Environmentalist (30 sm), Agriculture Specialist (12 sm) and Groundwater Hydrologist (36 sm) required to assist in project implementation and GMAP, respecitvely. There will be a degree of flexibility associated with the inputs ofthese staff.

(d) For financial management: (i) An adequately qualified and experienced Financial Management Specialist with the responsibility to implement the financial management system, cash flow planning and management, expenditure control and management, withdrawal

63 documentation, preparation ofperiodical financial statements and building the FM capacity ofrelevant staff etc (30sm). (ii) Two financial assistants designated as Finance Officer and Accounts Officer respectively to assist Financial Management Specialist in the assigned financial management responsibilities (1OOsm).

(e) For procurement: An adequately qualified and experienced Contract Administration and Procurement Specialist (36 sm), preferably an engineer will be hired for the project to assist the PIU in procurement of civil works. The currently deputed Procurement Engineer has gained experience during the Project Preparation Phase and with further training and support from the Procurement Specialist will be retained in the PIU.

47. In August 2006, GoBal through PIU recruited a consortium of firms to supply relevant services for the (6 months) project preparation phase. The consultants undertook all required investigations and surveys to prepare the detailed design of BKK and six SSIS. Also, to prepare, screening reports for the SSIS and commence community mobilization for formation of FOs on the 6 selected schemes and initiate FO strengthening. The consultants have developed watershed and range management plans for the SSIS and BKK and have also identified beneficiary communities who will participate in implementation. Design and supervision consultants for the implementation phase are to be recruited, invitation for EOIs were pubIished on UNDB and national newspapers in February 2007 and EOIs received (from 11 firms) in mid March. Five firms were shortlisted and WPs issued in April; receipt of full technical and financial proposals is due in mid May and award of contract and mobilizationby July 2007.

48. FO Strengthening The project has commenced development and strengthening of FOs so they can take the responsibilities required under the project and become self sustaining, multi facetted bodies. FOs’ responsibilities include: (a) interacting and agreeing with PIU staff on the overall planning and design of the scheme; (b) deciding and agreeing with PRJ on the nature and scope of OFWM interventions; (c) implementing the FO contract and OFWM interventions; (d) operating and maintaining irrigation systems through capacity building and linkages with local irrigation service providers; (e) organizing and collecting beneficiaries’ contributions to capital and O&M costs, whether in cash or labor and depositing the cash collected in the FO’s bank account; and (f) in association with the relevant IPD and project support staff and beneficiary communities, assisting in agreeing on the use of funds in the FO account. After the project the FO would be responsible for future development of the irrigation systems, and could organizer and procure services its members required, for example, agricultural extension advice, agricultural inputs, credit, group commodity marketing etc. Linkages with appropriate service providers are imperative for future sustainability.

49. PIU Community Support Group (CSG) staff would assist beneficiaries in establishing their FO, electlappoint the necessary office bearers (chairperson, secretary and treasurer) the open the FO bank account. CSG would train FO office bearers in group organization, management, record keeping and monitoring. CSG staff would provide a wide range of services and training including inter alia; (a) training in: (i)project financing and cost recovery; (ii)construction techniques including planning, cost estimation (basic), budgeting, materials procurement and quality control; (iii)providing

64 an O&M manual and operating and maintaining the irrigation system; (iv) appropriate agricultural practices; (b) designs for OFWM interventions and supervision of FO construction; and (c) agricultural advice including demonstrations, field days and applied research. To give FO members “on the job” training in construction work and contract administration, PIU would agree with FOs (through a formal contract) to undertake simple portions ofthe main works, which would not impinge on completion of the main works contract, such as channeI lining and gabion works.

50. Community Organizations for Watershed Management There are two clearly distinct types of communities where the project will be implemented. The first type of communities is those where Farmer Organization (FO) has been established for implementation of SSIS and the second type of communities are those where only watershed and rangeland rehabilitation and development activities will be implemented. On SSIS, the FO general body may be asked to organize Village Watershed and Rangeland Management Committee (VWC) comprising person capable of implementing watershed and range management activities. The VWC will be part of FO but work independently for implementation ofactivities with technical support ofthe project.

51. Where the watershed and range management activities are to be implemented remotely from an SSIS, the community organization will ideally comprise all men of the village to form the Village Watershed Committee (VWC). The general body for the VWC will comprise men from the community representing all clans and families. At least men from 70 percent of the village households (but with 100 percent representation of clans) should become members of the VWC. An inclusive approach is to be adopted to ensure representation of tenants, sedentary grazers and other migrating communities.

52. The VWC will participate in all activities related to promotion, planning and implementation of sustainable management of range and watershed management, proper management of natural vegetation and fauna, and soil conservation. Membership would be formal and would comprise farmers, tenants, sedentary grazers and shepherds. Women could participate through separate WGs where this is considered feasible within social confines of the area. Alternatively, mainstreaming through inclusion in awareness campaigns and the implementation process may be a more realistic option.

53. Major functions of the VWCs which will be the key decision makers are to: (a) identify, plan and implement watershed management activities; (b) operate, improve and maintain soil and water interventions; (c) assist in natural resources awareness raising; (d) where possible impart information to nomads and grazers in watershed and rangeland management; and (e) organize and collect beneficiary contributions.

54. The PIU CSG would work closely with VWCs to develop annual operation plans outlining improved conservation and watershed management treatments for the area and provide (a) training in: (i)natural resources awareness, (ii)intervention financing and cost recovery; (iii)construction techniques including planning, cost estimation (basic), budgeting, materials procurement and quality control; (iv) maintaining rangeland and catchment management interventions; (v) appropriate soil and water conservation practices; (b) designs for interventions and supervision of constmction; and (c) demonstrations and applied research. To give communities “on the job” training PrtT would agree with COS (through a formal contract) the implementation of soil and water conservation interventions within the catchment.

65 55. A flexible approach will be maintained for implementation of activities based on the resourcefulness of the VWC and the Village Watershed Management Plan. This will be developed conjunctively and will provide a break up by quarterly phasing of activities. This will be shared with the community and copy will be provided to VWC for its records. Each VWC will open a bank account where a token amount ofRs.2000 raised by the community will be deposited.

56. If the quarterly budgets exceed a threshold value of Rs 20,000 and the VWC is under resourced, the project will release the amount upfiont to enabIe implementation. At the beginning of each quarter, the project will issue a check in the name of VWC for completion of activities specified for that quarter. At the end ofquarter the PISJ and VWC will review the disbursement and completion oftasks. If all tasks have been completed to the satisfaction of required standards and verified37 as completed then they will recommend release ofinstaIlment for the next quarter through bank cheque.

57. Where the quarterly budget is less than Rs 20,000 the Project will release funds on completion ofworks following their verification. Subsequent funds will be transferred by the PIU to VWC in installments based on works executed and verified, so long as they fall below the threshold amount. Where the work plan indicates an increase in resources requirement, the alternative method ofupfiont release will be adopted.

58. The Project will assist in execution ofworks by paying wages (at current market rates) to the participants. The VWCs will name the people responsible for coordinating the community effort. Labor intensive activities and methods will be preferred to execute the works. Advisory and supervision services will be provided by PIU CSG staff that will also assist in verification and mobilizing resources such as plant and materials.

59. Women’s Groups. The project would include women through its gender mainstreaming strategy rather than relying entirely on implementation of gender targeted interventions. Mainstreaming will ensure inclusion of females in the project process, particularly in scheme awareness campaigns and similar activities for implementation of GMAP and watershed management plans. The project would support the formation of informal women’s groups (WGs) to represent female beneficiaries. WGs would be responsible for: (a) giving input to PIU on infrastructure design particularly location of social structures such as washing points and animal drinking troughs; and (b) acting as an agent for basic health and hygiene training, agricultural extension messages for those activities in which women are engaged, community managed rangeland activities including identifying protected areas and locating medicinal plants. CSG would train WG members in health and hygiene and safe water usage and training.

60. Training. This is an integral aspect of the project and will be aimed at three main groups: CSG and engineering staff to train key implementation staff; FO, VWC and WG to establish viable, sustainable organizations and improve water resources management within the PLB; and IPD staff to enhance technical skills and knowledge and strengthen orientation towards community participatory approach. Except for a limited number of

37 Verification ofcompleted works and payments for labor will be by the CSG Team responsible for the site with approval by the PIU Watershed and Range Management Adviser. Final authorization and approval for release ofpayment will be by the Project Director

66 international short-term studies to countries that have successfully encouraged integrated water resources management, project training is structured around short-term local level courses. These would mainly comprise in house workshops and one to five day programs. CID staff would undertake in field farmer training, particularly in construction techniques and O&M. CSG specialist staff would provide induction training for community organizers, agriculture extension advisers, watershed management advisers and OFWM engineers who would subsequently be responsible for training the FO, VWCs and WGs. MIS staff will monitor training and its impacts.

61. Applied Research A number of well-established institutions (including Arid Zone Research Institution in association with ICARDA, IUCN and Pakistan Council for Research in Water Resources) have been involved in valuable research in water resources and watershed management in Balochistan. However, a key impediment in transferring successful outcomes of research to farming communities is the lack of a suitable implementation vehicle. The project provides a highly conducive mode for practical application of research successes without further requirement of field trials and demonstration plots. For example, AZRI is testing, multiplying and disseminating improved varieties including rust resistant wheat (AZRI-96), large seeded lentil (ShirAZ- 96) and short season spring barley (Sanobar-96). Similarly, within the scope ofrangeland management, AZRI is testing multiplying and disseminating seed of an annual forage legume - wooly pod vetch (Kohak-96) and other legumes to provide feed during periods of shortage. The FA0 Food Security Program (USAid) is currently focusing such activities within Loralai, Kila Saifullah and Mastung, the latter overlapping with the project’s area of interest. IUCN is implementing water resource management research projects, one of which on integrated water resources management is located within the project area.

62. The project will build on such activities through: (a) close linkages with key local research institutions; (b) acknowledging results of relevant research and highlighting in periodic reports and sharing with CSG and engineering staff; (c) inclusion of successful research outcomes in annual work plan for direct dissemination in field; (d) organizing stakeholder workshops including GOBal, PIU, research institutions, farming communities and private enterprise to provide user interfaces and provide an information network.

63. In field, direct application of research will be financed by the project through a series of research consultancy contracts (ranging between $10k and $20k) to finance for example, bulk purchase of improved seed variety, associated agrochemicals and land preparation costs. The key players for undertaking applied research will be CSG field staff who will introduce improved techniques in awareness campaigns (with relevant research institution stafi) followed up with farmers’ requests for introduction on their land. Assistance would be provided in preparing a formal application to PIU for provision of an applied research grant with brief justification for need and farmer’s commitment to further replicate based on successful outcome. MIS will be responsible for impact monitoring and reporting results.

67 Annex 5: Groundwater Management Action Plan

Balochistan SmaI1-scale Irrigation Project (BSSIP)

Background

Intensified groundwater use has been an important contributor to agricultural growth in Pakistan in the last thirty years. In the absence of assured surface water supplies, people depend heavily on groundwater to meet their irrigation requirements. However, groundwater in Balochistan remains poorly managed and an unmonitored resource. The uncontrolled expansion of tubewell irrigation concomitant with severe drought has resulted in significant overdrawn and deficit conditions in the Pishin Lora and Nari basins. The annual rate of decline in the Pishin Lora Basin was estimated in 1996 to be 1.52 &year. An action plan that incorporates social, financial, technical, and institutional components is formulated.

Groundwater Availability in Balochistan

Annual availability of groundwater in Balochistan is about 1.07 BCM, representing only 3.9 percent of the total water available (27.44 billion m3). Of this total, 603 MCM is already being used (72 percent for agriculture, 24 percent for drinking and domestic uses, 4 percent for industrial and mining), thereby leaving 467 MCM still available for development3*. It must be pointed out, however, that in the Pishin Lora and Nari basins, groundwater is already being overexploited beyond its development potential. The groundwater balance in deficit basins in Balochistan is given in table A 5.1 below:

Table A 5.1: Groundwater Balance in Selected Basins in Balochistan

31 Basins Sub-Basin (cusec) (cusec) Storage (cusec) Pishin Lora Quetta-North 3 8.4 67.2 28.8 Pishin Lora Mastung 21.8 31.7 9.8 Pishin Lora Mangochar 10.0 24.7 14.7 Pishin Lora Pishin 28.5 84.0 55.5 Nari Loralai 63.2 74.8 11.6 Zhob Qilla Saifbllah 41.3 59.4 80.1 - West

Tubewell Irrigation

According to Agriculture Statistics of Pakistan (2002), the number of tubewells used in Balochistan swelled fiom 8,063 in 1985 to 25,734 in 2002 (Figure 1) - irrigating an area of0.33 million ha39.The average annual growth rate oftubewells during the last 3 1 years

38 Balochistan Groundwater Resource Reassessment - TA No. 2125-Pak, Final Report, Jan 1996. Asian Development Bank, Halcrow Rural Management 39 Assuming an average low discharge of tubewells of around 5.0 Ips (0.176 cusec) and operational time oftubewell of 16 hours and 80 percent days of the year (292 days) provide an amount of water pumped

68 is 10 percent and 6.6 percent for electric and diesel operated tubewells, respectively. The higher growth rate of electric-operated tubewells is primarily due to the electricity subsidy. The highest number of tribewells within the Balochistan province is in the Pishin Lora Basin where abstraction rates are far in excess of recharge.

Figure A 5. I:Figure 1 Growth of Tubewells in Balochistan

under tubewell irrigation has an average growth rate of 8.1 percent. In 2001-2002, in the Pishin District, of the irrigated 49.4 million ha area, 87 percent was irrigated with 3891 tubewells.

Currently, when tubewells are used to tap groundwater resources, the right exploit and develop belongs to the landowner on whose land the tubewell has been installed. Tubewells are individually owned. Water is shared among stakeholders according to their share of investment in installing.

Current Policies

A key contributor to the over exploitation of groundwater is the tubewell subsidy that allows farmers to pay a flat rate monthly tariff (of $67). The reported consumption of electricity for agriculture purposes grew at 8 percent per annum from 1990-2000. Water is also not a priced commodity and is subsequently not recognized as a finite resource. The Balochistan Resource Management Program4' Integrated Water Resources

of2 I6billion m3per annum. This is around four-fold ofthe amount of water use reported by Balochistan Conservation Strategy and the IPD. 40 The Balochistan Resource Management Programme, BRMP, (2004 to 2007), supports poverty reduction through good governance and improved public sector resource management while ensuring increased

69 Development Policy developed a policy in 2004 to fix the upper limit of subsidy in 2004- 05 to (2003 level of) $12 million; this has yet to be implemented by the Government of Balochistan. Moreover, absence of domestic water and electricity metering (for agricultural tubewells) coupled with growth in agriculture tubewell numbers within the PLB has significant repercussions for sustainability of rural and urban populations. Of critical importance is the impact on domestic water supply in the provincial capital, Quetta41 which is entirely dependent on groundwater abstraction.

In 1978, the GOB established the Groundwater Rights Administration Ordinance to controI groundwater mining. The Ordinance established the procedures and framework within the district level administration to issues permits for the development of new karezes, dug wells, and tubewells. It provided a legal framework for local resource management by the involving the local administration, as well as tribal leaders. However, the main shortcoming ofthe existing ordinance has been the Iack of involvement of local communities in the implementation and formulation ofgroundwater management rules.

Action Plan Components

To promote better groundwater management in the PLB, a combination of social, technical, and institutional interventions will be required. Previous World Bank experiences demonstrate that effective and sustainable management of groundwater resources requires: (a) strong stakeholder participation, (b) support programs and introduction of modern methods necessary to support farm incomes and employment to reduce reliance on groundwater aquifers, (c) economic incentives and proper energy and water pricing, and (d) strong Iegal and regulatory institutions. This action plan will address on a pilot basis groundwater management on the ground in parallel with strengthening legal and regulatory institutions and knowledge base and will involve several components given below:

Groundwater Inventorv The effective management of groundwater resources demands a continuous, detailed, high-quality record of hydrogeologic data. Inadequacy and unreliability of surface and groundwater data is one of the major factors affecting planning, development and management of water resources. Existing hydro-meteorological data collection by Directorate ofPlanning, Development and Monitoring (IPD) and Pakistan Meteorological Department, are inadequate for water resource planning42. Lack of coordination between public sector institutions (concerned with water resources) results in piecemeal and isolated efforts and a reactionary rather than preemptive approach to planning.

participation of key stakeholders for transparent, accountable and sustamable public service provision BRMP, funded by a US$130 million ADB loan 40 Supports actions and reforms in two domains. policies, laws and regulations, institutional strengthening and capacity building 41 Quetta sub basin IS approximately 10 percent (area wise) ofthe overall PLB with 46 percent of the total basin population. 42 Issues include a) inadequate and poor spatial coverage of measuring stations for surface water, groundwater and climatic data, b) inadequately trained technical manpower; c) differences in instrumentation and measurement techniques, d) lack of timely data processing and analysis, and e) discontinuity in records

70 A groundwater monitoring program will include, inter alia, socioeconomic information that shows how and for what is water used, location and number oftubewells, discharge, capacity, satellite and GIS database inventories, water quality and GW conditions, water levels, water and energy consumption, efficiencies, and crop areas served. Dedicated tubewells will provide data in real time basis.

Social Validation A participatory approach will be taken with collection of data. The inventory will be sanctioned by all the stakeholders as the basic instrument for planning and will be made public by the lead water authority and the users. Information sharing will be part of such a monitoring program, communicating results to local media, decision makers and key stakeholders.

Modeling and Water Allocations Using the existing and collected data, it will be possible to build simulation models to produce different future scenarios in terms ofwater allocations and investment decisions. The scenarios will help in developing an overall PLB Plan and improve on the conjunctive use ofboth surface water and groundwater by FO and IPD.

Social Awareness Although groundwater users are aware of aquifer depletion, it will be necessary to initiate an awareness campaign that substantiates local aquifer conditions, emphasizes the risks of overexploitation, legal provisions and enforcement, water conservation measures and the importance of local management. Participatory hydrologic monitoring and local micro planning should follow up from the campaign. In participatory monitoring, groundwater users are being facilitated to measure groundwater fluctuations and prepare local groundwater budgets. This awareness campaign will support overall BSSIP efforts to empower communities to better manage scarce water resources in the PLB through improvement ofexisting surface water delivery.

Strengthening ofInstitutions and Legal and Regulatory Framework The aim with BSSIP is for the PSC to evolve into a PLB planning committee with full participation ofall stakeholders. The role ofthe Committee will need to be defined by the stakeholders. Responsibilities may include sanctioning of different water resource programs, development of rules and regulation, enforcement of water rights, and authority to oversight the regulatory framework. An Aquifer Management Organization, within the PLB will be needed in order to include only stakeholders related with their specific concerns. The design and supervision consultants will help to provide guidance and build the technical capacity ofthis committee.

Existing regulations have not been enforced and there is a need to firstly review and assess why they have not been enforced, and assess whether regulations andor minor adjustments would suffice. The requirement for new legislation or modifications to the existing may be proposed since which will be based on the functioning of the PLB Committee. The role of key stakeholders (e.g. IPD, PHE, FO/COs) will have to be well defined in addition to the appointment of an independently administered regulatory body (as is currently being suggested for the apex water resources authority). The sanctions and rules must be clear and transparent. The establishment of water rights and water market mechanisms should be included in the legislation and the regulatory framework. Lessons learned from other Bank experiences will be shared.

71 Control of drilling and the need for permits should be defined as well as the technical justifications to grant permits to deepen the existing wells. No new wells will be authorized.

Enforcing Mechanisms

Specific provisions and resources will be allocated to enforce the regulatory framework, monitoring and evaluating the evolution ofthe aquifer in terms ofquality and Ievels.

Incentive Programs

Different incentive programs could be defined to improve the efficiency of the water use in the different sectors e.g. programs to encourage reuse of water, efficient irrigation practices and installment ofmodern irrigation and pumping equipment, reuse of water in Quetta and rural towns, green houses. Transparent rules for the incentives have to be defined. Incentives can also be defined to encourage implementation of watershed and range management, induced recharge programs, etc.

Water and Energy Pricing

Exploitation of groundwater continues to be subsidized and still draws heavily on public sector budgets. Consultations will explore alternatives for gradual phasing out oftubewell subsidies. Metering will be introduced with a combined power and water metering by a third party agency. Improvements will be necessary in the collection of water and energy tariffs as cost recovery is currently very low.

Recharge Investments

The major investments in groundwater recharge to date have been on delay action dams in Balochistan, of which 150 were constructed with 300 more potential sites identified. However, there is large scope to improve the effectiveness of these structures. A survey that investigated 110 delay action dams, established that some had a noticeable impact on groundwater availability, yet most did not (JICA, 1997). There is a case to invest more in artificial recharge and water harvesting, but a wide range of options should be considered, including an initial analysis of cost-effectiveness and feasibility in promotion of spate irrigation, flood spreading, innovative redesigns of groundwater recharge dams, and watershed rehabilitation programs for vegetation recovery through planting and protection ofcatchment areas.

Groundwater quality

Although groundwater quality is largely linked to potable water supply, groundwater quality parameters must be monitored to ensure optimal crop yields.

72 The GWMATE43 assisted GoBalochistan in developing a draft GWMAP. The hydrogeological and socioeconomic differences among subbasins and within subbasins recognize the need to characterize the aquifers and sub-aquifers of PLB as part of the Groundwater Management Plan, and to approach groundwater management through successive pilot projects instead oftyng to cover simultaneously the entire PLB

The main recommendation is to start participative designlimpfernentation of groundwater management in Quetta basin, where intense competition between highly profitable irrigated agriculture and urban demands for water supply, are putting in risk the underlying aquifer sustainability. Under the GWAP emphasis is placed on the opportunity to opt for a parallel track approach when implementing the strategy, Le., to go ahead using the information available and implementing the existing legal and institutional framework, while undertaking the necessary improvements in a phased manner and with the participation of stakeholders.

Specific components include: Characterization ofeach sub basin with available information 8 Groundwater inventory, social validation, and monitoring systems Groundwater modeling and basin-wide water allocation systems Social awareness campaigns 8 Strengthening and coordination ofinstitutions 8 Reform oflegal and regulatory frameworks 8 Enforcing mechanisms Water and energy pricing and metering rn Incentive programs to promote improved irrigation practices 8 Municipal wastewater reuse in irrigated agriculture using low-cost technology rn Groundwater quality monitoring

43 GWMATE Mission visited Balochistan in March 2007 to consult with GoBalochistan and other stakeholders.

73 Annex 6: Project Costs

Balochistan Small-scale Irrigation Project (BSSIP)

The project costs have been derived at 2007 price levels. Various cost components include: i)execution of civil works, ii)watershed management and range rehabilitation activities, iii) On Farm Water Management activities, and iv) staffing, operational and capacity building costs including the purchase of equipment.In addition there will be compensation costs for affected encroachers within the Bund Khushdil Khan Reservoir area, technical services for project implementation, procurement and operating costs, and funds for applied research consultancy contracts.

1. Civil Works

The cost of civil works for the BKK is estimated as Rs 460.74 million. The cost for 6 identified small schemes has been estimated as Rs 147.35 million. In addition, the likely expenditure for 9 schemes tentatively identified on the basis of reconnaissance visit/ average for the identified schemes is Rs 221 million. Total cost of civil works for BKK and small schemes is Rs 892 million. The cost break up for the major activity viz. BKK civil works is as in Table A 6.1 below:

Table A 6.1: Abstract of Cost for Augmentation of Bund Khushdil Khan

2 Watershed and Rangeland

The works in BKK command will be implemented in 3-4 years. Cost of Watershed treatment and Rangeland rehabilitation is Rs 12,150 and Rs 10,600 per ha treated as detailed below:

74 T a

Tractor rental for 16 hours @ Rs 375 per hour 6,000 150 plants @ Rs 5 750 Seed 100 Labor 3,750 Sub total 10,600

Area treated for Watershed and Rangeland in the command areas of BKK and 6 identified Schemes is 4,515 ha and 4,680 ha respectively. The activity involves plantations for watershed management and rehabilitation ofrangelands in the catchments and some community lands. The cost for BKK command and in the command area of 6 identified schemes is calculated as Rs 72.3 1 million and Rs 32.15 million respectively as detailed in Table 6.3. The cost for 9 additional schemes on pro-rata basis is Rs 48.23 million.

7.5 3 On Farm Water Management

The OFWM activities aim at improved irrigation efficiency by lining the channels, provision of ‘pacca naccas’, culverts, kareze rehabilitation etc. Establishment of green houses and introduction ofhigh efficiency irrigation system (HEIS) at selected tubewell farms including construction of water storage tanks is also envisaged. The cost for BKK and 6 small identified schemes is Rs 46.95 million and Rs 48.35 million respectively as given in Table A 6.4. The cost for 9 additional schemes to be studied later is estimated as Rs 72.52 million. Total cost for this component is Rs 167.82 million ($2.80 mil).

W 2 I e. x c S.No Description x W (b 01 W c: (b

I 1 Commandarea-ha I 1 357 I 128 105 I 72 1 196 I 101 1 1800 1 2,759 Lining oftertiary water 700 9,725 6,240 6950 4,125 10,825 3475 16,350 57,690 courses - metres 3 Nucca Structure - No 2,000 135 110

4 Washing Pad - No 3.500 3 3 ~ Pipe Nacca (for earthen 5,000 10 10 77 5 I section) -No 6 I Culverts-No 1 5000 1 31 3 Water Storage Tank (100,000 7 264,000 I I g) - No OFWM with storage- tank and 8 trickle irrigation component * 794,000 2 2 - ha 9 1 No. of sprinkler systems - No 1 30,000 1 21 2 21 11 11 2 I 100 I 110 10 I Land Levelling -ha 1 2,500 1 20 I 20 28 1 10 1 11 I 27 I 200 I 316 B - Cost - mil Rs

* - Trickle irrigation for BKK

76 5 Resettlement Costs

The area within the reservoir were encroached significantly by farmers over the past years. Very good orchard plantations can be seen in the fertile alluvial plains of the lake and seasonal cultivation is observed to a vast extent, almost up to the outlet well. Though the fanners cultivating these lands do not have ownership rights, compensation will have to be made to affecters in accordance with World Bank OP 4.12 “Involuntary Resettlement” which recognizes the rights ofnon-titled persons to compensation.

A comprehensive cadastral map was prepared during the project preparation in which the precise details pertaining to plot sizes, cropping, name of cultivator and age oftrees have been recorded. Surveys were completed in May 2006 and cut off date notified by PIU to project beneficiaries and ED0 Revenue (Pishin).

The market rate ofvarious apple trees age-wise and other standing (seasonal) crops were also determined in conjunction with District Revenue and Agriculture Extension Departments.

Compensation will be paid for a) removal of (899 mainly immature trees) within the reservoir - those which cannot be protected by the peripheral bund; b) standing crops within a 150 feet width corridor adjacent to the alignment of the peripheral bund from which material will be sourced for bund raising; and c) removal of 302 mature & 46 immature apple trees along Timrak Nullah (due to channel widening).

The cost has been calculated as Rs 15.00 million for the BKK (assuming an optimistic 30-year productive life of the orchard), a breakdown is provided in Table A 6.5. Although a minimal area of titled land44may be acquired to accommodate the realigned road (adjacent to spillway/fall structure) and downstream channel, no land acquisition costs will be involved for improvement ofSSIS.

Table A 6. 5: Resettlement costs

44 No titled land falls in the lake as clearly mentioned by the Irrigation Department and verified by the District Revenue Department

77 Table A 6.6: Showing Owners & their Trees likely to be affected with Age and Value in the Periphery of Bkk

10 60 Mohammad Yam I 160 11 61 HajiZahir Total Zero 354 I 32 1 224

5. Staff, Traveling, Equipment and Operating Costs Total expenditure for the component is Rs 271.77 million ($4.53 mil). It includes the expenditure for staff, traveling, purchase of equipment, studies to be camed out, capacity building etc.

Staff Cost:

The staff in the PIU will be by transferred from within the department. However, in view of limited staff availabilities in PD, part of the staff will be hired from the market. The cost for technical staff required for the implementation ofvarious works is charged to the relevant component. The staff cost is detailed in Appendix Table 6.1 including the funding requirements ofevaluation by 3rd Party (Rs 110.33 million, $ 1.77 mil).

Equipment purchase: In addition to the staff cost, other related costs pertain to procurement of vehicles, computers, printers, mobile phones, water meters etc. Equipment cost is given in Table A 6.7. The total cost works out to Rs 43.21 million or USs0.72 million as detailed below:

78 Operating Costs:

The operating costs are given in Table A 6.8 including the expenditure for rental of office buildings, office maintenance and running. Total expenditure is estimated as Rs 29.34 million ($ 0.49 mil) at 2007 constant price level.

Expenditure - mil Rs S. No Item =mil $ Annual I Entireperiod I I Office Premises Rental 0.840 I 3.780 I 0.063 2 I Utilities (electricityigasiwater) 0.550 1 2.475 I 0.041 3 I Repair and Maintenance (office) 0.090 } 0.405 I 0.007

4 equipment) 0.250 1.125 0.019 5 POL and Vehicle Maintenance 2.920 13.140 0.219 r 6 Stationary and Office Supplies 0 780 3.510 0059 7 Communication (pnnting, fax, email) 0 600 2700 0045 8 Postage (courier) 0 200 0900 0015 9 Misc (bank charges etc ) 0 100 0450 0008 IO Contingencies @ 3 percent 0.190 0.855 0014 Total expenditure 6 520 2934 0489

79 Capacity Building:

Capacity building expenditure meant for training ofprofessionals and FOs/ COSwill cost Rs 38.28 million ($ 0.64 mil) given in Table A 6.9. It includes the expenditure for international and local training (including academic training opportunities), hotding of workshops, awareness campaigns, preparation of Manuals/ Modules, groundwater and environmental monitoring etc.

Cost - mil Rs Cost S Quantity Unit Description in .No unit /year Entire Rate Annual I Deriod mi,$

Research Studies: A sum of Rs 14.28 million ($ 0.24 mil) is earmarked for applied research which will be provided to communities willing to apply successful research outcomes within the command area. The money will be provided as grant.

6 Total Project Cost

The project is anticipated to be completed over a period of 4.5 years from 2007 onwards. Total cost for the entire period has been calculated as Rs 1,499.34 million (US$ 24.99 million). Scheme wise costs for various components including staff, equipment, studies etc. is given in Table A 6.10 below:

Table A 6. 10: Project Cost for BKK and Small Schemes by components I S.NU 1 Scheme/ 1 Civil I Watershed I OFWIW/ 1 ResetfEem 1 Total- I =mil$ 1

Note: Cost of 9 additional Schemes is based on the average cost of 6 PSIS studied in detail.

80 7. Cost Phasing

The cost of civil works for BKK is distributed over a 3 year period. Small amounts in year 4 will be required for clearance of pending bills and backlogs. In addition 15 small schemes will be implemented over a period of 5 years. Six of the small schemes have already been identified. The remaining schemes will be identified during the course of implementation of identified schemes and implemented within the stipulated period of 5 years from the beginning. The cost phasing for different years is as in Table A 6.11 below:

Table A 6. 11: Capital requirements in different Years Cost in Year million Rs = mil Item\ Year - 21 31 41 5 1 Total $

OFWM 24.8 I 30.4 I 28.6 I 27.4 I 9.7 1 120.9 1 2.01

Sub total 115.1 39.2 39.2 39.2 39.2 271.8 1 4.9 All components - mil Rs 389.1 336.8 472.6 252.0 48.8 1499.3 I 25.3 $43 3 All components - mil $ $ 6.49 5.61 7.88 4.20 0.81 $ 25.00

81 Annex 7: Implementation Arrangements

BaIochistan Small-scale Irrigation Project (BSSIP)

Arrangements for the implementation of the project aim at achieving the development objective within the context of strengthening the Government’s devolution program through strong community participation. Most project activities should be demand driven and must be implemented in a decentralized settings. Farmer Organizations (FOs) and Community Organizations will be strengthened or formed where needed, within the identified watersheds or command areas of the small-scale irrigation schemes, and in consultation with the existing institutions at the village and the Union Council (UC) levels. These grass roots organizations will fully participate in executing the key project activities. The role of the provincial line departments will be limited to preparation of broad implementation guidelines and technical supervision and support. Existing government structures will be used for project implementation. An overview of the institutional arrangements is given below. The Irrigation and Power Department (IPD) will be the agency responsible for project implementation. There will be one project implementation unit (PIU), which will be located within the IPD, to ensure implementing arrangements with multidisciplinary skills. These arrangements are aimed at ensuring (a) strong community involvement in project planning? implementation and operation, and (b) efficient project implementation and sustainability after project completion.

Provincial level. An inter-departmental Project Steering Committee (PSC), chaired by the Additional Chief Secretary (ACS), Planning and Development Department (P&DD), will provide policy guidance and inter-agency coordination at the highest level. The Secretaries of IPD, Agriculture, Forest and Wildlife, Finance, representatives of IUCN, Balochistan Environmental Protection Agency (BEPA), the Project Director (PD), and Secretary of the PSC will be invited to participate. The PSC would, inter alia, (i) formulate guidelines and policies aimed at realizing full project benefits, (ii)coordinate inputs from other government departments? (iii)approve annual work plans, and (iv) review the project implementation progress. The PSC will initially meet at least every quarter ofthe year. .

The PD, a technical person to be nominated by the IPD with rank no less than a Superintending Engineer (Basic Pay Scale Grade-l9), will be responsible for overall coordination, monitoring, and management of the project, and will be assisted by the design and supervision consultants (DSC). The project will provide the required incremental staff to strengthen the PIU.

45 These include Village Watershed Management Committees (VMC) and informal Women’s Groups.

82 Figure A 7. 1: Overview of BSSIP Institutional Arrangements

Inter-Departmental GOB Government of Balochistan PSC (for PLB) PLB Pishm Lora Basin IPD Imgation and Power Department PSC Project Steenng Committee PIU Project Implementation Umt DSC Design & Supennsion Consultants FO/COs Farmer and Community Organizations

1 1 I Farmer and Community Organizations (FO/COs) I

Design and Supervision Consultants. The PD, also the Secretary of the PSC, will be a technical person to be nominated by the IPD with rank no less than a Superintending Engineer and will be responsible for overall coordination, monitoring, and management of the project, and will be assisted by the design and supervision consultants, DSC (consultancy firm). This team will have expertise and operational staff with skills in civil engineering design and construction supervision, contract management, water resources management, social mobilization, watershed and rangeland management, community development, groundwater management, irrigation and agronomy, cash crop agronomy (apples or grapes), environmental expertise, agricultural economics (monitoring and evaluation) and gender development. The team will prepare basic guidelines for project implementation, provide technical support to the professionals carrying out the work, and prepare the new basin plans and associated feasibility report. The DSC will also assist in supervising implementation of RAP. Equipment, vehicles, computers, video and audio materials, and operational costs will be provided by the project. The GovernmentIIPD will provide the offices.

Pre-qualification of contractors for BKK has been done and bidding documents for the SSISes (NCB based on post qualification) are being finalized. The DSC will undertake detailed design (for the 9 SSIS) and assist in tender documentation. The DSC will be the “EngineeriProject Manager” for all Civil and ancillary works financed under the project. The DSC will administer the Civil works contract, make engineering decisions, be responsible for quality assurance, provide general guidance and furnish timely response to the Contractors in all matters relating to the civil works and ensure the all clauses of the Contract Agreement between the civil works contractors and the GoBalochistan are complied.

83 This process has commenced through financing with a Project Preparation Facility (PPF) effective from January 2006. The PPF Advance of $0.607 million has been used for establishment of a project office and procurement of goods and equipment required for preparatory activities. The preparation phase consultants have already undertaken site investigations at BKK to finalize the detailed design, preparation of screening reports and detailed designs for 6 small-scale irrigation schemes (SSIS) and tender documentation for BKK and 6 small-scale irrigation schemes. Also, commencement of the socia1 mobilization process at the SSIS including establishment of Farmer Organizations and opening of FO bank accounts. Watershed and range management plans have been completed for the BKK and SSIS catchments and agriculture extension plans discussed with beneficiaries. Agreements have been signed between the IPD and BKK beneficiary communities and a RAP prepared. Seelction process for continuation of the DSC has already commenced and the Bank expects to receive the combined evaluation report by negotiations.

Institutional Arrangements for Community Participation Getting the institutions right will be critical in ensuring success. The basic building block would be the village level institutions of the people - the Community Organization (CO). As the optimum size of a CO is app. thirty people, in the case of large villages several COS can be formed within the same village and these would federate and form a Village Council (VC). Members from these COsiVCs would then form the electoral college from which a Farmer Organization (FO) would be created. Good COs/VCs/FOs i.e. those that are participatory, inclusive, equitable and well governed, would promote social cohesion and collective action; ensure planning according to local needs, better sharing of resources specially water, reduced costs ofdelivery and sustainable operations and maintenance.

Reaching out to the community and assisting them in mobilizing themselves and building social capital would be carried out by the Community Irrigation Services Unit (CISU). This unit which has been established in 1999 has acted as the social mobilization arm of the IPD. Amongst its tasks has been the registration of water user associations formed under the Balochistan Water Users Association Ordinance of 1981. It has in the past conducted social mobilization and provided training to farmer organizations under the BCLA Project. However, since the closure of the project in 2002 and due to shortage of hnds the Unit has been relatively dormant. Currently, it has eight professional and seven support staff, but little else in terms of logistical support. Under the BSSIP it is proposed that this Unit be strengthened in terms of additional staff, logistics and capacity building of its staff through trainings and exposure visits. For this unit is to work effectively it would be important to give it a certain degree ofautonomy and flexibility.

The design and supervision consultants (DSC) supported under this project would also work closely with the CISU to facilitate and coordinate holistic delivery ofirrigation and agricultural extension services including information dissemination on better water management and agricultural practices to the community. The DSC would also be responsible for monitoring and evaluation of the social mobilization and participation component of the project.

Farmer Organizations (FOs). In order to ensure the sustainable and effective use of rehabilitated and newly developed irrigation systems, actual implementation of the key project activities would be the responsibilities of Farmer Organizations. The FO is envisaged as a community development organisation that will have a pivotal role in

84 implementing the scheme development activities. A total of six FOs have been established on the SSIS identified and designed during the project preparation. A further nine are to be formed during the project implementation.

They will collectively and with technical support fiom the PIU CSG identify needs and set priorities, identify and elect their representatives, mobilize labor or collect farmers’ or beneficiaries’ share ofthe cost ofimprovement works on productive investments, procure material required for the community based investments and carry out construction and improvement works under the FO Contract. The FOs will participate in the introductioddissemination of new/modified practices and technologies applicable to irrigation, agronomy and watershed and rangeland management. In this case the FO general body may be asked to organise a Village Watershed and Rangeland Management Committee (VWC) comprising person capable of implementing the watershed management plan. The VWC will be part of the overall FO but will work independently for implementation of watershed and rangeland rehabilitation and development activities with technical support provided by the project.

Based on lessons learnt from other irrigation sector projects based on community participation, the sustainability of FOs and their ability to diversify into muti facetted organizations capable of continuing development, is linked to post construction support. The project will aim to achieve this by; (i)intensive community mobilization prior to commencement of civil works to enable FOs to fully understand their long term role as development organizations; (ii)to implement post construction support strategy through CSG and reinvigorate the FO following completion of civil works; (iii)to strengthen the FOs ability to collect and use funds for further development works and (iv) to build strong linkages following construction with locally based irrigation service providers.

Watershed management activities. Village Watershed Management Committees (VMC) will be formed in the identified areas46local to the watershed of BKK and SSIS. The VMCs will implement the watershed management activities in order to safeguard infrastructure investments and to contribute to a more holistic approach to water resources management. From a joint needs assessment and technical observations (and inventory) within the local watershed and rangeland, a watershed and rangeland management plan will be developed. The VMC will provide guidance on which type of soil and water conservation practices will be prioritized and assist in preparing the quarterly implementation plan.

The Project will finance the execution of these works thorugh community performance contracts. Each VWC will open a bank account where a token amount of Rs.2000 raised by the community will be deposited. The VWC will name the people responsible for coordinating the community effort. A ffexible approach to financing the works will be adopted depending on the quarterly value of works (see paragraphs 60 and 61 of Annex 4). Usually hand labor will be preferred to execute the works. A fixed amount could be authorized as a maximum (around 20 percent of the total amount by community) by the project to help in the establishment ofworks or practices.

46 During project preparation specific areas were identified within the BKK catchment, including direct drainages to the reservoir and Surkhab and Barshore rivers Similarly areas have been identified within the local catchments of the 6 preparation phase SSIS

85 On farm management works. The project will support the installation of modem irrigation systems, both in new areas and in already irrigated areas from a set of alternatives decided by the FOs and the individual farmers. In the BKK area, the project will organize with the community an initial turn-key project to demonstrate the use of modem inputs and techniques to improve the water productivity in the area. Around 400 ha will be developed in this initial phase over the life ofthe project (5 years). A contract supported by the project in a competitive basis will be awarded to guarantee the proper introduction of this modem technology that requires field investigations and negotiation with the farmers. If required the farmers will be invited to learn about these systems.

Legal Status of FOs. To give a legal cover to the newly formed FOs, they will be required to register under the Community Irrigation Farmer Organization (CIFO) Regulations. The comprehensive CIFO Regulations were framed and notified under the Balochistan Irrigation Development Authority (BIDA) Act of 2000. All FOs previously registered under the WUA Ordinance 1981 were de-registered and were registered anew under CIFO regulations. The project would provide the needed support to IPD to activate the implementation of CIFO regulations, by strengthening the Community Irrigation Services Unit (CISU). The Unit was created to support the irrigation management transfer process and is currently impeded in undertaking its activities by limited operational budget. CISU would be assisted through staff capacity building, providing linkages with FOs and improving mobility to ensure folIow up with FOs.

Figure A 7.2: BSSIP Social Institutions

gation sub-projects in subbasins

86 Annex 8: Social Characteristics of the Project Area

Balochistan Small-scale Irrigation Project (BSSIP)

Population and Settlement Patterns The total population of the Pishin Lora Basin (PLB) is currently estimated at 1.26 . million. With a 3 percent growth rate and an average family size of 8 persons. The population density varies across the districts. Pishin District has the largest population concentration amongst the five districts within the basin if the urban population of Quetta district is excluded from the basin. The average population density per Km is much higher at than the provincial average, putting greater pressure on the natural resources in the area. The location of settlements in the PLB is primarily determined by the presence of perennial water sources and mostly located in intervening valleys between a series of rugged mountain ranges.

Poverty and Social Indicators The incidence of poverty in the province is the highest in Pakistan; it increased from 26 percent in 1993 to 47 percent in 2002. Social development indicators of literacy, infant and child mortality, and life expectancy, are all considerably worse for Balochistan compared to other parts of the country. And though three of the five districts of the PLB i.e. Quetta, Pishin and Kalat are relatively better-off in the provincial context the rural population in these districts has been devastated by the recent drought by losing their orchards and livestock.

Physical isolation, inaccessible terrain and scattered settlement patterns make development and the provision of social services difficult. Infrastructure and services are not only inadequate but are unevenly distributed and seriously mismanaged. There is significant disparity between male and female literacy and enrollments ratios. A higher school drop out rate also disproportionately affects the girl child, while infant and maternal mortality rates remain high. Similarly many health services in the province are either non-functional or provide poor quality services. The estimated numbers of maternal deaths for the PLB was 880 per 100,000 and immunization coverage is extremely low. A social assessment carried out in the field and secondary sources show that the overall status of health is poor in PLB districts particularly in the rural areas - communicable diseases, especially water borne, and nutritional disorders are predominant. The existing health facilities in the PLB suffer from lack of adequate quality staff, poor infrastructure and the shortage of funds. Sanitary, sewerage and solid waste management facilities are almost absent. Aquifer vulnerability assessment and drinking water source protection are needed.

Gender Inequalities and Vulnerability Women in the PLB like the rest of the province are extremely vulnerable. They have low social and economic status, less access than men to social services and far fewer opportunities for income generation activities and financial services etc. primarily due to cultural and tribal customs. These customs have been slow to change - isolating women form the outside world particularly in the Pashtun dominated areas; restricting their mobility and preventing their access to even basic services. This social structure also limits women’s ability to own resources and most women do not own land or other

87 property, inspite of specific Islamic and legal provisions to the contrary which give them the right to inherit and own land. According to the revenue records ofthe BKK area there was not a single women owner of land amongst over three thousand shareholders. Except for a few traditional skills women face difficulties in obtaining new skills and employment. They do, however, have a significant role in the pastoral economy particular in livestock rearing. Their time is taken-up with fetching water and fuel wood, preparing meals, taking care of the children etc. There are very limited opportunities for female education in rural areas of the PLB and higher education opportunities for girls are practically non-existent, resulting in high gender disparity in enrolment. Women face difficulties in accessing health services resulting in high prevalence of disease, high maternal mortality and a low contraceptive prevalence rate. They also suffer from general malnutrition, anemia, and iodine deficiency.

Social Organization and Community Structure Social organization in the PLB ispredominantly tribal. The two major ethnic groups are the Pashtun and Brahvi. They each have distinctive social customs and power structures based on strong patriarchal kinship. The social organization is mainly structured along tribal lines each tribe further divided into clans and sub-clans. The most important institution is kinship which commands loyalty of its members. The tribal system constitutes a comprehensive system of governance - regulating economic, social and political activities of the community and resources. However, with the passage of time, the tribal system has been heavily influenced by religion and the state.

The Pashtun tribes do not have a strict hierarchy or centralized leadership and therefore are more egalitarian. Maliks or Mashers who are their tribal notables wield a higher social status and often play a leadership role for the community. These Malik and Masher represent their clans and sub-clans in the Jirga. The Jirgu system provides a mechanism for collective decision-making and mediation of disputes within the community. The tribal system of the Brahvi’s is based on the same patriarchal kinship organization, however, with more pronounced hierarchy of leadership and a strong central tribal chief often with authoritarian character. The leadership structure in most cases is a major hindrance in the way ofpeople’s participation and equitable distribution ofresources.

Water Rights and Customary Practices Water rights are determined by customary tribal laws and derive to a large extent from customary land rights. Unlike farmlands, generally water sources are collectively owned by the community, and specific water use rights are allotted to individual holdings. Though water rights may be rented or sold, they are highly valued. Water sale and exchange of turns are common on the minor irrigation sources. The right to use groundwater by a dug well or borehole belongs to the person who owns the land. Water rights in perennial irrigation systems are usually well defined. All water rights from perennial and non-perennial sources of irrigation are written in the Record of Rights prepared by the land revenue department. Each Record of Rights provides details of water and irrigation rights and elaborates local custom and tradition of water distribution in the area. Water rights are settled and well defined and in case of dispute, matters are referred to courts for adjudication. In case ofsurface water in perennial streams, however, different mechanisms are used to determine size of individual water share. In most communities water rights are based on initial contribution of a shareholder towards development of water sources such as karezes. In some cases, water rights are not fixed

88 permanently among stakeholders or families but follow the clan-wise distribution of cultivable land. In other cases water rights are usually inherited on principles similar to those governed in land inheritance. In some parts of PLB and particularly around BKK the share ofthe perennial spring water is permanently fixed according to the requirements of the cultivation attached to each village. The usual unit of division here is the Shabaizaroz or day and night flow ofwater. The Shabanaroz is further divided in smaller units such as hours. River channels which are occupied by a number of tribes have a fixed share ofwater for every tribe. Each tribe is entitled to build a temporary dam across the river, without depriving the lower riparian of water. From this temporary dam, a number of water channels are dug in accordance with the number of clans. From these channels minor channels are laid into the individual fields. In spate irrigation system, flood water is diverted into embanked fields through distribution channels. The upper riparian has prior rights to water. Run-offs belong to the person in whose land the water enters. In BKK, the individual water rights are categorically defined in fixed proportions of the flow and allowed used time. The land and water rights are well established and documented and are legally endorsed by extensive records including cadastral maps held in the Revenue Office, Pishin. Water rights are attached to land rights and can be sold or leased. A variety of lease and tenancy agreements are made for limited periods and most ofthese arrangements are not officially recorded.

Grazing Patterns Three grazing patterns exist in the project area which can be categorized as nomadic, transhumance and sedentary ago-pastoralist systems depending on forage regimes, ecological conditions and social systems. In the central and northern parts grazing systems have existed since times immemorial. The nomadic and transhumance migratory system account for about 30 and 90 percent respectively of the livestock in Balochistan. Two migratory routes are followed; the North-south migratory routes are used by Pashtun nomads and transhumants while the East-west migratory routes are followed by Brahvi transhumants. Under the nomadic system, nomads move constantly throughout the year. Movement ofherds which is used as a survival strategy can be for short or long distances or sometimes seasonal depending on forage availability. Under the transhumance system the pastoralists who live in central highlands move their flocks from adjoining valleys in summer but keep close contacts with their homes. During winter, scarcity of fodder coupled with extremely temperatures force them to migrate with their flocks to the lowlands where they not only graze their flocks but also work on agricultural land. Flock owners at times have to pay for stubble or range forage and occasionally purchase feed for their animals. The third system of sedentary agro-pastoralists is mainly in practiced in the irrigated plains in the lowlands and to a limited extent in up lands of Balochistan where perennial water is available and agricultural farming is in practiced. Small farmers, peasants or landless pastoralists exercise this system and are dependent upon forage from the ranges or from crop lands. In some areas, shepherds are also hired to look after the livestock of an entire village. Livestock is an important source of income as well as wealth in the economy ofthe PLB. Most households keep some livestock such as cows, sheep and goats. Livestock raising communities have regular pattern of seasonal migration to different grazing areas and pastures. However, this pastoral way of life has reduced substantially in the PLB following tubewell development and settled agriculture. Also the long spell of drought has drastically reduced the livestock population.

89 Grazing Rights & Property Regimes The private rangelands of Balochistan are commonly classified into two types ofproperty regimes: common and open. Common rangeland is traditionally governed by tribes with customary institutional arrangements for their sustainability and effective management. In these areas tribesmen raise their animals on commonly owned rangelands. Traditionally, grazing in common property areas was regulated through complex community rules and procedures institutionalized by the common adherence to such rules. For instance, rules such as range closure commonly known as pergore in Pashto and ruk in Brahvi and rotational grazing were practiced. Such rules not only ensured equity but also promoted conservation of biodiversity and resources. In some cases, particularly, in Brahvi areas, pastures near the cultivated land and slope of hills and mountains are used for grazing. The ownership of these pastures rest with tribes living in the area. Mostly these pastures are regarded as common property regime. The usufhct rights are equal and there is no restriction from the communities who keep more or less animal. In other instance, agriculture land is also used for grazing but the grazing rights are limited only for the owners of the land. These grazing practices and traditional institutional structures are perceived to be closely inter-connected and were part of the socioeconomic structure ofthe given community. However, over the years a considerable decline of the traditional institutions has taken place, which has severely strained the carrying capacity ofthe grazing land resulting in gradual transformation ofmost common rangelands into open rangelands.

Open rangelands have unrestricted access and open to every one. Rangeland degradation is a serious problem in these open range lands where large increase in human and livestock papulations have had a profound impact on grazing and transhumance. In addition, due to the influx ofthe Afghan refugees with their large number of animals has had a devastating effect on the rangeland resources. This coupled with the long drought has further worsened the situation and the open rangelands have lost their remaining productivity to sustain animals grazing needs. This has led to heavy losses to herders and small farmers both in terms ofanimal mortality and selling animals at nominal prices.

Migrating Communities Available information on migrating communities is limited. Historically, Afghan migrants (puwindu) migrated with their livestock and paid an entry tax for their livestock on crossing the Afghan border. The system has gone through tremendous changes since Soviet occupation of Afghanistan and it is porposed that data on seasonal migrants will be collected during project implementation phase.

There are several settled and well established communities (formerly seasonal migrants) located close to the main agricultural villages of the area. In addition to these communities there is a substantial Afghan rehgee camp in the Surkhab Refugee camp.

Migrant communities that had settled around main villages (mainly after the Soviet occupation of Afghanistan in the late 1970s) have obtained land for construction of residence fi-ee of cost from local landowners. Land was provided to these people on the condition that they could be evicted at anytime when landlord needs land. In case of eviction ordered by the landlord these migrants will be paid compensation for the construction of walls of their houses, they will be allowed taking any wood used in construction. If the migrants want to leave on their own sweet will they are entitled to

90 take all wood used in construction ofhouses. The agreement is fair and is dictated by the need of labour for agriculture in the area.

Expansion of horticultural crops in the area with increased number of tube wells expanded labour market, particularly in harvest season but also throughout the year. A11 orchards are owner cultivated and managed which means all works, irrigation, fertiliser and pesticides application, harvest, picking and packing are done through hired labour. In addition to that, orchard owners replace the top soils of orchards after several years which created demand for labour in expanding orchard areas.

Afghan seasonal migrants found jobs almost regularly throughout the year and temporarily settled in the project area. Daily wage rate of Rs. 150 to 200 is paid for different activities. Three such settlements were surveyed during project preparation and their brief description is given below.

All the male members of these localities are working as labourer and some also work as sharecropping tenant for melon ad wheat crops grown in the area and in BKK reservoir area. They perfom all kind oflabour required in orchards for wages. Some are employed on monthly basis while others work on daily wages. A few households in each locality own tractors and work with tractors for different activities. Mostly they are working in the area because labour is frequently available. In slack season few men from some households migrate to Quetta and Karachi for earning wages in other sectors. A very small number ofhouseholds migrate to Sindh province for work in winter season.

Most household own a few small ruminants while about 10 percent of household own cows and about two thirds ofhouseholds own donkey. Grazing is allowed on uncultivated land. Most of the fodder for animals is collected through weeding in orchards. Wheat straw is used as dry fodder for cattle. Grazing of root stalk after harvest is also common practice in the area.

Women are mainly responsible for housekeeping, water fetching and caring for the livestock. Community close to BKK fetches water from the reservoir and it is transported on donkeys. When there is no water in the reservoir then water is fetched from water supply scheme of nearby villages or from irrigation tube wells. Some fuel wood for household is collected from the area comprising mainly dry plants and bushes.

One such settlement is located near village Khairabad and inhabited by Tarakai Afghans. This settlement is close the existing spillway of BKK. These are about 25 households in the village and all are kin relations who have established this locality about a decade ago on the land provided by large landlords of the area on the terms and conditions described above. About 14 households of this settlement are working as sharecropping tenants for different landowners and mainly cultivating land in BKK reservoir. They graze their livestock in dry pond area of BKK. There are few houses of local people in this settlement.

Another settlement nearby comprises about 50 households of Tarakai Afghans, they have settled in the area since past 15 years. The settlement is located on both sides of the Pishin-Barshore road near BKK. Some households are working as tenants on flood irrigated lands ofvillage Ysinzai.

91 Another large settlement is known as Baloch Killi very near to village Sirajabad. Houses of this settlement are located on both sides of the Pishin-Barshor road. This is the largest and oldest settlement established about a quarter century ago. There are about 85 households in this settlement and all belong to Baloch tribe of Afghanistan. There is government primary school for boys in village Sirajabad. Some household of the village are working as sharecropping tenant on flood irrigated land in the vicinity. There are few houses oflocal people in this settlement.

These communities are not located near the schemes identified for rehabilitation of watershed. If any scheme is identified in future for watershed development in vicinity of these villages, their participation is open to question because they are not landowners and have no legal rights to land and trees.

Environmental & Social Assessment The client has carried out a detailed environmental social assessment (ESA) which describes the socio-economic baseline, the stakeholder consultation process, the socio- economic impacts and mitigation measures, a policy and institutional framework (PIF). Subsequently a resettlement action plan (RAP) has also been prepared and is presently in draft and will be finalized soon. The ESA is included in project files and the PIF and RAP are attached as appendix 2 and 3 to this annexure. A sample of the MOU is presented below.

Memorandum of Understanding (MOU)

Between

Beneficiary Communities And Balochistan Small-scale Irrigation Project (BSSIP)

This agreement is signed today on (Day) (Date)

Between

Beneficiary Communities of Balochistan Small-scale Irrigation Project (Hereafter called Beneficiaries')

And

Balochistan Small-scale Irrigation Project (Hereafter called the Project')

The project is for 5 years (2007-2012) and will be implemented by the Irrigation & Power Department (IPD) and funded by the World Bank.

We both the parties hereby enter into this agreement which is binding on both of us with the following detail;

Responsibilities of the Project

92 The Project determines and undertakes that;

(1) It will mainly intervene in the PLB located in Balochistan through three components: (a) partial restoration of water storage capacity in the Bund Khushdil Khan (BKK) (b) development of small-scale irrigation schemes in the PLB, and (c) institutional strengthening and capacity building of the Irrigation and Power Department (IPD), water management institutions, and farmer and community organizations and further studies and preparation activities for the next phase. Improved watershed and rangeland management and on-farm water management, including introduction of high efficiency irrigation systems, will be integral components.

1 There are three types ofbeneficianes; (I) Down stream beneficiaries: The farmers of around 14 downstream vlllages being direct beneficianes who depend on tmgabon of their fields on the BKK water. 01) Upstream beneficzaries . Upstream beneficianes are those who have been cultivating the bund land (state land) and are of two types; orchard owners & seasonal culbvators. fin) Water-shed beneficiaries. This group of beneficianes includes those commumbes who reside withm the watershed of the BKK area, and who wll benefit from soil and water conservabon interventions.

(2) The project as per historical agreement of the dam will not prohibit the cultivation of seasonal crops in dry seasons but such cultivation is visibly prone to flooding that will be at their own risk and no compensation will be paid for any loss caused due to any flooding. Historical agreement of the dam is a document which dates back to Year 1897 that allows the upstream beneficiaries after obtaining leave from the Irrigation Officer, to cultivate small patches of land near the water’s edge for melons and such like rapid growing produce.

(3) The main BKK dam has remained intact for the past century with no reports of sabotage or damage. Even in case of a breach, there is no risk ofany inundation ofthe upstream areas as these are located at a higher elevation than the reservoir itself. However, round the clock patrolling during flood emergency will be ensured through the existing staff ofIrrigation and Power Department.

(4) The Project will provide an adequate drainage network to mitigate the drainage issues ofthe area.

(5) The Bund operation is essentially based on inflows and outflows both of which are regulated. It is highly unlikely that water will be allowed to pond within the reservoir for lengthy periods, which could induce seepage through the periphera1 bund. At the occasion of the reservoir approaching FSL the intakes on the feeder channels will be closed and the outlet well will continue to supply flows downstream.

Responsibilities of the Beneficiaries

We the community members of the villages; upstream, downstream and watershed beneficiaries hereby pledge and undertake that;

93 (1) We agree to the above stated BSSIP interventions including the rehabilitation of Bund Khushdil khan. And we pledge to cooperate and support that is required from us during such developmental initiatives.

(2) We agree and are determined to provide support asked for to the proposed plan of BKK to raise the dike of the Bund in order to increase its water storage capacity.

(3) We agree to the proposed construction of protective peripheral bund that will safeguard orchards in the bund periphery and also the villages in the close proximity ofthe bund from water inundation.

(4) We agree to the small-scale irrigation schemes under BSSIP proposed by the project for the uplift ofthe farmers in Pishin Lora Basin.

(5) We agree to the proposed interventions of introducing improved practices in agriculture extension, on farm water management, watershed management, rangeland management and ago forestry or other packages to help raise the income level ofthe farmers.

(6) We agree not only to support the physical development initiatives such as rehabilitation of BKK, small irrigation schemes etc. but also institutional development related to organization and strengthening of communities.

Signed Signed

(Community Members ofVillages) Project Director of BKK

Date: Date:

94 Annex 9: Economic and Financial Analyses Balochistan Small-scale Irrigation Project (BSSIP)

I Project Benefits The Project aims at increased water storage, enhanced reservoir life by reduced sedimentation, improved water use efficiency and consequently higher farm productivity. In addition, rehabilitation of rangelands will lead to increased livestock population and higher productivity. The OFWW HEIS activities will lead to reduced water losses translated to higher irrigation efficiency and consequently higher cropping intensity and better yields. The introduction of green houses will enable the farmers reap benefits of off-season production ofvegetables like tomato or other vegetables.

With substitution of groundwater by surface supplies from BKK, the energy used by tubewells will be saved. Also the cost of deepening tubewell boreholes and material costs involved attributed to increased water table depth will be saved.

In assessing the performance (benefits) of the project, the following assumptions were made in the feasibility studies:

The BKK reservoir is an off the river storage reservoir and does not meet year round water requirements of the crops. Irrigation storage is depleted in Sept/Oct each year. The reservoir regulates flood flows and releases water when needed for irrigation. The Rabi season crops included in the cropping pattern are wheat, cumin and some Rabi vegetables. All other crops are Kharif or late Kharif season crops. Cumin, a low delta crop, survives in harsh climates. Rabi vegetables and cumin are high value crops and are thus, preferred by the farmers. The reservoir will help increase sowing of irrigated wheat in the month of December. Application of irrigation water to wheat at crucial stages of tillering and grain formation by releases from the reservoir will increase wheat yields significantly. B The yields assumed for Wheat are very conservative (1275 kg per acre). In view of high returns from orchards, its area is increased to 324 ha by optimal year ofdevelopment from the existing level of 127 ha. B Area under various crops is increased considering the overall water availability. B Total cropped area is increased from 708 ha at present to 1800 ha at optimal development level (Sth year) after the implementation of the project.

1.1 Crop Budgets The direct benefits from various interventions will be in the form of increased crop and livestock production. The crop benefits are estimated by preparing year-wise crop budgets. The yields and inputs for various crops are given in Appendix Tables 9.1-a to 9.1-m.

95 1.2 Crop Input/ Output Prices The crop input prices are based on information gathered form the project areas. Financial prices for the fertilizers, labor rates (varying slightly by operation type) and tractor charges for plowing and marketing charges are as prevailing in the beneficiary areas. Harvest season prices as prevailing in the adjoining markets are used in the analysis. lrnport parity prices for tradable commodities like wheat and chemical fertilizers are given in Appendix Table 9.2. Since Balochistan is a wheat deficit area, import parity price for wheat has been used. For non-tradable goods, SCF of 0.9 has been used in Economic analysis. SWR of 0.8 is used to convert financial wages of unskilled labor to economic wage. For specialized activities like fruit picking and grading, economic wage rate is taken at par with the financial rate. Financial and economic prices used in the crop budgets are as in Table A 9.1 hereunder.

Financial Economic Crop/ Input Price per Seed price - Rs/ Price per Seed price - Rd kg kg kg kg

R. Veg 6.5 200 6.175 180 Cumin 85 100 80.75 90 Tomatoe 9.3 850 8.37 765

Ploughing - each 250 225 Urea per kg 11 21.0483 DAP per kg 19 21.8245 Potash ner kg. 18 12.1355

Planting 150 120 Fertilizing 120 96 Weeding 120 96 TI+ gation 100 80 Wheat harvest 250 200 Loading/ Unloading per Crate 2-3 2-3 Transport per Crate 5 4.35

96 1.3 Crop Budgets

Income for various crops, is derived from crop budgets as summarized in Appendix 9.3- a to 9.3-m using financial prices. The same are calculated in Appendix 9.4-a to 9.441 using economic prices. Highest returns are calculated for grapes followed by apple. Amongst other crops, vegetables and cumin are high return crops. The lowest return is for wheat, sown on vast areas to keep land busy (water and other resource constraints) and to generate employment for family labour.

1.4 Command area

The Project area of Pishin Lora Basin extends to the districts of Pishin, Killa Abdullah, Quetta, Mastung and Kalat. Bund Khushdil Khan will irrigate the areas falling in Pishin district only. However, the adjoining districts will be benefited due to enhanced recharge.

With decreased availabilities of surface water from BKK, part ofthe area is now irrigated by tubewells. In order to ensure sustained aquifer and to have groundwater equilibrium, the farmers will be required to switch over to surface supplies from ground water pumpage. Thus there will be partial substitution of area presently irrigated by tubewells and conversion ofpresently un-irrigated area to irrigated conditions.

1.4.1 BKK

The command area extends over the ‘doab’ between Pishin and Surkhab Loras and was previously served by the Sarala Canal, Haikalzai Branch Canal and Shebo Canal system. With declined surface supplies, the farmers are abstracting groundwater at an increasingly large scale to meet crop water needs. Presently groundwater development has been exploited to unsustainable levels unless the focus is shifted to improved groundwater recharge. In the absence of the project being undertaken, the trend of groundwater pumpage from deeper aquifer shall however, continue unabated.

1.4.2 Small Schemes

In addition to the command area of BKK, there are some other promising sites in Pishin Lora Basin where viable small schemes can be implemented. These include small channels with perennial flows varying from 22.65 to 92.31 l/s which are prone to seasonal variations with higher flows in spring and less flow in winter. After discussion with the IPD and in the light of experience gained in the past, 6 small promising sites have been identified for inclusion in the proposed project. The command area for these schemes is as follows:

97 2 Agriculture without Project

Agriculture is the main stay offarm economy in the area. The farm size is small (about 1- 2 ha). Livestock dominated by ruminants (goats and sheep) are an integral part of the rural economy. Cows are also kept to meet family needs by some land owners. Due to persistent drought of 2-3 year back, the livestock population decreased attributed to over grazing and decreased palatable grasses in the rangelands. The effect of this decrease is still visible especially on large animals.

The cropping intensity and yields in ‘Without’ project situations will decrease in future attributed to high cost of tubewell installation and poor quality of water due to over exploitation of groundwater. However, to be on a conservative side, water level is assumed to remain stagnant at present level. Presently the crop area is irrigated by surface supplies (5000 acre feet) from BKK and by tubewells. Area irrigated by tubewells and small surface supplies is as follows:

Table A 9.3: Presently Irrigated area in BKK Command No of Tubewells 68 Area per Tubewell -ha 6 Total area in Tubewell command - ha 408 Surface water availabilities - acre feet 5000 45 Irrigation efficiency - percent percent Area commanded by Surface water 0 3 feet delta - ha 3 00

2.1 Cropping pattern In view of comparatively high returns and long gestation period for newly planted hit trees, irrigating orchards is the first priority of the farmers. Other cash crops include cumin, tobacco, some vegetables and wheat over extensive areas. The cropping patterns for irrigated areas of various districts falling in Pishin Lora Basin are given in Table A 9.4 below:

98 100 =ha I 7645 I 27038 I 8788 I 17542 I 26752 I 87765 Source: Agri Statistics Balochistan 2002-03

As can be seen from above, orchards are an integral part of the cropping pattern in all districts. Its share is 53 percent and 48 percent in the districts of Quetta and Pishin respectively. On overall basis, 38 percent or irrigated area is under orchards. Wheat is an important crop in all areas. Vegetables are grown in Pishin and Quetta. Under un- irrigated conditions, wheat, barley and sorghum are the main crops planted over about 50 percent ofthe cultivable land.

2.2 Crop Yields

The crop yields are low primarily attributed to less water availabilities, non availabilities of improved seed, poor agri-extension services etc. Under un-irrigated conditions, wheat and sorghum are the main crops planted. The yields for these crops are roughly 40 percent of the yield level under irrigated conditions. The yields of irrigated areas for the districts falling in Pishin Lora Basin are as in Table A 9.5 below: f Killa

1 Source: Agri Statistics Balochistan, 2002-03

99 3 Agriculture with Project

In order to improve or at least sustain groundwater table, the installation of tubewells in BKK command needs to be discouraged. In the absence ofany policy to monitor ground water and current practices relating to tubewell installation, there seems little likelihood if any tangible measures would be taken in this regard. In view of comparative ease of irrigation application from the reservoir compared with the tubewells, it is assumed that: i)the area presently irrigated by tubewells (68#) estimated as 408 ha will be switched over to surface water with no or bare minimal pumpage, and ii)the area irrigated by limited availabilities of reservoir water (5000 acre feet) will increase with additional surface supplies made possible by project implementation. Further the additional supplies made possible as a result of improved irrigation efficiency will lead to horizontal expansion ofcrop area.

The command area of BKK is likely to increase to 1,800 ha from the present level of 708 ha. Out ofthe increased area of 1,192 ha, 250 ha is likely to be the area which is presently rain fed. The balance 840 ha will be the new area brought which will be brought under cultivation due to assured surface supplies. It may be mentioned that there is vast area available for cultivation provided the constraints particularly the water is made available.

In the commands of small schemes most of the area is under cultivation and is irrigated by karezes or tubewells. Karezes are the main source of irrigation in the PISs with partial irrigation by tubewells. Like the BKK command the water table in these areas is continuously decreasing due to increasing number of tubewell installations within and areas adjoining the commands. Major impact is however, due to the tubewells installed at the head of karezes at many places. With the implementation of schemes, not only the objective of stable aquifer will be achieved but the area commanded will also increase with improved irrigation supplies as a result ofwater saving measures.

The statistics maintained by Irrigation Department regarding area or yields is unreliable. It does provide a base to the planners to assess the trends but mere reliance on this would lead to unrealistic projections. Considering this aspect, future projections are made in the light of reconnaissance survey adopting Rapid Rural Appraisal (RRA) whereby group discussions were made in the area and discussion with the professionals.

3.1 Cropping Patterns

The projected crop area and the cropping pattern have been estimated keeping in view the land potential and water availabilities. The cropping pattern has been assessed in the light ofexisting pattern of concerned districts and particularly the pattern within the command area. In the light of field visits made in the perspective commands and considering various secondary sources of information, the area projections are made for the future. Taking a conservative view, the area under orchards is taken on lower side compared with the figures given in Agricultural Statistics. Small increase in area under other high value crops has been made with ensuing crop diversification as a result ofsustained water availabilities.

The development of additional command area will be attained in a period of about 4-5 years for different crops. The shift will however, be slow in the beginning but is likely to pick up in later years.

100 3.1.1 BhX Command

Total water availabilities from BKK are 20.73 M.cum (16,800 acre feet). PDC considered various cropping patterns for BKK primarily considering the water availabilities from the reservoir and crop delta requirements. Cropping intensity for various cropping patterns varied from 108 percent to 11 8 percent as shown in Table A 9.6 below:

Table A 9.6: Cro

Melons 4 4 3 4 2 Onions 4 4 4 4 2 Wheat 37 40 43 34 29 Veg 17 19 11 16 29 Cumin 11 12 I1 16 14 Cropping intensity 117 108 117 116 118 100 = ha 1,768 1,901 1,733 1,809 1,915

The cropping patterns considered are divergent from the patterns derived from secondary sources or observed during the reconnaissance visit. The share of high value crops like orchards is much on lower side. Though reliance can not be placed on the statistics maintained by Agriculture Department, yet it is safe to assume that orchards are the top most priority of farmers, followed by vegetables. The only governing factor is sustained water availabilities.

The irrigation efficiency likely to be attained as a result of various intervention^^^ is likely to be 50 percent. Total water availabilities from BKK will be 20.73 M.cum (16,800 acre feet) or an availability of 10.36 M.cum (8,400 acre feet) at fieId level.

Water requirements taken by PDC have been adjusted slightly keeping in view the prevailing practices and departmental recomrnendati~ns.~~.It may however, be mentioned that Reservoir is not planned to meet year-round water requirements of the crops. The cropping pattern has been selected primariIy in view of the water availabilities and farmer’s behaviour. Total cropped area is calculated as 1,800 ha as shown in Table A

47 Various irrigation improvements include 100 percent provision of pacca ‘naccas’ and culverts, 50 percent lining of watercourses for surface as well as tubewell commands, introduction of HEIS etc

48 Water requirements for grapes and cumin as well as wheat were on higher side.

101 9.7. The perennial crops like apple, grape and lucern occupy 28 percent of total cropped area. Annual cropping intensity thus, works out to 128 percent.

3.1.2 Small Schemes

Cropping pattern for small identified schemes has been proposed in the light of patterns followed in Pishin Lora Basin, the discussions held with concerned beneficiary groups and visual observation/ Transact survey.

3.2 Area Build up

Optimal cropped area will be achieved in a period of 3-5 years for various crops. This is attributed to development of additional command area over 4-5 year period, layout of water channels, the financial and physical resource constraints and farmer adoption behaviour etc. About 40 percent of the perspective command area of BKK is presently irrigated by tubewells or limited surface supplies from BKK reservoir. Out of the remaining (1092 ha), roughly 250 ha will be the presently un-irrigated area and balance land will be the new addition to the command. The addition ofnew land to the command is taken as 40 percent in lStyear, 75 percent in 2"d year and 90 percent in 3Tdyear. The addition will be small - 5 percent in year 4 and 5. Cropped area in different years for BKK and identified Small Schemes is given in Appendix Table 9.5. Total cropped area will increase to 1,970 ha by 2"d year and optimal level of 2,625 ha by 5th year compared with the present area of 1,092 ha.

3.3 Crop Yields

The yield levels are not likely to change in future under 'Without' project situations. Rather these are likely to decrease due to rise in water table depth attributed to poor quality of water, high capital cost of installation and likelihood of withdrawal of subsidy on electric tubewells. The cost of pumping ground water will increase due to added borehole cost every year to pump from deeper and deeper aquifers.

The yields under 'With' project condition will increase due to assured and sustained water availabilities and involvement of beneficiaries in planning during and after project implementation in the entire project area. The yield build up will roughly behave the

102 pattern of area build up. The increase is likely to be comparatively less in the beginning, more after 2-3 years but will increase at a diminishing rate at tail end. The optimal yields assumed are in Table A 9.8 below:

3.4 Incremental Crop Income

Orchards start fruiting after a time lag of 2-3 years while optimal yields are attained at 5- 7 year age. To calculate income from orchards, year wise income has been multiplied with the incremental area planted in respective year. The incremental (financial) income from orchards is given in Appendix Table 9.6-a for the BKK command. Income from fruit plantations for the Small Schemes is also calculated in Appendix Table 9.6-b to 9.6-g. The income from fruits, calculated using economic prices is given in Appendix Table 9.7-a to 9.7-g.

Income from all crops including the fresh plantation of fruit trees has been derived by multiplying unit area returns with area planted. It is given in Appendix Table 9.8-a for the BKK command and in Appendix Table 9.8-b to 9.8-g for Small Schemes. Crop income has also been calculated in Appendix Table 9.9-a to 9.9-g using economic values for BKK and Small Schemes.

Crop income is calculated as Rs 40.3 million for ‘Without project’ scenario for the BKK command. It is likely to increase progressively to Rs 126.2 million by 4th year and at optimal level of Rs 167 million by lothyear as detailed in said Appendix Table 9.8-a. The incremental income is Rs 126.7 million by the optimal year of development. The contribution of high value new plantations of apple and grapes is 48 percent to the incremental income followed by vegetables (17 percent), irrigated wheat (14 percent) and tobacco (1 1 percent). The increase in income for small schemes also follows the pattern of BKK command. It is primarily due to planting of orchards and vegetables, with substitution oflow value wheat area at many places.

3.5 Watershed/ Range Benefits

In addition to crop income, the income of the target group will increase with increased availabilities of dry matter from grasses/ shrubs from rangelands, increased availability of fire wood from plantations made to check silt erosion in the reservoirs (watershed treatment) and tree plantations in the rangelands. Benefits will accrue from 4 counts as given below:

8 Fuel wood from watershed area at every 3rd year from plantation stage at an average rate of Rs 600 per ha commencing from year 5. It will increase by 25 percent till gth year and will be constant there after; Fuel wood fiom Rangelands every 5th year from planting, worth Rs 3,950 per ha;

103 Availability offorage (Rs 1,250) and dry matter as grasses for ruminants valued at an average rate of Rs 2,000 per ha or a total ofRs 3,250. There will be an increase of25 percent for the next 3 years; and Medicinal plants worth Rs 600 per ha from year 3 onwards.

The benefits from watershed/ rangeland for BKK catchment are calculated in Appendix Table 9.10-a. These increase from Rs 15 million in 5 years to Rs 30.7 million in 25 years. The benefits per ha ofwatershed and rangeland for small schemes are calculated in Appendix Table 9.10-b. Using unit area figures, total benefits for each of the small scheme are calculated in Appendix Table 9.10-c.

3.6 Benefits from Energv Saved

There are 68 tubewells in the command of BKK. Based on the information in QESCO (WAPDA) for 2002-03, average consumption of electricity per T/W per month is 17,194 units. The energy cost @ 2.5 cents per unit works out to $5,158 (Rs 0.31 million) per tubewell per annum. With substitution of groundwater by the surface supplies from BKK reservoir, the energy used in pumping water will be saved. Total savings on this account for 68 Tubewells are worked out as Rs 21 million annually.

3.7 Cost of Boring

Due to over exploitation ofaquifer, water table is going deeper and deeper every year. In order to draw water from lower aquifers, the borehole depth is increased by about 20 feet every year. The cost of this additional boring (labour and material) is estimated as Rs 1,375 per foot. Total annual savings for an average of 20 feet depth per tubewell, is Rs 1.87 million for 68 tubewells.

3.8 Other Benefits

In addition to the direct quantifiable benefits, the Project will have demonstrational effect in adjoining areas which are not added to the project benefit stream. The Project will also help improve environmental degradation by way of increased vegetation and reduced land sliding resulting in less environmental pollution. It will generate employment directly in project implementation and indirectly in the form of added economic opportunities in business and other sectors ofthe economy.

The execution of watershed and range land activities will generate 0.35 million days of employment opportunities for the execution of watershed and range land activities as given in Table A 9.9. In addition, the job opportunities will be created for the implementation of civil works in BKK and small schemes. The employment generation in crop production sector will be 0.092 million days per annum for the entire project life period.

104 Table A 9.9: Labor Generated due to Watershed and Rangeland activities

* - 4,5 15 ha ofWatershed and 4,680 ha Rangeland

4 Economic Analysis Total cost of the Project is 1,499 million to be spent over a period of 5 years. There is little involvement of foreign exchange (purchase of vehicles, some International Consultancy and travel). However, there are numerous taxes like 6 percent tax deduction at source on account of income tax on all payments made to the contractors, sales tax etc. Also there is some variation in official and open market exchange rate for the currency. SCF of 0.9 has been used to convert financial prices of farm produce into economic prices. The import parity price has been calculated for fertilizers and wheat. Financial costs are converted to economic costs using a weighted factor of 0.87. Cost benefit analysis has been carried out using Base value figures. Sensitivity analysis is also been made for 3 scenarios: 1) 10 percent rise in costs, 2) IOpercent decreased benefits, and 3) simultaneous decrease in benefits and increase in costs by 10 percent. The results are given for BKK and each Small Scheme in Appendix Table 9.11-a to 9.11-g. EIRR is calculated as 14.2 percent for BKK. For the small schemes, the lowest return of 15.1 percent is for Khushab and Ranj Haud PIS followed by 15.4 percent for Sahibzada PIS. The highest return of 18 percent is calculated for Khanibaba.

The economic analysis has also been calculated for the entire project in Appendix Table 9.11-h incorporating the figures for the small schemes. On overall basis, the Project yields a return of 15.7 percent. Various parameters of the economic analysis derived are shown in Table A9. IObelow:

Table A 9.10: Economic Analvsis for Pishin Lora Basin +10 percent -10 percent +/- 10 percent cost & Item Base case cost Benefits benefits NPV 279 198 278 90 B:C at 12 percent 1.46 1.22 1.21 1.10 15.7 14.5 EIRR percent percent 15.7 percent 13.2 percent

Scheme wise results are summarized in TabIe A 9.11. The overall return rate is calculated as 15.5 percent which is much above the prevailing cut-off rate of 12 percent used by Planning Commission. The EIRR is 13.2 percent under adverse conditions of 10 percent rise in costs and simultaneous decrease in benefits by the same magnitude of 10

105 percent. The Project as such is cost effective in terms of return on investment and qualifies for implementation.

Table A 9.11: Scheme wise Resuits ofEconomic Analysis 1 +lopercent 1 -lopercent I +/-lopercent 1 Descriptiom I Basecase 1 cost 1 Benefits I cosi4eneJits Bund Khushdil Khan NPV 114.2 55.8 113.4 -14.0 B: C at 12 percent I.2 1.1 1.1 1.o EIRR 14.1 percent 13.0 percent 14.1 percent 11.8 percent

NPV 63.0 59.2 62.2 49.1 B:C at 12 percent 2.7 2.4 2.4 2.2 EIRR 25.6 percent 24.1 percent 25.4 percent 22.5 percent

NPV 9.9 6.2 9.2 1.4 B:C at 12 percent 1.3 1.1 1.1 1.o EIRR I 15.0 percent I 13.7 percent I 14.8 percent 1 12.4 percent Khanibaba NPV 16.3 12.4 15.5 6.9 B:C at 12 percent 1.4 1.3 1.3 1.2 EIRR 17.4 percent 15.8 percent 17.1 percent 14.2 percent

NPV 12.9 I 9.0 1 12.1 I 3.8 B:C at 12 percent 1.3 1 1.2 j 1.2 I 1.1

NPV 278.7 198.2 277.9 89.9 B:C at 12 percent I.5 1.2 1.2 1.1 EIRR 15.7 percent 14.5 percent 15.7 percent 13.2 percent

5 Financial Analysis

Financial analysis is made using financial income figures for costs and various benefit figures.

5.1 Financial Rate of Return

The analysis is carried out on the analogy of economic analysis in Appendix 9.12-and 9.12-g for BKK and small schemes. Financial analysis is carried out in Appendix Table 9.12-h for the entire project. The EIRR for BKK is calculated as 13.2 percent. The results

106 for various schemes, including the BKK area are given in Table A 9.12. From amongst the small schemes, the highest return of25 percent is derived for Ado Kareze followed by 16.9 percent for Khanibaba. Scheme wise results showing various parameters are summarized in Table 9.12 below:

NPV 9.3 5.0 8.6 -0.3 B:C at 12 percent 1.2 1.1 1.1 1.0 FIRR 14.5% 1 13.2% 1 14.3% I 11.9%

NPV 16.9 12.5 16.1 6.3 B:C at 12 percent 1.4 1.3 1.2 1.1 FIRR 16.9% 15.4% 16.7% 13.8%

NPV 12.5 I 8.8 I 11.8 I 3.9 B:C at 12 percent 1.3 1.2 1.2 1.1 FIRR 15.7% 14.4% 15.4% 13.1%

NPV 15.81 11.67 15.05 5.96 B:C at 12 percent 1.38 1.26 1.24 1.13 FIRR 16.2% 14.9% 16.0% 13.5%

NPV 2.5 1 -2.0 1 1.8 I -6.7 B:C at 12 percent 1.1 1.o 1.0 1 0.9 FIRR 12.7% 11.5% 12.5% 1 10.1%

NPV 199.9 107.8 199.1 -4.2 B:C at 12 percent 1.5 1.1 1.1 1.o I FIRR 14.4% 1 13.2% 1 14.4% I 12.0% 1

5.2 Impact on Farmer’s Income

All Census figures regarding farm size or other agricultural statistics are available at tehsil level. However, the geographical area of BKK or other schemes does not match administrative boundaries. Based on the discussion with beneficiaries, average farm size for the beneficiary area ofBKK is about one hectare.

107 Total investment for the 5 year Project is Rs 1,499 million benefiting 17,303 ha of area benefited including the area for 9 schemes likely to be identified and implemented in future. It includes 3,863 ha of farm area and 13,440 ha treated for range/ watershed. Average one time investment per ha of area impacted works out to Rs 86,655 (US$ 1,444) including the cost of civil works, OFWM and Watershed Range and implementation.

The Impact on farmer income is calculated for one ha farm size of BKK command for the cropping patterns used in the anaIysis in Appendix Table 9.13. Total crop income per ha farm is likely to increase to Rs 92,791 (US$ 1,546) over the existing level of Rs 21,807/- or an increase ofRs 70,984/- per ha. High income is primarily attributed to comparatively high returns from orchard plantations compared with other crops, crop diversification and higher returns from vegetables grown on wider area due to increased and assured surface water supplies.

5.3 Cost Recovery

Involvement ofbeneficiary communities is built in each and every component ofthe project. In order to ensure the sense ofownership of the entities and to have proper post- project maintenance, a portion ofthe cost will be recovered (-10 percent).

Note on Financial vs Economic AnaIysis

Balochistan is an undeveloped area of the country. Major produce items include wheat, orchards and vegetables. Wheat, with in-elastic demand is much less to the needs of population, and therefore, is imported from other provinces (Punjab) or from abroad. Since the country is deficit in wheat, the import parity price has been used. Fruits and off season vegetables, produced abundantly in the province and the project area, are sold in other provinces (Lahore/ Karachi).49 Transport cost therefore, is a major component for these commodities. Various considerations made to run the economic analysis, are as follows:

Fertilizer (N, P, K) is imported in the country to meet local needs. Keeping in view the returns in farming sector, the fertilizers are subsidized by varying proportions. For purposes ofeconomic analysis, subsidies are added to arrive at farm gate price. Similarly the subsidy on wheat imported from abroad is added.

Various taxes include sales tax, income tax, taxes on fuel (transport), etc. All these taxes are the transfer payments and therefore are to be excluded from financial costs for use in economic analysis. Taxes on items procured from local market are thus, deducted from the financial cost. 0 Sales tax is levied at 15 percent on most of the items procured Therefore, the economic price ofsuch goods is 85 percent of the financial price. 0 The prevailing rate of income tax is 5 percent on all payments made to the contractors (civil works) and hence, is to be excluded.

.49 Fruits are also exported to Gulf countries but in smalI quantities. For the items procured from International market like vehicles, the price is taken at par or a factor of 1 for such goods

108 The market price of all fuel items is much higher than the fiee market price on account of a number oftaxes and VAT at different stages. The economic price is about 60 percent ofthe financial price for these items. The open market rate of $ is around Rs 60.50 while the official rate is about Rs 59.50. Thus the difference in real price of IocaI currency is 1.7 percent or a factor of0.983 on this account only. The wage rate for unskilled labor is higher than the open market wage rate (under/ un-employment). The Standard wage rate (SWR) is generally taken as 0.8 for unskilled labor but at par for the skilled labor. The SCF used to calculate border price of non tradable commodities (fruits, vegetables) is taken as 0.9 attributed to Rs:$ parity difference and heavy taxes on he1and lubricants.

Factors Used In the light of above, various factors used to convert financial costs to economic costs are shown in Table A 9.13.

Item Conversion Rent arks percent factor Weighted of total contribution Civil works 35 09 5 percent tax deduction at source and Rs $ percent 0.32 parity Equipment 3 08 Sales tax @ 15 percent & some other in-built percent 0.02 taxes Staff - Skilled 16 1 under valued percent 0.16 Staff - Unskilled 24 08 low efficiency I percent I 0.19 Others I 22 I 0.8 I Govt taxes at different levels I percent I 0.18 Overall n 87

The analysis carried out indicates that the ERR for the Pishin Lora Basin is higher by about 0.8 percent (15.3 percent against 14.5 percent) than the FIRR. This increase in return rate is attributed to the followings:

Hinher Income 0 Higher import parity price for wheat;

Decreased Project cost: 0 Lower financial cost due to lower SWR for skilled labour, deduction of taxes (sales tax, VAT) etc; 0 Decreased economic cost offuel etc due to heavy taxation ofthis item; Decreased cost for certain items on account ofincome tax, VAT, sales tax etc.

109 Annex 10: Procurement

Balochistan Small-scale Irrigation Project (BSSIP)

A. General

1. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement Under lBRD Loans and IDA Credits” dated May 2004 (revised October 2006); and “Guidelines: Selection and Employment of Consultants by World Bank Borowers” dated May 2004 (revised October 2006) and the provisions stipulated in the Legal Agreement. The general description of various items under different expenditure category is given in succeeding paragraphs. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank project team in the Procurement Plan. PIU has drafted a procurement plan for the initial 18 months procurements. The Procurement Plan will be updated after every six months or as required to reflect the actual project implementation needs and improvements in institutional capacity.

Procurement of Works 2 Works procured under this project, would include civil works for restoration of storage capacity of KK Bund by raising embankment and about 15 or more small irrigation schemes in Pishin Lora basin. Community participation in Watershed Improvement and Rangeland Rehabilitation is also envisaged. The ceiling for the contracts to be awarded under community participation shall be US $ 30,000. A contract form as agreed with the Bank shall be used for the community contracts. The procurements will be done using the Bank’s Standard Bidding Documents (SBD) for all ICB and National SBD agreed with (or satisfactory to) the Bank. All works estimated to cost US $ 3 million and above will be procured through ICB. All works estimated to cost more than US $ 30,000 will be procured through National Competitive Bidding. Works costing upto US $30,000 will be procured through shopping.

Procurement of Goods 3. Goods and commodities under the project would generally include office furniture, office equipment, field equipment and vehicles required by PIU in carrying out their duties.

4. Given the nature of the Project, goods and commodities estimated to cost up to US$30,000 per package will be procured through Shopping procedures. Goods estimated to cost up to $ 200,000 will be procured through National Competitive Bidding (NCB) procedures. Goods estimated to cost more than $200,000 shall be procured through ICB procedures. Vehicles for field deployment may be procured through shopping procedures.

110 Improvement of Bidding Procedures under National Competitive Bidding;

5. The follou ing iniprovements in bidding procedures v,dl apply to all procurement of Goods and Works under National Competitive Bidding, in order to ensure economy, efficiency, transparency and broad consistency with the provisions of Section 1 of the Guidelines:

Invitation to bid shall be advertised in at least one national newspaper with a wide circulation, at least 30 days prior to the deadline for the submission ofthe bid. Bid documents shall be made available, by mail or in person, to all who are willing to pay the required fee; Foreign bidders shall not be precluded from bidding and no preference of any kind shall be given to national bidders in the bidding process; Bidding shall not be restricted to pre-registered firms; Qualification criteria shall be stated in the bidding documents; Bids shall be opened in public, immediately after the deadline for submission of bids; Estimates shall be based on market rates and bids shall not be rejected merely on the basis of a comparison with an official estimate without the prior concurrence ofthe Association; Before rejecting all bids and soliciting new bids, the Association's prior concurrence shall be obtained; Bids shall be solicited and contracts shall be awarded on the basis ofunit prices and not on the basis ofa composite schedule of rates; Contracts shall not be awarded on the basis ofnationally negotiated rates; Single bids shall also be considered for evaluation. Contracts shall be awarded to the lowest evaluated and qualified bidder; and Post-bid negotiations shall not be allowed with the lowest evaluated or any other bidders.

Selection of Consultants

6. Design and Supervision Consultancy Services for the entire project will be procured through Quality and Cost Based Selection (Section I1 of the Consultants Guidelines). Other consultancy services can be procured through the selection methods given in Section I11 to the Consultants' Guidelines, or QCBS. Short lists of consultants for services estimated to cost less than $ 500,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions ofparagraph 2.7 ofthe Consultant Guidelines.

7. Individual Consultants. Services for assignments that meet the requirements set forth in the first sentence of paragraph 5. Iof the Consultant Guidelines may be procured under contracts awarded to individual consultants in accordance with the provisions of paragraphs 5.2 through 5.3 of the Consultant Guidelines. Under the circumstances described in paragraph 5.4 of the Consultant Guidelines, such contracts may be awarded to individual consultants on a sole-source basis.

111 B. Assessment of the agency’s capacity to implement procurement

8. Procurement activities will be carried out by the Project Implementation Unit placed within the Balochistan Irrigation and Power Department. The PKJ comprises of a Social Support Group and Engineering Support Group. The first full time Project Director, as well as the procurement staff left the PIU and a new PD and Procurement Engineer has been recently been appointed. . It is imperative for the success ofthe project that the PIU staff turnaround is kept at a minimum. Another procurement staff has to be appointed in the PIU for assisting the Procurement Engineer. Currently the Engineering Support Group is without any staff. Staffing of the group by qualified engineers by Feb/Mar 2008 is necessary.

9. An assessment of the capacity of the Implementing Agency to implement procurement actions for the project was carried out by the task team’s procurement specialist on December 20, 2005, and reviewed on April 25-26, 2007. The assessment reviewed the organizational structure for implementing the project and the interaction between the project’s staff responsible for procurement and the approving authorities within the government setup.

10. Most of the issues/ risks concerning the procurement component for implementation of the project have been identified. These risks along with the mitigation measures are:

i. PIU’s Capacity PIU comprises Project Director, Procurement Engineer, 3 officers from agriculture, a watershed management advisor, one sociologist, and staff for accounts. The PD and Procurement Engineer are both recently appointed. One additional procurement staff has to be hired for assistance by March 2008. IT would be beneficial for the project, if the two procurement staffs also have the responsibilities of overall projectlcontract management. The three staff for engineering support group have been truncated by the government approving authorities, but this deletion will have a serious bearing on the operation ofthe PIU. Fulltime deployment of engineers by July/August is essential for adequate project implementation. The selection of a design and supervision consulting firm is in process and this firm shall provide assistance to PJXJ in procurement of works. An initial procurement training session was held for the PD and Procurement Engineer during the assessment, and detailed training workshop on procurement will be held for the benefit of the PIU as well as other interested/ relevant IPD staff as soon as they are posted in PIU (Mar/Apr 2008). .. 11. Contractor’s Capaciv Generally the contractors in Balochistan are not very familiar with the bidding procedures of the Bank, particularly with post qualification. PW will hold a workshop; during the early stages of the project (Jan/Feb 2008) to disseminate procurement procedures and bidding requirements to the contractors. The project outline and types ofworks and requirements of filling in the bid documents will be discussed in the workshop. Representatives of the communities will also be invited in the workshop.

112 ... 111. Delays in Procurements “Standard Operating Procedures” (SOP) document the agreed procurement approval arrangements. PIU is the finaI authority on all procurements ofgoods and works. For Consultancy Services the intra secretarial Committee is the approving authority. The procedures and service standards at every step of the procurement process are given in the SOP. The procurement plan will be prepared keeping adequate time required at every stage ofthe process.

iv. Unrealistic Estimates /Specifications In the provincial government cost estimates are made based upon the Composite Schedule of Rates (CSR) which are almost always outdated and unrealistic. It is agreed that the estimated costs for the works under the project shall be based on the market rates. The Design & Supervision Consultants will be responsible for ascertaining the current market rates for each scheme.

v. Transparency In order to ensure transparency in the project implementation, disclosure is made mandatory. PIU will maintain their website (\Y\~~~~.bssip.orP.pk)whereon all the procurement related information will be displayed. This information will include procurement plan, notices of invitation, summary of bid evaluation and awards. Information regarding complaints and the action taken will also be posted on the website. For the contracts involving community participation, there will be a community representation in the evaluation committee.

11. The overall project risk for procurement is High. The risk shall be reassessed in every supervision mission.

Procurement Actions Action Responsibility Timeframe PIU Staffing IPD Done in April 2007. IPD to PD and procurement staff 1 assure least possible deployed turnaround. . Procurement training ofPlU World Bank Before major work staff procurements are done. Initiaf informal sessions held in April 2007. . Dissemination workshop for PIU Before publication of IFB contractors. for the first NCB contract. Documentation PIU Draft prepared. Should be Preparation ofthe finalized by negotiations. procurement SOP Current market rates PIU/ design and supervision ongoing process. consultancy firm Website PIU/ design firm selected Done in April, 2007. under the PPF.

113 C Procurement Plan

12. The Borrower, at appraisal, drafted a Procurement Plan for project implementation which provides the basis for the procurement methods. This plan is to be updated and finalized during negotiations. It will be posted on the PIU’s web-site and will be available in the Project’s database and in the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

Review of Procurement by the Bank

13. Prior Review is required for:

1. all ICB works contracts, 11. the first goods and works contract to be executed through NCB as well as national shopping regardless ofits value, ... 111. all contracts for goods and works estimated to cost more than US$500,000 equivalent per contract, iv. the first community contract, V. the first consultancy services contract regardless ofits value, vi. consultants’ services with firms estimated to cost more than US$100,000 equivalent per contract, vii. the first individual consultant contract regardless ofits value, and viii. services of individual consultants estimated to cost more than US$50,000 equivalent per contract.

14. All other contracts will be subject to post review by the Bank and emphasis would be placed on ex-post procurement and end-use audits which will be carried out on a regular basis to verify that the activities financed under the project are procured in accordance with agreed procedures and are used for the intended purposes.

Procurement Information and documentation

15. Procurement information will be recorded and reported as follows:

(a) Complete procurement documentation for each contract, including bidding documents, advertisements, bids received, bid evaluations, letters of acceptance, contract agreements, securities, related correspondence etc., will be maintained by the implementing agencies in an orderly manner so as to readily available for audit; (b) Contract award information will be promptly recorded and contract rosters, in the Bank’s sample format, maintained by each implementing agency, and the PIU; and (c) Comprehensive quarterly reports by PIU, indicating:

i) revised cost estimates, where applicable, for each contract; ii) status of on-going procurement, including a comparison oforiginally pIanned and actual dates ofthe procurement actions, inchding preparation ofbidding documents, advertising, bidding, evaluation,

I14 contract award and completion time for each contract; and iii) updated procurement plans, including revised dates, where applicable, for the procurement actions.

D. Frequency of Procurement Supervision

16. In addition to the prior review supervision to be camed out from Bank offices, the capacity assessment of the Implementing Agency has recommended annual supervision missions to visit the field to carry out post review ofprocurement actions.

Rs.2389 NCB Khushab million Rs.2489 NCB Khanibaba million Rs2648 NCB Ranjwali Haud million Rs24.31 NCB Sahibzada million Rs27.42 NCB Abad Kareze mllllon

18. List of Consulting Assignments with short-list of international firms.

Description of Estimated Selection Review Expected Comments Assignment cost Method by Bank Proposals (Prior / Submission Post) Date Design and US$2.5 QCBS Prior Supervision million services Monitoring and US$ 0.01

evaluation I I I

115 Annex 1E : Financial and Disbursement Arrangements

Balochistan Small - scale Irrigation Project (BSSIP)

Executive Summary

The Department ofIrrigation and Power have included key financial management staff as part of the Supervision and Design Consultants in order to move forward the financial management arrangements. By implementing the financial management arrangements, the PMU would ensure the project implementation in accordance with the requirements of OP 10.02 of the Bank. Therefore, the financial management arrangements of the project, as designed, are acceptable to the Bank.

The financial management assessment of the proposed arrangements identifies the key FM risks which are, overall, rated ‘High’. Weak financial management capacity of the staff in government departments, difficulty in attracting adequately qualified accountants from the local market, tendency ofpolitical influence on payments to the contractors due to the tribal structure in the province, and complex project implementation design (involving local agencies and community organizations) are some of the risks identified from FM perspective. The recruitment of incremental FM staff at competitive rates from the market, the development of a simplified FM Manual, and the conduct of a quarterly internal audit (equivalent to about 3 person-months per annum) by an independent firm of auditors are key recommendations to mitigate the identified financial management risks.

The report-based disbursement method shall apply for purposes of making withdrawals from the credit, which enhances the importance of effectively operating financial management systems. The project will use quarterly Interim Unaudited Financial Reports (IUFRs) to access Bank funds. The format ofIUFRs has been agreed with the PIU during negotiations. The IDA resources will be transferred in US$ to a Designated Account to finance the project expenditures. The project shall benefit from Country Financing Parameters agreed between the Bank and GoP, whereby IDA shall finance 100 percent of all eligible expenditures. The PIU, which is centrally located in the project area, will make all the payments and keep the accounts of the project activities. The Auditor- General will perform the external audit of the project. The draft Financial Management Manual, prepared by the consultants, documents the design of the financial management procedures for the project.

Fiduciary assurance is a key requirement, which the project implementation agency has to fulfill before the project can progress for further processing and for financing from Bank resources. Therefore, adequate FM arrangements have been. Towards this end, FM Manual has been developed and FM staff is being recruited as part of the selection and appointment of DSC. An interim arrangement for FM staffing until the appointment of DSC has been agreed.

Country and Provincial Issues

The Country Financial Accountability Assessment finalized on December 30, 2003 concluded that there are substantial opportunities for consolidating current reforms and for introducing additional reforms to further strengthen public financial accountability in

116 Pakistan. GFAA also analyzed the PFM situation at the provincial and local levels and concluded that there are significant weaknesses in financial management particularly at lower tiers of government. The issues identified are particularly relevant for Balochistan since that province has the weakest FM systems in the entire federation. The Balochistan Public Financial Management and Accountability Assessment, recently carried out by the Bank along with other development partners, also confirms the considerably weak FM capacity in the province.

At present, there are ‘treasuries’ instead of ‘District Accounts Offices (DAOs)’ operating in most of the districts of Balochistan. The FM capacity of treasuries is less than the DAOs (as present in other provinces) because ofthe fact that the earlier merely record the transactions in the form oflist ofpayments and cash account. As a result, the Accountant General at the provincial level perfoms the classification, compilation and reporting of province’s accounts. PIFRA I1 and ADB assisted Balochistan Resource Management Program have initiated important reforms but the substantial benefits of these reforms would come later.

Keeping in view these issues, a centralized financial management structure has been proposed where adequately qualified staff would be based in the PIU in the Department of Irrigation and Power. Since Quetta (the provincial capital) is located in the center of the Pashin Lora Basin, the FM staff would equally be accessible by all the five districts in the project.

Risk Assessment and Mitigation

The financial management risks of the project, arising from the identified weaknesses, are assessed as ‘High’. These together with their mitigating measures are hghlighted in the following table:

Risk Rating Risk Mitigating Measures Incorporated Condition of into Project Design Negotiations, Board or RI* Effectiveness (Y/N) - Project implementationby a dedicated N PIU - Entity Level High - Project implementationby a dedicated PIU with enhanced FM capacity N - Project Level Substantial -Recruitment of adequate FM staff at Achieved advanced competitive market rates through the Design stage upto Negotiations and Supervision Consultants. ( To be agreed and an interim- dunng Negotiations) arrangement for FM staffing has been ag-reed Control Risk - Budgeting Substantial - Development of the FM Manual Negotiations (Done) - Accounting High - DeveEopment ofthe FM Manual --do-- - Internal Control High

- Funds Flow Modest - Financial High Reporting - Auditing Substantial

Overall Risk High

117 Strengths & Weaknesses

The project has the following strengths from the FM perspective:

I. The implementing agency had prior experience ofmanaging Bank-funded project that represents, to some extent, cognizance with the Bank procedures, however the project had to rely on technical assistance to support the EM arrangements.

2. The project design is simplified with focus on few Iocations and centered on three defined components, thus requiring less complicated FM arrangements.

The major weakness envisaged is the lack of financial management and disbursement capacity while considering the technical and geographical coverage of the project. A number of measures are suggested to enhance the FM capacity and to reduce its impact on the project implementation.

Implementing Entities and FM Staffing

Irrigation and Power Department of Government of Balochistan is responsible for creating a PIU headed by a Project Director. In addition, an inter-departmental Project Steering Committee (PSC) would provide the policy guidance and support the inter- agency coordination at the highest level. PSC will have a broad membership from the provincial and local governments and the civil society. The Additional Chief Secretary - Planning and Development Department would chair the PSC. However, the PIU would have the primary responsibility for managing the procurement and monitoring of actual works and other project activities, which includes execution of selected works through the beneficiary organizations under output-based agreements.

Since the implementing agencies have acute shortage of FM skilled staff, incremental professional staff for PIU and outside professional support in the form of concurrent internal auditing is agreed. Specifically, it requires one adequately qualified and experienced FM Specialist (Chartered Accountant or a Cost & Management Accountant) and two part-qualified accountants (see figure A101). Due to scarcity of qualified FM resource in Balochistan, the FM personnel budget of the project should be based on reasonably competitive rates. In addition to the respective assignments in the PIU, the incremental FM staff would also be mandated to provide necessary guidance to local offices involved in the districts. For example, guidance may be required for opening of bank accounts for community contribution or keeping of accounts by FO/COs in case of output-based agreements etc.

I18 .

j Irrigation and Power Department - : .,...... i ....

t

Figure A IO. 1: IPD-Centralized Financial Management

Although the recruitment of FM professionals directly from the market could have provided the requisite independence; however, the lengthy and difficult government procedures relating to the recruitment may cause unacceptable delays in the initial recruitment as well as in the event of any replacement needs arising during the life of the project. Therefore, it has been agreed to engage three FM professional staff through the Design and Supervision Consultants (DSC) which would expedite the recruitment. These staff wiIl assist and provide support to the PIU Accountant. The job descriptions / terms of reference of the FM Specialist have been included in the Request for Proposals for DSC along with weightage in the evaluation criteria. It was also agreed that a statement would be included in the RFP to encourage the inclusion of accounting firms in the consortium by the short listed firms for sourcing of FM staff thereby providing increased assurance for back-office support, quality and quick replacement in case ofneed. While the FM team would be engaged through the DSC, the FM Specialist, as the head of the FM unit within the PKJ, would directly report to the Project Director. The Project Director would approve the monthly time sheets of the FM Specialist to authorize the payment ofhis salaries.

Under the Project Preparation Phase, an initial Financial Management Manual has been prepared which will be reviewed and adjusted at the commencement of project implementation. The PrpJ would submit the Financial Management Manual to the Controller General ofAccounts seeking the approval.

119 Budgeting

The required funds for the project will be budgeted in the Public Sector Development Program of the Government of Balochistan as an identifiable single head budget item. From there onwards, the FM Specialist will coordinate an appropriate budgeting process for the overall project activities on a quarterly basis. The budget period will be six- months on a quarterly rolling basis and the FM Specialist will need to liaise with the Project Director and other operational heads to collect initial budget estimates. The proposals, once consolidated, would be compared with the overalI cost estimates given in the PC-1 of the project. The FM Specialist would initiate any revisions of PC-1 in case significant variations are expected during the course of actual activities. The Project Director would approve the six-monthly budget.

Accounting Policies and Procedures

The PIU would adhere to government financial regulations and the Project Financial Management Manual as applicable to this project. The chart of accounts will be devised to meet the expenditure reporting requirements of the government (function-cum-object) as well as those ofthe Bank (component and sub-component).

Recognizing the fact that the government accounts are maintained on cash basis, which also meets the Bank’s minimum requirements, the project accounts shall be maintained on a cash basis. However, for purposes of additional comprehensiveness, ‘notes’ to the quarterly and annual financial reporting to the Bank should adequately disclose the commitments and obligations outstanding at the end ofany reporting period.

Financial Reporting

The financial information system that the PIU would implement should have the capacity to provide accurate reporting as per requirements in a timely manner. The IUFRs will include, but not limited to sources and application of funds, budgeted vs actual expenses, financial vs physical progress, and procurement status reports. The format of these statements have been finalized and agreed during the negotiations.

From the developmental perspective as well as for capturing total project costs, the IUFRs will include accounting of both the actual contributions in cash as well as the notional contribution in kind by the beneficiaries’ organizations. In case of community- led execution under the output-based agreements, the notional contribution for total of cash and in-kind contribution by the FOKO would be accounted for in proportion to the works completed.

The FM Specialist will prepare the project annual financial statements in accordance with the International Public Sector Accounting Standards for Cash Basis along with adequate notes and disclosures to present information about project operations, accounting policies and break-down ofkey figures given in the summary statements.

Internal Audit

The project is exposed to a significant risk due to past track of political influence for payments to contractors. This risk is further enhanced when viewed together with the

120 remoteness from the federal capital. Therefore, to mitigate the risk of induced departure from internal controls over disbursements and accounting, a continuous internal audit, covering systemic and transaction issues, by an independent firm of auditors shall be put in place. The firm engaged would conduct a quarterly internal audit of the project activities, systems and transactions and would submit the reports to the Secretary, Department of Irrigation and Power with a copy endorsed to the Bank. The level of effort estimated for the annual internal audit service shall not be more than three person- months equivalent effort ofan individual consultant.

ExternaI Audit

The Auditor-General of Pakistan will perform the external audit of the project consistent with the Bank’s and the Auditor-General’s own guidelines. The PKJ will submit the audited financial statements to IDA within six months of the end of the Government’s fiscal year (which is June 30) or such other date as the IDA may agree. The auditing and certification of the PMU financial statements does not, as per normal government auditing requirements, preclude the auditing of district and provincial government transactions related to the project by the Auditor-General.

The following table summarizes the audit requirements:

Audit Report 1 Auditors 1 DueDate Project Specific Financial Statements for the 1 The Auditor-General 1 December 3 1 - I year ending on June 30 1 ofPakistan 1 eachyear

While FOs / COS may be required to produce their own audited accounts under the law, these agencies will not be required to submit their audited accounts to the Bank. These agencies act in the capacity of contractors for works under output-based arrangements rather than implementing agencies.

Funds Flow and Disbursement Arrangements

The IDA Credit of US$25 million would be disbursed over a period of five years. Disbursement from IDA credit would be made using the report-based method where the quarterly IUFRs will include the six-months forecast of project expenditures. This forecast would be used to determine the amount to be advanced in to the Designated Account. The Designated Accounts will be replenished on a quarterly basis. Format of quarterly IUFRs, to be submitted with the Withdrawal Application, has been agreed with the PIU during the negotiations.

In addition, the PIU may opt for other methods of disbursement including the direct payments and the special commitment in case of specific needs. In these cases, the PIU will provide full documentation supporting the expenditures.

The Designated Dollar Account have been opened with the National Bank of Pakistan into which IDA funds would be deposited through the State Bank of Pakistan. The Project Director will operate and maintain the Designated Account. The Designated Account will finance eligible expenditures of the project as defined in the disbursement table. The accounting mechanism for the purpose of receiving and reporting Credit will be as per the requirements of Government of Pakistan’s MoF Circular ofNovember 25,

121 2002 as revised on June 6, 2005, relating to the maintenance and operation of ‘revoIving fund’ accounts ofIDA/IBRD/ADB credits and loans.

Expenditure Category Amount in IDA Financing US$ Million Percentage 1. Project Preparatory Finance (PPF) 0.607 100% Activities 2. Civil works, Goods, Consultants’ services, 24.393 100% Training, Resettlement Costs and Incremental Operating Costs’

Total Project Costs with Bank Financing I 25.000 100%

Action Plan

No. Actions Required Target Dates

1. Achieve a considerably advanced stage in the Achieved recruitment of the DSC, which should cater the agreed inclusion ofthe FM team and internal audit function. 2. Ensure that adequate EMarrangements are in place Agreed an interim arrangement for FM staffing till the appointment ofDSC 3. Develop and finalize a Financial Management Manual Completed for the project

Financial Covenants

1. The Government of Balochistan shall ensure that a satisfactory financial management system is maintained throughout the duration ofIDA funding.

2. The Government of Balochistan, through the PIU, shall submit audited annual financial statements of the project to IDA no later than six months of the end of the fiscal year to which they relate.

Supervision PIan With the implementation ofthe financial management and monitoring system as designed including the stipulated engagement of professional staff, Bank’s full supervision procedures will suffice. Extensive supervision would however be required for initial year or so to ensure compliance with the proposed systems and staffing improvement/ enhancement outlined in this annex. During the project implementation, the Bank will review: (a) the project’s quarterly IUFRs as well as the project’s annual audited financial statements together with the management letter; and (b) the project’s financial management and disbursement arrangements (including a transaction review of the supporting documents on a sample basis and movements on the Designated Account) to ensure compliance.

122 Annex 12: Safeguard Policy Issues

Balochistan SmalI-Scale Irrigation Project (BSSIP)

An Environmental and Social Assessment has been carried out by the IPD, to identify issues in basin and in the area affected directly by the BKK works.

The project area, in the Pishin Lora basin in the north-west of Balochistan, has been severely impacted by this drought, which has exacerbated underlying water management problems. The surface water availability decreased resulting in increased dependency on limited groundwater resources, rangelands degraded, agricultural activities significantly reduced, and economic activities were severely curtailed. Groundwater is being used to augment the surface water and uncontrolled installation of public and private tube wells has resulted in groundwater mining. This unsustainable use of groundwater has affected kareze flows (tunnel or underground channel tapping an aquifer or a spring). The poor and marginalized sections of the society have been most severely affected resulting in increased urban migration.

The basin has been facing various types of bio-environmental degradation problems (deforestation, loss of vegetative cover, and overgrazing). Environmental degradation accentuated during the last 7-8 drought years, resulting in increased soil erosion, water scarcity, and increased vulnerability to wildlife from these changes. One of the major causes of the problems was the refugees from Afghanistan who were settled in various camps in the basin.

There are many existing environmental concerns in the Basin and it must be stressed that the project is trying to help address these, as a first stage in what must be a long and sustained effort. (The possible impacts of the project, especially the rehabilitation of the BKK, are discussed further below.) Among the most critical of the existing problems in the overall Pishin Lora Basin are the following.

Impact on Forests. The natural forests in the basin are found at two places, i.e. Popelzai (531 ha) and Muslekh (46,538 ha). The Popelzai natural forest reserve has been completely cut and used as fuel by the refugees. Due to vanishing of vegetation cover on the land surface, soit erosion accelerated at alarming rates due to flash floods and hill torrents. Many wildlife species such as wolf, fox, jackal, ravine deer, horses, mountain sheep, Suleman nzarkhor, ibex, rabbits, chikors, see- see, sand grouse, bustard, pigeon, houbara and ducks are disappearing rapidly because of loss of forest and other vegetative cover (shrubs and grasses) and illegal hunting.

Impact on Rangelands. Extreme temperatures, high winds and evaporation, low humidity and degraded lands are conditions in which survival of plant life was very difficult. The local communities resorted to uncontrolled grazing to feed their livestock causing overgrazing, cutting and uprooting. The persistent drought therefore caused irreparable losses to land, water, and vegetative cover in the rangelands, which act as the main source offood to the livestock population ofthe basin.

123 Poor Watershed Management. All watersheds are in very poor state and are mostly degraded. Local communities urgently need to change their pattern of land and associated resources use to improve the long term sustainability of the environment and their livelihoods. The government departments have made some efforts in the basin to improve upon the conditions but due to isolated nature of these efforts, appreciable impact has not been observed.

Inefficient Use of Water by Agriculture. Irrigation practices followed in the Province are inefficient. Orchards in particular are irrigated by flooding entire fields, which reduces the water use efficiency to below 30 percent. A bubbler irrigation demonstration project installed on 2 hectares of land near Quetta increased the efficiency to 90 percent.

Depleting Groundwater Tables. Historically, the slopes of the mountains around Quetta valley within the Pishin Lora basin (PLB) and the watersheds were partially covered with forests. The natural recharge of the underground aquifer balanced well with the discharge from springs and karezes. With the passage of time, due to the pressure of increased population to meet its fuel and construction requirements, not only the forest cover disappeared but the soil that covered the slopes also washed down into the streams. As a result, occasional rainstorms in the basin now cause flash floods. The continued abstraction of groundwater with over-pumping has resulted in depletion of fresh water in many areas. This problem has become more acute in the recent years due to the extended drought. It is estimated that the depletion of groundwater is taking place at rates exceeding 3 meters per year in many places depending on the geology of the affected area and the extraction rates. Many ofthe old karezes have either reduced discharge, or they have totally dried up. Many open wells and tubewells have gone dry.

The small projects in the basin that will be supported by the project are all designed to find ways to address some of these problems and to move the agricultural practices to a more sustainable basis. The ESF points out the participatory design of these projects, with inputs from technical specialists and the impacts are localized and, by planning, expected to be positive or benign.

No. Description Cost(Pak Rs.) Basis

Environmental Personnel 1 ESI 2.160.000 ~~ 2 ESS 3,300,000 3 ESO (3) 1,080,000 Sub Total 6,540,000 $109,000 Environmental Monitoring 6 samples after 3 months; 5 Physical 540,000 Rs. 5,000 per sample; 54 months.

124 No' 1 Description 1 Cost(Pak Rs.) Basis 3 Surveys (Preconstruction, Mid Construction, Post Project) Rs. I Vegetation I 1507000 50,000 per survey 3 Surveys (Preconstruction, Mid 7 Wildlife 150,000 Construction, Post Project) Rs. 50,000 per survey 8 trainings per yearof one day duration; 25 personnel to be trained per training; Rs 50,000 per training. Rs 15 million included in the 9 Compensation 0 I I project cost Rs 0.56 million included in the 10 Land Acquisition 0 project cost Pest Management 30 days 10,000 per day; travel 300,000 l1 I Study 1 and lodgingboarding expenses. Development of 30 days x 10,000 per day and 12 Resettlement Action 350,000 associated expenses. Plan Linkage with IPM 14 application project in 300,000 Lump sum

Sub Total 1,890,000 31,500 Total 8,430,000 $1.686 million

Impacts of the BKK Works

The works at the BKK are designed to restore the original storage volume of the reservoir, so that the supplies to the existing command area can be returned to earlier volumes and made more reliable. The BKK system is an off-river storage, meaning that it is situated at some distance from the river and water is diverted into it during flood flows in the river, for release over the subsequent irrigation periods. The system is not large enough to provide year-to-year storage. The works involved are raising the main Bund (embankment) by 2.77m meters in order to partially restore the volumes lost to siltation over the years, together with rehabilitation of existing diversion, intake and spillway works that link the reservoir with the river. All of these works are localized and will have limited impacts.

The main issue with relation to the reservoir works is the need to provide a protective bund to protect orchards that were established within the edge of the reservoir area by encroachers during the drought years. Negotiations are ongoing with encroachers to reach an agreed design for the bund. There will be minor widening of the spillway channel below the Bund, over a distance of a few kilometers until it reaches the river again. The current channel is about 100 feet wide and this will be widened to 140 feet, this can be easily accommodated with negligible environmental impacts.

125 The BKK area was declared a wildlife sanctuary in 1982 under the Balochistan Wildlife Protection Act, 1974, since it used to be the only large water body around Quetta before it became dry. It was a staging and winter ground for birds migrating from Siberia to warmer climates in the south. Rehabilitation of the Bund will increase the seasonal area and shoreline ofthe lake and will heIp to restore the lake as wintering ground for birds.

The environmental management plan (EMP) for the project has been developed to provide the delivery mechanism to address the adverse environmental and socia1 impacts of the project during its execution, to enhance project benefits and to introduce standards of good practices during the project implementation.

Implementation Arrangements for EMP

The overall responsibility for compliance with the EMP rests with the Project Implementation Unit of IPD. During the Project Preparation Phase an Environmental and Social Inspector was deputed to the PIU in compliance with the requirements ofthe EM. However, in the absence of suitably qualified environmental personnel with the department, contractor’s compliance with the EMP during the construction phase will be supervised by design and supervision consultants (DSC) engaged for the job. During the operation phase of the project, environmental and social management will be integrated into the O&M activities and hence no dedicated environmental personnel will be required for this stage ofthe project.

Safeguard Issues

The ESA study identifies safeguard issues emerging in OP 4.01 (Environment Assessment), OP 4.12 (Involuntary Resettlement), and OP 7.50 (Project on International Waterways). Implementation of EMP and RAP will ensure compliance with all the safeguard policies triggered due to the project.

Environmental Assessment (OP 4.01, BP 4.01, GP 4.01): Physical interventions of the Project will be spread across Pishin Lora basin, which has varying geography and socio- environmental features. Major project intervention is in the form of restoration of KK Bund reservoir capacity and the likely adverse environmental impacts are expected generally during the construction phase. Most ofthese and other impacts like soil erosion, partial submergence of cultivated lands at the periphery of the reservoir and water contamination will be of temporary and reversible in nature and will be mitigated by adopting adequate management measures proposed in the EMP. There are potential social issues related to the distribution and management of additional water made available through the project interventions and these will be resolved through community participation and social mobilization. The Environmental Management Plan developed under ESA outlines the grievance redress system which provides an opportunity to the communities for voicing their concerns and their adequate redress. The EMP also clearly outlines the responsibilities within the Department, consultants and the contractors to effectively implement the proposed mitigation measures during the construction stage. Pest Management COP 4.09): The Project does not envisage financing directly the purchase ofpesticides, however, proposed interventions may result in the transformation

I26 of the basic food crop to more commercial crops, promoting the modernization of irrigation systems and providing associated technical assistance. The EMP recommends developing linkages with other ongoinghpcoming projects, such as National IPM Project - which aims to build capacities for the introduction of IPM techniques, and a UNDP funded project - which intends to put IPM techniques in apples farms in Pishin district. Natural Habitat (OP 4.04, BP 4.04, GP 4.04): While the project can potentially affect a critical natural habitat (the KK Bund Wildlife Sanctuary), it does not involve significant conversion or degradation of the habitat. Restoration of reservoir capacity will improve and support the habitat for the migratory birds. Further, due to the project interventions there will be no change in the ffow regime of any of the stream feeding into BKK. The potential impacts of the project on the habitat and wildlife resources pertain to the construction phase only; hence these are temporary in nature, and mostly reversible. The impacts of the proposed scheme on the status of the lake as a wintering ground for the birds and implications for the management of the wildlife sanctuary have been assessed as part of the present ESA. Recommendations to minimize the adverse impacts and maximize the ecological benefits ofthe project have been incorporated into the EMP. Forestry (OP 4.36, GP 4.36): No component of the proposed project has any adverse impacts on meager forest resources in the project area. On the contrary, the project seeks to improve and rehabilitate rangeland and watershed area ofthe basin, which will have a positive impact on the forest resources ofthe area. Safety of Dams (OP 4.37, BP 4.37): The BKK is an off-stream reservoir, and the two intake structures can be closed when the lake is filled to the design level. Furthermore, the proposed project includes remodeling of the BKK spillway to accommodate unusual large flood event. An independent review of dam safety is in progress. As part ofEMP it has been suggested to prepare an emergency preparedness plan during construction supervision and quality assurance; a plan for instrumentation at the BKK; an operation and maintenance plan for the BKK; and an overall emergency preparedness plan for the BKK. Indigenous People (OP 4.10): ESA studies have concluded that no indigenous people live in this area with a social and cultural identity distinct from the dominant society that makes them vulnerable to being disadvantaged in the development process. Projects in International Waters (OP 7.50, BP 7.50): Pishin Lora ofwhich Bershore is the major tributary runs into Afghanistan - and then returns into Pakistani territory. There were some concerns that proposed delay dams in the Pishin Lora basin - Balochistan, would have affected the lower riparians and therefore triggered the need to notify the Government of Afghanistan. At present there are discussions underway between the Governments of Pakistan and Afghanistan on cross-boundary water issues and it is expected that these talks will provide a framework for notification and discussion of such matters. A formal framework is expected but is not yet in place. A major program of delay dams is not included in the current program and notification is not required.

The project team has assessed the project components in the context of OP 7.50 and concluded that OP 7.50 applies to the project, as the project site is located on the Pishin Lora river which is an international waterway as described in paragraph 1 (a) of OP 7.50. However, the project involves only in the partial restoration ofthe lost storage capacity of the BKK reservoir and in making it safe and more efficient in operation by remodeling the feeder canals and improving other associated structures. The project also involves

127 only in the rehabilitation of some small irrigation schemes. It does not involve works and activities that would exceed the original scheme, change its nature, or alter or expand its scope and extent to make it appear a new or different scheme. The project’s works are minuscule compared to the original scheme and are meant to support the rehabilitation of the original scheme, and are expected not to impact other riparians. Similar repair and improvement work has been carried out as part of the normal operation and maintenance over the years. The rehabilitation work will not result in any expansion in the original water diversion fiom the Pishin Lora River. Given the nature of works envisaged under the proposed project, it is believed that: (a) the project will not adversely affect the quality or quantity of water flows to other riparian; and (b) it will not be adversely affected by other riparian’ water use either. Therefore, the project Team has concluded that the project falls within the exception to the notification requirement under paragraph 7 (a) ofOP 7.50. Involuntary Resettlement (OP 4.12): The social assessment carried out under the project preparation suggests that invohntary resettlement is unlikely except if agreement cannot be reached on dealing with loss of orchards and standing wheat crop on the encroached state land following the rehabilitation of KK Bund under the project. Since means of livelihood may be moderately impacted due to project intervention, a Resettlement Framework Plan has been prepared as part of ESA studies to mitigate these effects. Resettlement Action Plan was prepared and 9 of the 10 communities have accepted. However, Tora Shah village has not accepted it. The GOB has provided assurances that they will continue working with this community to reach an agreement to implement the improvements to the BKK.

128 Annex 13: Project Preparation and Supervision Balochistan Smalt-scale Irrigation Project (BSSIP)

Planned Actual PCN Review August 26,2004 August 26,2004 Initial PID to PIC October 15,2004 November 9,2005 Initial ISDS to PIC October 15,2004 November 1I, 2005 Appraisal February 5,2006 December 14,2005 Negotiations December 18,2007 December 18,2007 BoardRVP approval February 2 1,2008 Planned date of effectiveness Planned date ofmid-term review Planned closing date

Key institutions responsible for preparation ofthe project: Balochistan Irrigation and Power Department

Bank staff and consultants who worked on the project include:

Name Title Unit Manuel Contijoch Sr. Water Resources Specialist SASDA Lilac Thomas Program Assistant SASDA Shyam Ranjitkar Sr. Irrigation Engineer SASDA Ghulam Ali Program Assistant SASDA Uzma Sadaf Procurement Specialist SARPS Ismaila Ceesay Sr. Financial Management Specialist SARFM Furqan Ahmad Saleem Financial Management Specialist SARFM David Hanrahan Lead Environment Specialist SASDS Winston Yu Young Professional SASDA Javaid Afzal Environmental Specialist SASDN Qazi Asmat Isa Sr. Community Develop. Specialist SASDN Riaz Mahmood Disbursement Specilist SACPK Shah Rehman Consultant Yasmin Siddiqi Consultant M. Asif Khan Consultant Rashid U1Qayyum Consultant Syed Mohammad Arif Consultant Roy Mann Consultant Karin Kemper Lead Water Resources Management SASDS Specialist Hector Garduno GW-MATE Planning and Institutional Consultant Marcella Nani GW-MATE Legal and InstitutionaI Consultant Shahid Ahmed Groundwater Management Consultant Frank Steenbergen Peer Reviewer Consultant Ijsbrand H. de Jong Peer Reviewer AFTS2 Fernando Gonzalez Consultant

129 Name Title Unit Salman Salman Lead Counsel LEGEN Jose Simas Lead Water Resources Engineer MENA Usman Qamar Sr. Irrigation Engineer SASDA Tekola Dejene Lead Operations Officer SASDA Thomas Buckley Sr. Country Officer SACPK Sakwa Bunyasi Senior Agriculture Economist SASAR

130 Annex 14: Selected Documents in the Project File

Balochistan Small-scale Irrigation Project @SSIP)

1.Augmentation of Storage Capacity of Bund Khusdil Khan. March 2005. Pakistan Drainage Consultants. Feasibility and Design Report.

2. Preparation ofGroundwater Management Strategies for Balochistan. May 2007 GWMATE. Hector Garduno, Marcella Nani. Shahid Ahmed. Mission Report.

3. The Balochistan Gazette. November 17,2000. The Balochistan Groundwater Water Rights Administration (Amendment) Ordinance 2000. Government ofBalochistan. Law Department.

4. Integrated Water Resources Management Policy. Balochistan, Pakistan. June 27,2004. GWP. Shahid Ahmed. Report.

5. Watershed and Rangeland Management in the Pishin Lora Basin. Balochistan Pakistan. March 6,2006. Roy S. Mann and Shah Rehman. Report

6. Rehabilitation and Storage Augmentation. December 2004. Pakistan Drainage Consultants. Appraisal Report.

7. Balochistan Small-scale Irrigation Project. July 20,2004. World Bank Documents. Project Concept Note.

8. Augmentation of Storage Capacity ofBund Khushdil Khan. November 7,2005. IMTA. Alfonso Gutierrez and Javier Aparicio.

9. Environmental and Social Assessment. September 2005. Irrigation and Power Department. Government ofBalochistan. Study Report.

10. No Objection Certificate. Balochistan Small-scale Irrigation Project. February 28, 2006. Environmental Protection Agency. Review ofthe Environmental Impact Assessment.

11. Public Hearing. Balochistan Small-scale Irrigation Project. February 20,2006. Irrigation and Power Department. Minutes.

12. Exception to Notification. Balochistan Small-scale Irrigation Project. July 26. 2005. Compliance with OP/BP 7.50 ( Projects in International Waterways)

13. Financial Management Manual. Balochistan Small-scale Irrigation Project. May 16,2007. N. A. Naqvi. Report

14. Bidding Documents Bund Khushdil Khan and six small-scale irrigation schemes.

131 May 15,2007. Irrigation and Power Department. Government of Baloehistan Project Implementation Unit.

15. Quetta Water Supply and Environmental Improvement Project. December 2002 Techno-Consult. Report

16. Resettlement Framework. Balochistan Small-scale Irrigation Project. December 15, 2006. Report

17. Detail Geotechnical and Design Studies. BaIochistan Small-scale Irrigation Project. March 2007. Halcrow and Cameos.

18. Feasibility and Design Reports of Ado Kareze, Khuslab, Shanibaba, Ranj - Wadi Hud, Sahibzada and Abad Kareze Small-scale Irrigation Projects. Balochistan Small- scale Irrigation Projects. March 2007. Halcrow and Cameos Consultants.

19. Augmentation of Storage Capacity of Bund Khushdil Khan Pishin. Design Report. March 2007. Halcrow and Cameos Consultants.

132 Annex 15: Statement of Loans and Credits

Pakistan--BaIochistan Small-scale Irrigation Project (BSSIP)

Difference between expected and actual Original Amount in US$ Millions disbursements

Project ID FY F’urpose IBRD IDA SF GET: Cancel. Undisb. Ong. Frm Rev’d

~ PO84302 2008 Sindh Water Sector Improvement Project 0.00 150.20 0.00 0 00 0.00 155.31 a oo 0 00 PO90501 2007 Land Records Mgmt & Information 0.00 45.65 0.00 0 00 0.00 45.00 -0 01 0 00 Systems PO94086 2006 Balochistan Education Support Project 0.00 22.00 0.00 0 00 0.00 20.60 -1.21 0.00 PO83929 2006 Punjab Municipal Services hprovement 50.00 0.00 0.00 0 00 0.00 45.38 12.50 -2.63 PO97402 2006 Second Partnership for Polio Eradication 0.00 46 70 0.00 0 00 0.00 0.32 -22.36 -13.32 PO76872 2006 PIFRA I1 0.00 84.00 0.00 0 00 0.00 64.99 10.42 0.00 PO991 10 2006 Pakistan Earthquake ERC 0.00 400.00 0.00 0 00 0.00 58.58 -12.68 0.00 PO88994 2005 Taunsa Barrage Emergency Rehab & 123.00 0.00 0.00 0 00 0.00 33.16 29.17 0.00 Modem PO77306 2005 Tax Administration Reform Project 24.40 78.50 0.00 0 00 0.00 90.94 53.78 0.00 PO83370 2004 PK Public Sect Capacity Building Project 0.00 55.00 0.00 0 00 0.00 28.93 12.77 0.00 PO82977 2004 Second Poverty Alleviation Fund Project 0.00 238.00 0.00 0 00 0.00 192.23 -137.46 100.22 PO82621 2004 hWFP Community Infrastructure I1 ( 0.00 37. IO 0.00 0 00 0.00 17.63 0.3 1 0.00 CIP2) PO78997 2004 Sindh On-Farm Water Management 0.00 61.14 0.00 0 00 0.00 13.74 9.19 0.00 Project PO10556 2004 HIGHWAYS REHAB 50.00 150.00 0.00 0 00 0.00 209.53 -3.12 8.37 PO71454 2003 AJK Community Infrastructure & Services 0.00 20.00 0.00 0 00 0.00 37.04 0.89 15.89 PO74797 2003 Banking Sector Technical Assistance 0.00 26.50 0.00 0 00 0.00 7.60 2.50 0.00 PO74856 2003 HIVIAIDS Prevention Project 0.00 27.83 0.00 0 00 0.00 16.99 8.38 7.9 1 PO77288 2003 National Education Assessment System 0.00 3.63 0.00 0 00 0.00 2.48 1.29 0.00 PO71092 2001 NWFP ON-FARhI WATER 0.00 21.35 0.00 0 00 3.47 6.09 -3.85 -6.87 MANAGEMENT PROJECT PO35823 2001 GEF-Protected Areas Management Project - 0.00 0.00 0.00 10.08 0.00 5.45 8.10 0.00 Total: 247.40 1,467.60 0.00 10.08 3.47 1,051.99 - 31.39 109.57

133 PAKISTAN STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions of US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2005 ABAMCO FUND 0 00 3 46 0 00 0.00 0 00 3 46 0.00 0 00 1995 AES La1 Pir 12 42 9 50 0 00 0.00 12 42 9 50 0.00 0 00 1996 AES Pak Gen 9 20 9 50 0 00 5.37 9 20 9 50 0.00 5 37 1995 Abamco Mgmt 0 00 0 29 0 00 0.00 0 00 0 29 0.00 0 00 1991 BRRM 0 00 0 23 0 00 0.00 0 00 0 23 0.00 0 00 1993 Crescent Bahuman 0 00 0 31 0 00 0.00 0 00 031 0.00 0 00 1997 Crescent Bahuman 0 00 0 20 0 00 0.00 0 00 0 20 0.00 0 00 2001 Crescent Bahuman 2 72 0 00 2 50 1.50 2 72 0 00 2.40 150 2006 Dewan Petroleum 15 00 E2 00 0 00 0.00 0 00 0 00 0.00 0 00 2004 Dewan SME 0 00 0 98 0 00 0.00 0 00 0 00 0.00 0 00 2003 Dewan Salman 25 00 0 00 5 00 0.00 25 00 0 00 4.00 0 00 1991 Engro Chemical 0 00 195 0 00 0.00 0 00 1 95 0.00 0 00 2006 Engro Chemical 0 00 0 64 0 00 0.00 0 00 0 64 0.00 0 00 200 1 En1 Pakistan 12 00 0 00 0 00 0.00 12 00 0 00 0.00 0 00 1990 FIIB 0 00 0 27 0 00 0.00 0 00 0 27 0.00 0 00 1992 FIB 0 00 0 40 0 00 0.00 0 00 0 40 0.00 0 00 2004 First UDL 7 00 0 00 0 00 0.00 0 00 0 00 0.00 0 00 GTFP Metropolita 2 54 0 00 0 00 0.00 2 08 0 00 0.00 0 00 1996 Gul Ahmed 8 10 4 10 0 00 5.22 8 IO 4 10 0.00 5 22 2006 Habib Bank Li 0 00 0 00 50 00 0.00 0 00 0 00 0.00 0 00 2003 KCT 6 46 0 00 150 0.00 6 46 0 00 1so 0 00 1995 Kohinoor 6 25 6 30 0 00 2.03 6 25 6 30 0.00 2 03 2002 Micro Bank 0 00 2 43 0 00 0.00 0 00 2 43 0.00 0 00 2004 NBFI Credit 6 50 0 00 0 00 0.00 6 50 0 00 0.00 0 00 Onx Finance 5 00 0 00 0 00 0.00 0 00 0 00 0.00 0 00 2006 Onx Leasing I700 0 00 0 00 0.00 17 00 0 00 0.00 0 00 2005 PlCT 6 00 0 00 0 00 0.00 6 00 0 00 0.00 0 00 2006 PICT 8 00 0 00 0 00 0.00 0 00 0 00 0.00 0 00 1983 PPL 0 00 133 0 00 0.00 0 00 I33 0.00 0 00 2002 PPL 0 00 5 63 0 00 0.00 0 00 5 63 0.00 0 00 1965 Packages 0 00 0 05 0 00 0.00 0 00 0 05 0.00 0 00 1987 Packages 0 00 0 02 0 00 0.00 0 00 0 02 0.00 0 00 1991 Packages 0 00 0 02 0 00 0.00 0 00 0 02 0.00 0 00 1994 Packages 0 00 0 01 0 00 0.00 0 00 0 Of 0.00 0 00 1995 Packages 0 00 0 26 0 00 0.00 0 00 0 26 0.00 0 00 2005 Packages 25 00 5 43 0 00 0.00 0 00 1 41 0.00 0 00 2006 Paktel 2005 35 00 0 00 0 00 0.00 0 00 0 00 0.00 0 00 200 1 Sarah Textiles 112 0 00 0 00 0.00 112 0 00 0.00 0 00 2004 TRG Pakistan 0 00 4 16 0 00 0.00 0 00 4 16 0.00 0 00 2007 TRG Pakistan 0 00 2 50 0 00 0.00 0 00 2 50 0.00 0 00 2006 Tameer Bank 0 00 I01 0 00 0.00 0 00 101 0.00 0 00 1996 Uch Power 29 60 0 00 000 0.00 19 68 0 00 -0.00 0 00 Totalportfolio 23991 7298 5900 14 I2 13453 5604 7.90 14 12

134 Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Pamc 2004 CSIBL 0.04 0 00 0.00 0.00 2006 MFL I1 0.0 1 0 00 0 00 0.00 2004 Dewan SME 0 00 0 00 0 00 0.00 2006 JSPE Fund 0.00 0 02 0.00 0.00 2006 Habib Bank 0.00 0 05 0.00 0.00 2006 Pa!de12005 0.00 0 00 0.00 0.03 2006 Orix SME OLP 0.02 0 00 0.00 0.00 2006 Tameer Bank 0.00 0 00 0.00 0.00 2006 Dewan Petroleum 0.00 0 00 0.00 0.03 Total pending commitment: 0.07 0.07 0.00 0.06

I35 Annex 16: Country at a Glance

PAKISTAN: Balochistan Small-scale Irrigation Project (BSSIP)

Development diamond'

Lifeexpectancy

63 59

Access to improvedratersource

xx_-- Pakistan Lowincome group

2006 ~ [Eonomic ratros' 86 8 217 i P 153 Trade D7 23 6 T

43 Domestic Capital 07 savings formation 28 4 Ra i

Indebtedness

Pakistan -~Lowincomegroup ~~ 1

STRUCTURE of the ECONOMY

I986 1996 2005 2006 Fowth of capttal and GDP (%) (%ofGDP) 1 Agriculture 276 247 215 84 Industry 234 235 27 1 27 2 M anufactunng 83 152 86 85 Services 490 522 514 53 4 Household final consumption expenditure 773 744 76 9 75 5 General gov't final consumption expenditure 07 05 78 09 Imports of goods and services 69 I78 86 23 3 I GCF -GOP

1986-96 1996-06 2005 2006 Growth of exports and imports (%) (average annualgrowth) 1 Agriculture 43 24 65 16 Industry 58 55 t?l 50 M anufactunng 52 71 155 00 Services 51 48 85 96 Household final consumpton expenditure 47 37 PI 33 Generalgov't final consumption expenditure 30 45 17 48 3 Gross capital formation 43 22 67 PI Imports of goods and services 43 31 40 5 87

Note 2006data ate prelimmaryestirnatesGroupdataare for2005 'Thediamonds showfourkeyindcators inthecount!y(in bo1d)comparedwthlls incomegroupaverage lfdataaremissing,thediamondunli be incomplete

136 BALANCE of PAYMENTS 1986 2996 2005 2006 Currenl account balance to GDP (%) (US$ milkonsj Exports of goods andsewices 3,796 9,977 0,601 20,345 Imports of goods and sewices 7,230 '6227 25.606 33,232 Resource balance -3,434 -5,250 -7,607 -P,88? Net income -MQ -1,953 -2,366 -2.676 Net current transfers 3,302 2.613 9,125 6,135 Current account balance -772 -4,593 -t,068 -5,458 Financingitems (net) I200 4,63 458 6.588 Changes in net reserves -428 431 6r) -1130 Memo: Reserves including gold /US$ millions) 1638 2,639 13,722 12.053 Conversion rate (OEC local/US$J B1 33 5 594 599

EXTERNAL DEBT and RESOURCE FLOWS 1986 1996 2005 2006 (US$ millions) Total debt outstandingand disbursed w.954 29,829 33,675 36,079 3,007 IBRD 605 2238 2,151 I G 1630 A 2,151 I IDA 1560 3.480 6,665 7,777 Total debt service 1626 3267 2,443 2,269 IBRD 68 436 404 363 IDA 26 63 157 252 Composition of net resource flows Official grants 325 200 gn 0 Official creditors 398 1115 590 634 Pnvate creditors 55 556 933 852 Foreign direct investment (net inflows) r)6 922 2.183 3,500 Portfolio equity(ne1inflolus) 3 265 451 0 0 6 899 WorldSank program 1 Commitments 756 558 1.550 1498 A - IBRD E- Bilaterai Disbursements 249 651 e45 975 R-IDA D.GtkrmItrIRerd F-Rivde Pnncipal repayments 50 265 427 387 C-IMF G-Short-term Net llows 89 386 49 588 I Interest payments 63 224 145 "A6 Net transfers 136 $52 274 440

Development Economics 13/Y07

137

MAP SECTION

IBRD 35842 TAJIKISTAN 66°00’E 66°30’E 67°00’E 67°30’E TURKMENISTAN CHINA PISHIN LORA BASIN PAKISTAN FED. CAPITAL TERRITORY BALOCHISTAN SMALL SCALE ISLAMABAD N.W.F.P. MuzaffarabadMuzaffarabad BSSIP SCHEMES 31°00’N Peshawar

PISHIN LORA BASIN IRRIGATION PROJECT AFGHANISTAN ISLAMABAD BUND KHUSHDIL KHAN STORAGE DAM Chaman MAIN RIVER Lahore STREAMS PUNJAB Sanzala MAIN ROADS Kareze Randah Kazha Kareze PISHIN Quetta SELECTED TOWNS Ado Kareze PROVINCE CAPITAL er PAKISTAN Area of Map ora Riv Spina ISLAMIC DISTRICT BOUNARIES Pishin L REP. BALOCHISTAN Bund Khushdil Khan OF DIVISION BOUNDARIES Storage Dam Khanozai IRAN QILA ABDULLAH Kareze INDIA INTERNATIONAL BOUNDARIES (For detail, see map at right) SINDH Pishin Khushab

This map was produced by the Map Design Unit of The World Bank. Karachi The boundaries, colors, denominations and any other information 30°30’N Khani Baba 30°30’N shown on this map do not imply, on the part of The World Bank (Dargai Dam) Group, any judgment on the legal status of any territory, or any Arabian Sea endorsement or acceptance of such boundaries. Kach AFGHANISTAN QUETTA ZIARAT 66°48’E 66°54’E 67°00’E 67°06’E 67°12’E 67°18’E Bostan

BUND KHUSHDIL KHAN STORAGE DAM BUND KHUSHDIL KHAN STORAGE DAM Hanna River LOCATION KKB CANAL QUETTA r STREAMS e iv Karanga SIBI R METALLED ROADS

ra Lo 30°48’N SHINGLE ROADS hin QUETTA Pis SIBI RAILROADS 30°48’N

la VILLAGES a a N d n i a a 30°00’N 30°00’N h M g i o b T

m i 0 2 4 a a r p Tiri A S Panjpai PAKISTAN KILOMETERS Kolpur Ibrahimzai Shinghari Ibrahimzai la Na Mian Khanzai Shakarzai irgi Kulak Alizai Shero D Huramzai Gangalzai Kakazai Simzai Ibrahimzai Lamar Mastung Kakozai Maikhanzai Ismailzai Dab Khanzai Kardegap BOLAN Badwan MASTUNG Shinghari Bagarzai Shahabudin Abdullah Nau Majak Manzaki 30°42’N Aabi Gul Shaikhalzlai Majak Rodengai Yasinzai 30°42’N Ambara Yasinzai Killi Nali Malikyar Kamaizai Sha Malkharma Khairabad ran Shalkot Karbala Malezai Malik Mohammed Killi Waliyat Killi NASIRABAD Badezai Tor Shah Kumbi/Chahi Mast Nushki Lai Khanzai Bund Khushdil Khan Jigda Karbala Balauri 29°30’N 29°30’N Torkhel Bahramzai Storage Dam Bora Killi Gul Mohammed Amir Killi Shan Pando Sulaiman Khel Kulalzai

Khudaidzai Haikalzai Batezai KALAT Popalzai Spin Bianzai Surkha Saranan b Nala 30°36’N Ahmed Khel Saranan Nau Killi Nigandi Kuz Piran Killi S ur 30°36’N kh Batezai ab Saranan Killi Muchan Batezai Iskalku Agha Mohammed Pishin Saranan Barracks KALAT Faqirzai Killi Haji Jalal Killi Haji Faiz Mohammed Shadizai Sulaimankhel a Killi Haji Abdullah i Nal 0 10 20 Rokh Sahibzada 29°00’N 29°00’N Killi Malik Sattar Killi Mohammed Ghous Gwal KILOMETERS Kalabagh Malik Raza Samkhel 66°00’E 66°30’E 67°00’E 67°30’E 66°48’E 66°54’E 67°00’E 67°06’E 67°12’E 67°18’E

DECEMBER 2007