ACTION MEMORANDUM FOR THE MISSION DIRECTOR THRU DEPUTY DIRECTOe ) FROM: Robert W. trieb, Chief, PDM SUBJECT: Baluchistan Area Development Proje (910479 Project Authorization Amendment No. 2 I. PROBLEM Your approval is requested to amend the Project Authorization for the Baluchistan Area Development Project and to authorize an increase in the life of project funding by 45.0 million, from the current $40.0 million to 445.0 million. II. BACKGROUND The Baluchistan Area Development (BALAD) Project was authorized by the A.I.D. Administrator on August 17, 1984 with LOP funding of 440.0 million. Its purpose is to accelerate the integration of the Makran Division of Baluchistan, one of the least developed areas in Pakistan, into the socio-economic mainstream of the rest of the country, and to improve the quality of life in Makran through improving roads, water and agricultural infrastructure and strengthening Provincial and Divisional planning, management and human resources. Itqqoal is to contribute t6 the socio-economic development of the lagging areas of akistan. An Amendment to this Project Authorization was approved by the USAID/Pakistan Acting Mission Director on March 4, 1987, to permit the financing of the Bela-Awaran Road sub-project, which is located in the adjacent Division of Kalat, serving as the principal overland link to and from the Makran Division and the rest of Pakistan. The Makran Division is important politically and economically. It borders Iran and the Arabian Sea and is close to Karachi, Pakistan's. principal port and market center. The potential for trade between Makrarf and Karachi is limited by the surface transpertation network, which is the least developed in Baluchistan. Little has been done to maintain &nd improve the road network which evolved from old caravan trails. Many contemporary roads in reality are stone, gravel and silt tracks. The lack of low-cost surface transportation facilities represents one of the most serious constraints to development in Makran and to its integration with the rest of Baluchistan and Pakistan. MISSION AUTHRIZATIONS FM/IMD (if Loan) FM/PAFD GC/ANE ANE/TR Off ioer ANE Desk ANDP pcl"RPA PwDOf f Iaer &File -2- In August, 1987 USAID signee a contract for the construction of the 110 kms Bela-Awaran road. In several project meetings, the Government of Baluchistan (GOB) requested that USAID finance the A/E and construction work of the 255 kms Awaran-Turbat road. This would be an extension to the Bela-Awaran road authorized in the BALAD Project. III.. DESCRIPTION OF PROJECT AMENDMENT The proposed Amendment requests an increase in the life of project funding from 440.0 million to 445.0 million. The ad,.itional 45.0 million funds are needed to finance the A/E costs for des2an of the 255 kms Awaran-Turbat road and general construction activizics of the BALAD Project. An estimated budget is attached as Tab-D. The proposed project Authorization Amendment attached to this Action Memorandum (Tab C) neither changes the project purpose or goal, nor modifies project intent. For that reason, this action memorandum together with its attachments and the cable which requested AID/W approval to amend the project (See Islamabad 14168), serve as the project paper amendment. A third Project Authorization Amendment for Awaran-Turbat Road construction will be considered after the A/E work is complete and final cost-estimates are known. A/E work will take approximately one year to complete and will be completed before the current PACD of December 31, 1990. The present Awaran-Turbat road has an average daily traffic count in excess of 150 vehicles. Physically, the existing alignment is almost straight and it is cut at stream/river crossing at several places. The valley's geological characteristics show continuous outcrops of water-deposited gravels and cobbles, resulting in rough track conditions throughout the section. Accidents often occur and it is difficult for heavy vehicles to use the road safely due to steep gradients. The completion of this road will facilitate efficient movement of goods through -the eastern half of Makran Division. In addition, the people of Makran will have a direct link to Karachi and the present Turbat/Karachi travel time will be reduced from two to three days to only 9 hours. This is expected to have a positive impact on local economic conditions. IV. RECOMMENDATION That you authorize an increase in the life of project funding of 45.0 million by signing the attached Project Authorization Amendment. For this purpose, an ad-huc delegation of authority has been granted to you by the A.I.D. Administrator through a cable (STATE 241169 dated August 5, 1987) to approve the Project for $45.0 million in ESF grant funds. Attachments:Tab A - Original Project Authorization dated 8/17/84 Tab B - Project Authorization Amendment No. 1 signed by Acting Mission Director dated March 4, 1987 Tab C - Proposed Project Authorization Amendment No. 2 for signature Tab D - Budget for $5.0 Million Tab E - PP Amendment and Facesheet -3- Clearances:PDM:RMathia: (Draft) PRO:PDavis: (Draft) ENG:GGeorge: (Draft) RLA:BQadir: (Draft) FM :ADPratt: (Draft) RAO/K-RTraister: (Subs.) Drafted by:PIt. MSaleem/LMail loux:sp:aq 1770p/0115S (9/20/87) UPiilb SYrAYSSs wt1mmwAYrow&L lviJ0'sgwY't sao~a, .w'o.aI|NC -_ .Aml AStNC:Y POR INTOMNATIONAL DEVEL@PMj Jlr i WASI~gWaYoW me |0||t PROJECT AUTHORIZATION Same of Country: Pakistan Rame of Project: Baluchistan Area Development roeci Numer of Project: 391-0479 1. Pursuant to Section 531 of the Foreign Assistance Act of 1961, as amended, (the Act) I hereby authorize the Baluchistan Area -Development Project for the Islamic Republic of Pakistan (the Cooperating Country) involving planned obligations af not to exceed Forty Million United States Dollars ($40,000,000) in grant funds over a four (4) year period from the date of authorization, subject to the ovailablity of funds in accordance with the A.I.D. OYB/allotment process, to help in financing foreign exchange and local currency costs for the project. The planned lie of the project is through December 31, 1989. 2. The project is intended to assist the Cooperating Country's effort to integtate the Makran Division of Baluchistan Province into th--ocio-economic mainstream of Pakistan ard to improve the quality of life for the people who live there by providing technical assistance, construction services, training and operating expenses tc (a) construct, rehabilitate or upgrade maintenance of approximately 900 kilometers of road -in.the primary road network of Makran Division, (b) construct or improve water karezes and small and mediu scale diversion structures and dais, and (c) strengthen the capacity of the Cooperating Country, the Government of Baluchistan, and the Makran Division to plan, prioritize, select and implement developmen' projects for Baluchistan, particularly the Makran Division. 3. The agreement(s) which may be negotiated and executed by the officer(s) to whom such authority is delegated in accordance with A.I.D. regulations and Delegations of Authority shall be subject tc the following essential terms, covenants and major conditions, together with such other terms and conditions as A.I.D. may deem *ppropriate. a. Source and Origin Commodities, Nationality of Services Commodities financed by A.I.D. under this project shall have their .souice and origin in the Cooperating Country or in the United States except as A.I.D. may otherwise agree in writing. Except for ocean shipping; the suppliers of commodities or services shall have the Cooperating Country or the United States as their place of nationality, except-s A.I.D may otherwise agree in writing. Ocean shipping financed by A.I.D. under the project shall except as A.I.D. may otherwise agree in writing, be financed only o flag vessels of the United States or the Cooperating Country. b. Condition Precedent to Disbursement for Selected Activities Except as A.I.D. may otherwise agree in writing, prior to any disbursement of funds under this project for any activities, except for design york, under the roads and wateT components and fo those activities related to construction of the office and housing facilities for the Project Planning and Management Unit in Makran, to the issuance by A.!.D.'of the documentation pursuant to which su disbursements will be made, the Cooperating Country shall furnish t A.I.D. in form and substance satisfactory to A.I.D. documentation that: i. an overall Governrent of Baluchistan project manage located in Quetta has been appointed; ii. the Commissioner of ihe Makran Division has been appointed as Field Project Manager with full operational authority over the Project Planning and Management Unit at Turbat; iii. a Steeri Committee at Quftta and a Working Committee at Turbat have Seen formally established; iv.. the Pro44Ct Planning and Management Unit has been formally established under the authority of the office of the Commissioner of Makran Division; and, v. a Director of the Project Planning and Management Unit has been appointed. c. Conditions Precedent to Disbursement for Construction of the Office and Housing Facilities for the Project Planni and Management Unit Except as A.I.D. may otherwise agree in writing, prior t the disbursement of funds under this project for activities relat( to construction of the office and housing facilities for the Proj, Planning and Management Unit at Turbat, other than disbursements f architectural und engineering services related thereto, or to the issuance by A.I.D. of documentation pursuant to which such disburI ments will be made,the Cooperating Country shall furnish to A.I.d. in form and substance satisfactory to A.I.D., written assurance t, the land to be used for construction of the office and housing facilities wiil remain available for this purpose for.