Completion Report

Project Number: PAK 19141 Loan Number: 1294-PAK(SF) November 2005

Pakistan: Pehur High-Level Canal Project

CURRENCY EQUIVALENTS (as of 30 June 2005) Currency Unit Pakistan rupee/s (PRe/PRs) At Project Completion (30 June 2005) $0.0168 PRs59.66

PRe1.00 $1.00

= =

At Appraisal (30 November 1993) $0.033 PRs30.1256

For the purpose of calculation in this report, the rate of PRs50.00 to $1.00 is used.

ABBREVIATIONS ADB ADC ASPL-II BME CBIO CCA CR CRBC DAE DOA DOFWM DOI EA EIRR FIDIC FO FSC FSU IBIS ICB ISF ISRIP IWMI LCB LSC M&E NDSP NGO NWFP O&M PC-1 PCR P&DD PHLC PIDA PPTA PRM Asian Development Bank agriculture development component Agriculture Sector Program Loan II benefit monitoring and evaluation crop-based irrigation operations cultivable command area cross regulators Chashma Right Bank Canal Department of Agriculture Extension Department of Agriculture Directorate of On-Farm Water Management Irrigation and Drainage Department executing agency economic internal rate of return Fdration Internationale des Ingnieurs-Conseils (International Federation of Consulting Engineers) farmers organization farmer services center farmer support unit Indus Basin Irrigation System international competitive bidding irrigation service fee International Sedimentation Research Institute, Pakistan International Water Management Institute local competitive bidding Lower Swat Canal monitoring and evaluation National Drainage Sector Program nongovernment organization North-West Frontier Province operation and maintenance Planning Commission Performa 1 project completion review Planning and Development Department Pehur High-Level Canal Provincial Irrigation and Drainage Authority project preparatory technical assistance Pakistan Resident Mission (ADB)

PSC RD SAWB SCARP SDC SDR SMO SSP SWHP TA TOR TPA USC WAPDA WC WMED WO WSIPS WUA

project steering committee reduced distance Swat Area Water Board Salinity Control and Reclamation Project Swiss Agency for Development and Cooperation special drawing rights SCARP Monitoring Organization (WAPDA) Swabi SCARP Project Service Water Hydrology Project technical assistance terms of reference Topi Priority Area Upper Swat Canal Water and Power Development Authority Watercourse Watercourse Monitoring and Evaluation Directorate womens organization Water Sector Investment Planning Study water users association

WEIGHTS AND MEASURES ft3/sec GWh KWh m3/sec cubic feet per second gigawatt-hour kilowatt-hour cubic meter per second

NOTES (i) The fiscal year (FY) of the Government and its agencies ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2000 ends on 30 June 2000. (ii) In this report, $ refers to US dollars.

CONTENTS Page BASIC DATA MAP I. II. PROJECT DESCRIPTION EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Project Design B. Project Outputs C. Project Costs D. Disbursements E. Project Schedule F. Implementation Arrangements G. Conditions and Covenants H. Consultants Recruitment and Procurement I. Performance of Consultants, Contractors, and Suppliers J. Performance of the Borrower and the Executing Agencies K. Performance of the Asian Development Bank EVALUATION OF PERFORMANCE A. Relevance B. Efficacy in Achievement of Purpose C. Efficiency in Achievement of Outputs and Purpose D. Preliminary Assessment of Sustainability E. Environmental, Sociocultural, and Other Impacts OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment B. Lessons Learned C. Recommendations iii vii 1 2 3 6 6 6 7 7 8 9 9 9 10 10 10 11 11 12 13 14 14 15 15 17 18 20 26 30 31 35 36 38 48 53 55 56 69 75 77 79 81

III.

IV.

APPENDIXES 1. Civil Works Contracts 2. Project Scope (Appraised and Actual) 3. Hydraulic Capacity Test Report 4. Operational Issues and PCR Mission Recommendations 5. Consulting Inputs 6. Project Costs 7. Annual Loan Disbursements 8. Project Implementation Schedule 9. Status of Compliance with Loan Covenants 10. O&M Funding 11. Subsurface Drainage System Performance Report 12. Status of Compensation for Land Acquisition 13. Economic Cost and Benefit Analysis 14. Farm Budget 15. Watercourse Discharge and Conveyance Efficiency 16. Labor Data 17. Groundwater and Soil Quality Data 18. Socioeconomic Impact of the Project

BASIC DATA
A. Loan Identification 1. 2. 3. 4. 5. 6. 7. B. Country Loan Number Project Title Borrower Executing Agency Amount of Loan Project Completion Report Number Pakistan 1294-PAK(SF) Pehur High-Level Canal Project Islamic Republic of Pakistan Water and Power Development Authority Department of Irrigation, North-West Frontier Province SDR91,542,000 (or $127,600,000) PAK-907

Loan Data 1. Appraisal Date Started Date Completed 2. Loan Negotiations Date Started Date Completed Date of Board Approval Date of Loan Agreement Date of Loan Effectiveness In Loan Agreement Actual Number of Extensions Closing Date In Loan Agreement Actual Number of Extensions Terms of Loan Interest Rate Maturity (number of years) Grace Period (number of years) Terms of Relending (if any) Interest Rate Maturity (number of years) Grace Period (number of years) Second-Step Borrower

8 September 1993 29 September 1993

18 November 1993 20 November 1993 22 December 1993 6 June 1994

3. 4. 5.

4 September 1994 2 November 1994 2

6.

31 December 2002 30 June 2005 2

7.

1% per annum 35 10

8.

1% per annum 35 10 Government of North-West Frontier Province

iv
9. Disbursements a. Dates Initial Disbursement 27 December 1994 Effective Date 2 November 1994 Final Disbursement 15 November 2005 Original Closing Date 31 December 2002 Revised Closing Date 30 June 2005 Actual Closing Date 20 November 2005 b.
Category or Subloan

Time Interval 130 months Time Interval 96 months Time Interval 138 months Time Interval 143 months
Amount Disbursed 83,435,968
a

Amount ($ as of 30 June 2005)

Original Allocation 81,970,221 4,690,547 3,764,219 17,698,131 395,222 967,063 6,801,294 5,001,803 Last Revised Allocation Amount Canceled Net Amount Available 74,863,299 4,567,420 3,775,358 17,355,316 350,292 954,059 6,750,404 4,693,467 Undisbursed Balance (8,571,169) 2,835909 2,206,512 5,207,881 (1,051,530) 466,019 5,429,014 0 11,466,434 17,989,070

01A Civil Works - Part A 01B Civil Works - Part B 02 03 Equipment & Vehicles Consulting Services

1,731,511 1,568,846 12,147,435 1,401,822 488,040 1,321,390 4,693,467

04C LOC Expb Investigations and Surveys 04F LOC Exp-Adaptive Research & Demo Program. 04G LOC Exp-IOC 05 06 Service Charge Unallocated

11,396,294 11,466,434 Total 132,684,794 124,776,049 106,788,479 BME = benefit monitoring and evaluation, Demo = demonstration, Exp = expenditure , IOC = incremental operation cost, LOC = local, a Includes pipeline disbursements of about $2.5 million. b Includes expenditure of $0.43 million on BME related activities.

10.

Local Costs (Financed) - Amount ($ million) - Percent of Local Costs - Percent of Total Cost

59.46 65.48 43.05

C.

Project Data 1. Project Cost ($ million) Appraisal Estimate 52.20 110.80 163.00 Actual 47.33 90.81 138.14

Cost Foreign Exchange Cost Local Currency Cost Total

2. Cost

Financing Plan ($ million) Appraisal Estimate 35.40 127.60 163.00 0.00 4.81 0.00 4.808 Actual 31.35 106.79 138.14 0.00 4.69 0.00 4.693

Implementation Costs Borrower Financed ADB Financed Total IDC Costs Borrower Financed ADB Financed Other External Financing Total

ADB = Asian Development Bank, IDC = interest during construction.

3.

Cost Breakdown by Project Component ($ million) Appraisal Estimate 107.42 8.55 0.12 1.38 117.47 15.03 25.70 4.81 163.00 Actual 124.30 4.97
a

Component A. Irrigation and Drainage B. Agriculture Development C. Land Resource Conservation D. Environmental and Benefit Monitoring and Evaluation Total Base Cost Physical Contingencies Price Escalation E. Service Charge during Construction Total Cost
a

0.41 129.68 0.90 2.86 4.70 138.14

Component C was awarded to Component B consultants and charged to Component B.

4.

Project Schedule Appraisal Estimate Jan 1994 Dec 1995 Jun 1995 Sep 2001 Actual Dec 1994 Jun 1996 Nov 1996a Jun 2005

Item Date of Contract with Engineering Consultants Completion of Engineering Designs Civil Works Contract Date of Award Completion of Work Equipment and Supplies Dates First Procurement (PCSS005) Last Procurement (PCSS0069) Completion of Equipment Installation Start of Operations Completion of Tests and Commissioning Beginning of Start-Up
a

Jan 1995 Sep 1996

Jan 1995 May 2005

Jun 1999 Jul 1999

Nov 2003 Nov 2002

Minor civil work contract for construction of residential quarters. The first large civil works contract for tunnel and canal works was awarded on 19 Dec 1997.

vi

5.

Project Performance Report Ratings Ratings Development Objectives Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Implementation Progress Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory

Implementation Period 1 October 1998 to 31 December 1998 1 January 1999 to 31 December 1999 1 January 2000 to 31 December 2000 1 January 2001 to 31 December 2001 1 January 2002 to 31 December 2002 1 January 2003 to 31 December 2003 1 January 2004 to 31 December 2004 1 January 2005 to 28 April 2005 D. Data on Asian Development Bank Missions Date

Name of Mission

No. of Persons

No. of PersonDays 160 26 10 9 2 9 13 30 20 8 8 14 16 10 12 26

Specialization of Membersa

Fact-finding Appraisal Special Loan Administration 1 Special Loan Administration 2 Follow-up 1 Review 1 Special Loan Administration 3 Review 2 Review 3 Mid-term Review Review 4 Review 5 Review 6 Review 7 Review 8 Review 9 Project Completion Reviewb = data not available.
a

14 Jun6 Jul 1993 9 Sep1 Oct 1993 23 Jun19 Jul 1994 30 Nov10 Dec 1994 1926 June 1996 1719 Dec 1996 57, 1112 Nov 1997 1822, 2729 May 1998 1214 Oct 1999 21 Feb2 Mar 2000 816 Dec 2000 1822 March 2002 1219 Aug 2002 28 Mar5 Apr 2003 16 Dec 2003 2026 July 2004 25 April to 6 May 2005

5 8 1 1 2 1 2 3 3 2 1 2 2 2 2 2 3

a,b,c,d,e f,b,c,g,h,i,j,k a a a,m a a,n o,p,n o,e,q p,m p p,r p,r p,r p,r p,r p,o,j

a - senior project engineer, b - project specialist, c - project economist, d - senior implementation officer (Pakistan resident office), e - staff consultant, f - project agronomist, g - counsel, h - project engineer, i - programs officer, j staff consultant, k - mission secretary, l - senior project engineer, m - resident representative (Pakistan Resident Mission), n - loan administration assistant, o - senior project implementation officer, p - project implementation officer, q - assistant project analyst, r - associate project analyst, s - senior project assistant. The project completion report was prepared by Mian S. Shafi, Project Implementation Officer.

I.

PROJECT DESCRIPTION

1. Irrigated agriculture in Pakistan accounts for 90% of crop production from 16.5 million hectares (ha) of irrigated land. Some 14.3 million ha are under the Indus Basin Irrigation System (IBIS), which comprises three major reservoirs (Chashma, Mangla, and Tarbela,), 23 barrages/headworks, 12 inter-river link canals, and 45 canal systemsextending about 60,800 kilometers (km) to serve over 140,000 farmer-operated watercourses. Agriculture production accounts for 23% of the gross domestic product (declining steadily from 30% in the late 1970s), employs 42% of the workforce, provides livelihood for 68% of rural inhabitants, and contributes 60% of export revenues. However, the overall irrigation efficiency of IBIS is below 40%. The main technical limitations constraining agriculture production are (i) seasonal disparities between water supplies and crop water requirements, (ii) weakness in water conveyance efficiency, (iii) waterlogging and salinity, (iv) quality of agriculture extension/research, and (v) inefficient use of inputs. 2. The Pehur High-Level Canal (PHLC) Project is located in the North-West Frontier Province (NWFP). The province covers 10 million ha and has a total population of 17.5 million, of which 83% live in rural areas and are predominantly dependent on agriculture. Current agriculture production levels in NWFP cannot meet the basic food needs of its population. An estimated 1.7 million ha per year are cultivated in NWFP but only 0.9 million ha are irrigated. The project area is located at the far reaches of the Upper Swat Canal (USC) system, and suffers from inadequate water supply, waterlogging, and salinity. 3. The main aim of the Project is to realize the full agricultural potential of about 40,300 ha in the project area by (i) alleviating shortage of irrigation supplies to about 35,800 ha at the far reaches of the USC; (ii) reclaiming about 6,000 ha of waterlogged land within the USC command area; and (iii) providing irrigation development for about 4,500 ha of mainly rain-fed land outside USC command in Topi Priority Area (TPA). The Project also intended to increase agricultural production in the adjacent Swabi Salinity Control and Reclamation Program (SCARP) Project1 (SSP) area by supplementing its water resources and allowing additional irrigation development of about 4,000 ha of mainly rain-fed land. To achieve these objectives, the Project had four components: (i) irrigation and drainage improvement and development; (ii) measures for accelerating agriculture development, capitalizing on improved irrigation and drainage conditions (Agriculture Development Component [ADC]); (iii) land resource conservation study; and (iv) environment and benefit monitoring and evaluation (BME) program. 4. The project loan, currently valued at $125.47 million (as of 30 June 2005), was approved on 22 December 1993, and became effective on 2 November 1994. Implementation was expected to take place over 9 years and the original loan closing date was 31 December 2002. The Water and Power Development Authority (WAPDA)the main Executing Agency (EA) of the Projectwas supported by the government of NWFPs Department of Irrigation (DOI) and Department of Agriculture (DOA) through its Directorate of On-Farm Water Management (DOFWM) and Department of Agriculture Extension (DAE), in implementing the Project.

Loan No. 976 PAK (SF) (ADB. Year. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan for SWABI Salinity Control and Area Reclamation Project, Manila.) This was approved in 1989 and completed in 2000. The Asian Development Bank (ADB) contributed $118 million.

II. A.

EVALUATION OF DESIGN AND IMPLEMENTATION

Relevance of Design and Formulation

5. The Project was consistent with the Government of Pakistans (the Governments) development strategies and the Asian Development Banks (ADBs) country strategy at appraisal. The Governments Seventh Five-Year Plan (19881993) projected annual growth of 4.7% in agriculture2 through a program designed to bridge the gap between actual and potential farm yield. The Water Sector Investment Planning Study (WSIPS) was published in December 1990 3 and the subsequent Water Apportionment Accord (1991)4 allocated Indus water resources between provinces and opened the doors for further investment in water sector infrastructure. The WSIPS focused on integrated management of the IBIS, including (i) construction of surface and subsurface drainage, (ii) rehabilitation and improvement of existing distribution systems (including watercourses), (iii) efficient use of available water supplies, and (iv) initiation of selected new pilot schemes. In the 1990s, ADB's strategy in Pakistan supported the Governments approach. In particular, ADB operations focused on export growth and improved efficiency of existing investment. Given the relative lack of additional land and water, increased agricultural growth was to be achieved through enhanced production by addressing inadequate capacity and low efficiency of existing irrigation systems, inefficient water management at farm level, waterlogging and salinity, and farm to market roads. The Project was in line with government and ADB water sector strategies, with its focus on production increase through (i) increased water supplies, (ii) on-farm water management and better extension services, (iii) surface and subsurface drainage, and (iv) demand-based integrated water management. 6. The Projects innovative design and approach are still relevant and consistent with current policies and strategies of the Government and ADB. Under the Governments Poverty Reduction Strategy Paper5, the water sector approach focuses on (i) integrated irrigation, hydropower, and agriculture development investment; (ii) modernizing water infrastructure and institutional and governance arrangements; and (iii) balancing investment in (a) water infrastructure and water management and (b) supply and demand management. Water conservation remains a priority area through watercourse maintenance, organizing water users associations (WUAs), and transferring responsibility for irrigation and drainage management to local water boards and farmers organizations (FOs). According to the draft National Water Policy, draft Medium-Term Development Framework (20052010), and the National Water Sector Strategy currently being processed, the scarcity of irrigation water will be reduced through augmentation and conservation measures, including (i) developing large reservoirs; (ii) improving the efficiency of the irrigation system; (iii) restoring agricultural productivity through control of waterlogging, salinity, and floods; (iv) enhancing institutional performance through reforms, and implementation of an integrated flood and on-farm water management program. In drainage, one of the key guiding policy principles is the implementation of a drainage strategy to reduce generation and ensure safe disposal of drainage effluent. The Project is relevant to ADBs current country strategy outlined in Country Strategy Program Update 200608, and the Governments development strategy in the sector, with its focus on (i) improvement in irrigation supplies and drainage infrastructure, (ii) demand management and efficient water use, (iii) support for institutional reforms, (iv) on-farm water management and extension services, and (v) multipurpose design supporting irrigation and hydropower generation.
2 3

Based on the Report of the National Commission on Agriculture (March 1988). Full reference to be given here 4 Executed between Government of Pakistan, and four federating units namely Punjab, Sindh, NWFP, and Balochistan on Indus water distribution.. 5 Approved by Government of Pakistan in December 2003

7. The Project was technically and economically viable within the original implementation schedule. The design of individual components was satisfactory, except for the subsurface drainage component (para. 8). Implementation arrangements were partly satisfactory, as they had to be adjusted to consider the capacity of the EAs, and efficient and economical use of consultants, as desired by the borrower. WAPDAs weak technical capacity and centralized management were not fully taken into account at the design stage, which resulted in major delays in contract award and implementation. Design work on PHLC started in 1970 but the Projects technical assistance (TA) consultants based their design appraisal on the updated project proposal prepared by WAPDA in 1991. The key components of the Project were based on further studies, surveys, and investigations (land use, soil, drainage, groundwater, and socioeconomic) carried out during the design phase by the consultants and the EA, including review of existing surveys/studies. This was followed by consultation workshops with beneficiary communities on key packages and approval by the DOI-led design committee, with representation from key government agencies. The project cost estimates at design stage were satisfactory (para. 19). Consultations with farming communities were not comprehensive and efforts were not well coordinated between different project stakeholders, leading to more intensive consultation before project commissioning. However, during remodeling and construction of watercourses (WCs), dialogue with beneficiaries was quite extensive which resulted in ownership of the completed WCs by the communities. 8. Changes to the appraised design and scope of components were introduced during the detailed design stage and, in some cases, during implementation (para 10). Lessons learned from the SSP were intended to be incorporated in the ADC design but limited interest from the NWFP government meant that ADB recommendations were not included. However, consultants incorporated lessons learned from the SSPs irrigation and surface drainage in the project design. In contrast, lessons learned from subsurface drainage in other projects were not fully incorporated in the project design, despite the hydro-geological conditions of the area which required subsurface drainage. This caused major problems in system operations after completion (Appendix 11). B. Project Outputs

9. The project output envisaged at appraisalto increase irrigation supplies by about 100% in the cultivable command area of 35,800 ha in the far reaches of the USChas been fully achieved. This includes 7,600 ha where canals were only improved and not remodeled to avoid the risk of waterlogging with increased supplies. The Project also provided irrigation development in about 4,310 ha of mainly rain-fed land in TPA (against the appraisal target of 4,500 ha) and allowed additional irrigation development in about 5,212 ha of mainly rain-fed land in the SSP (Ballar) area (higher than the 4,000 ha appraisal target). About 8,000 ha of waterlogged land within the USC command area was reclaimed (against 6,000 ha envisaged at appraisal) by providing surface drainage under the Project and subsurface drainage under SPP.6 The following section highlights key deviations in project design and outputs, and the reasons for these deviations. Details of civil works contracts awarded are in Appendix 1 and comparison of the Projects appraised and actual scope is in Appendix 2. 10. Irrigation and Drainage Component (Part A-1). The Gandaf tunnel was constructed as a pressure tunnel with a capacity of 28.3 cubic meters per second (m3/sec) and 4.65 km length, compared with the appraisal proposal for a gravity tunnel with 28.3 m3/sec capacity and 3.9 km
6

Originally included in the Projects scope but financed by the SSP (footnote 5).

length. The change in design created an option for future hydropower generation, allowed a more reliable flow-regulation regime, created flexible capacity, and produced flow to meet Jhanda Boka lift scheme requirementswith no increase in cost. The PHLC was constructed with a capacity of 27.1 m3/sec at the head of the canal as appraised (excluding 1.2 m3/sec for the Jhanda Boka lift scheme). Hydraulically efficient parabolic concrete lining, with 5 downstream control gates, was introduced at the design stage to improve operational and management efficiency of water, introduce automatic operations, and enhance the irrigation systems response time. In TPA, 4 low pressure piped minors, 1 open channel, and 24 direct outlets were constructed on the PHLC to irrigate 4,310 ha (against 4 minor canals envisaged at appraisal). Low pressure pipes were adopted to increase system efficiency, reduce requirement for land acquisition, and introduce demand management of water. About 78 km of the Maira Branch and associated distributaries and minor canals were remodeled (compared with the appraisal estimate of 98 km) to accommodate the design discharge of 0.7 liters per second per ha. Eight automatic control gates were added and 86 km of exiting canals was improved (equal to appraisal estimate). The remodeled length was cut to reduce the cost of remodeling. Downstream control gates were provided for automatic downstream control of flows and efficient demand management. 11. A total of 25 WCs drawing more than 140 liters/sec were converted into minor canals, as envisaged. Surface drains measuring 46 km were remodeled. About 8,000 ha were provided subsurface drainage (compared with appraisal estimates of 6,000 ha) through 450 km of collector and lateral drains, financed through the SSP. The scope was revised based on actual site conditions (drainability survey) and subsurface drainage component implementation was transferred to SSPconsidering the skill required for construction and to make the contract attractive for international competitive bidding (ICB). 12. System Management and Optimization (Part A-2). The operation, hydraulic, and optimization models required for optimal operation and maintenance (O&M) of PHLC and USC were developed by the International Water Management Institute (IWMI), formerly known as International Irrigation Management Institute (IIMI) as envisaged. Fine-tuning of these models (requiring four cropping seasons) was delayed because the PHLC was commissioned late, and will be completed by 31 December 2005. Crop-based irrigation operations (CBIO) designed to provide water (and reduce water wastage), based on crop requirement, faced problems (Appendix 3, paras. 79) because of breaks in the systems automatic operation, initial resistance from farmers, lack of coordination, and manual interventions in system operations by DOI staff. Measures have been agreed to resolve these issues with DOI (Appendix 4, para. 6). The CBIOs initial results are encouragingincreased acceptance by farmers and DOI staff helped reduce water wastage by (40%) in 2004. 13. Agriculture Development Component (Part B). A total of 444 WCs and associated WUAs have been completed, compared with the appraisal target of 450 WCs and WUAs. This includes WCs in Narranji and Kalu Khan (SSP) not included in the original project scope, as irrigation water was made available to these areas after commissioning the PHLC. The rest of the activitiesunder extension, adoptive and action research services, land development (93 ha), and training (434 training sessions for farmers)are also complete. A consortium of consultants won the bid for community mobilization and capacity building and was hired with ADBs approval, instead of a nongovernment organization (NGO) as envisaged at appraisal. The majority of WUAs developed under the Project are dormant, as water issues have reduced with the increase in water, lining of WCs and outlet structures, and reduced operation and

maintenance requirement. Pilot FOs, established under the Project and other initiatives7, for water management at distributaries cover 33% of project WUAs (para. 25). The FOs are functioning in accordance with the Provincial Irrigation and Drainage Authority (PIDA) Act. However, until this Act is fully implemented on the USC, the sustainability of the remaining WUAs (66%), which are part of the FOs, is doubtful. Lessons learned from the SSP (para. 8) have not been incorporated in the ADC design, which reduced the impact of extension services on crop yield in some areas. 14. Land Resource Conservation study (Part C). The study was completed by the DOA in 2000 under the overall guidance of the Planning and Development Department (P&DD) as envisaged at appraisal. The recommendations of the study are being implemented under the ADB-financed Forestry Sector Project.8 15. Monitoring and Evaluation (Part D). As envisaged at appraisal, a detailed environment and BME program was implemented by WAPDAs SCARP Monitoring Organization (SMO). This component was given additional support from the consultants because the SMO was downsized during project implementation, drastically reducing SMOs implementation capacity. This remained an issue throughout project implementation and delayed the project completion review (PCR). The key components of monitoring and evaluation (M&E) program included (i) agroeconomic and WC discharge monitoring; (ii) groundwater depth, soil, and water quality monitoring; and (iii) canal and drainage discharge monitoring. SMO had overall responsibility for coordination and report preparation for three components. The 199697 baseline developed under the M&E program was well developed. However, after regular reporting up to 1999, subsequent reports were so late that they were no longer relevant. Except for 2000 (where data was not collected due to staffing issues), all impact reports providing analysis of data collected from 2001 to 2004 were published from April 2005 to July 2005. However, these reports still have gaps in data analysis and presentation, and some data sets are completely missing. 16. Consulting Services. WAPDA-attached units initiated engineering investigation and engaged consultants for supervision of investigation and survey work in July 1994 (directly engaging 22 person-months of SSP consultants). ADB approved direct engagement of SSP consultants under the Project and consultants were mobilized on 15 December 1994 to supervise surveys and investigations, prepare designs and tender documents, construction supervision, beneficiary consultation campaign, and on-the-job training of EAs. The construction supervision consultants were designated engineer in accordance with the provisions of the International Federation of Consulting Engineers (FIDIC). Most investigation and survey works were completed as scheduled. There was a slight increase in consultant inputs compared to appraisal estimates because SSP consultancy work was included in the PHLC consultants contract (Appendix 5),9 and there was a 30-month delay in contract awards and implementation of civil works. 17. The performance of the ADC consultants was satisfactory. The consultant provided momentum which reduced accumulated delays caused by delayed approval from the Planning
7

Loan No. 1413 PAK (ADB. 1995. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan, for National Drainage Sector Project. Manila) and World Bankfinanced On Farm Water Management (OFWM) Program II. Loan No. 1403-PAK(SF) (ADB. 1995. Report and Recommendation of the President to the Board of Directors on on Proposed Loan to the Islamic Republic of Pakistan, for Forestry Sector Project. Manila) approved in November 1995 with current value of $41.2 million (as of 31 Oct 2005) and closing date of 31 Dec. 2004. Construction supervision of works awarded in the Ballar area, under Loan No 976 PAK(SF), was transferred to PHLC consultants.

Commission Performa 1 (PC-1) and delayed recruitment. The consultants used additional inputs within the overall cost ceiling of their contract (Appendix 5). The key reasons for additional inputs were (i) 2-year delay in starting the ADC, (ii) 3-year delay in water availability from PHLC, and (iii) addition of the FO pilot project to the ADC consultancy contract to support reforms under the PIDA Act. 18. IWMI was directly engaged to develop operational procedures and computer simulation models for USC and PHLC, and train DOI staff. The slight increase in IWMI inputs against the appraisal estimate (Appendix 5) is due to an extension in IWMIs contract because of delays in commissioning the system and testing and fine-tuning of the three models developed by IWMI (para. 12), as well as inclusion of farmer education and awareness campaign in IWMIs contract. C. Project Costs

19. ADB provided a loan of SDR91.7 million ($127.60 million) to finance about 78% of the total estimated project cost ($163.00 million), comprising all the foreign exchange cost ($52.20 million) and 68% ($75.41 million equivalent) of the local currency cost (Appendix 6). The Project is expected to disburse $106.89 million10 from ADBs contribution, financing 77.3% of the total project cost ($138.13 million), comprising $47.33 million of the foreign exchange cost and 65.5% ($59.46 million equivalent) of the local currency cost. ADBs contribution is 15.7% less than the appraisal estimate, mainly because a large amount of unallocated funds ($40 million) was allocated at the design stage to meet conditions encountered during tunneling. This was useful as there were major cost overruns in contracted amounts of irrigation and drainage components because (i) bid prices were high as contractors had to cover the risk of tunneling, and (ii) the overall cost of the component increased by 19% ($20.60 million) compared to the appraisal estimate, but the unallocated funds were still not fully utilized. ADC provided major cost saving (54%) as work carried out through WUAs was completed at 60% of the estimated cost. Consulting services were completed at 73% of the appraisal estimate, as the main consultancy contract was terminated immediately after commissioning the PHLC. There were cost under-runs in the adoptive research and incremental operating costs components. In general, cost underruns had a positive impact ($17.90 million) on the Projects economic returns. D. Disbursements

20. The appraisal schedule of annual disbursements expected major expenditures in the first five years of the Project (19951999). However, disbursements were low from 1995 to 1997 and did not pick up until 1998 with the award of civil works contracts (Appendix 7). They peaked at $328.95 million in 2001 but remained low during the last 2 years (20042005) and relatively high during the remaining 6 years of the Project (19982003). The Government opened two imprest accounts for the loan, one with WAPDA and the other with DOA. The DOI was also declared as an EA without any imprest account facility. These arrangements were effective in financing implementation expenditures. E. Project Schedule

21. There was a delay of 2 months in loan effectiveness (para. 22) and 42 months in project commissioning (Appendix 8). The captioned loan was extended twice to accommodate these delays. The first extension (from 1 January 2003 to 31 December 2004) covered delays in the

10

Includes pipeline expenditure of $2.5 million.

main contract,11 mainly due to delay in contract award (para. 27), difficult rock conditions in the Gandaf tunnel,12 and slow work progress by the same contractor towards the end of contract.13 This caused delays in all other contracts for irrigation, ADC, and system operation, which were dependent on PHLC water provision. ADB approved a further 6-month extension in the loan closing date (from 1 January 2005 to 30 June 2005) to complete four remaining minor works, testing of the final system, completion of BME activities, and financing 6 months of IWMI services14 for fine-tuning O&M models. All major civil works contracts were substantially completed within the extended loan period and handed over to DOI. The loan account closed on 20 November 2005, 35 months after the original closing date. F. Implementation Arrangements

22. There was a 2-month delay in loan effectiveness due to disagreement between WAPDA and DOI in finalizing implementation arrangements. The complicated implementation arrangements of the Project were dictated by the Government to reduce consultancy costs at appraisal and to some extent necessitated by the established capacity of WAPDA to manage large contracts. The arrangements made WAPDA a subcontractor and the lead EA, responsible for all civil works under the irrigation and drainage component, consulting services, and BME component. DOI was responsible for developing the water optimization, hydraulic, O&M, and CBIO models. 23. The DOAthrough DOFWM and DAEwere responsible for implementing the ADC. A project coordination committee, headed by DOI with representatives from all EAs and consultants, was established to coordinate implementation and review progress. A project steering committee, chaired by the additional chief secretary of P&DD with representation from WAPDA, DOI, DOA, and consultants, met biannually to provide overall guidance and approve major activities. To increase DOI ownership and reduce differences between WAPDA and DOI, upon the request of the NWFP government, ADB allowed a minor change in implementation arrangements, engaging DOI as EA for minor ratification work and procurement of operational equipment. 24. The implementation arrangements not only delivered project physical outputs with delays, but also resulted in developing major gaps in ownership and operations of the Project. This caused unnecessary cost overruns and further delays at loan closing (paras. 31 & 32). G. Conditions and Covenants

25. The loan covenants were relevant to project implementation and reforms envisaged under ADB's sector strategy. Out of 62 covenants, 48 were complied with, 3 were complied with delays, 9 were partly complied with, 1 was not complied with, and 1 was not applicable (Appendix 9). Out of the 10 partly or not complied with, 7 covenants require further actions for full compliance and 3 do not require any further action. The partly complied with covenants that need further actions relate to (i) delays in provision of counterpart funds, (ii) complete optimization of PHLC-USC operations and implementing CBIO, (iii) timely compensation for land acquisition, (iv) provision of O&M funds for drainage and irrigation facilities remodeled/improved under the
11 12

Tunnel and Main Canal Contract WP01. Unexpected rock formation in Gandaf tunnel (4.6 km long) reduced speed of tunneling to 0.2% of the target. 13 Subcontractor Siemens Pakistan Engineering Co. Ltd. delayed re-fabrication of electro-mechanical equipment at the tunnel inlet by more than 6 months. The re-fabrication was undertaken against the advice of the consultants, which had proposed new equipment. 14 The NWFP government has already approved financing for a budget neutral extension of the IWMI contract until 31 December 2005.

Project, (v) beneficiary dialogue, and (vi) appointment of regulation cell staff. The covenants requiring the irrigation service fee (ISF) to increase at an annual rate of 25% until full cost recovery of the O&M was complied with (Appendix 10). The covenant requiring effective compliance by the NWFP government with O&M arrangements is partly complied with, as DOI is only receiving 25% of funds required for O&M of the USC and Lower Swat Canal (LSC) systems. The PIDA Act allows the formation of FOs and Swat Area Water Boards (SAWBs), which will take over management and O&M of the irrigation and drainage system from DOI and collect ISF. This initiative is supported mainly by the National Drainage Sector Program (NDSP)15 and is in the pilot stage (complete management was transferred to 5 out of 14 FOs). The PCR Mission reported a loss of productivity and inadequate use of project infrastructure, because of limited availability of O&M funds and staff for DOI. The NWFP government has made financial allocations in the budget for the year 200506, to comply with all the partly complied with loan covenants. Recommendations for full compliance are in Appendix 9. H. Consultant Recruitment and Procurement

26. A breakdown of consultancy input is in Appendix 5 and details of consultant recruitment and inputs are in paras. 1618. There was no major disagreement on the recruitment of consultants, which was timely and efficient. However, reduction in consultants overall inputs to reduce the cost of consulting services to less than 10% of project cost (based on government policy) required changes in implementation arrangements that caused difficulties in project operations and handover (para. 31). Direct recruitment allowed the Projects investigation and surveys work to be completed according to schedule. There was major disagreement between the consultant and EA on extension of time and liquidated damages under the main contracts, which caused major delays in implementation. A major issue arose between the consultant and the NWFP government when the NWFP government pre-audited the consultants accounts for the last 10 years, after the post-audit. Most of these issues were resolved with ADBs interventions (Appendix 4, para. 13) but some consultant payments are still outstanding on this account. 27. The main civil works contracts for irrigation and drainage activities were bundled into 5 contract packages (compared with 16 contract packages at appraisal), including an ICB contract16 for constructoin of main canal and tunnels, and four local competitive bidding (LCB) contracts for providing irrigation systems in TPA, remodeling and improvement of Maira Branch and associated distributaries and minors, surface drainage (mainly in Ballar area), and conversion of WCs into minors (Appendix 2). The average time taken between prequalification and tender was 25 months and the time between tender and award was on average 11 months. The delays were mainly due to lengthy negotiations and slow decision making by WAPDA, which often challenged consultants (engineers) recommendations. The main contract was re-tendered due to high bid prices, resulting in a delay of 18 months without any improvement in bidding rates. The reduction in the number of contracts facilitated construction supervision and improved quality control but caused major contractual issues towards the end of the Project due to interdependence of contracts,17 making it difficult to determine extension of time and liquidated damages. Some of the main contractors on remodeling of canals contract, had to be terminated
15

Loan No.1413 PAK (SF) for $64.8 million was approved in December 1995 (footnote 7) and its current loan closing date is 31 December 2006. 16 Excluding the ICB contract for subsurface drainage in the project scope that was funded by SSP Loan No. 976 (footnote 1). 17 The contract period of WP-02 was 102 weeks compared with 165 weeks for contracts WP-01 and WP-03, although WP-02 was awarded 1 month after WP-01 in April 1998. Interdependence was not taken into account in packaging different contracts.

prematurely (without adequate testing) to settle issues of delays and interdependence. As a result, 15 minor contracts (totaling $1.1 million) were awarded to rectify shortcomings observed during system testing. While effective monitoring by ADB and efficient management of contacts by consultants recovered some of the lost time, this delay contributed 30 months to the overall delay in contract implementation. 28. Procurement of goods (including vehicles and office equipment) was satisfactory and was undertaken in line with ADBs Guidelines for Procurement. Vehicles were procured under international shopping and all office equipment was procured following LCB procedures. I. Performance of Consultants, Contractors, and Suppliers

29. The overall performance of consultants for all three components was satisfactory. The quality of the consultants design was tested by DOI and verified independently by IWMI (Appendix 3). The main consultants were able to act as a balancing force in a multi-institutional arrangement and dealt with bureaucracy in WAPDA and DOI very effectively. There were minor issues related to design and construction supervision in the subsurface drainage components, which did not receive the required attention from consultants (Appendix 11). In addition, major differences in the engineers estimate and bid prices on all major contracts (especially the main PHLC and tunnel contract) caused major controversies (including re-bidding) and delayed contract awards (para. 27). 30. The quality of work performed by most contractors was satisfactory. However, delay in implementation of the main tunnel and PHLC contract (para. 21) delayed project commissioning and caused overlap of contracts (para. 27). The quality of work done on TPA piped minor (contract WP-02) delayed availability of water to TPA by 24 months, which reduced the overall EIRR of the Project (para. 42). Most of the supply contracts were awarded and delivered on time and generally involved procurement of operational equipment and vehicles in small numbers, based on the requirement of WAPDA authorities and consultants during different phases of implementation. J. Performance of the Borrower and the Executing Agency

31. The performance of the NWFP government and DOI was partially satisfactory. The NWFP government regularly delayed provision of adequate counterpart funds for the Project (Appendix 4, para. 12). In particular, it supported two extensions for the Project but was unable to finance WAPDA for costs incurred during the extension, and was unable to provide adequate O&M funds to DOI for regular O&M of the drainage infrastructure handed over to DOI in 2000. DOI unnecessarily delayed the handing-taking over of completed irrigation schemes and caused WAPDA to sustain additional management costs. Payment of compensation to landowners by the NWFP governments revenue department was also very slow (Appendix 12) and some payments are still outstanding. Changes made at mid term review were not implemented by the NWFP government, even after major investment in the low pressure piped minor had already been made, with the consent of the NWFP government (para. 8). DOI has still not deployed regulation staff, although the NWFP government has approved recruitment funds. 32. WAPDA's overall performance as lead EA was also partially satisfactory. However, the performance of WAPDAs field staff was satisfactory, as they implemented the Project despite WAPDA managements centralized and delayed decision-making throughout the Project. Due to difficult implementation arrangements, WAPDA had to make extra efforts to coordinate project activities with the NWFP government, DOA, and DOI. Its centralized decision-making often disputed engineers decisions, which delayed the Project substantially without any added value.

10

In particular, its award of contracts and settlement of issues on the TPA contract was unreasonably long (para. 27), which delayed provision of water to TPA by 2 years. Its unusually delayed audit18 of consultants interfered with project activities and affected consultants performance. 33. DOAs performance was generally satisfactory. It had a slow start but performance improved during implementation and ADC activities were completed 6 months before the completion of the first extension in the loan closing date, in accordance with the revised plan. The delay in the original schedule was caused by delayed availability of water from PHLC, which was critical to delivery of the OFWM component. K. Performance of the Asian Development Bank

34. ADBs performance was satisfactory. It played an effective role in project implementation. Regular and special missions reviewed implementation process and provided the required technical review and guidance to the EAs. ADB's responsiveness was enhanced after delegating the Project to the Pakistan Resident Mission (PRM). PRM conducted regular training of EA staff in procurement and disbursement, which had a positive impact on the performance of the EA. There were no reported delays in disbursement and processing of withdrawal applications by ADB. 35. ADB staff was actively involved in resolution of disputes between contractors and the EA, and settlement of payment and audit issues between consultants and the EA. ADB played a key role in resolving disputes between WAPDA and DOI on system performance and handover of project components. As a result of ADBs interventions, there were no major disruptions to project implementation. III. A. Relevance EVALUATION OF PERFORMANCE AND BENEFITS

36. The Project is rated relevant and consistent with ADBs country operation strategy/program at appraisal and the Governments development strategies in the water sector at PCR (paras. 58). The overall impact of the Project (paras. 3843), shows that the majority of the appraised design aspects of the Project were relevant (paras. 1013) and had a positive impact in increasing farm productivity, reducing water losses, increasing water use efficiency, improving drainage, and increasing income of small farmers. 37. Design changes during implementation improved the relevance of the Project and its overall operations and impact. The quality of extension services and expansion of the scope of WC renovation component to include and repair damaged canals in Ballar (paras. 13 and 41) helped restore water supplies to a major portion of the SSP area, and made it possible to achieve higher intensities more quickly than anticipated at appraisal. In addition, flexibility in project design allows development of additional irrigation and energy projects, which can further improve project relevance (Appendix 13, para. 28, cases II and IV). Inclusion of lessons learned from the SSP in the project design (para. 8) and improvement in O&M related covenants (para. 25) could have further increased relevance, but these options did not materialize.

18

Day-to-day audit functions were not undertaken during implementation. Suddenly, an audit for the last 10 years was done and many objections were raised, which were extremely difficult to settle after such a long period.

11

B.

Efficacy in Achievement of Purpose

38. The Project was efficacious in achieving its immediate development objectives and purpose (para. 9). Incremental production at full development (by 2014) was re-estimated to compare favorably with appraisal estimates: 54,700 metric tons (t) of wheat (against 23,500 t at appraisal), 100,000 t of maize (against 25,700 t), 15,700 t of tobacco (against 14,300 t), and 116,000 t of sugarcane (against 360,000 t at appraisal). See Appendix 14, Table 5. The more than anticipated increase in maize is related to the high adoption rate of hybrid maize in the area. The less than anticipated increase in sugarcane is due to much less than anticipated increase in area under sugarcane because of low potential yields and absence of local sugar industry. Data from IWMI and the Watercourse Monitoring and Evaluation Directorate (WMED) shows that except Maira Branch canal, PHLC, and all associated distributaries and minor canals remodeled or improved under the Project, can accommodate their design discharges (Appendix 3, para. 3)19. WCs show an average increase of 41% in summer and 31% in winter in the far reaches of USC (29,800 ha), although average supplies are no longer a measure of project impacts with CBIO. The maximum discharges in the WCs monitored (Appendix 15) show a 50100% increase in water discharges in project areas under the command of USC, and 1215% increase in WC conveyance efficiency, in line with project objectives of alleviating the current shortage of irrigation supplies in the USC. However, an increase of 130230% in WC discharges in the drainage area is a concern that will be addressed during CBIO implementation. 39. The Project was estimated to generate 20.9 person-days of additional employment during construction and 0.9 million person-days of additional farm labor annually upon completion. According to the PCR Missions revised estimates, the Project generated 12.05 million person-days of employment during construction and is expected to have generated 0.9 million person-days of additional farm labor annually since 2003 (Appendix 16). The difference in actual and appraised estimates of employment generated during construction is due to a reduction of 16% in the project cost, a 30-month extension to project completion, and use of more efficient construction technology (pre-cast structure and imported machinery). 40. Subsurface drainage completed under SSP and surface drainage completed under the Project and operated by DOI is under-performing due to deferred system maintenance. There are also indications of increased water tables in the area (Appendix 11 and Appendix 17, Table 6). Irrigation systems developed under SSP have been damaged because of deferred maintenance in Ballar area (5,212 ha), although a major portion now receives water after start of PHLC operations and repair works carried out under the Project. However, Ballar is still not fully under canal irrigation (pending minor repairs) and immediate objectives to increase irrigation supplies in the SSP area and improve drainage conditions in Ballar area have not been fully met. Recommendations to meet these objectives are in Appendix 4 (para. 12). 41. The long-term aim of the Projectto realize full agricultural potential of about 40,110 ha of agriculture land in the project area and 5,212 ha in the SSP areais achievable if the recommendations of the PCR Mission are met (Appendix 4). C. Efficiency in Achievement of Outputs and Purpose

42. The Project was efficacious in achieving its immediate development objectives and purpose. The quantifiable benefits of the Project include the incremental increase in crop production after 1998, when the Project began. An underlying key assumption at appraisal was
19

Maira branch canal takes 84% of design discharge.

12

that measurable incremental crop benefits would begin to accrue in 1999. However, according to PCR estimates, incremental crop production benefits were taken when benefits actually began to accrue in each part of the four domains of the Project area. (Appendix 13, para 5) The PHLC start date was also shifted from 1999 (as appraised) to 2002. Full development is expected from 2008 to 2014 (compared with the appraisal estimate of 2009 because of the circumstances of different project areas (Appendix 13, para 16). The economic internal rate of return (EIRR) was reevaluated using the same approach as at appraisal[OPD143]. The reestimated EIRR was based on investments made from 1995 to 2005 and incremental benefits gained from 1999 onward. The EIRR reestimated at project completion as 12.0% compares well with the appraisal estimate of 15.4% and the December 1996 estimate of 11.6% (Appendix 13).20 The reestimated EIRR shows that the investment choice was sound even though the EIRR was lower than predicted. The EIRR is still slightly above the opportunity cost of capital and shows that the Project was efficient in achieving its purpose, despite a lower EIRR because of delays in achieving full agricultural development. This was due to (i) 30 months delay in project completion, (ii) 42 months delay in availability of water from PHLC (para. 21), (iii) overestimation of potential yields at appraisal (Appendix 13, paras. 1215), (iv) inefficiencies of WAPDA (para. 27) and DOI (para. 31) in operationalizing and maintaining the remodeled system (para. 40), and (v) delay by WAPDA in providing water to TPA because of contractual issues (para. 32). The PCR Missions observations, based on farmers responses in the field, are that the cropping intensities and incremental production at full development will be higher than anticipated at appraisal. This will offset the effects of implementation delays on project benefits. Similarly, an EIRR of 14% has been estimated for a scenario where the pipeline projects for irrigation are considered to have been made possible because of flexibility built into the project design (Appendix 13, para. 32). 43. At 12.0%, the EIRR is moderately sensitive to benefit changes keeping the cost factor constant. The EIRR is specifically sensitive to change in crop yields and power losses at Tarbela (Appendix 13, paras. 2832). D. Preliminary Assessment of Sustainability

44. The sustainability of project operations is less likely. Operation of the tunnel has been handed over to WAPDA, adequate staff has been trained and deployed for its operation, and O&M funds have been provided by the NWFP government. The remodeled system was taken over by DOI in June 2005, but there are still gaps in deployment of O&M staff and adequacy of O&M funds. DOIs capacity and understanding of the remodeled system and its operation is limited to a few staff members who have been involved in project implementation or have been trained by the consultants and IWMI. To offset these shortcomings, IWMIs overall support for the operation of the system has been extended until December 2005, which should ensure a smooth transition and increase the DOIs confidence to run the system. Until the PIDA Act is fully implemented, sustained O&M of PHLC can only be ensured by NWFP government funding (para. 25 and 55). However, the commitments made by the NWFP government in terms of provision of additional funds have not been fully met, and drainage infrastructure handed over to DOI is not being maintained (Appendix 4, paras. 2 and 12). 45. To reach the reestimated targets of productivity by 2014, sustained provision of agriculture extension and research services in the project area is crucial. DOA is providing agriculture extension and research services to farmers through its extension staff and partly through farmer service centers
20

EIRR was reestimated during a detailed review by ADB as provided in the back-to-office report dated 24 December 1996.

13

(FSCs). The FSCs are farmer-managed membership organizations, which were established under the SSP and strengthened through the Project. About 490 staff members from extension and research services were trained under the Project. FSCs were given extension machinery and equipment, and the curriculum of the agriculture staff training institution was revised to include approaches (social interaction and technical training) relevant to farmers needs. However, due to a delay in water availability, project-funded extension services could not provide to the farmers as envisaged. Support for these activities will continue to be provided through the Agriculture Sector Program Loan II (ASPL-II),21 Provincial Trust Fund for the Joint NGO and extension agent program for small farmers, an improved outreach program for agriculture extension and research in provinces funded from ASPL-II,22 and the NWFP governments regular annual funds. In addition, WTO pressure (opening up of agricultural-trade with neighbors has already started) and the overall change in the policy environment (deregulation of agriculture commodity prices and drastic reduction in government interference in the market) has increase the incentive for farmers to grow more and receive better returns. As competition grows in the agriculture sector, it will also put more political pressure on decision-makers to allocate more funds for O&M of the irrigation system. 46. Routine WC maintenance is generally provided by individual farmers on a needs basis and is considered adequate for sustained operation, as observed by the condition of completed WCs during the PCR Mission (para. 13). The strengthening of womens organizations (WO) under the Project through local NGOs has resulted in networking the WOs, which has given WOs access to other programs implemented by the same NGOs after project completion. 47. The monitoring and evaluation system developed under the Project is not sustainable under the SMOs current institutional setting. This function must be integrated in DOI through its regulation cell in Swabi, as recommended by the PCR Mission (Appendix 4, para. 6) and agreed by the NWFP government for sustained support and operation of the remodeled irrigation system. E. Environmental, Sociocultural, and Other Impacts

48. At appraisal, no major negative environmental impacts were envisaged. The Project improved drainage and reduced erosion by providing surface/subsurface drainage, land development, and watershed management. No new irrigation development was financed in command areas adjacent to the Project and contracts for Pehur SCARP was awarded to further improve the drainage condition. CBIO and hydraulic models intended to increase water use efficiency and introduce demand based water regime (reducing excessive supply of water) have been functional for 1 year. These measures are adequate to satisfy Loan Agreement covenants (Schedule 6, para. 33). The only environmental impact of the Project is deferred maintenance of the subsurface drainage system and possible failure of the CBIO, which could increase the water table, deteriorate soil quality (Appendix 17, Table 6), and cause loss of productivity. These impacts will be mitigated through regular O&M of the drainage facilities, groundwater monitoring by DOIs regulation cell, and regular follow-up (para. 61) of CBIO implementationas agreed during the PCR Mission (Appendix 4). The quality of drainage effluent monitored by SMO poses no threat to fish or micro-fauna in the project area.

21

Loan No. 187779 PAK [SF] (ADB. 2001. Report and Recommendation of the President to the Board of Directors on {a} Proposed Loan{s} {and Technical Assistance Grant(s)} to the {full name for DMC} for {project title}. Manila) was valued at the equivalent of $350 million at the time of approval (13 December 2001). 22 One of the conditions for second tranche release under ASPL II.

14

49. The Project has substantial positive social impacts. As envisaged at appraisal, no major shift in farm sizes, farm operations, or tenancy arrangements were noted in the USC command area.23 About 98.5% of farmers in the project area have a landholding of less than 5 ha, where 90.1% of these small farmers are subsistence farmers with less than 2.5 haslightly above 80% subsistence farmers reported at appraisal. About 52.6% of farms are tenant-operated (compared with 55% reported at appraisal), 38.8% are owner-operated (against 30% at appraisal), and the remaining 8.6% are owner-cum-tenant operated (compared with 15% at appraisal).24 This shows that owners are moving to non-farm employment because of further reduction in farm size. The tenancy arrangements in the USC command area without drainage have remained the same. In the drainage area, owners have increased their share from 25% 33% of the produce to 50%, depending on the level of improvement brought about by the Project. The incomes of both tenants and owners have increased due to increased production (para. 50). Similar revision in tenancy arrangements has been noted in the new areas of TPA and Ballar, where irrigation has been provided. The income and social condition of both tenants and owners have improved in terms of spending on health and education, reduction in conflict and access to services, improvement in agricultural practices, improved water availability, and drainage conditions (Appendix 18, para. 4). 50. The Project is currently benefiting more than 60,000 farm families, in line with appraisal estimates. With increased cropping intensities, higher crop yields, and high income-generating cropping patterns, income at full development for owner-operators is estimated to range from PRs59,408 to PRs78,503 in TPA, Ballar, and Pehur drainage area (against the appraisal estimate of PRs37,619). Tenant-operators farm income will range from PRs27,935 to PRs42,585 against the appraisal estimate of PRs25,212 in the same areas. In the USC command area, farm income for owner-operators is estimated at PRs113,310 (against the appraisal estimate of PRs40,554) and farm income for tenant-operators is estimated at PRs74,506 (against the appraisal estimate of PRs25,212). The key reasons for substantial increase in farm income compared to appraisal estimates are provided at Appendix 14 (para 4). IV. A. OVERALL ASSESSMENT AND RECOMMENDATIONS

Overall Assessment

51. The Project is rated successful25 considering its relevance to the Government's water and agricultural development strategies and ADB's lending strategies in these sectors, and the achievement of the immediate objectives within appraisal cost, despite delays and reduced economic returns (paras. 38 and 42). The majority of the design aspects conceived at appraisal were implemented, with some minor changes (para. 10 and 11). 52. Difficulties encountered during implementation included (i) delays in decision-making by EAs (para. 32); (ii) delays in completion of civil works (para. 21); (iii) limitation of work to periods of canal closure on Maira branch canal and related distributaries (contracts WP-03 and 05); (iv) delays caused by contractual issues related to contract packaging (para. 27); and (v) delays caused by DOI in handover and management of completed works (paras. 31 and 40).

23 24

SMO. 2005. Final Impact Evaluation Report: Lahore. SMO. 2005. Agro-Economic Survey Data Report : Lahore. 25 This project completion report is part of a sample independently reviewed by ADBs Operations Evaluation Department. The review has validated the methodology used and the rating given.

15

53. The key benchmarks for monitoring were increases in water availability, agricultural production, and farm incomes, which were all substantially met (paras. 38, 42, and 50). Other major impacts that showed positive trends included improved water management and use, increases in water delivery efficiency, reduction in water management labor, and reduction in water related conflict (Appendix 18 and para. 38). B. Lessons Learned

54. Contract packaging caused delays and legal issues (para. 27). To avoid this in the future, overlapping contracts should be packaged together and the legal aspects of delays caused by interdependency should be covered under the contract clauses. 55. DOI did not have adequate O&M resources to operate and maintain the handed over system (para. 40). Covenants did not fully cover the availability of ISF to DOI for O&M, although they provided for increases in ISF to meet O&M requirements (para. 25). Implementation arrangements were imbalanced as the NWFP Government (as the owner) did not have the capacity or technical knowledge to influence and guide WAPDA (para. 31). To ensure sustainability and ownership of water sector projects, new projects should include the necessary support for reforms, which ensure financial autonomy, transparent and efficient decision-making, and availability of resources for O&M of the system. In addition, future initiatives should support capacity building of water sector institutions to implement and monitor water sector projects. 56. To maintain DOIs ownership of the Project, consultants should be recruited by the lead EA who would ultimately operate the system to improve its capacity to supervise implementation by the subcontracting agency (in this case WAPDA). Delays in contract awards and implementation could also be reduced if training on contract management and ADB procedures are organized at the outset for EAs. 57. Most WUAs developed under the Project became dormant after project completion (para. 13). To sustain operations of community organizations (WUA and WOs), project designs should include entry and exit strategies, which can adequately address WUA objectives. 58. The monitoring system established in the EA was not responsible for operating the Project and was discontinued after the Project. In future, the priority should be to strengthen the existing monitoring systems of EAs responsible for operating the Project, build their capacity, and ensure sustained monitoring. C. Recommendations

59. Future Monitoring. ADB should monitor DOIs ISF collection performance, and the gap between levied ISF and collection percentages. This should be carried out during regular reviews of NDSP to improve the ISF collection percentage before handover to the SAWB FO. In addition, ADB should follow up on the implementation of CBIO and hydraulic models for USC operations through ongoing and pipeline TAs26 to sustain USC system operations and apply the results of this water management model in future irrigation sector programs. 60. Covenants. The status of compliance with loan covenants and measures taken for full compliance are in Appendix 9. The covenant on Produce Index Unit is irrelevant since the
26

TAR: PAK37189. ADB. 2004. Technical Assistance to the Islamic Republic of Pakistan for Water Sector Irrigation Development, Manila.

16

Government abolished the Wealth Tax and introduced agriculture income tax, which adequately meets agriculture revenue requirements (Appendix 9, para. 49). 61. Further Action or Follow-Up. DOI should operationalize the subsurface drainage system to ensure efficient drainage of surplus water, and operationalize parts of Kallu Khan and its tributaries to ensure supply of irrigation water (Appendix 4, paras. 2 and 12). ADB should follow up on these issues with the NWFP government in provincial project review meetings. ADB should also monitor the annual O&M allocation for irrigation and drainage for LSC and USC until the PIDA Act is fully enforced in the area. In addition, appointment of PHLC staff and issues related to settlement of payment to consultants should be closely monitored in provincial project review meetings. 62. Additional Assistance. As agreed with the NWFP government (Appendix 4, para. 2), the subsurface drainage system completed under SSP will be made functional through DOIs regular O&M funds. The subsurface system should be monitored for at least 6 months after it becomes operational, and major rectifications should be undertaken under NDSP based on year-end review. 63. Timing of Project Performance Audit Report. The water optimization and crop-based model of USC and PHLC system operations are expected to be fully functional by October 2005. DOI is expected to take at least one season (June 2005June 2006) before its starts running the system optimally without disruptions. As more regular irrigation water supply has only recently (mid-2004) been ensured to all parts of the project area and 98% of farms in the project area are below 5 ha (with limited means), a more noticeable increase in productivity will take at least 2 years (July 2005June 2007). The Project Performance Audit Report Mission could be fielded after June 2007 when full intensities have been achieved in the majority of the project area.

Appendix 1

17

CIVIL WORKS CONTRACTS (amount in PRs million)

Sr. No. Contract Name Contract No. EA MOP Engineer's Estimate Contract Cost Original Revised Bids Invitation Dates Contract Substantial Award Completion

A.

Main Contracts 1 Main Canal and Tunnels 2 Topi Priority Area 3 Remodeling of Canals 4 Remodeling of Surface Drains 5 Conversion of Watercourses Subtotal Additional Works 1 Additional Works on Resurfacing of Patrol Road (Maira Branch) 2 Additional Works on Chowki Disty and Chowki No. 1 & 2 3 Construction of 11 Nos. Link water Courses 4 Additional Works on Surbandi Daggai and Yar Hussian mains 5 Additional Works for Construction of 30 Nos. Sumps 6 Additional Works on Kalu Khan New Minor 7 Additional Works on Maira Branch 8 Desilting of Machai Branch 9 Construction of permanent boundary wall 10 Additional Works on Narranji Minors 1, 2 & 3 11 Additional Protective Work Ground Silting Basin 12 Additional Works on Maira Branch 13 Mechanical Works for manual operation 14 Additional Civil Works, Swabi Division Subtotal Total

WP-01 WP-02 WP-03 WP-05 WP-08

WAPDA WAPDA WAPDA WAPDA WAPDA

ICB LCB LCB LCB LCB

3,022.00 3,136.52 83.23 101.77 353.43 414.40 174.20 174.20 50.60 50.60

3,664.57 101.77 541.46 216.59 69.18 4,593.57

31 Mar 97 19 Dec 97 10 Jun 97 19 Mar 98 27 Oct 96 27 Apr 98 17 Oct 97 13 Jul 98 09 Jun 97 07 Sep 98

30 Nov 02 30 Nov 02 30 Jun 01 01 Feb 00 12 Sep 00

B.

WAPDA LCB

9.37

10.78

10.78

15 Mar 04 06 May 04

08 Sep 04

WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB WAPDA LCB DOI LCB

2.91 6.02 1.37 2.50 1.55 0.07 0.67 0.64 3.19 1.42 2.99 3.28

3.35 6.32 1.57 2.87 1.68 0.08 0.72 0.72 3.66 1.64 3.08 2.77 13.58

3.35 6.32 1.57 2.87 1.68 0.08 0.72 0.72 3.66 1.64 3.08 2.77 13.58 52.83 4,646.40

10 Apr 04

15 Apr 04

13 Jul 04 06 Sep 04 13 Jul 04 27 Apr 04 13 Jul 04 15 Jul 04 06 Feb 04 03 May 04 11 Aug 04 13 Jul 04 14 Aug 04 13 Jul 04 30 Jun 05

06 May 04 10 May 04 10 Apr 04 22 Feb 04 15 Apr 04 01 Jan 04 15 Apr 04 25 Feb 04 08 Jan 04

07 Jan 04 01 Aug 04 10 Jun 03 05 Mar 04 14 May 04 15 Apr 04 15 Apr 04 15 Apr 04 12 Dec 04

= not available, DOI = Department of Irrigation, EA = executing agency, ICB = International Competitive Bidding, LCB = Local Competitive Bidding, MOP = mode of procurement, No = number, Sr = Serial, WAPDA = Water and Power Development Authority, WP = WAPDA Source: Data provided by executing agencies to project completion review mission, and various bid evaluation reports

18

Appendix 2

PROJECT SCOPE (APPRAISAL AND ACTUAL) Component Appraisal Targets RRP PC-1 Actual

Irrigation and Drainage Component Realize full potential of agricultural land (ha) Additional irrigation development in mainly rain-fed area (ha) Construction of distribution system in Topi (ha) Canal to be designed for peak irrigation requirement (l/sec/ha) Conversion of existing watercourse (with a capacity of 140 l/sec) to minors (no.) PHLC Canal Length (km)a Gundaf Tunnel Length (km) Internal diameter (m) Conveyance capacity (m3/sec) Bajja Tunnel Length (km) Internal diameter/section 1.20 1.20 1.29 3.50 m 4.30 x 4.90 4.20 x 4.80' 3.90 3.80 28.30 4.55 4.65 n.a. 3.103.40 m b 28.32 40,300.00 4,000.00 4,500.00 0.70 4,500.00 0.70 30.00 40,110.00 5,212.00 4,310.00 0.70 25.00

26.20

26.20

24.10

Total Length of PHLC, including tunnel (km) Remodeling of existing canalsMachai, Maira, and others (length in km) Cross regulators to control water levels along Maira Branch (no.) Length of existing canals (Pehur, Ambar, and Indus) to be improved (km) Provision of horizontal subsurface drainage in waterlogged area (ha) Improvement of surface drainage system (km)

31.30 98.00

31.95 189.00

30.04 86.00

2.00

8.00 c

86.00

86.00

86.00 8,000.00 d

6,000.00

6,000.00

280.00

46.00

Appendix 2

19

Component

Appraisal Targets RRP PC-1

Actual

Agriculture Development Component A. Strengthening Benefit Participation 1. Formation of water users associations (Nos.)

450.00

372.00

444.00

B. On-Farm Water Management 1. 2. Watercourse remodeling and construction (no.) Land development demonstration program (ha) 450.00 372.00 100.00 444.00 92.40

C. Agriculture Extension and Adaptive Research 1. Agriculture Extension a. b. c. d. Demonstration Plots (no.) Field days (no.) Staff training (no.) Refresher courses (no.) 566.00 132.00 495.00 52.00 592.00 125.00 490.00 15.00

2. Adaptive Researche a. b. c. d. Research plot laid out (no.) Action research studies (hectares) Training of farmers (no.) Field days (no.) 396.00 714.68 624.00 22.00 396.00 714.68 434.00 13.00

ha = hectare, km = kilometer, l = liter, m = meter, m3/sec = cubic meters per second, no. = number, PC-1 = Planning Commission Performa 1, RRP = report and recommendation of the President, sec = second. a Including two siphons. b Internal diameter 3.1 m in steel-lined portion and 3.4 m in reinforced concrete-lined portion. c Downstream control gates instead of cross regulators. d Financed through the Swabi SCARP Project. Source: Borrowers Project Completion Report prepared by Consultants

20

Appendix 3

HYDRAULIC CAPACITY TEST REPORT1 A. Pehur High-Level Canal and Gandaf Tunnel Operations

1. The design discharge of the Pehur High-Level Canal (PHLC) is 27.1 cubic meters per second (m3/sec). PHLC can easily accommodate and pass this discharge, based on test results. Water was released in PHLC in November 2002. At first, water releases were small for trial and testing purposes and because demand on the system was low. No problems were reported for the testing process conducted by the consultants for the Gandaf tunnel and PHLC. Cross regulators (CRs) were adjusted where needed to respond to fluctuations in water level. No design, construction, or physical capacity problems were reported in PHLC operations and none have been observed to date, during the last (2 ) years of operations. 2. The tunnel has not caused any interruptions in PHLC operations to date and has functioned satisfactorily since the start of operations in November 2002. The capacity and pressure test undertaken by the consultants and Department of Irrigation (DOI) showed that the tunnel can sustain its design pressure and pass the design discharge. 3. However, some management issues were observed in system operations, which led to disruption in flows to Maira Branch and its secondary off-takes. The observations are reported below: (i) Low flow in the Tarbela reservoir prevents pressure from being developed in the tunnel, and the system was manually operated as run-of-the-river type in early 2004. System shutdowns were reported due to electricity failures. A standby generator has been provided but the automatic conversion system was closed when power shutdown took place. This issue has been resolved by the Water and Power Development Authority (WAPDA). Manual operations continued due to breakdown of a cable linking the water level downstream of the channel to the automatic system. Manual operations affect the implementation of crop-based irrigation operations (CBIO) schedules, as water from PHLC was not flowing according to demand and fluctuations from the Upper Swat Canal did not allow pond development in the upper reaches, affecting the withdrawal of off-takes. However, the system has been running automatically for the last few months (since October 2004) and ran manually for more than half of 2004.

(ii)

(iii)

Based on information provided by the International Water Management Institute (IWMI), to Project Completion Review Mission..

Appendix 3

21

B.

Maira Branch Canal

3. Maira Branchs design discharge is 26.28 m3/sec. Several tests were conducted on Maira Branch to measure the discharge passing through its cross-sections. The International Water Management Institute (IWMI) carried out 10 tests from May 2003 to December 2004. The maximum discharge was 22.57 m3/sec, which was around 84% of the design discharge (Figure A3.1). Discharge remained low during the other tests because of several factors, including (i) interventions on secondary off-takes by DOI, (ii) manual operation of tunnel by WAPDA, and (iii) improper use of escapes and CRs. In some cases, farmers also tried to intervene with the secondary system. The low demand sometimes caused fewer withdrawals (particularly in November and December), as DOI field staff lowered the discharge of distributaries/minor canals, upon the request of farmers. Restricted cross-sections downstream of CRs 8 and 9 are key impediments to Maira Branch canal passing the design discharge. C. Secondary Off-Takes below RD 242

4. IWMI has been monitoring the system below RD 242 of Machai Branch since December 2003. Daily discharges passing through the secondary channels are monitored. It has been observed that all the remodeled secondary system can easily pass its design discharge at the head reaches. IWMI did not observe any problem in the head sections of distributaries/minors, but overflowing has been observed in the downstream reaches either due to less demand in the head sections. There is evidence that the head sections of secondary channels accommodated more than design discharge (Table A3.1). Table A3.1: Measured Discharge at Off-Takes Heads Downstream of RD 242 (m3/sec)
S. No. Channel Design Discharge Actual Discharge Passed
3.06 2.04 1.86 0.86 1.06 0.89 1.67 0.29 0.94 1.62 2.83 0.83 0.67 0.26 0.61 0.68 0.56 0.93 1.08 0.77

1 Chauki Disty 3.07 2 Dagi Disty 1.92 3 Daulat Minor 1.82 4 Ghazi Kot Minor 0.77 5 Gumbaad Minor-1 1.04 6 Gumbaad Minor-2 0.85 7 Link Cannel 1.04 8 Neknam Minor 0.23 9 Old Indus Branch 1.21 10 Pehur Branch 0.95 11 Pir Sabaq Disty 2.39 12 Qasim Minor-1 0.77 13 Qasim Minor-2 0.66 14 Sadri Minor 0.21 15 Sarbandi Minor 0.60 16 Sard China Minor 0.66 17 Sudher Minor 0.45 18 Toru Minor 0.92 19 Yaqubi Minor 1.00 20 Yar Hussain Minor 0.72 disty = distributory, S.No. = serial number Source: Data provided to PCR Mission by IWMI.

22

Appendix 3

5. Average discharges in Maira Branch canal for winter 2003/04 and the summer of 2004 are provided in Table A3.2. Table A3.2: Average Discharge in Off-Takes Downstream of RD 242 (m3/sec)
S. No. Canals and Minors Maximum Design Discharge Average Discharge Post-Project Pre-Project Post-Project Rabi 200405 Kharif 2004
1 Chowki Disty 1.29 2 Dagi Disty 0.90 3 Daulat Minor 0.58 4 Gumbaad 2 Minor 0.21 5 Gumbad1 Minor 0.46 6 Haricot Minor 0.40 7 Link Channel 1.04 8 Neknam Minor 0.14 9 Old Indus 0.52 10 Pehur Branch 0.93 11 Pir Sabaq Disty 1.14 12 Qasim Minor 1 0.24 13 Qasim Minor 2 0.22 14 Sadri Minor 0.12 15 Sarbandi Minor 0.27 16 Sard China Minor 0.30 17 Sudher Minor 0.25 18 Toru Minor 0.31 19 Yaqubi Minor 0.42 20 Yar Hussain Minor 2.95 disty = distributory, S. No. = serial number Source: Data provided to PCR Mission by IWMI. 3.07 1.92 1.82 0.85 1.04 0.77 1.53 0.23 1.21 1.47 2.39 0.77 0.67 0.2 0.60 0.66 0.45 0.92 1.00 0.72 1.87 0.94 0.52 0.69 0.44 0.39 0.14 0.62 0.99 1.20 0.53 0.26 0.11 0.29 0.38 0.35 0.55 0.43 0.27 2.38 1.31 1.30 0.70 0.84 0.68 1.45 0.34 1.01 1.54 1.95 0.71 0.51 0.19 0.40 0.65 0.53 0.93 0.97 0.78

D.

Sedimentation in Maira Branch Canal

6. Maira Branch canals cross-sectional survey was conducted in JanuaryFebruary 2005 during canal closure to investigate the effect of sedimentation on its capacity. The results are provided in Table A3.3. Overall, there is deposition trend in the canal and scouring has been observed at the canal sections downstream of the CRs. Table A3.3: Sedimentation in Maira Branch Canal (m2)
S. No.
1 2 3 4 5 6 7 8 9 10 11 12

RD
50 600 1+220 1+750 2+200 2+400 3+000 3+655 4+750 5+040 10+075 11+200

Design Cross-Section Existing Cross-Section

67 67 66 74 70 40 43 52 58 47 42 56 75 63 45 68 58 35 41 48 52 40 41 53

Difference
-8 4 21 6 12 5 2 4 6 7 1 3

Effect
Scoured Deposited Deposited Deposited Deposited Deposited Deposited Deposited Deposited Deposited Deposited Deposited

Appendix 3

23

S. No.

RD

Design Cross-Section Existing Cross-Section

36 43 50 50 52 30 43 34 23 37 34 23 23 36 26 24 24

Difference
2 2 0 6 7 3 -5 1 4 0 0 1 0 3 (2) 4 1

Effect
Deposited Deposited Deposited Deposited Deposited Scoured Deposited Deposited

13 13+780 38 14 14+750 45 15 15+600 50 16 16+700 56 17 17+600 59 18 25+400 33 19 26+800 38 20 28+225 35 21 30+800 27 22 32+250 37 23 33+600 34 24 35+037 24 25 37+570 23 26 39+708 39 27 39+745 24 28 41+620 28 29 44+260 25 S.No = serial number, RD = reduced distance. Source: Data provided to PCR Mission by IWMI.

Deposited Deposited Scoured Deposited Deposited

E.

Canal Operations and CBIO Implementation

7. Water was released in PHLC in February 2003, when tests of the channel capacity and automatic gates were conducted. Canal operations under CBIO started in December 2003 after considering the availability of water to meet the low demand of the winter season (2003/04). PHLC discharge dropped by about 50% (from about 19.83 m3/sec to about 9.92 m3/sec) after CBIO implementation, as half the off-takes were alternately closed for 1 week due to low demand. Overall, canal operations under CBIO went well until April 2004, with the exception of a few disruptions. Secondary off-takes were operated at lower than their design discharge due to low demand during winter 2003/04, while the average discharge was usually close to design estimates during the summer of 2004 for most of the time when off-takes were open. 8. Automatic water deliveries from PHLC were disrupted during much of the second half of 2004 by power shutdowns, low water level in Tarbela reservoir, and problems with the cable linking the water level in PHLC to the control room. Manual operation of PHLC and sudden fluctuations from the Upper Swat Canal system had an overall negative impact on CBIO. However, CBIO was implemented whenever possible despite resistance from water users who wanted water for tobacco and hybrid maize. Overall, the role of DOI was positive with the exceptional case of the Link Channel, which always created problems due to tail shortages. CBIO operations were regularly disrupted because stop logs were laid across Maira Branch and downstream of Link Channel head regulator, and CR 9 was chained down to raise the water level to feed the Link channel. 9. IWMI conducted a survey during the summer of 2003 on warabandi (water turns for irrigation) implementation and water use during conventional supply driven system operations. A similar survey was conducted during the summer of 2004 and the results were compared: (i) Water use efficiency improved substantially during the summer of 2004, although water supplies increased. Farmers halved disposal of excess water into drains outlet closures were considerably reduced. Following traditional operations with increased water supplies and frequent rainfall in 2003, 60% of delivered water

24

Appendix 3

was wasted. However, wastage fell to about 20% in 2004 when supplies were higher than the previous season and rainfall was less frequent. (ii) Irrigation system operations (according to the new concept of CBIO) coupled with active and vigilant monitoring in the field have saved about 40% of delivered water in 2004, compared with 2003. Further improvement is possible if the efficiency of DOIs field staff is improved, as they are not yet used to CBIO. There are many examples of undesirable manipulation with head regulators by regulation staff or water users, which has reduced the efficiency of CBIO.

F.

Maira Branch Capacity Test

10. Simulation of Irrigation Canals (SIC) Model was run for Maira Branch Canal with Design and Actual Cross Sections and following three scenarios were simulated. 11. Scenario I. Maira Branch with design cross-sectional data, while retaining all old bridges (hindering flows) can pass a discharge of 25.25 m3/sec. Mannings roughness coefficient 0.023 (design) was used for this estimation. 12. Scenario II. Maira Branch discharge with actual cross-section (taken January February 2005) can pass a total discharge of 19.56 m3/sec through the canal, with Mannings roughness value of 0.023. Overtopping takes place upstream of CR 9 with higher discharge. CR 8 may pass 22.05 m3/sec by operating escape upstream of CR 9. 13. Scenario III. By removing narrow cross-sections downstream of CR 8 and 9 at RD 11800, RD 17950, and RD 19310 (which seem to cause hindrance), flows through the canal improve significantly. By improving these crosssections, a total discharge of 23.447 m3/sec (827.91 ft3/sec) can be passed through the canal. This exercise shows that the total flows of 14.767 m3/secs can pass downstream of CR 9 against the design 17.012 m3/sec. Design discharge at CR 8 is 20.680 m3/sec whereas reaches downstream cross regulator (CR)-8 allow only 18.34 m3/sec discharge to pass. 14. Scenario IV. By using actual discharge data (with removed narrow cross-sections) in distributaries/minors (as on 23 Jul 2004 when the discharge measurement exercise was conducted), a total discharge of 23.40 m3/sec passed through the canal using the design Mannings value of 0.023. However, the actual roughness coefficient is higher than design. 15. Summary. The above discussion shows that a total of 25.25 m3/sec.discharge can pass through Maira Branch at the design cross-sections with retained bridges. However, with actual cross-section, the maximum flow passed through the Maira Branch is 19.56 m3/sec, whereas by removing the problematic cross-sections, a total discharge of 23.46 m3/sec can be passed. 16. By improving and widening the two sections identified above, more than 90% of the design discharge can pass through Maira Branch. The cost of improving these sections is about PRs2 million, which can be accommodated in DOIs regular annual operation and maintenance budget.

Appendix 3

25

Table A3.4: Actual Versus Design Discharge S. No. Date Discharge (m3/sec) 15.67 17.53 17.47 16.18 16.76 17.8 19.92 21.8 22.58 19.14 Percent of Design Discharge 58.03 64.92 64.72 59.94 62.08 65.95 73.81 80.75 83.65 70.89

1 2 3 4 5 6 7 8 9 10

08 May 2003 06 Jun 2003 19 Jun2003 10 Sep 2003 02 Oct 2003 18 Oct 2003 20 May 2004 21 Jul 2004 23 Jul 2004 29 Dec 2004

s.no = serial number Maira Branch Design Discharge : 952.66 Measurement Location : Maira Branch Head Source: Data provided by IWMI to PCR Mission

26

Appendix 4

OPERATIONAL ISSUES AND PRC MISSION RECOMMENDATIONS

S. No. 1 Issues and Action Maira Branch (contract WP-03) was tested for 84% of the design discharge in June 2004. The need to further widen two sections was identified but DOI did not widen them during the closure period, even after ADB approval. The key reason for reduction in canal sections is lack of maintenance by DOI. In Maira, which is running canal with a downstream control regime (and was in operation throughout the project implementation period), silt deposits have increasedespecially during the period when Indus water from PHLC was not available. As maintenance was not carried out during the January 2005 closure period, the canals capacity to take design discharge has further reduced. IWMI has identified two sections downstream of gate 8 and 9, which need further widening (Appendix 3, para. 3). The estimate cost of widening is $400,000. It was agreed that widening will be done by DOI during the next closure period (JanFeb every year) through their regular O&M budget. More than 6,000 ha of land were given surface and subsurface drainage under the Project. The PCR Mission visited the drainage area along the Ballar Drain and observed that the tertiary system in most of the area visited had been bulldozed and converted into agricultural fields by landowners, although secondary and primary surface drains were functioning well (except for damage to profile structures). In many areas visited, the 4-inch subsurface lateral was chocked. A general lack of monitoring and maintenance was observed on these drains, mainly due to (i) limited O&M fund availability, (ii) DOIs failure to follow the O&M manual developed for the project area, and (iii) possible design problems. The state of subsurface drains is seriously undermining crop production in the area, thus putting the achievement of project objectives at risk. IWMI has provided a report on the performance of the system and recommended remedial measures (Appendix 11). DOI will implement IWMIs short- and long-term recommendations. In addition, the NWFP government will make special provisions in its O&M budget (fixed percentage) for drainage. DOI will also develop and approve laws to control interference in and blocking of tertiary drainage systems and develop a monitoring system as part of O&M operations to closely monitor waterlogged areas for timely O&M intervention. DOI will operationalize all clogged piped drains and, if necessary, submit a separate proposal to ADB for undertaking improvement works under NDSP (Appendix 11). Target Date Jan 2006 Responsibility DOI

Jan 2006

DOI: short-term recommendations DOI: short-term recommendations

Jul 2006

30 Jun 2005

NWFP government: O&M funding

Appendix 4

27

S. No. 3

Action It was agreed that final withdrawals for all outstanding liabilities of the Project will be submitted by DOI, WAPDA, and DOA to ADB by 15 August 2005 and the imprest account will be closed by 30 August 2005. DOI will complete warabandi (schedule for water turns) for farmers on a priority basis by end-February 2006. PHLC has been tested to design discharge as certified by DOI. After minor rectification by WAPDA (requested by DOI) and testing of the piped minors in TPA, DOI will take over the PHLC system. CBIO has been in operation for two seasons (1 year) for the Pehur system and the next season has started since April 2005. CBIO faced problems because of breaks in the systems automatic operation, initial resistance from farmers, and lack of coordination and interventions from DOI. Initial results are very encouragingthere has been wide acceptance by farmers and DOI staff, and water wastage has reduced 4060%. Farmers adherence to the warabundi (water turns) schedule has increased from 20% to 40%. It was agreed that successful operation and fine-tuning of this model requires the following measures: (i) WAPDA and DOI will ensure that automatic canal operations are maintained throughout the year without interference. DOI will ensure that appointment of all staff positions for PHLC operations (1619 staff) is made by 30 June 2005 and appointments for the regulation cell (46 staff) by 15 July 2005. DOI will ensure recruitment of dedicated and professionally sound staff who understand the operations of the models developed for the PHLC system and operate the system accordingly. The increase in watercourse discharges (from 130% to 230%) in drainage area will be addressed during CBIO implementation through close monitoring and by ensuring supplies according to requirements and demand only. IWMI will train DOI staff to monitor groundwater in the drainage area and transfer all monitoring stations and equipment to regulation cell staff. The regulation cell will take over the monitoring role, SMO (in agro-economic terms), cropping pattern, groundwater depth, soil, canal and drainage discharge, and monitoring.

Target Date 15 Aug 2005

Responsibility DOI, WAPDA, and DOA Compliance delayed by one month. DOI DOI and WAPDA (complied with)

4 5

28 Feb 2006 30 June 2005

30 June 15 July 2005: staff appointment 30 Sep 2005: streamlining CBIO operations 30 Oct 2005: take-over monitoring role by DOI regulation cell from IWMI.

DOI

IWMI and DOI

DOI regulation cell

(ii)

(iii)

(iv)

(v)

28

Appendix 4

S. No. 7.

Action DOI will make allocation in their next budget (200506) to support IWMI activities until 31 December 2005.

Target Date 30 June 05

Responsibility DOI and NWFP government (complied with) SMO/WAPDA (not complied with) NWFP government

8.

10

11

12

Final BME report based on agro-economic, soil, groundwater and hydraulic data collected by WAPDA will be completed and provided to ADB by 31 May 2005. NWFP government will comply with all 11 partly complied with and 2 not complied with loan covenants (Appendix 9), where compliance actions have been agreed. This does not include the revision of the Produce Index Unit for the Wealth tax (LA schedule 4, para. 49), which has been abolished by the Government and replaced by agriculture income tax, making this covenant irrelevant. NWFP government will approve the revised PC-1 and make the outstanding counterpart funds available to WAPDA to settle outstanding counterpart fund liabilities on completed contracts. DOA will send request for closing of the imprest account to ADB, surrendering the remaining balance of the imprest account. The PCR Mission observed that the O&M budget for the last 5 years (200001 to 200405) is only 2025% of the actual requirement of the Swat Canal System. The increase in ISF was maintained at 25% per annum from 1995 to 2003. The current levels of levying ISF are adequate to meet the O&M requirement of the Swat Canal system (Appendix 10). However, these funds are not being channeled back to the area and there seems to be a major gap in the increase in the level of ISF levied and the increase in revenue collection (only 50% of ISF levied is collected). The PCR Mission observed that a large portion of the Swat Canal system was receiving inadequate water, although water is available in the main canals (5,012 ha in Ballar Area are affected) and another major portion (1,200 ha along Ballar Drain) is waterlogged due to deferred maintenance. It is clear that the full potential of the system is not being exploited because of lack of O&M funds for essential works. Most bottlenecks were minor essential repairs (Kalu Khan Minor) which would be met with a slight increase in the O&M budget. (i) NWFP government agreed to make an O&M allocation for the Lower and Upper Swat Canal system equal to the ISF collected from USC and LSC last year (200405) in the 200506 O&M budget. NWFP government will continue to ensure adequate O&M allocation to the LSC and USC based on the above formula until the PIDA Act is fully implemented in the project

31 May 2005

See Appendix 9

30 Jun 2005

15 Aug 2005

NWFP government (not complied with) DOA Not complied yet. NWFP government

Allocation in 200506 budget by 30 Jun 2005 and in subsequent budgets until the PIDA Act is fully implemented in USC and LSC. Development of revised formula by 30 Jun 2005

NWFP government Not complied.

Appendix 4

29

S. No.

Action area. All damaged portions of Narranji and Kalu Khan minors will be repaired during the next closure period (January 2006) using DOIs O&M budget to ensure full water supply to these areas for the next cropping season in 2006. NWFP government agreed to develop and approve a formula for the O&M budget as a percentage of ISF generated from the area. The percentage will be worked out based on current O&M requirements in the area (irrigation and drainage), and budget would increase and decrease based on the collection efficiency of ISF from different irrigation circles. The irrigation and drainage budget would be separate to check against lack of spending on drainage facilities.

Target Date

Responsibility

(ii)

(iii)

(iv)

13

WAPDA has withheld payments to PHLC consultants as a result of pre-audit observations. Most of the issues have been settled and general agreements have been reached on remaining issues. WAPDA management will issue instructions on the remaining issues to settle all liabilities on which agreements have been reached by 30 June 2005 and send relevant withdrawal applications to ADB by 15 August 2005. Failing this, all remaining liabilities will have to be settled by WAPDA from its own funds.

15 Aug 2005

WAPDA Partially complied.

ADB = Asian Development Bank, BME = benefit monitoring and evaluation, CBIO = crop-based irrigation operations, DOA = Department of Agriculture, DOI = Department of Irrigation, ha = hectare, ISF = irrigation service fee, IWMI = International Water Management Institute, LSC = Lower Swat Canal, NDSP = National Drainage Sector Program, NWFP = North-West Frontier Province, O&M = operation and maintenance, PC-1 = Planning Commission Performa 1, PCR = project completion review, PHLC = Pehur High-Level Canal, SCARP = Salinity Control and Reclamation Project, SMO = SCARP Monitoring Organization, TPA = Topi Priority Area, USC = Upper Swat Canal, WAPDA = Water and Power Development Authority. Source: Data collected by PCR Mission.

30

Appendix 5

CONSULTING INPUTS (person-months)

Component Irrigation and Drainage APPRAISAL International Domestic 433 830 Total 1,263 UTILIZED/a International Domestic 248 1,059 Reason for Deviation Total 1,306 M&E activities were shifted from LRC Consultancy to this Package. Delay in some major Civil Works Contracts Supervision of Surveys and Investigation Development of Operational Procedures and a Computer Simulation Model for b USC-PHLC Agriculture Development Component Land Resource Conservation (Including M&E) 7 15 22

38

55

93

13

105

119

117

120

269

277

LRC Studies were added in TORs of ADC Consultants LRC studies were assigned to ADC consultants while M&E was assigned to the main (irrigation and drainage) consultants.

19

33

52

Total 500 1,050 1,550 269 1,433 1,702 ADC = agriculture development consultants, I = international water management institute, L = land resource conservation, M&E = monitoring and evaluation, PHLC = pehur high-level canal, TOR = terms of reference, USC = upper swat canal. a Including all approved variations/addendums. b Through IWMI). Source: Report and recommendations of president, Borrowers PCR, data collected by PCR Mission.

Appendix 6

31

PROJECT COSTS Table 6.1:Project Cost Summary ($ 000)

Component A. Irrigation & Drainage 1 2 B. Construction, Remodeling and Improvement System Optimization At Appraisal FC LC Total 35,186 72,230 107,416 34,711 475 848 708 140 60 71,617 106,328 613 7,702 424 5,287 1,991 58 1,088 8,550 424 5,995 2,131 118 Actual FC LC Total 41,465 86,586 128,051 40,869 86,586 127,456 595 1,170 1,170 3,800 379 1,851 1,570 595 4,971 379 3,021 1,570

Agriculture Development Component 1 2 3 Strengthening Beneficiary Participation Watercourse Remodeling and Construction Adaptive Research and Extension
a

C.

Land Resource Conservation

D.

Environmental Benefit Monitoring & Evaluation Subtotal

328 36,422

1,054

1,382

418

418

81,044 117,466

42,635 90,804 133,439

E.

Unallocated

10,961

29,765

40,726

F.

Service Charge During Construction

4,808

4,808

4,693

4,693

Total 52,191 110,809 163,000 47,328 90,804 138,133 = zero magnitude, ADC = agriculture development consultants, FC = foreign currency, LC = local currency a carried out by agriculture development component consultants. Source: Report and recommendations of president, loan financial information system, data collected by PCR Mission.

32

Appendix 6

Table A6.2: FINANCING PLAN (ACTUAL AND APPRAISED) ($ 000)

Component FC 35,186 34,711 25,761 303 5,128 7,411 1,484 0 0 451 11,287 8,950 0 3,736 4,956 180 78 0 475 50 425 0 ADB LC 46,168 45,704 33,917 324 9,168 16,890 2,384 0 0 758 2,922 11,787 0 4,443 6,607 221 53 463 125 339 125 388 Total 81,354 80,415 59,678 324 14,296 24,301 3,868 0 0 1,209 14,209 20,737 0 8,179 11,563 401 131 463 550 389 550 388 Appraisal Estimate Government FC LC Total 0 26,062 26,062 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25,913 10,239 0 3,800 4,039 967 0 0 685 748 15,674 11,397 1,919 2,203 50 105 0 29 120 29 36 25,913 10,239 0 3,800 4,039 967 0 0 685 748 15,574 11,397 1,919 2,203 50 105 0 29 120 29 36

A. 1.

Irrigation & drainage Construction, Remodeling and, Improvement WAPDA a. Investigations and Surveys b. Civil works i. Tunnels a ii. Irrigation canal system iii. Subsurface drainage iv. Remodeling of surface drains b c. Office and residential facilities d. Vehicles and equipment e. Consulting services Irrigation Department a. Land acquisition b. Civ il works i. Irrigation canal system ii. Surface drainage iii. Office and residential facilities c. Vehicles and equipment d. Supervision and administration System Optimization a. Vehicles and equipment b. Consulting services Agriculture development component Strengthening beneficiary participation a. Vehicles and equipment b. Operational cost Watercourse remodeling and construction a. Civil Works (including land development demonstration) b. Vehicles and equipment c. Consulting services d. Supervision and administration Adaptive research and extension a. Contract research b. Vehicles and equipment Land resource conservation c d a. Consulting services Environmental benefit monitoring & evaluation a. Vehicles and equipment b. Consulting services c. Incremental operation cost Subtotal

FC 35,186 34,711 25,761 0 5,128 7,411 1,484 0 0 451 11,287 8,950 0 3,736 4,956 180 78 0 425 50 425 0

Total LC 72,230 71,617 44,156 324 12,968 20,929 3,351 0 0 1,443 3,670 27,460 11,397 6,362 8,810 270 158 463 154 459 154 424

Total 107,416 106,328 69,917 324 18,096 28,340 4,835 0 0 1,894 14,957 36,410 11,397 10,098 13,766 450 236 463 579 509 579 424

2.

B. 1.

0 0 0 708 578 130 0 0 140 0 140 60 60 328 68 260 0 36,422

388 201 187 4,665 2,734 191 380 1,360 1,732 320 560 52 52 944 57 67 820 53,943

388 201 187 5,373 3,312 321 380 1,360 1,872 320 700 112 112 1,272 125 327 820 90,371

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

36 36 0 622 409 193 20 0 259 0 259 6 6 110 93 17 0 27,095

36 36 0 622 409 193 20 0 259 0 259 6 6 110 93 17 0 27,095

0 0 0 708 578 130 0 0 140 0 0 60 60 328 68 260 0 36,422

424 237 187 5,287 3,143 384 400 1,360 1,991 320 560 58 58 1,054 150 84 820 81,044

424 237 187 5,995 3,721 514 400 1,360 2,131 320 560 118 118 1,382 218 344 820 117,466

2.

3.

C.

D.

Appendix 6

33

Component FC E. Unallocated a. Physical contingencies b. Price contingencies Service charge during construction Total Component FC 41,465 40,869 0 28,314 0 0 1,148 360 0 10,877 0 0 83 0 0 87 595 0 595 1,170 ADB LC 55,456 55,456 984 49,969 0 0 2,029 1,477 836 0 0 0 146 0 0 14 0 0 0 3,586 Total 96,920 96,325 984 78,284 0 0 3,177 1,837 836 10,877 0 0 228 0 0 101 595 0 595 4,757 10,961 4,388 6,573 4,808 ADB LC 21,462 6,926 14,536 0 Total 32,423 11,314 21,109 4,808

Appraisal Estimate Government FC LC Total 0 0 0 0 8,303 3,713 4,590 0 8,303 3,713 4,590 0

FC 10,961 4,388 6,573 4,808

Total LC 29,765 10,640 19,126 0

Total 40,726 15,028 25,699 4,808

F.

52,191

75,411

127,602

35,398

35,398

52,191

110,809

163,000

A. 1.

2.

Irrigation & drainage Construction, remodeling and improvement WAPDA a. Investigations and surveys b. Civil works i. Tunnels a ii. Irrigation canal system iii. Subsurface drainage iv. Remodeling of surface drainsb c. Office and residential facilities d. Vehicles and equipment e. Consulting services f. Supervision and administration Irrigation department a. Land acquisition b. Civil works i. Irrigation canal system ii. Surface drainage iii. Office and residential facilities c. Vehicles and equipment d. Supervision and administration System optimization a. Vehicles and equipment b. Consulting services Agriculture development component Strengthening beneficiary participation a. Vehicles and equipment b. Operational cost Watercourse remodeling and construction a. Civil works (including land development demonstration) b. Vehicles and equipment c. Consulting services d. Supervision and administration Adaptive research and extension a. Contract research b. Demonstration program c. Vehicles and equipment

Actual Government FC LC Total 0 31,131 31,131 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 31,131 0 16,098 0 0 651 0 0 0 10,315 4,020 47 0 0 0 0 0 0 214 0 0 0 0 0 0 214 31,131 0 16,098 0 0 651 0 0 0 13,315 4,020 47

FC 41,465 40,869 0 28,314 0 0 1,148 360 0 10,877 0 0 83 0 0 87 595 0 595 1,170

Total LC 86,586 86,586 984 66,067 0 0 2,679 1,477 836 0 10,315 4,020 193 0 0 14 0 0 0 3,800

Total 128,051 127,456 984 94,382 0 0 3,828 1,837 836 10,877 10,315 4,020 275 0 0 101 595 0 595 4,971

B. 1.

379

379

379

379

2.

1,170 584 0 586 0 0 0 0 0

1,637 1,148 489 0 0 1,570 262 0 0

2,807 1,732 489 586 0 1,570 262 0 0

0 0 0 0 0 0 0 0 0

214 214 0 0 0 0 0 0 0

214 214 0 0 0 0 0 0 0

1,170 584 0 586 0 0 0 0 0

1,851 1,362 489 0 0 1,570 262 0 0

3,021 1,946 489 586 0 1,570 262 0 0

3.

34

Appendix 6

Component FC 0 ADB LC 1,308 Total 1,308

d. Incremental operation cost C. Land resource conservation c a. Consulting services Environmental benefit monitoring & evaluation a. Vehicles and equipment b. Consulting services c. Incremental operation cost Subtotal E. Unallocated a. Physical contingencies b. Price contingencies Service charge during construction

Actual Government FC LC Total 0 0 0

FC 0

Total LC 1,308

Total 1,308

D.

0 0 0 0 42,635 0 0 0 4,693

418 0 418 0 59,460 0 0 0 0

418 0 418 0 102,095 0 0 0 4,693

0 0 0 0 0 0 0 0 0

0 0 0 0 31,345 10,640 10,640 0 0

0 0 0 0 31,345 10,640 10,640 0 0

0 0 0 0 42,635 0 0 0 4,693

418 0 418 0 90,804 10,640 10,640 0 0 0

418

418 0 133,439 10,640 10,640 0 4,693 138,133

F.

Total 47,328 59,460 106,788 0 31,345 31,345 47,328 90,804 ADB = Asian Development Bank, ADC = agriculture development component, DOI = department of irrigation, FC = foreign currency, LC = local currency, WAPDA = water and power development authority a tunnel and main canal were constructed under a single contract. b this work was intended to be carried out by DOI, however it was also executed by WAPDA. c carried out by ADC consultants Source: Report and recommendations of president, loan financial information system, data provided by project implementation agencies

Appendix 7

35

(ANNUAL LOAN DISBURSEMENTS) ($ 000)

36
Appendix 8

PROJECT IMPLEMENTATION SCHEDULE

Appendix 8

37

38

Appendix 9

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant Central/NWFP Government
Section 3.01. (a) The Borrower shall make available the proceeds of the Loan to NWFP upon the same terms and conditions as are applicable to the Borrower which shall include interest at the rate of one per cent (1%) per annum and a repayment period of 35 years including a grace period of 10 years. The foreign exchange risk shall be borne by NWFP. (b) The Borrower shall cause NWFP to apply the proceeds of the Loan to the financing of expenditures on the Project in accordance with the provisions of this Loan Agreement and the Project Agreement. Section 3.02. The goods and services and other items of expenditure to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan among different categories of such goods and services and other items of expenditure shall be in accordance with the provisions of Schedule 3 to this Loan Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank. Section 3.03. Except as the Borrower and the Bank may otherwise agree, all goods and services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 and Schedule 5 to this Loan Agreement. The Bank may refuse to finance a contract where goods or services have not been procured under procedures substantially in accordance with those agreed between the Borrower and the Bank or where the terms and conditions of the contract are not satisfactory to the Bank. Section 3.04. Except as the Borrower and the Bank may otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively in the carrying out of the Project. Section 3.05. Withdrawals from the Loan Account in respect of goods and services shall be made only on account of expenditures relating to: (a) goods which are produced in and supplied from and services which are supplied from such member countries of the Bank as shall have been specified by the Bank from time to time as eligible sources for procurement, and (b) goods and services which meet such other eligibility requirements as shall have been specified by the Bank from time to time. Section 3.06. The closing date for withdrawals from the Loan Account for the purposes of section 8.03 of the Loan Regulations shall be 31 December 2002 or such other date as may from time to time be agreed between the Borrower and the Bank. Section 4.01. (a) The Borrower shall cause NWFP to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and agricultural and irrigation practices. (b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to this Loan Agreement. Article III Complied with.

Reference in Loan Agreement

Status of Compliance

Article III

Complied with.

Article III

Complied with.

Article III

Complied with.

Article III

Complied with.

Article III

Complied with.

Article III

Article IV

Complied with. The loan was given two extensions. The final loan closing date was 30 June 2005. Complied with.

Appendix 9

39

Covenant
Section 4.02. The Borrower shall make available to NWFP, promptly as needed, and on terms and conditions acceptable to the Bank, the funds, facilities, services, land and other resources, which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.

Reference in Loan Agreement

Article IV

Status of Compliance
Partly complied with. There were constant problems of delays in provision of counterpart funds for the Project. The final tranche of the counterpart funds is expected by 30 Nov 2005, with revision of the Project PC-1. Complied with.

Section 4.03. The Borrower shall ensure that the activities of NWFP, WAPDA and the Borrower's departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures. Section 4.04. The Borrower shall furnish, or cause to be furnished, to the Bank all such reports and information as the Bank shall reasonably request concerning (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the administration, operations and financial condition of NWFP and WAPDA and any other agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof; (v) financial and economic conditions in the territory of the Borrower and the international balanceof-payments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan. Section 4.05. The Borrower shall enable the Bank's representatives to inspect the Project, the goods financed out of the proceeds of the Loan, and any relevant records and documents. Section 4.06. The Borrower shall take all action, which shall be necessary on its part to enable NWFP to perform its obligations under the Project Agreement, including its obligations under Schedule 6 to this Loan Agreement, and shall not take or permit any action, which would interfere with the performance of such obligations. Section 4.07. The Borrower shall promptly inform the Bank of any amendment to the Act or the WUA Ordinance. Section 4.08. (a) It is the mutual intention of the Borrower and the Bank that no other external debt owed a creditor other than the Bank shall have any priority over the Loan by way of a lien on the assets of the Borrower. To that end, the Borrower undertakes (i) that, except as the Bank may otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and service charge and any other charge on, the Loan; and (ii) that the Borrower, in creating or permitting the creation of any such lien, will make express provision to that effect. 12. To ensure detailed coordination of the various agencies involved in Project implementation, NWFP shall, within three (3) months of the Effective Date, establish a Project Coordination Committee (PCC). 14. Prior to the Effective Date, NWFP shall, for the purpose of implementing Parts A and D of the Project, enter into an Implementation Agreement with WAPDA pursuant to which WAPDA shall carry out for NWFP the activities required to implement these Parts. The Implementation Agreement shall have terms and conditions acceptable to the Bank, including the following:

Article IV

Article IV

Complied with.

Article IV

Complied with.

Article IV

Complied with.

Article IV Article IV

Complied with. Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

40

Appendix 9

Covenant
Beneficiary Participation 18. For the purpose of ensuring involvement and participation of the beneficiary farmers in implementing the civil works associated with watercourse remodeling and construction (Part B.2 of the Project), NWFP shall cause DOA through DOFWM to formally organize and register beneficiary farmers at the watercourse level as WUAs under the WUAs Ordinance. NWFP shall ensure that upon completion of the remodeling and construction, the concerned WUAs shall assume full responsibility for O&M of the watercourses. 19. Before beneficiary farmers are organized into WUAs, NWFP and the Bank shall jointly review the experiences gained with the participatory approach under the SSP and initiate modifications in said approach. A second joint review shall be carried out after two years of Project Implementation to evaluate the experiences with the participatory approach in the Project Area. 20. Beneficiary participation shall be effected and assured through the WUAs. They shall be formed through a series of dialogues held between Project staff of DOA and the beneficiary farmers. The dialogues shall be organized by SOs to be engaged by DOA in accordance with paragraph 7 of Schedule 5 to this Loan Agreement. At each dialogue at least 70 per cent of the actual irrigators (owner and tenant farmers) shall be present. 21. NWFP shall ensure that the formation of the WUAs (Part B.1 of the Project) and their involvement and participation in the survey and design of the respective watercourses shall be carried out in an integrated process in accordance with the specific arrangements agreed upon with the Bank. 22. Upon their legal existence through registration with DOFWM, the WUAs, through their respective procurement and construction committees, shall actively engage in carrying out the construction works. This shall include contributions by the WUA members of a total of fifteen per cent (15%) of the total material cost for the works. The WUAs shall also be given the option to provide at their own cost sand, gravel and cement to reduce the WUAs share in the cost of other materials required for lining and structures. 23. For the purpose of construction, NWFP shall cause the WUAs to engage skilled labor or to contribute the labor of the beneficiary farmers for carrying out the works. 24. (a) In order to ensure that the General Bodies of the WUAs can effectively exercise control over all physical and financial operations of the WUAs, NWFP, if experience during Project implementation so requires, shall amend the WUA Ordinance or adopt adequate rules under the WUA Ordinance before Project completion. 26. NWFP shall cause the beneficiary farmers concerned to make available free-of-charge the required land for the remodeling and construction of watercourses. DOFWM shall ensure that, to the maximum extent possible, new watercourse alignments will follow plot boundaries to minimize the division of plots into uneconomic units. 27. NWFP shall ensure that DOFWM staff will receive refresher courses in relevant technical subjects immediately after their assignment to the Project. DOA's Agriculture Officers and Field Assistants in the Project Area shall also receive refresher courses and training in farm level irrigation techniques during the early years of Project implementation. To orient the staff towards the Project's participatory approach, DOFWM and DOE staff shall also receive training in social interaction.

Reference in Loan Agreement

Schedule 6

Status of Compliance
Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

Schedule 6 Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with. Only limited staff (75% of project staff) was trained due to fund constraints, staff turnover, and time constraints in making the staff available.

Appendix 9

41

Covenant
29. The NWFP shall, upon completion of the preparatory work, actively pursue the implementation of a land resource conservation program for the Narranji catchment area subject to the conclusions of the study to be prepared under this Part of the Project. The ensuing project shall be prepared in such a way that it would be eligible as a potential subproject under the proposed Bank-financed Forestry Sector Project for NWFP. Environmental Consideration 32. To safeguard against any possible adverse effects on the environment, NWFP shall, in the implementation of the Project, observe the Bank's Environmental Guidelines for Irrigation Projects, Land Clearance and Watershed Development. 33. NWFP shall ensure that the recommendations contained in the Initial Environment Examination (IEE) prepared under the feasibility study for the Project (Bank-financed T.A. No. 1709PAK) are implemented. In particular, NWFP shall ensure that, (i) to avoid further water logging in the existing Pehur Main Canal command area, no irrigation development will be financed with its own or the Borrower's assistance, if said development is based on traditional gravity methods in areas adjacent to above-mentioned command area which have soils unsuitable for this type of irrigation until adequate drainage measures have been implemented to counteract potential negative impacts; and

Reference in Loan Agreement

Schedule 6

Status of Compliance
Complied with.

Schedule 6 Complied with.

Schedule 6

Complied with.

Schedule 6

(ii) the PHLC-USC system will be operated in such a manner that (a) Swat River water resources will be optimized to reduce the loss of power at Tarbela Dam, and (b) excessive irrigation supplies to the distributaries and minors of the PHLC, Machai and Maira Branch Canals which command the areas adjacent to the Pehur Main Canal area, will be avoided.

Schedule 6

Complied with. No new irrigation development is being financed in areas adjacent to the Projects command area. Pehur SCARP has been initiated in this area by the NWFP government, which will further improve drainage conditions in this area Partly complied with. CBIO (which supplies water as demanded by different crops and reduces wasteful supply of water when it is not needed) and the hydraulic model (which will optimize water use in PHLC [Tarbela reservoir water] by giving first use priority to Upper Swat Canal water [river water]) are both operational. However, the CBIO and hydraulic optimization models require further fine-tuning based on operational results, which will be completed by IWMI, and full implementation will start by 30 October 2005.

42

Appendix 9

Covenant
34. NWFP shall pursue the early implementation of the planned Salinity Control and Reclamation Project for the Pehur Main Canal command area to facilitate the control and improve the groundwater table situation in this command area as well as upslope towards the Project Area, particularly in the Lahor area. Land Acquisition 35. NWFP shall ensure that all land and rights in land, including rights of way and riparian rights, required for the Project will be acquired in a timely manner to ensure Project completion by 30 June 2002. NWFP shall further ensure that people affected by land acquisition will be compensated as provided for under the prevailing law of land acquisition. To ensure timely compensation to all concerned affectees, the assessed value of the land acquired shall be deposited with the concerned land acquisition collector prior to the award of contracts for civil works requiring prior land acquisition.

Reference in Loan Agreement

Schedule 6

Status of Compliance
Complied with. Pehur SCARP contract has been awarded by DOI and work is ongoing. Partly complied with. Funds released to board of revenue but use and award are extremely low with less than 70% disbursement. NWFP will make an extra effort for complete disbursement to affected people by 30 September 2005. Complied with.

Schedule 6

Recovery of O&M Cost 42. NWFP shall establish and collect irrigation service fees (ISF) from the beneficiary farmers in the areas .encompassing the USC and LSC systems, the Pehur Main Canal System (excluding the cost relating to the O&M of the pump station at the head of the canal) and the PHLC System for O&M of the irrigation (excluding tube-well and lift irrigation schemes), and surface and subsurface drainage systems. 43. The O&M cost to be covered by the ISF shall comprise only the cost incurred at the divisional level and below. Cost incurred at the circle and headquarters level of DOI shall not be considered in determining the level of the ISF. 44. The ISF shall be increased annually by at least 25% of the amount of the ISF as of the date of increase from the year 1994 until full cost recovery is achieved. Thereafter, the ISF shall be adjusted annually, if required, by a rate, which will warrant full recovery of the annual O&M cost as defined in paragraph 43 of this Schedule. 45. Prior to the Effective Date, NWFP shall issue the appropriate, legally binding instrument to establish the ISF at a rate, which will constitute an increase of the ISF as of the date of the Loan Agreement by at least 25% as per 1 July 1994. 46. The issuance of the appropriate instrument to increase the ISF by at least 25% as per 1 July 1995 shall be a condition to be met prior to the Bank's approval of the award of contracts relating to the construction of the PHLC and the Gandaf and Baja tunnels. 47. NWFP shall ensure that a two-step communication campaign will be implemented under the Project to create awareness among the beneficiary farmers, foster cooperation between them and the implementing agencies and to incorporate suggestions to improve the implementation and impact of the Project. During the early stage of Project implementation, DOI and WAPDA, assisted by DOA staff, jointly shall inform the farmer beneficiaries about the general objectives of the Project, the nature of the Project interventions and their likely impact on them through village-level public meetings, meetings with elected representatives and NGOs, and the print media in the local language. During the preparation of the detailed design of the irrigation and drainage facilities, DOI and WAPDA shall present to and discuss with the farmer beneficiaries the designs through village-level public meetings. Appropriate suggestions from the farmer beneficiaries will be incorporated in the final design and construction phasing. Audio-visual equipment will be procured and materials prepared for this information campaign with the assistance of consultants.

Schedule 6

Schedule 6

Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

Schedule 6

Partly complied with. Information and dialogues started but the effort was not well coordinated. IWMI TORs have been revised to intensify the dialogue and interaction with farmers on system operations and CBIO. Full compliance is expected by 30 October 2005.

Appendix 9

43

Covenant
Wealth Tax on Agricultural Land 49. To reflect the increased productivity of the land in the Project Area and the adjacent SSP Area after development of the irrigation facilities, and in the interest of promoting equity of benefits and domestic resource utilization from PHLC, NWFP, through its Revenue Department, shall, upon Project completion, revise the Produce Index Units classification appropriately.

Reference in Loan Agreement

Schedule 6

Status of Compliance
Not relevant. The wealth tax was abolished in 2003 and this action had no impact on revenue generated from agriculture, as it was replaced by agriculture income tax. The system for increase in agriculture income tax, with increased productivity, is already in place and is adequate.

WAPDA
3. WAPDA shall establish a Project Directorate, which shall be headed by a Chief Engineer who will act as Project Director. The Project Director, under the general supervision of WAPDA's General Manager (Water), North, shall be responsible for the overall implementation of Part A of the Project. He shall be assisted by two Deputy Project Directors of the rank of Superintending Engineers, one each from WAPDA and DOI. The Deputy Project Director WAPDA shall be responsible for Part A.l.a)(i)-(iii) of the Project. The Deputy Project Director DOI shall be responsible for Part A.l.a)(iv)-(vi), A.l.b)(i) and A.2 of the Project. The Chief Engineer (O&M) of DOI shall be responsible for Part A.2 of the Project. The subsurface drainage works (Part A.l.b)(ii)) shall be carried out through the Project Director appointed pursuant to paragraph 2(b) of Schedule 6 to the SSP Loan Agreement. 4. The Engineering Consultants shall be engaged by WAPDA to provide services for planning and supervision of engineering surveys and investigations, detailed design, construction supervision and quality control of all the civil works under Part A of the Project. In respect of construction supervision and quality control, the Engineering Consultants shall perform the functions of the Engineer. The Engineering Consultants shall carry out their services under the direction of the Project Director and shall be headed by team leaders. Within the scope of their functions, the team leaders, who shall be delegated the powers of the Engineer as required for the Project by the Engineering consultants, shall (a) have day-to-day responsibility for the execution of the works; and (b) directly supervise (i) the staff of the Engineering Consultants and (ii) the DOI and WAPDA staff acceptable to the team leaders of the Engineering Consultants who shall be assigned to the Consultants' office, as required. 5. A joint WAPDA-DOI design review panel will be established to review design criteria and the detailed designs for irrigation and drainage facilities. The panel will be headed by DOA's Chief Engineer (Operation and Maintenance) and will comprise WAPDA's and DOA's Deputy Project Directors, DOA's Superintending Engineer (Northern Circle), DOA's Executive Engineer (Swabi Division), who will act as secretary of the panel, and a representative of IIMI referred to in paragraph 7 of Schedule 5 to this Loan Agreement. Article IV Complied with.

Schedule 6

Complied with.

Schedule 6

Partially complied with. DOI played a very passive in the review panel and WAPDA exercised control on the approvals. No further compliance is needed.

44

Appendix 9

Covenant
6. DOFWM shall appoint a Project Director who shall be assisted by technical and administrative staff to carry out the watercourse remodeling and construction and the land development activities (Part B.1-3) under the Project. To organize WUAs, male and female social organizers shall be engaged (see paragraph 21 of this Schedule). Qualified staff of DOA's Soil Conservation Wing and NWFP's Forest Department (FD) shall provide technical assistance to DOFWM for implementing the land development demonstrations under Part B.3 of the Project. 10. The Chief Engineer, WAPDA's Salinity Control and Reclamation Project (SCARP) Monitoring Organization (SMO), shall have the overall responsibility for the BME program and coordinate the activities of the two other specialized WAPDA agencies involved, i.e. the Watercourse Monitoring and Evaluation Directorate and the Surface Water Hydrology Project Directorate. The Environmental Cell of WAPDA's Planning Division shall be associated with the detailed design of the BME program. The Environmental Section of PEDD shall be given sufficient opportunities by WAPDA to provide its views on the various steps and activities to be undertaken and to discuss relevant matters. NWFP-WAPDA Implementation Agreement (i) WAPDA shall undertake the procurement of all agreed goods and services and the selection and engagement of consultants for said Parts in accordance with the relevant procedures described in Schedules 4 and 5 of this Loan Agreement, in consultation with NWFP; (ii) WAPDA shall carry out the implementation of said Parts in accordance with the agreed Project implementation schedule; (iv) WAPDA shall be responsible for operating and maintaining the facilities provided under said Parts, subject to the provisions of paragraphs 3637 of this schedule. 15. WAPDA, on behalf of NWFP, shall plan surveys and investigations and the design and construction of the irrigation and drainage facilities in such a way that the Project benefits are maximized. Upon completion of the design phase and prior to the award of major civil works contracts of Project implementation, WAPDA, in consultation with DOI and DOFWM, shall prepare a detailed schedule of construction activities which indicates the sequence of all civil works, and a revised estimate of the cost related to the Project's civil works. Such schedule shall be discussed between NWFP, WAPDA and the Bank during the comprehensive review of the Project referred to in paragraph 48 of this Schedule and subsequently be updated by WAPDA on a quarterly basis, and provided to the Bank through quarterly progress reports. b) Remodeling of the Irrigation System 16. The construction activities relating to remodeling of the canal systems shall be phased so as to minimize disruptions in irrigation water deliveries. To that end, WAPDA and DOI shall ensure that, where appropriate, remodeling activities are physically accomplished during the annual canal closure period and other appropriate periods when irrigation demands are low.

Reference in Loan Agreement

Schedule 6

Status of Compliance
Complied with.

Schedule 6

Partly complied with. Involvement of PEDD was and continues to be marginal. It was agreed that the M&E role would be taken over by DOIs regulation cell by 30 October 2005.

Schedule 6 Complied with.

Schedule 6 Schedule 6

Complied with. Complied with.

Schedule 6

Complied with.

Schedule 6 Complied with.

Appendix 9

45

Covenant
Part D of the Project 30. Project benefit and environmental, monitoring and evaluation (BME) shall be carried out by WAPDA on behalf of NWFP in accordance with the Bank's Handbook on Benefit, Monitoring and Evaluation. BME shall focus on assessing (i) the Project's impact on agricultural output, farming practices and income; (ii) the performance of the irrigation and drainage facilities, (iii) the Project's effects on socio-economically disadvantaged groups including tenants, landless laborers and women; and (iv) establishing a causal link between Project interventions and inferred agricultural and social impacts. 31. NWFP shall ensure that WAPDA prepares a BME program and submits it to the Bank for review and concurrence by 31 December 1996. Upon approval, the program shall be integrated with the existing program developed by WAPDA for the SSP. This integrated BME program shall continue to be used for the SSP after mid-1998 when the SSP is expected to be completed. (a) the Gandaf tunnel and associated control works provided under Part A.1.a(i) shall be operated and maintained by WAPDA on behalf of NWFP, which shall finance the cost thereof. (b) the PHLC and its new distribution system (Part A.1.a(ii) of the Project shall be operated and maintained by WAPDA during the civil works contract period including the contractual maintenance period and thereafter by DOI.

Reference in Loan Agreement

Schedule 6

Status of Compliance
Complied with delay. Submission of reports was so delayed on most accounts that they were no longer relevant. M&E role will be transferred from SMO to DOIs regulation cell by 31 October 05. Complied with.

Schedule 6

Schedule 6

Complied with.

Schedule 6

Complied with delay. The construction period expired on these contracts but the system was handed over to DOI with a delay of more than 2 years in June 2005.

Department of Agriculture
7. The Deputy Director, Extension (Mardan), shall be responsible for the extension and adaptive research activities. His responsibilities shall include designing and managing the extension program as well as identifying research needs and contracting research work out to research institutions. DOE's staff in the Project Area shall be strengthened by the posting of four water management subject matter specialists and one research agronomist. 8. To ensure close coordination, regular coordination meetings between staff of DOFWM, DOE and the consultants referred to in paragraph 1(c) of Schedule 5 to this Loan Agreement shall be held. The meetings shall be chaired by DOE's Deputy Director. 9. The Chief of the Agriculture Section of PEDD shall be responsible for providing guidance to the consultants referred to in paragraph 1(d) of Schedule 5 to this Loan Agreement who will prepare the study under this Part C. Staff of FD and DOA's Soil Conservation Wing shall provide assistance. 25. DOA shall ensure that the remodeling of watercourses will generally be undertaken simultaneously with the remodeling of the irrigation system, with priority given to areas where the remodeling will have a high impact. In respect of the subsurface drainage, the remodeling works shall be deferred until the completion of the subsurface drainage works to preclude the need for repairs. DOFWM shall ensure that WUAs shall remodel and construct the earthen sections of the watercourses prior to the procurement of structures and materials for watercourse lining. Schedule 6 Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

Schedule 6

Complied with.

46

Appendix 9

Covenant
Farm Level Water Management and Extension 28. DOA shall, through demonstration and test plots, provide farm level water management extension to the beneficiary farmers on a continuous basis. Training in irrigation techniques, watercourse maintenance and social interaction shall be incorporated in the regular in-service training courses for Agriculture Officers and Field Assistants. To ensure this, NWFP, through its own resources, shall suitably strengthen the staffing of DOFWM's Training Center in D.I.Khan in all relevant technical fields by 31 December 1995. Courses in social interaction shall be arranged through competent local institutions. 41. Watercourses remodeled and constructed under the Project shall be operated and maintained by the concerned WUAs. For this purpose, DOA shall continue to provide appropriate technical guidance to the WUAs upon completion of the Project. (c) the irrigation facilities remodeled under Part A.l.a)(iii) of the Project shall be operated at all times by DOI; the maintenance shall be carried out by WAPDA during the respective civil works contract periods including the contractual maintenance period, and thereafter by DOI;

Reference in Loan Agreement

Schedule 6

Status of Compliance
Complied with. Existing staff of agriculture institute have been trained in all relevant disciplines and social interaction. Although no new staff has been allowed, the curriculum has been changed accordingly. Complied with.

Schedule 6

Schedule 6

Complied with delay. The construction period expired on these contracts but system was handed over to DOI with a delay of more than 2 years in June 2005. Partly complied with. Facilities were handed over to DOI but DOI is not undertaking regular O&M of these facilities. Recommendations for full compliance are in Appendix 4 (para.12). Complied with.

(d) the irrigation and drainage facilities remodeled, improved and converted under Part A.l.a)(iv)-(vi) and l.b)(i) of the Project shall be operated and maintained by DOI; and (e) The drainage facilities re-modeled and constructed under Part A.l.b)(ii) of the Project shall be maintained by WAPDA during the respective civil works contract periods including the contractual maintenance period and thereafter by DOI.

Department of Irrigation

(f) DOI shall carry out the O&M through its existing Division at Swabi and a new division to be established for the PHLC system during Project implementation. 37. DOI shall also establish a Regulation Cell for the PHLC-USC main canal system comprising of one Executive Engineer and a Subdivisional Officer. This cell shall plan seasonal and weekly canal operations; coordinate the daily canal operations by DOI's divisional staff including the head-works of USC at Amandara, and the WAPDA staff operating the Gandaf tunnel and associated control works; and monitor and evaluate the actual water distribution on a daily, weekly and seasonal basis. 38. To optimize the use of the Indus and Swat River water resources and minimize the loss of energy at Tarbela Dam, DOI shall develop a comprehensive mathematical model of the PHLC and USC main canal system. The model shall, as a decision-support tool, assist the divisional staff and the staff of the Regulation Cell in the operation of that main canal system. The model shall be developed before the completion and commissioning of the PHLC and calibrated during the first two seasons after the canal's commissioning.

Schedule 6

Schedule 6

Partly complied with. Regulation cell funds approved but staff is still to be deployed. Staff deployment is expected to be completed by 15 July 2005.

Schedule 6

Partly complied with. Model developed and is being fine-tuned. Full operations are expected by 30 November 2005.

Appendix 9

47

Covenant
39. For the management of the PHLC-USC main canal system, DOI shall install communication facilities, which shall be compatible with the communication system to be installed for the SSP. To facilitate the evaluation of the performance of the USC-PHLC main canal system, data-loggers shall be installed at critical points in the system and the surface drainage system. Review of O&M Organization 40. DOI shall examine the current O&M organization for the PHLCUSC system with a view to identifying measures to improve operational efficiency and reduce DOI's establishment cost. The staff functions and the lines of command and communication of the Northern Irrigation Circle of DOI and the O&M divisions in charge of this system and associated drainage systems shall be reassessed against system management requirements for crop-based canal operations and cost-effective system maintenance. The review shall include the findings and recommendations of the Bank-financed Technical Assistance for Crop-Based Irrigation Operations (T.A. No. 1481 PAK), the operational procedures to be developed under Part A.2.b) of the Project, and recommendations of other studies which may be commissioned to investigate options for institutional reforms for NWFP's irrigation sector. To carry out this review, DOI, within six (6) months of the Effective Date, shall constitute a working group comprising the Superintending Engineer at Mardan and the Executive Engineers of the O&M Divisions for the PHLC-USC system. The working group shall report to the Chief Engineer. By 30 June 1996, DOI shall submit a report to NWFP recommending possible organizational changes relevant for the PHLC-USC system and quantifying the impact of these changes on establishment and system maintenance cost. The report shall be discussed between NWFP and the Bank after which appropriate institutional changes for the PHLC-USC system shall be introduced. 11. The Project Steering Committee (PSC) established pursuant to paragraph 5(a) of Schedule 6 to the SSP Loan Agreement shall also function as PSC for the Project. The PSC, chaired by the Additional Chief Secretary NWFP, shall be responsible for the overall Project supervision and coordination. The PSC shall meet, in the same composition as under the SSP, as required, but at least every six (6) months. 13. The members of the PCC shall include the Secretary of the DOI as Chairman, the Project Director, the Deputy Project Directors of DOI and WAPDA, the Project Director of DOFWM, the Deputy Director (Extension), Mardan, of DOE, the team leaders of the consultants engaged under Parts A and B of the Project and representatives of NGOs, if engaged. Representatives of other institutions including contractors may be invited to participate on a case-by-case basis. The PCC shall meet as required, but at least every three (3) months.

Reference in Loan Agreement

Schedule 6

Status of Compliance
Not complied with. DOI will continue to use existing facilities. No further action is required.

Schedule 6 Partly complied with. Report developed and submitted but implementation in progress. Staff appointments are expected by 15 July 2005. Recommendations for full compliance are in Appendix 4 (para. 12)

Schedule 6

Complied with.

Schedule 6

Complied with.

Miscellaneous
Islamabad-Peshawar Motorway 17. To ensure adequate cross-drainage and conveyance of irrigation Schedule 6 Not applicable. supplies across the planned Islamabad-Peshawar Motorway, the No compliance Borrower shall cause its National Highways Authority to consult with required. NWFP on the motorway's design and implementation if the motorway construction is carried out. DOA = department of agriculture, DOE = directorate of agriculture extension, FD = finance department, IWMI = international water management institute formerly known as international irrigation management institute (IIMI) ,NWFP = north-west frontier province, PEDD = planning, environment and development department, PHLC pehur high-level project, SSP = swabi SCARP project, USC = upper swat canal

48

Appendix 10

O&M FUNDING Table A1-10.1: Budget Allocations and Expenditure of DOI

Head of Expenditure USC Maintenance Contracts & Contracts for reh./Imp: works a Electricity charges for Pumps/Tubewells Maintaining Office related to canal system (Equipment, O&M, Utility charges, and Building etc. Subtotal Salary, TA./DA and other costs associated with the b O&M of the system 4.0 LSC 1.9 200001 TW+LIS FIS 5.9 1.4 200101 TW+LIS FIS 6.3 2.2

drain. 5.3

Total 18.5

USC 6.6

LSC 7.0

drain. 1.2

Total 23.4

0.7

1.0

55.3

1.0

55.3 2.7

1.5

1.2

55.3

1.2

55.3 3.8

4.7 27.9

2.9 34.1

61.2

2.4

5.3

76.5 62.0

8.0 31.0

8.1 35.3

61.7

3.4

1.2

82.5 66.3

Total

32.6

37.0

61.2

2.4

5.3

138.5

39.0

43.4

61.7

3.4

1.2

148.8

Head of Expenditure USC Maintenance Contracts & Contracts a for reh:/Imp: works Electricity charges for Pumps/Tubewells Maintaining Office related to canal system (Equipment, O&M, Utility charges, and Building etc. Subtotal Salary, TA./DA and other costs associated with the O&M of the system b 6.3 LSC 6.7

200203 TW+LIS FIS 5.6 3.9

drain. 1.0

Total 23.6

USC 13.6

LSC 4.0

200304 TW+LIS FIS 3.0 1.7

drain. 1.4

Total 23.7

1.3

1.7

61.0

1.7

61.0 4.8

1.1

1.0

43.9

43.9 2.2

7.6 33.6

8.4 38.8

66.6

5.6

1.0

89.4 72.4

14.8 47.3

5.0 41.7

46.9

1.7

1.4

69.8 89.0

41.2 Total

47.3

66.6

5.6

1.0

161.8

62.1

46.7

46.9

1.7

1.4

158.8

Appendix 10

49

Head of Expenditure USC LSC

2004-05 TW+LIS FIS

drain.

Total

Maintenance Contracts & Contracts for reh:/Imp: works a Electricity charges for Pumps/Tubewells Maintaining Office related to canal system (Equipment, O&M, Utility charges, and Building etc. Subtotal Salary, TA./DA and other costs associated with b the O&M of the system Total

15.2 1.4

4.6

4.9 54.2

3.1

2.4

30.2 54.2 2.6

1.3

16.6 41.3

5.9 48.6

59.1

3.1

2.4

87.0 90.0

57.9

54.5

59.1

3.1

2.4

177.0

DA = daily allowance, DOI = department of irrigation, drain. = drainage, FIS = flow irrigation scheme, LIS = lift irrigation scheme, LSC = lower swat canal, Imp = improvement, reh = rehabilitation, TA = traveling allowance, TW = tubewell, O&M = operation and maintenance, USC = upper swat canal. a Based on estimated annual requirements for O&M sent by 3 divisions in Mardan Circle and review by PCR Mission, on average, O&M expenditure is 25 percent of the required expenditure.b Salary, and TA/DA budget is for all Northern Circle and includes the staff working on Irrigation schemes other than USC, and LSC. Source: data collected by PCR Mission from DOI

50

Appendix 10

Table A1-10.2: Gaps in O&M Allocations

O&M USC Actual Demand Fund Provided Deficient Amount/GAP 33.0 4.0 (28.9) LSC 38.0 1.9 2000-01 TW+LIS FIS 17.4 5.9 4.9 1.4 2001-02 TW+LIS FIS drain. 13.7 6.3 (7.4) 6.4 2.2 46.2 1.2

drain. Total 19.9 5.3 113.1 18.5

USC 26.5 6.6 (19.9)

LSC 28.0 7.0 (21.0)

Total 120.8 23.4 (97.5)

(36.1) (11.5)

(3.5) (14.6) (94.6)

(4.1) (45.0)

% of available 12% O&M funds versus actual demand O&M USC Actual Demand Fund Provided Deficient Amt./GAP % of available O&M funds versus actual demand 13.1 6.3 (6.7)

5%

34%

28%

27%

16%

25%

25%

46%

35%

3%

19%

LSC 25.7 6.7 (19.0)

2002-03 TW+LIS FIS 13.2 5.6 (7.6) 7.1 3.9 (3.2)

drain. 43.1 1.0 (42.1)

Total 102.2 23.6 (78.6)

USC 37.0 13.6 (23.4)

LSC 32.2 4.0 (28.2)

2003-04 TW+LIS FIS 15.2 3.0 (12.2) 7.0 1.7

drain. 56.8 1.4

Total 148.2 23.7

(5.3) (55.3) (124.4)

48%

26%

43%

55%

2%

23%

37%

12%

20%

24%

3%

16%

O&M USC Actual Demand Fund Provided Deficient Amt./GAP 44.3 15.2 (29.1) LSC 35.4 4.6 (30.8)

200405 TW+LIS FIS 15.2 4.9 (10.4) 10.5 3.1 (7.4)

drain. 52.8 2.4 (50.4)

Total 158.1 30.2 (127.9)

% of available O&M funds versus actual demand 34% 13% 32% 30% 5% 19% DA = daily allowance, DOI = department of irrigation, drain. = drainage, FIS = flow irrigation scheme, LIS = lift irrigation scheme, LSC = lower swat canal, Imp = improvement, reh = rehabilitation, TA = traveling allowance, TW = tubewell, O&M = operation and maintenance, USC = upper swat canal. a Based on estimated annual requirements for O&M sent by 3 divisions in Mardan Circle and review by PCR Mission, on average, O&M expenditure is 25 percent of the required expenditure.b Salary, and TA/DA budget is for all Northern Circle and includes the staff working on Irrigation schemes other than USC, and LSC. Source: data collected by PCR Mission from DOI

Appendix 10

51

Table A1-10.3: Irrigation Service Fee and O&M)

ISF Details USC Overdues Current Levied Total Receivable Recovery Made Balance LSC 2000-01 TW+LIS FIS 48.6 10.0 58.6 8.9 49.7 5.9 2.7 8.6 1.8 6.8 2001-02 TW+LIS FIS 49.7 12.2 62.0 6.0 56.0 6.8 2.8 9.6 1.8 7.8

drain.

Total 217.5 101.4 318.8 93.1 225.7

USC 106.0 59.8 165.8 50.0 115.8

LSC 63.2 54.7 117.9 58.7 59.2

drain. Total 225.7 129.6 355.3 116.5 238.8

100.2 62.8 46.4 42.3 146.6 105.1 40.6 106.0 41.9 63.2

Collection Efficiency Cumulative 28% On Current demand 87% O&M Requirements and ISF O&M Required 33.0 ISF receipts 40.6 Gap in O&M required and ISF collected %age 7.6

40% 99%

15% 89%

21% 66%

29% 92%

30% 84%

50% 107%

10% 49%

19% 65%

33% 90%

38.0 41.9 3.9

17.4 8.9 (8.5)

4.9 1.8 (3.1)

19.9 (19.9)

113.1 93.1 (19.9) -18%

26.5 50.0 23.6

28.0 58.7 30.7

13.7 6.0 (7.8)

6.4 1.8

46.2 120.8 116.5 (4.3) -4%

(4.5) (46.2)

ISF Details USC Overdue Current Levied Total Receivable 115.8 88.4 204.2 LSC 59.2 56.0 115.2 35.7 79.5 31% 64% 25.7 35.7 9.9

200203 TW+LIS FIS 56.0 13.8 69.8 4.1 65.7 6% 30% 13.2 4.1 (9.1) 7.8 4.8 12.6 1.3 11.2 11% 28% 7.1 1.3 (5.8)

drain. 0% 0% 43.1

Total 238.8 163.1 401.8 86.8 315.0 22% 53% 102.2 86.8 (15.4)

USC 158.6 93.2 251.8 64.2 187.6 26% 69% 37.0 64.2 27.2

LSC 79.5 64.8 144.4 59.7 84.7 41% 92% 32.2 59.7 27.5

200304 TW+LIS FIS 65.7 14.7 80.4 10.2 70.2 13% 69% 15.2 10.2 (5.0) 11.2 3.3 14.5 2.4 12.1 17% 75% 7.0 2.4 (4.6)

drain. Total 56.8 315.0 176.0 491.0 136.5 354.5 28% 78% 148.2 136.5 (11.7)

Recovery Made 45.6 Balance 158.6 Collection Efficiency Cumulative 22% On Current demand 52% O&M Required 13.1 ISF receipts 45.6 O&M Requirements and ISF Gap in O&M 32.6 required and ISF collected %age

-15%

-8%

ISF Details USC Overdue Current Levied Total Receivable Recovery Made 187.6 57.7 245.2 31.9 LSC 84.7 63.2 147.9 25.8

200405 TW+LIS FIS 70.2 13.3 83.5 3.2 12.1 2.0 14.0 0.7

drain.

Total 354.5 136.2 490.7 61.6

52

Appendix 10

ISF Details Balance Collection Efficiency Cumulative On Current demand O&M Requirements and ISF O&M Required ISF receipts Gap in O&M required and ISF collected %age USC 213.3 LSC 122.1

200405 TW+LIS FIS 80.3 13.3

drain.

Total 429.1

13% 55%

17% 41%

4% 24%

5% 35%

13% 45%

44.3 31.9 (12.4)

35.4 25.8 (9.6)

15.2 3.2 (12.0)

10.5 0.7 (9.8)

52.8

158.1 61.6 (96.5) -61%

Appendix 11

53

SUBSURFACE DRAINAGE SYSTEM PERFORMANCE REPORT A. Situation Statement

1. In the tail end areas of the Project, there is a subsurface drainage system which was developed under the Swabi Salinity Control and Reclamation Project (SCARP) Project1 (SSP), to control waterlogging in the drainage survey area. During the project completion review, farmers informed the Mission that the drainage systems had been functioning properly in the first three cropping seasons (20002003), cropping intensities and agricultural productions increased until 2003, and land prices also rose. However, improper functioning of the subsurface drainage systems under the prevailing increased canal water supplies caused productivity in the tail end areas to fall due to increased waterlogging. 2. The International Water Management Institute (IWMI) was tasked to review the situation, provide analysis, and make recommendations for making the system functional. According to the IWMI review, provision of manholes was eliminated at the design stage to avoid farmers interventions in the operation of subsurface drainage systems. As a result, the subsurface drainage system is totally underground and only has one opening at the end. In such a system, gravity flow conditions could be stopped if air is trapped. This could be one of the reasons for system clogging, which was exposed to heavy rainfall and additional water after the three year drought (20002003). 3. Subsurface drainage systems usually have a limitation of excessive drainage flows in irrigated areas. The root zone dries quickly after the irrigation event. Farmers like to avoid this situation, hence the recent popularity of controlled subsurface drainage systems. There is a possibility that farmers intervened in the existing system, which could have caused the system to stop working. This is evident from some farmers fields, where holes were found during the Mission. B. 4. IWMI Recommendations In the light of problem diagnosis, the following short-term recommendations are made: (i) For maintenance purposes, the Department of Irrigation (DOI) should be given the equipment and facilities for operation and maintenance (O&M) in the relevant irrigation subdivision. Such a facility originally existed in Mardan and Swabi SCARP area, which was later moved to Peshawar. Improved drainage management and control of waterlogging is part of canal management work. DOI should carry out cleaning of five to six laterals to identify the reason for blockages and the cost of making the whole system operational. Based on this exercise, DOI should submit a proposal for allocation of O&M funds in the 200506 budget to include budget for intensified district engineer work in terms of monitoring and field training. DOI should make crop-based irrigation operations functional in the affected area and control water availability based on regular monitoring of groundwater, as there is more than 700 millimeters (mm) of annual rainfall in the area (washing salts), and the soil and water monitoring report do not indicate any significant salinity/sodicity problems.

(ii)

(iii)

Originally it was under the scope of the PHLC Project Loan No. 1294 PAK(SF) (ADB. Year. Report and Recommendation of the President to the Board of Directors on {a} Proposed Loan{s} {and Technical Assistance Grant(s)} to the {full name for DMC} for {project title}. Manila).

54

Appendix 11

6.

In the longer term it is recommended that:

(i)

(ii)

Future planning and design of drainage systems in the area should include compulsory analysis of the comparative advantage of surface and subsurface drainage systems. According to IWMIs analysis, subsurface drainage systems may not be needed in the area, as it has sufficient gradient and excessive lateral groundwater movement. Manholes (with the control mechanism) should be added to the system if clogging persistseven after support for opening the system has been extended by DOI. These manholes can be multipurpose and can help in (a) maintaining gravity flow conditions due to opening to the atmosphere (air venting), (b) monitoring and maintenance of the subsurface drainage system, (c) providing proper control for farmers in operating these systems, and (d) facilitating the achievement of enhanced water productivity.

Appendix 12

55

STATUS OF COMPENSATION FOR LAND ACQUISITION (PRs 000)

S. No. 1 2 3 4 District/ Tehsil Swabi Lahor Mardan Buner Total Advance Released 153,417 20,000 21,712 31,055 226,184 Disbursement Period From Jan 1998 Jul 2000 Mar 1999 To Dec 2003 Dec 2003 Mar 2002 122,512 10,091 14,778 13,305 160,686 30,905 9,909 6,934 17,750 65,498 District revenue officers were asked by PD PHLCP vide letter dated 23 Feb 2005 to provide the accounting adjustments of the outstanding amounts. Amount Disbursed Balance Amount Remarks

= not available, PD = project director, PHLCP = pehur high-level canal project, S.No = serial number Source: Data collected by project completion review mission

56

Appendix 13

ECONOMIC COST AND BENEFIT ANALYSIS 1. The economic internal rate of return (EIRR) has been calculated for the Project on the basis of the capital costs incurred during project implementation, estimated future maintenance costs, benefits achieved to date, and considering estimated future benefits. The composite EIRR for the Project is 12.0%. A. Production Impact

2. To determine production impact, the same approach was used as at appraisal. At appraisal, it was assessed that improvements in irrigation systems under the Project would lead to (i) an overall increase in cropped area, (ii) yield improvements, (iii) changes in the cropping pattern, and (iv) increased cropping intensities. To capture the differential production regimes in the post-project setting, the cultivable command areas of the Project were disaggregated into four domains, compiled from Water and Power Development Authority (WAPDA) and Department of Irrigation (DOI) records by the Project Completion Review (PCR) Mission. Domain I (with irrigation improvement and surface drainage) consists of 6,000 hectares (ha); Domain II (with the new irrigation system and surface drainage) consists of 5212 ha; Domain III (with irrigation improvement only) consists of 29,800 ha; and Domain IV (with new irrigation system only) consists of 4,310 ha. Table A13.1 illustrates the distribution of domains. Table A13.1: Distribution of Domains
Item No Surface Drainage Existing Irrigation System Domain III Upper Swat Canal-Below RD 242 excluding Pehur (29,800 ha) Domain I Pehur Drainage Area (6,000 ha) New Irrigation System Domain IV Topi Priority Area (4,310 ha) Domain II Ballar Drainage Area (5,212 ha)

Surface Drainage

Source: Data collected by PCR Mission.

3. There were changes in the command area of Domain II and IV compared with appraisal estimates. The Project allowed additional irrigation development in 5,212 ha of mainly rain-fed area in Domain II (against 4,000 ha envisaged at appraisal) and provided irrigation in 4,310 ha of mainly rain-fed area in Domain IV (against 4,500 ha envisaged at appraisal). For the purpose of the analysis, drainage area in Domain I has been assumed as 6,000 ha, as at appraisal. 4. Major project activities were implemented over 8 years (from 1998 to 2005). However, some investment expenditures were incurred in 1995, 1996, and 1997, which were included in the economic analysis. Thus, the period of analysis is taken to extend for 30 years (from 1995 to 2024). Salvage values are ignored. 5. An underlying key assumption at appraisal was that measurable incremental crop benefits will begin to accrue in 1999 in all domains. However, in accordance with the PCR analysis, incremental crop production benefits were taken in the year that they actually started accruing in each domain. In Domain I and II, incremental crop production benefits actually started accruing in 1999, which was assumed at the time of appraisal. In Domain III, benefits started accruing in 2001 compared with the appraisal estimate of 1999, as most of the work under the Area Development Component of the Project was carried out in this domain during 2000 and water from the Pehur High-Level Canal (PHLC) became available in this domain from

Appendix 13

57

November 2002 onwards. In Domain IV, benefits started accruing in 2003 in comparison to the appraisal estimate of 1999, as irregular supply of water became available from PHLC in November 2002. Furthermore, the analysis was distributed domain-wise to capture the differential production regimes. 6. Both primary and secondary data were used for the analysis. Secondary data was collected by departments involved in project implementation, i.e., Department of Agriculture (DOA), DOI, WAPDA, and the International Water Management Institute (IWMI). 7. The PCR Mission calculated the cropping intensities of the four domains between 1998 and 2004 by analyzing cropping pattern and cultivable land data reported by WAPDA in the agro-economic survey reports, and used these as the basis for estimating cropping intensity buildup (Table A13.2, Table A13.3, and Table A13.4). 8. The buildup of cropping intensity was assumed to take 12 years (up to 2005) to reach its full potential of 157% in Domain II and 148% in Domain I, II, and IV, at appraisal. 9. The PCR Mission estimated the full cropping intensity of 149% in Domain I to be achieved in 200607 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain I in 2003-04 is 126%. In Domain II, the full cropping intensity of 149% is assumed in 2005-06, slightly above the appraisal estimate of 148% in 2005. The cropping intensity in Domain II in 2003-04 is 141%. In Domain III, the full cropping intensity of 162% was achieved in 2002-03 against the appraisal estimate of 157% in 2005. The cropping intensity in Domain III in 2003-04 stands at 167%. In Domain IV, the full cropping intensity of 148% was achieved in 2004-05 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain IV in 2003-04 stands at 147%, which is very close to the appraisal estimate. Thus, cropping intensities in Domain III and IV were achieved earlier than anticipated at the time of appraisal, and in Domain II as envisaged in the appraisal. Only Domain I will achieve its full cropping intensity with a delay of 1 year. The reason was the satisfactory performance of DOA, which was able to complete most of the activities on time. Cropping intensities were adjusted to avoid double counting of perennial crops, i.e., sugarcane and orchards. Table A13.2 shows the cropping intensities until they reach their full potential as assumed in the PCR. Table A13.2: Cropping Intensity at Full Potential in Four Project Domains
(%)
Year (a) With Surface Drainage Domain-I 92 88 88 103 112 Domain-II 110 113 115 119 110 (b) Without Surface Drainage Domain-III 147 156 162 Domain-IV 130 = not available, WAPDA = Water and power development authority. Source: WAPDA Agro-Economic Survey Reports for 19981999 to 20032004. 126 141 147 135 147 141 149 149 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007

148

10. Table A13.2 shows that cropping intensity in each domain was taken in the baseline year after incremental production benefits started to accrue. The baseline year for Domain I and II is 1998, Domain III is 2000, and Domain IV is 2002.

58

Appendix 13

11. To project future incremental agriculture production benefits, a nominal increase of 1% in the area and 7% in the crop yields was assumed until crop yields attained the maximum possible yield or the project area reached its full development potential. Only the maize crop yield has been increased at a rate of 15% due to a drastic increase in the potential yield for maize compared with the appraisal estimates (para. 13). After this, the yields are not likely to increase and, therefore, have been kept constant. The maximum possible yields assumed in the PCR have been based on crop yield data collected from the Directorate of Agriculture Extension (DAE). This data is adjusted based on crop yields attained in demonstration farms established by DAE and actual yields assumed in the project area. This increase in crop yield is also based on the 7.5% growth rate achieved in the agriculture sector this year (200506), and targeted growth rate of 8.5% per year for the next five years (200607 to 201011) through an improved outreach program for agriculture extension and research in provinces funded by the NWFP government from the Agriculture Sector Program Loan II (ASPL-II). 12. The maximum possible yields used in the analysis have been changed from the appraisal estimates. Table 13.3 presents the comparison between maximum possible yields assumed at the time of appraisal, maximum yields expected to be achieved in the project area, and current average yields achieved in the project area. Table A13.3: Crop-Wise Yield in the Project Area (t/ha)
Crops Maximum Yield Assumed at Appraisal Maximum Yield Assumed in PCR Average Yield Achieved in the Project Area

Kharif Maize Tobacco Fodder Sugarcane Rice Orchards Vegetables Rabi Wheat Oilseed Fodder Vegetables

2.5 2.8 28.0 60.0 10.0 13.0

5.2 2.8 30.0 48.3 2.3 11.0

4.9 2.7 29.9 48.3 1.9 9.1

3.0 1.3 55.8 17.5

3.1 55.8 17.5

2.7 51.5 12.6

= data not reported., WAPDA = water and power development authority Sources: Department of Agriculture (Extension), WAPDA Agro-Economic Survey Reports for 19981999 to 2003 2004, appraisal estimates, and PCR mission findings.

13. The potential yield for maize has been drastically increased in comparison to appraisal estimates because DAE has reported that synthetic maize (current average yield 2.2 metric tons per hectare [t/ha]) is being replaced by hybrid maize (current average yield 4.9 t/ha) in the project area. 14. Data on maximum yields for Kharif fodder, Rabi fodder, and Rabi vegetables was not available from DAE and is assumed based on the appraisal estimates and PCR Mission estimates. The crop yield for rice is assumed based on the maximum yields achieved in the Swabi Salinity Control and Reclamation Project (SCARP) project area for these crops. Kharif vegetables and oilseed have not been considered in the PCR analysis, as these were not one of

Appendix 13

59

the major crops reported by WAPDAs Agro-Economic Survey Reports against the assumption made at the time of appraisal. 15. The crop yield for sugarcane was taken equal to what has already been achieved in the project area (48.37 t/ha), rather the potential production quoted by DAE, compared with the appraisal estimate of 60.00 t/ha. Additionally, the chances of increase in sugarcanes yield are also less as farmers might tend to reduce its cultivation because there is no sugar mill in the project area and potential for higher yield is low (in comparison with other cropping options). However, sugarcane will not be completely wiped out in the area and will remain as one of the main crops, as it is used to prepare indigenous sugar that is sold in neighboring districts. 16. In accordance with the PCR analysis, crop yields will attain their maximum possible yield or will reach full development potential in each domain as follows: in Domain I, full development will be achieved by 200809 against the appraisal estimate of 2009; In Domain II, full development will be achieved by year 2012-13 against the appraisal estimate of 2009; In Domain III, full development will be achieved by year 2010-11 against the appraisal estimate of 2009; and In Domain IV, full development will be achieved by year 2012-13 against the appraisal estimate of 2009. The reason for delayed achievement of full development against appraisal estimates is lower crop yields in the baseline year compared with baseline year appraisal estimates and the delayed completion of the Project. 17. The PCR Mission has used the existing crop yield data of the four domains between year 1998-99 and 2003-04, as reported by WAPDA in their Agro-Economic Survey Reports. The base crop yields in each domain were taken in the year when incremental production benefits started accruing in each domain. Table A13.4 summarizes the projections of the PCR Mission for crop yields. Table A13.4: Average Yields of Different Crops (t per ha)
Domain I (With Surface Drainage) Base Year 2003 Full CI Full Dev. (1998 2004 (2006 (2008 1999) 2007) 2009) Domain II (With Surface Drainage) Base 2003 Full CI Full Dev. Year 2004 (2005 (2012 (1998 2006) 2013) 1999) 1.6 29.0 12.4 1.6 1.3 1.3 26.2 23.3 2.7 1.4 1.8 30.0 26.7 2.8 1.7 5.2 48.4 30.0 2.8 2.4

Crops

Kharif Maize Sugarcane Fodder Tobacco Rice

1.6 29.0 12.4 1.6 1.6

2.0 48.4 29.9 2.3 1.9

3.5 41.2 30.0 2.8 2.4

5.2 48.4 30.0 2.8 2.4

Rabi Wheat Fodder Vegetables

1.6 23.6

2.4 51.5 12.6

2.9 55.8

3.1 55.8 17.5

1.6 23.6

1.4 42.8 12.0

1.8 49.0 13.7

3.1 55.8 17.5

60

Appendix 13

Crops

Domain III (Without Surface Drainage) Base Year 2003 Full CI Full Dev. (2000 2004 (2002 (2010 2001) 2003) 2011)

Domain IV (Without Surface Drainage) Base Year (2002 2003) 1.3 22.0 23.0 2.3 8.6 2003 2004 Full CI (2004 2005) Full Dev. (2012 2013)

Kharif Maize Sugarcane Fodder Tobacco Orchards

1.4 33.5 12.9 1.1 8.4

2.0 27.1 25.6 2.5 9.1

1.4 32.3 13.4 2.3 8.8

5.2 48.4 30.0 2.8 11.0

1.4 26.0 24.9 2.3 8.7

1.7 27.8 26.6 2.5 9.3

5.2 48.4 30.0 2.8 11.0

Rabi Wheat 2.6 2.7 2.6 3.1 1.9 Fodder 43.9 48.2 44.2 55.8 38.5 Vegetables 11.3 12.0 12.0 17.5 11.3 = not available, CI = cropping intensity, dev = development Source: WAPDA Agro-Economic Survey Reports for 19981999 to 20032004.

2.0 40.5 11.9

2.2 43.3 12.7

3.1 55.8 17.5

18. Table A13.5 presents the change in cropped area for different crops by giving a comparison of the cropped area at baseline and full development in each domain. Table A13.5: Change in Cropped Area Domain-Wise (ha)
Crops Domain I (With Surface Drainage) Base Year (19981999) Production Kharif Maize Sugarcane Fodder Tobacco Rice Rabi Wheat Fodder Vegetables Crops Full Dev. (20082009) increased Production 1,649 1,225 135 456 557 Inc. Area Domain II (With Surface Drainage) Base Year (19981999) Production Full Dev. (20122013) increased Production 1,206 554 79 98 898 Increased Area

588 756 376 350 346

1,061 469 (241) 106 212

349 125 684 77 310

857 430 (606) 21 588

1,192 384

3,189 482 56

1,997 98 56

1,340 233

3,565 518 45

2,224 285 45

Domain III (Without Surface Drainage) Base Year (20002001) Production Full Dev. (20102011) increased Production 18,008 1,554 675 7,039 1,261 Increased Area

Domain IV (Without Surface Drainage) Base Year (20022003) Production Full Dev. (20122013) increased Production 2,808 36 11 491 54 Increased Area

Kharif Maize Sugarcane Fodder Tobacco Orchards

15,836 1,208 497 5,654 1,208

2,172 347 178 1,385 54

1,919 19 8 186 42

889 17 4 305 12

Appendix 13 Crops Domain III (Without Surface Drainage) Base Year (20002001) Production Full Dev. (20102011) increased Production Increased Area

61

Domain IV (Without Surface Drainage) Base Year (20022003) Production Full Dev. (20122013) increased Production Increased Area

Rabi Wheat 11,802 14,833 3,032 2,618 2,892 Fodder 1,949 2,349 400 90 100 Vegetables 1,949 2,906 958 161 178 = not available, dev = development Source: WAPDA Agro-Economic Survey Reports for 19981999 to 20032004 and PCR mission projection estimates.

274 9 17

19. Table A13.6 depicts the pattern of incremental production in the project area. Against the appraisal estimates of annual incremental production at full development of 25,670 t of maize, 360,000 t of sugarcane, 10,400 t of Kharif fodder, 14,281 t of Tobacco, 23,459 t of wheat, 16,950 t of Rabi fodder, and 6,200 t of Rabi vegetables, the agriculture incremental production at full development according to the PCR estimate is 97,136 t of maize, 96,594 t of sugarcane, 7,238 t of Kharif fodder, 15,284 t of Tobacco, 36,104 t of wheat, 88,848 t of Rabi fodder, and 31,886 t of Rabi vegetables. Rice production was not assumed at the time of appraisal as a major crop but it became one of the main crops in Domain I and II, according WAPDAs AgroEconomic Survey Reports. Its incremental production in all four domains at full development is 2,464 t. Orchard production was taken to remain constant at appraisal but its incremental production at full development is 3,959 t, according to PCR estimates. The basis for the increased incremental production is the increase in cropped area (Table A13.5) of the Project and the increase in potential yields (Table A13.3). Table A13.6 compares the incremental crop production as estimated at the time of appraisal and at full development. Table A13.6: Appraisal and PCR Incremental Production Comparison (t)
Crops Inc. Prod. appraisal Total Kharif Maize Sugarcane Fodder Tobacco Rice Orchards 25,670 360,000 10,400 14,281 Inc. Prod. at Full Development With Surface Drainage DI DII 7,650 37,346 (619) 716 756 5,726 23,203 (6,132) 152 1,708 Without Surface Drainage DIII DIV Total 71,653 34,735 13,829 13,471 3,729 12,107 1,310 160 945 230 97,136 96,594 7,238 15,284 2,464 3,959 Change from Appraisal Estimate 71,466 (263,406) (3,162) 1,003 2,464 3,959

Rabi Wheat 23,459 7,978 8,905 15,299 3,922 36,104 12,645 Fodder 16,950 17,827 23,407 45,526 2,088 88,848 71,898 Vegetables 6,200 973 780 28,839 1,294 31,886 25,686 = data not reported, D1 = domain I, DII = domain II, DIII = domain-III, DIV = domain IV, inc. prod = increased production Source: WAPDA Agro-Economic Survey Reports for 1998 to 2005.

20. Incremental production of major crops at full development on a domain-wise basis (Table A13.7) assumes that farmers would give greater preference to increasing production and productivity of cash crops (such as maize and tobacco) in the summer, and vegetables and fodder in the winter due to water availability. Fodder will also be continually grown in the area as

62

Appendix 13

it satisfies the livestock feeding needs of farmers. However, the production of sugarcane will decrease substantially from the appraisal estimates as there is no sugar mill in the project area and its potential yield in the area also will remain much below yields demonstrated in other agroeconomic zones. At the same time, the food security aspect will not be so easily dismissed by farmers and they will not produce fewer grains. This is partly due to the lack of an alternate winter cash crop to replace wheat, and partly due to fears of water shortages, similar to those experienced in the recent past (20002003).

Appendix 13

63

Table A13.7: Incremental Production Comparison at Full Development Domain-Wise (t)

Crops Domain I (With Surface Drainage) Base Year (1998-99) Prod. Full Dev. (2008-09) inc. Prod. Increase as per Appraisal Change from Appraisal Estimate at Full Dev. Domain II (With Surface Drainage) Base Year (1998-99) Prod. Full Dev (2012-13) inc. Prod. Increase as per Appraisal Change from Appraisal Estimate at Full Dev.

Kharif Maize Sugarcane Fodder Tobacco Rice Rabi Wheat Fodder Vegetables Crops

940 21,886 4,660 560 553

8,590 59,232 4,041 1,275 1,309

5,000 78,000 2,427

3,590 (18,768) 4,041 (1,152) 1,309

559 3,618 8,487 123 402

5,726 23,203 (6,132) 152 1,708

5,000 78,000 2,427

726 (54,797) (6,132) (2,275) 1,708

1,908 9,074 538

7,978 26,900 973

4,833

3,145 26,900 973

2,145 5,496 58

8,905 23,407 780

4,833

4,072 23,407 780

Domain III (Without Surface Drainage) Base Year (2000-01) Prod. Full Dev (2010-11) inc. Prod. Increase as per Appraisal Change from Appraisal Estimate at Full Dev.

Domain IV (Without Surface Drainage) Base Year (2002-03) Prod. Full Dev (201213) inc. Prod. Increase as per Appraisal Change from Appraisal Estimate at Full Dev. 7,107 (76,690) 160 (1,482) 230

Kharif Maize Sugarcane Fodder Tobacco Orchards

22,171 40,455 6,408 6,238 10,144

71,653 34,735 13,829 13,471 3,729

10,670 126,000 10,400 7,000

60,983 (91,265) 3,429 6,471 3,729

2,522 417 174 430 359

12,107 1,310 160 945 230

5,000 78,000 2,427

Rabi 4,833 (1,120) Wheat 30,684 15,299 6,339 8,960 5,042 3,922 Fodder 85,546 45,526 16,950 28,576 3,485 2,088 2,088 Vegetables 22,020 28,839 6,200 22,639 1,821 1,294 1,294 = data not reported, dev = development, inc. prod = increased production Source: WAPDA Agro-Economic Survey Reports for 19981999 to 20032004 and PCR mission projection estimates.

B.

Non-Quantifiable Benefits

21. The economic analysis does not quantify the following benefits: (i) additional powergenerating capacity of (a) power generation plant installed at Malakand with a sustained capacity of 562 gigawatt-hours (GWh), and (b) seven contracts for installing power generating turbines at 22 waterfalls on Machai Branch that will have a combined sustained capacity of 25 GWh; (ii) values of crop by-products, livestock, and off-farm income; (iii) economic value of additional labor that was required during the construction of irrigation and drainage systems, and the renovation of watercourses and higher future labor demand that will be created due to incremental crop production; (iv) improvement of social amenities along irrigation channels, including clothes washing facilities and animal drinking wallows; (v) creation of womens organizations that promote awareness of the status and empowerment of rural women; (vi) development of water users associations and organizing them into and/or linking them to

64

Appendix 13

farmer support units and other groups that have improved the delivery of extension services and could open further rural development opportunities; (vii) impact of integrated pest management techniques, introduced particularly for sugarcane and tobacco; and (viii) development of social capital that will enable farmers to play a greater role in irrigation system management in future. C. Costs and Prices 1. Investment Costs

22. Investment costs in current Pakistan rupees (PRs) were converted to economic prices in constant 2002 prices by applying a minimum unit value index, in US dollar terms, to exports from G-5 countries and then correcting the dollar to Pakistan rupee parity ratio to the 2005 exchange rate of PRs59.87 to $1. The minimum unit values are derived from the World Bank Commodity Prices Forecast. The total capital cost of the Project (PRs6,011.8 million) in current terms has been converted to 2005 constant Pakistan rupees, which amounts to PRs6,570.1 million. This figure reflects all investment costs reported by project executing agencies. 2. Operation and Maintenance Costs

23. Incremental operation and maintenance (O&M) and repair costs of project facilities were based on estimates provided by the DOI (Appendix 10). 3. Prices

24. For project outputs, economic prices were also derived from the World Bank Commodity Prices Forecast and expressed in constant 2005 US dollar to Pakistan rupee equivalents. Farm gate prices were taken from the WAPDA Agro-Economic Survey Reports for each year and converted into economic prices. A standard conversion factor of 0.9 was used. 4. Energy Costs

25. In accordance with appraisal, the Indus River flows to be diverted for the Project have an economic opportunity cost as a result of the energy reduction at Tarbela and its potential use for augmenting the water resources for the Chashma Right Bank Canal (CRBC) system during the Rabi season. The 53 GWh energy loss (equivalent to 0.3% of the energy generated at Tarbela) was valued at PRs58.3 million at appraisal, based on the long-run marginal cost of electricity at high voltage in Pakistan. However, the findings of the PCR mission show that this energy loss has been reduced to 25 GWh per year due to implementation of demand managed crop-based irrigation operation (CBIO) in the project area, which has resulted in 4060% water saving. This energy loss started occurring in 2003 and will continue throughout the life of the Project. The total energy loss in this duration (20032004) is valued at PRs75 million per year calculated at the cost of PRs3 per kilowatt-hour (KWh). At appraisal, the maximum annual agriculture production foregone in the CRBC area was estimated at PRs102.9 million in year 20 (2013) when agriculture production in this area stabilizes. This has been taken as appraised in the PCR analysis. D. Estimates of Economic Internal Rate of Return

26. A computer model was developed using differential data related to cropped area and cropping patterns to calculate the project benefits for the project area. In calculating the overall

Appendix 13

65

EIRR, four domains were constructed. These domains were then aggregated to Project level. Crop benefits were estimated by taking incremental crop production for each year starting from the base year in each domain. Full development was assumed to occur in 2009 for Domains I and II, 2013 in Domain III, and 2014 in Domain IV. After that, the cropped area and cropping pattern changes have been kept constant. The useful life of infrastructure assets was estimated to be 30 years from 1994, with no salvage value. The EIRR is shown in Table A13.8. Table A13.8: Economic Internal Rate of Return (%)
Item EIRR (%) Project Completion Report 12.0 Appraisal Report 15.4

EIRR = economic internal rate of return. {**Source{s}: ?**}

27. The main reasons for the lower EIRR are (i) much higher baseline intensities than analyzed at appraisal resulting in reduced gaps between baseline and potential intensities, (ii) lower potential yield than anticipated at appraisal, (iii) delay of 30 months in implementation of the Project and 42 months in availability of water from Tarbela, (iv) inefficiency of the irrigation department in taking over and management of the drainage and irrigation system, and (v) delay in availability of water to Topi Priority Area due to contractual issues and ineffective decision making by WAPDA. E. Sensitivity Analysis

28. Five scenarios were developed to test the sensitivity of the EIRR: (i) where all additional water required downstream of RD 242 is supplied by PHLC (Tarbela) to augment the additional water consumed by two pipeline schemes upstream of RD-242, (ii) 20% decrease in anticipated crops yields, (iii) 2-year delay in achieving full production, (iv) agricultural development occurs in Hero Shah and Bazai1 command area due to the flexibility offered by the Project in terms of tapping shortfall of water for tail reaches of USC from PHLC, and (v) power generation plant2 being installed at Gandaf Tunnel starts generating electricity equivalent to 57 GWh, thus compensating the power generation loss at Tarbela. Table A13.9: Sensitivity Analysis
Variable Tested Base Case (overall EIRR at project completion) Case I. PHLC meeting all the demand downstream RD 242 in Maira Branch Case II. 20% decrease in anticipated crops yields Case III. 2-year delay in achieving yields at full production Case IV. Agricultural development occurs in Hero Shah and Bazai command area due to the Project Case V. Power Generation plant installed at Gandaf Tunnel EIRR = economic internal rate of return, PHLC = Pehur High-Level Canal, RD = reduced distance Source: PCR Mission estimates, data provided by implementation agencies.
1

EIRR (%) 12.0 7.8 8.2 11.7 13.8 12.3

Bazai and Hero Shah are pipeline schemes for which studies have been completed and funds allocated for Bazai in the NWFPs budget of 20052006. 2 The contract for the power plant has been awarded and PRS140 million has been allocated in the current years budget.

66

Appendix 13

29. Case I analyses the scenario when additional water required downstream of RD 242 is supplied by PHLC (Tarbela) to augment all the additional water consumed by two pipeline schemes upstream of RD-242, without considering the benefit of the pipeline schemes (para. 28). The EIRR is quite sensitive to this case as the loss of electricity at Tarbela increases substantially from 25 GWh to 55 GWh, thus reducing the EIRR from 12.0% to 7.8%. 30. Case II analyses the sensitivity of the EIRR by decreasing the anticipated crop yields by 20%. However, anticipated crop yields are not continuously decreased by 20% for every crop. The yields have only been dropped by 20% to the level where they either reach or remain a bit higher than actual yields obtained in the project area. The EIRR is quite sensitive to the yield increase as this affects the incremental crop production substantially, which contributes heavily towards the benefit stream of the EIRR. Thus, a 20% decrease in anticipated crop yields would decrease the Projects EIRR from 12.0% to 8.2%. 31. Case III analyses the sensitivity of the EIRR by assuming a 2-year delay in achieving the yields at full development. This scenario has been analyzed by resetting the crop yields in a way that full development occurs 2 years later in each domain than anticipated in the original analysis. The EIRR is less sensitive to this, as full development is already occurring later in the original analysis than anticipated at the time of appraisal. Thus, a 2-year delay in achieving full development in the Project will reduce the EIRR from 12.0% to 11.7%. 32. Case IV analyses the sensitivity of the EIRR by assuming the additional area of Hero Shah and Bazai coming under the Project command (22,350 ha). The EIRR is sensitive to this scenario as this substantially increases production within the project area, thus increasing the EIRR from 12.0% to 13.8%. 33. Case V analyses the sensitivity of the EIRR by assuming that from 2007 onwards, a Power Generation Plant will be installed at Gandaf Tunnel, costing PRs861 million. This plant will start generating electricity equivalent to 57 GWh, which will compensate the power generation loss at Tarbela, thus resulting in a net gain of 32 GWh per year in the Project. The EIRR is less sensitive to this scenario as implementation of CBIO system has already reduced the power loss at Tarbela. In this scenario, the EIRR will increase from 12.0% to 12.3%. Table A13.10: Area, Yield and Production in Four Domains
Domain I Year Baseline (1998-1999) Area Yield Production (ha) (t) (t) 588 756 376 350 346 1,192 384 1.6 29.0 12.4 1.6 1.6 1.6 23.6 940.0 21,886.2 4,660.4 559.9 553.0 1,907.7 9,073.7 Full C-I (2006-2007) Area Yield Production (ha) (t) (t) 1,616.25 1,200.44 132.05 446.55 546.20 3,126.35 472.59 54.53 3.48 41.16 30.00 2.80 2.35 2.99 55.80 15.40 5,624.54 49,411.73 3,961.44 1,250.33 1,283.57 9,349.76 26,370.37 839.59 Full Development (2008-2009) Area Yield Production (ha) (t) (t) 1,648.73 1,224.57 134.70 455.52 557.18 3,189.19 482.09 55.63 5.21 48.37 30.00 2.80 2.35 3.10 55.80 17.50 8,589.90 59,232.26 4,041.07 1,275.46 1,309.37 9,886.48 26,900.41 973.44

Crops Maize Sugarcane Fodder Tobacco Rice Wheat Fodder Vegetables

Appendix 13 Domain II Year

67

Baseline (1998-1999) Area Yield Production (ha) (t) (t) 349 125 684 77 310 1,340 233 1.6 29.0 12.4 1.6 1.3 1.6 23.6 558.9 3,617.6 8,487.1 122.7 402.4 2,144.8 5,496.0

Full C-I (2005-2006) Area Yield Production (ha) (t) (t) 1,125.07 517.18 73.23 91.54 837.56 3,324.72 483.12 41.56 1.77 29.96 26.66 2.80 1.57 1.71 49.00 13.74 1,995.98 15,495.84 1,952.56 256.30 1,318.52 5,692.46 23,675.42 570.97

Full Development (2012-2113) Area Yield Production (ha) (t) (t) 1,206.23 554.49 78.51 98.14 897.98 3,564.55 517.97 44.56 5.21 48.37 30.00 2.80 2.35 3.10 55.80 17.50 6,284.44 26,820.67 2,355.35 274.79 2,110.25 11,050.10 28,902.93 779.75

Crops Maize Sugarcane Fodder Tobacco Rice Wheat Fodder Vegetables Domain III Year

Baseline (2000-01) Area (ha) Yield (t) 1.4 33.5 12.9 1.1 8.4 2.6 43.9 11.3 Production (t) 22,170.7 40,455.1 6,408.3 6,238.4 10,144.0 30,684.4 85,545.8 22,019.8 Area (ha) 15,703 1,262 841 7,067 1,346 13,698 2,169 2,684

Full C-I (2002-03) Yield (t) 1.4 32.3 13.4 2.3 8.8 2.6 44.2 12.0 Production (t) 22,597.2 40,733.5 11,313.2 16,337.8 11,777.6 35,616.1 95,968.6 32,125.7

Full Development (2010-11) Area (ha) 18,008.47 1,554.48 674.58 7,039.14 1,261.18 14,833.50 2,348.96 2,906.22 Yield (t) 5.21 48.37 30.00 2.80 11.00 3.10 55.80 17.50 Production (t) 93,824.15 75,190.08 20,237.54 19,709.60 13,872.98 45,983.84 131,071.84 50,858.89

Crops Maize Sugarcane Fodder Tobacco Orchards Wheat Fodder Vegetables Domain IV Year

15,836 1,208 497 5,654 1,208 11,802 1,949 1,949

Baseline (2002-2003) Area Yield Production (ha) (t) (t)

Full C-I (2004-2005) Area Yield Production (ha) (t) (t)

Full Development (2012-2113) Area Yield Production (ha) (t) (t)

Crops Maize 1,919.16 1.31 2,521.77 2,592.98 1.66 4,307.25 2,807.83 5.21 14,628.78 Sugarcane 18.96 22.00 417.21 32.98 27.82 917.48 35.71 48.37 1,727.37 Fodder 7.59 22.98 174.32 10.31 26.65 274.60 11.16 30.00 334.80 Tobacco 185.85 2.31 429.68 453.46 2.50 1,135.38 491.03 2.80 1,374.90 Orchards 41.72 8.60 358.80 49.47 9.31 460.50 53.57 11.00 589.24 Wheat 2,617.86 1.93 5,042.00 2,670.48 2.16 5,778.54 2,891.75 3.10 8,964.41 92.22 43.34 3,996.52 99.87 55.80 5,572.47 Fodder 90.41 38.55 3,484.81 Vegetables 161.16 11.30 1,821.10 164.40 12.73 2,093.29 178.02 17.50 3,115.36 = data not reported, C-I = cropping intensity, Note: Yields at full cropping intensity between year 2002 and 2007 are based on actual data or estimated data in relation to actual data as much as possible. Source: WAPDA Agro-Economic Survey Reports for 19981999 to 20032004 and PCR mission projection estimates.

68
Appendix 13

Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Year

Inv. Cost

O&M Costs

Incr. Prod. Cost

Eco. Loss 1

Eco. Total inv. Loss 2 Cost 94.7 113.4 229.6 486.7 834.2 1,303.1 1,373.6 1,077.6 730.9 345.4 345.3 323.5 335.0 346.7 357.5 373.7 380.3 386.9 386.9 386.9 386.9 386.9 386.9 386.9 386.9 386.9 386.9 386.9 386.9 386.9

MUV (2005=100) 96.5 94.9 94.7 94.4 94.1 93.8 89.2 93.1 97.5 98.7 100.0 102.4 104.8 107.1 109.5 111.9 113.7 115.4 117.2 119.0 120.8 120.8 120.8 120.8 120.8 120.8 120.8 120.8 120.8 120.8

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

94.7 113.4 229.6 484.6 822.1 1,271.8 1,298.4 984.3 536.6 130.6 45.7

61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0 61.0

4.9 22.0 59.8 72.7 93.6 103.9 112.0 120.6 127.0 133.5 139.2 145.1 146.5 148.0 148.0 148.0 148.0 148.0 148.0 148.0 148.0 148.0 148.0 148.0 148.0 148.0

75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0

2.1 7.2 9.3 15.4 20.6 25.7 36.0 51.5 66.9 72.0 77.2 82.3 92.6 97.8 102.9 102.9 102.9 102.9 102.9 102.9 102.9 102.9 102.9 102.9 102.9 102.9 102.9

Total Inv. Cost (Eco.) 91.4 107.6 217.3 459.4 785.0 1,222.8 1,225.8 1,002.9 712.3 341.0 345.3 331.2 350.9 371.4 391.5 418.1 432.3 446.6 453.4 460.3 467.1 467.1 467.1 467.1 467.1 467.1 467.1 467.1 467.1 467.1

U.S $-PKr Total Inv. Parity (Constant 2005) 31.3 175.1 35.4 182.0 40.6 320.3 53.5 514.1 51.6 910.9 53.4 1,371.0 64.0 1,147.6 59.5 1,008.6 58.5 729.6 57.6 354.5 59.9 345.3 58.0 341.9 58.0 362.2 58.0 383.4 58.0 404.1 58.0 431.6 58.0 446.2 58.0 461.0 58.0 468.0 58.0 475.1 58.0 482.2 58.0 482.2 58.0 482.2 58.0 482.2 58.0 482.2 58.0 482.2 58.0 482.2 58.0 482.2 58.0 482.2 58.0 482.2

Incr. Agri. Benefits

Total Benefits 17.1 62.7 190.0 462.6 614.9 771.4 858.1 1,095.2 1,233.8 1,390.3 1,537.0 1,664.2 1,698.6 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4

17.1 62.7 190.0 462.6 614.9 771.4 858.1 1,095.2 1,233.8 1,390.3 1,537.0 1,664.2 1,698.6 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 1,727.4 EIRR =

Incr. Cash Flow (175.1) (182.0) (320.3) (514.1) (893.8) (1,308.3) (957.6) (546.1) (114.7) 416.9 512.9 753.4 871.6 1,007.0 1,132.8 1,232.6 1,252.4 1,266.4 1,259.4 1,252.3 1,245.2 1,245.2 1,245.2 1,245.2 1,245.2 1,245.2 1,245.2 1,245.2 1,245.2 1,245.2 11.7%

Table A13.11: Economic Analysis Cost in Million (PRs.) (Constant Prices: 2005)

Agri = agricultural, Eco = economic, Incr = incremental, Inv = investment, O&M = operation and maintenance, PKr = Pak rupees, Prod = production, Sr.No = serial number Economic Los s 1: Energy Loss at Tarbela Dam Economic Los s 2: Downstream Agricultural Production Loss Source: PCR Mission estimates, data provided by project implementation agencies.

Appendix 14

69

FARM BUDGET 1. To evaluate the impact of the Project on beneficiary farmers, financial farm budgets have been developed based on data in the Water and Power Development Authoritys (WAPDAs) Agro-Economic Survey Reports for 199899 to 200304, and Department of Agriculture data. An average farm size of 1.5 hectares (ha) has been taken and farm budgets are developed for both owner-operated farms and tenant-operated farms for the purpose of analysis, as assumed at the time of appraisal. 2. To capture the differential farm-income regimes in the post-project setting, farms are disaggregated into four domains. Domain I includes areas with irrigation improvement and surface drainage, Domain II includes new irrigation system and surface drainage, Domain III includes areas with irrigation improvement only, and Domain IV includes areas with new irrigation system only. 3. The farm budget analysis takes into account production derived from major crops. The value of crop by-products and off-farm income are not considered. Farm enterprise budgets have been constructed from the baseline year in each domain. The baseline year for Domains I and II is 19981999, 20002001 for Domain III, and 20022003 for Domain IV to 200304, as data from WAPDAs Agro-Economic Survey Reports is only available from 199899 to 200304. After 20032004, crop budgets are projected for the year in which each domain will achieve full cropping intensity and full development. The tenant-operated farm budget has been calculated based on ratios projected in the appraisal estimate in relation to the owner-operated farm budget, as tenancy arrangements in the project area without drainage have remained the same. In the drainage area, owners have increased their share from 25% or 33% of the produce to 50% of the produce, depending on the level of improvement brought about by the Project. This has been incorporated in the tenant-operated farm budgets. The current local market and farmgate prices for inputs and outputs are assumed for all four domains as reported in WAPDAs Agro-economic Survey Reports. Table A14.1 shows the net farm incomes of owner-operated and tenant-operated farms in the project area. Table A14.1: Gross Margin of Owner-operated and Tenant-Operated Farms (PRs)

Appraisal Estimates Baseline Full Net Dev. Increase (a) With Surface Drainage Domain I 3,121 37,619 34,498 Domain II 3,121 37,619 34,498 (b) Without Surface Drainage Domain III 29,361 40,554 11,193 Domain IV 3,121 37,619 34,498

Owner-Operator

Baseline Year 21,049 9,788 31,976 10,292

PCR Estimates 200304 Full CI Full Dev. 33,538 13,501 55,360 26,918 51,393 20,954 59,458 31,501 63,779 59,408 113,310 78,503

Net Increase 42,730 49,620 81,333 68,211

70

Appendix 14

TenantOperator

Appraisal Estimates PCR Estimates Baseline Full Net Baseline 2003-04 Full CI Dev. Increase Year (a) With Surface Drainage Domain I 1,568 23,164 21,596 17,028 21,590 31,367 Domain II 1,568 23,164 21,596 4,620 5,975 10,452 (b) Without Surface Drainage Domain III 18,542 25,212 6,670 20,830 35,900 38,821 Domain IV 1,568 23,164 21,596 2,637 13,797 16,499 CI = cropping intensity, dev = development, PCR = project completion review Source: Agro-Economic Survey Reports WAPDA (19982004).

Full Dev. 39,331 32,555 74,506 42,585

Net Increase 22,303 27,935 53,676 39,948

4. With the increase in cropping intensities, higher crop yields of newly adopted varieties, and high income-generating cropping patterns for all four domains, future with Project net farm incomes at full development (estimated to be 200809 for Domain I, 201213 for Domain II and IV, and 201011 for Domain III) for owner-operators will be PRs63,779 in Domain I (against the appraisal estimate of PRs37,619); PRs59,408 in Domain II (against the appraisal estimate of PRs37,619); PRs113,310 in Domain III (against the appraisal estimate of PRs40,554); and PRs78,503 in Domain IV (against the appraisal estimate of PRs37,619). For tenant-operators, the net farm incomes at full development will be PRs39,331 in Domain I (against the appraisal estimate of PRs23,164); PRs27,935 in Domain II (against the appraisal estimate of PRs23,164); PRs74,506 in Domain III (against the appraisal estimate of PRs25,212); and PRs42,585 in Domain IV (against the appraisal estimate of PRs23,164). The reasons for substantial increase in farm incomes of both owners and tenants in Domain III and Domain IV compared with appraisal estimates are (i) delays in achieving full development in both domains against appraisal estimates, (ii) potential increase in maize yield compared with appraisal estimates;1(iii) improved price for agriculture commodities/produce due to the Governments agriculture promotion policies; and (iv) shift in cropping patterns towards higher value-added crops (hybrid maize). The government achieved 7.5% growth in the agricultural sector this year (200506) and expects to achieve 8.5% growth in the next five years (200607 to 201112) by improving agriculture outreach, research, and market liberalization in the provinces. This is expected to contribute towards increased farm income. These initiatives will be funded through the Agriculture Sector Program Loan II2 (ASPL-II), funded by the Asian Development Bank and implemented by the North-West Frontier Province government. 5. The farm budget analysis demonstrates that the Project is expected to have a significant impact on farm incomes. All farmers in the project area are expected to receive substantial social and economic benefits from the Project and activities being financed through ASPL-II, indicating that adequate incentives will be present for farmers to adopt better agricultural practices and improve the quality of their lives.

Synthetic maize with a current average yield of 2.2 metric tons per hectare (t/ha) is being replaced by hybrid maize with a current average yield of 4.9 t/ha in the project area, thus having a substantial impact of increasing farmers incomes. Loan No. 187779 PAK (SF): (ADB. 2001. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan for Agriculture Sector Program Loan II. Manila.) This was approved in 13 Dec 2001.

Appendix 14

71

Table A14.2: FORM BUDGET (DOMAINI)

Year 1998-99 Farm Holding (Ha) Kharif Maize Sugarcane Fodder Tobbaco Rice Rabi Wheat Fodder Sugar Beet Vegetables Total Cropped Area (Ha) Croppining Intensity 1.50 Owner Operator Full C.I 2003-04 2006-07 1.50 1.50 Full Dev. 2008-09 1.50 Tenant Operator Full C.I 2003-04 2006-07 1.50 1.50 Full Dev. 2008-09 1.50

1998-99 1.50

0.20 0.26 0.13 0.12 0.12

0.40 0.30 0.03 0.11 0.14

0.48 0.35 0.04 0.13 0.16

0.49 0.36 0.04 0.13 0.16

0.20 0.26 0.13 0.12 0.12

0.40 0.30 0.03 0.11 0.14

0.48 0.35 0.04 0.13 0.16

0.49 0.36 0.04 0.13 0.16

0.41 0.13

0.77 0.12

0.91 0.14

0.93 0.14

0.41 0.13

0.77 0.12

0.91 0.14

0.93 0.14

1.39 92.4%

0.01 1.89 125.7%

0.02 2.23 148.6%

0.02 2.27 151.6%

1.39 92.4%

0.01 1.89 125.7%

0.02 2.23 148.6%

0.02 2.27 151.6%

Gross Production Value (PRs) Kharif Maize Sugarcane Fodder Tobbaco Rice Rabi Wheat Fodder Sugar Beet Vegetables Total Production Cost (PRs/ha) Kharif Maize Sugarcane Fodder Tobbaco Rice Rabi Wheat Fodder Sugar Beet Vegetables Total Gross Margin (PRs)

1,441 6,678 763 5,104 1,363

4,171 14,874 543 7,589 1,836

9,060 15,845 682 11,980 2,851

14,396 19,762 723 12,714 3,026

721 6,010 763 3,063 682

2,085 13,386 543 4,553 918

4,530 14,261 682 7,188 1,426

7,198 17,786 723 7,629 1,513

4,755 12,080

14,649 3,348

22,466 4,540

24,715 4,818

2,377 12,080

7,325 3,348

11,233 4,540

12,358 4,818

32,185

1,202 48,211

1,844 69,268

2,224 82,379

25,696

1,202 33,361

1,844 45,703

2,224 54,249

785 4,371 228 937 872

2,135 3,386 142 1,192 888

2,608 4,116 173 1,477 1,080

2,714 4,283 180 1,536 1,123

361 2,885 228 815 436

982 2,235 142 1,037 444

1,200 2,716 173 1,285 540

1,248 2,827 180 1,337 562

3,363 579

5,718 978

6,950 1,189

7,233 1,237

3,363 579

5,718 978

6,950 1,189

7,233 1,237

11,136 21,049

233 14,674 33,538

284 17,875 51,393

295 18,601 63,779

8,668 17,028

233 11,770 21,590

284 14,336 31,367

295 14,918 39,331

= data not reported, CI = cropping intensity, Dev = development

Source: PCR Mission findings, data provided by DOA.

72

Appendix 14

Table A14.3: FORM BUDGET (DOMAINII)

Year Owner Operator 199899 200304 Full C.I Full Dev. 200506 201213 1.50 1.50 1.50 1.50 Tenant Operator 199899 200304 Full C.I Full Dev. 200506 201213 1.50 1.50 1.50 1.50

Farm Holding (Ha) Kharif Maize Sugarcane Fodder Tobbaco Rice Rabi Wheat Fodder Vegetables Total Cropped Area (Ha) Croppining Intensity

0.18 0.07 0.36 0.04 0.16

0.37 0.17 0.02 0.03 0.27

0.39 0.18 0.03 0.03 0.29

0.42 0.19 0.03 0.03 0.31

0.18 0.07 0.36 0.04 0.16

0.37 0.17 0.02 0.03 0.27

0.39 0.18 0.03 0.03 0.29

0.42 0.19 0.03 0.03 0.31

0.71 0.12

1.08 0.16 0.01

1.14 0.17 0.01

1.22 0.18 0.02 2.39 159.5%

0.71 0.12

1.08 0.16 0.01

1.14 0.17 0.01

1.22 0.18 0.02 2.39 159.5%

1.65 2.12 2.23 109.8% 141.1% 148.8%

1.65 2.12 2.23 109.8% 141.1% 148.8%

Gross Production Value (PRs) Kharif Maize Sugarcane Fodder Tobbaco Rice Rabi Wheat Fodder Vegetables Total Production Cost (PRs) Kharif Maize Sugarcane Fodder Tobbaco Rice Rabi Wheat Fodder Vegetables Total Gross Margin (PRs)

1,521 1,990 2,331 1,866 1,509

2,472 4,547 307 2,481 2,680

3,699 5,716 386 2,825 3,369

13,377 11,365 536 3,479 6,194

760 1,791 2,331 1,119 755

1,236 4,092 307 1,488 1,340

1,849 5,144 386 1,695 1,685

6,688 10,228 536 2,087 3,097

8,666 1,539 19,421

11,824 3,725 1,142 29,177

15,711 4,683 1,435 37,824

35,032 6,566 2,251 78,799

4,333 1,539 12,627

5,912 3,725 1,142 19,242

7,855 4,683 1,435 24,733

17,516 6,566 2,251 48,970

1,084 905 885 800 1,257

1,679 1,804 168 202 1,726

1,799 1,943 181 217 1,858

2,068 2,233 208 249 2,135

499 597 885 696 628

772 1,191 168 175 863

828 1,282 181 189 929

951 1,474 208 217 1,068

4,010 691 9,633 9,788

8,057 1,805 237 15,676 13,501

8,674 1,943 255 16,870 20,954

9,971 2,233 293 19,391 59,408

4,010 691 8,007 4,620

8,057 1,805 237 13,267 5,975

8,674 1,943 255 14,280 10,452

9,971 2,233 293 16,415 32,555

= data not reported, CI = cropping intensity, Dev = development

Source: PCR Mission findings, data provided by DOA.

Appendix 14

73

Table A14.4: FORM BUDGET (DOMAINIII)

Year Owner Operator 2000-01 Full C.I 2003-04 Full Dev. 2002-03 2010-11 1.50 0.87 0.07 0.03 0.31 0.07 1.50 0.84 0.07 0.05 0.38 0.07 1.50 0.92 0.08 0.03 0.36 0.06 1.50 1.00 0.09 0.04 0.39 0.07 Tenant Operator 2000-01 Full C.I 2003-04 Full Dev. 2002-03 2010-11 1.50 0.87 0.07 0.03 0.31 0.07 1.50 0.84 0.07 0.05 0.38 0.07 1.50 0.92 0.08 0.03 0.36 0.06 1.50 1.00 0.09 0.04 0.39 0.07

Farm Holding (Ha) Kharif Maize Sugarcane Fodder Tobbaco Orchards Rabi Wheat Fodder Sugar Beet Vegetables Total Cropped Area (Ha) Croppining Intensity Gross Production Value (PRs) Kharif Maize Sugarcane Fodder Tobbaco Orchards Rabi Wheat Fodder Sugar Beet Vegetables Total Production Cost (PRs/Ha) Kharif Maize Sugarcane Fodder Tobbaco Orchards Rabi Wheat Fodder Sugar Beet Vegetables Total Gross Margin (PRs)

0.65 0.11 0.01 0.11

0.75 0.12 0.01 0.15

0.77 0.12 0.01 0.15

0.82 0.13 0.01 0.16 2.71 180.6%

0.65 0.11 0.01 0.11

0.75 0.12 0.01 0.15

0.77 0.12 0.01 0.15

0.82 0.13 0.01 0.16 2.71 180.6%

2.21 2.43 2.51 147.2% 161.8% 167.2%

2.21 2.43 2.51 147.2% 161.8% 167.2%

6,240 2,266 193 10,442 4,430

7,680 2,233 333 26,759 5,040

9,573 2,307 485 27,375 4,696

30,808 5,130 710 38,478 7,075

3,120 2,040 193 6,265 4,430

3,840 2,010 333 16,056 5,040

4,787 2,076 485 16,425 4,696

15,404 4,617 710 23,087 7,075

12,984 2,594 229 8,486 47,863

14,972 2,891 313 12,300 72,522

15,913 3,226 2,379 12,587 78,541

22,501 4,596 3,445 22,663 135,406

6,492 2,594 206 8,486 33,825

7,486 2,891 282 12,300 50,237

7,957 3,226 2,141 12,587 54,379

11,251 4,596 3,101 22,663 92,502

3742 1066 111 3641 1078

3,520 914 147 4,451 1,046

4,710 1,041 227 4,558 975

5,480 1,211 265 5,303 1,134

1,721 703 111 3,168 1,078

1,619 603 147 3,872 1,046

2,167 687 227 3,965 975

2,521 799 265 4,613 1,134

2986 1106 104 2053 15,887 31,976

3,278 981 100 2,725 17,162 55,360

3,493 1,006 102 2,972 19,083 59,458

4,015 1,156 117 3,416 22,096 113,310

2,986 1,106 69 2,053 12,995 20,830

3,278 981 66 2,725 14,338 35,900

3,493 1,006 67 2,972 15,559 38,821

4,015 1,156 77 3,416 17,996 74,506

= data not reported, CI = cropping intensity, Dev = development

Source: PCR Mission findings, data provided by DOA.

74

Appendix 14

Table A14.5: FORM BUDGET (DOMAINIV)

Year Owner Operator 200203 200304 Full C.I Full Dev. 200405 201213 1.50 0.76 0.01 0.00 0.07 0.02 1.00 0.03 0.06 1.50 0.94 0.01 0.00 0.17 0.02 0.97 0.03 0.06 1.50 0.95 0.01 0.00 0.17 0.02 0.98 0.03 0.06 1.50 1.03 0.01 0.00 0.18 0.02 1.06 0.04 0.07 2.41 160.5% Tenant Operator 2002-03 2003-04 Full C.I Full Dev. 200405 201213 1.50 0.76 0.01 0.00 0.07 0.02 1.00 0.03 0.06 1.50 0.94 0.01 0.00 0.17 0.02 0.97 0.03 0.06 1.50 0.95 0.01 0.00 0.17 0.02 0.98 0.03 0.06 1.50 1.03 0.01 0.00 0.18 0.02 1.06 0.04 0.07 2.41 160.5%

Farm Holding (Ha) Kharif Maize Sugarcane Fodder Tobbaco Orchards Rabi Wheat Fodder Vegetables Total Cropped Area (Ha) Croppining Intensity

1.95 2.20 2.22 130.3% 146.8% 148.2%

1.95 2.20 2.22 130.3% 146.8% 148.2%

Gross Production Value (PRs) Kharif Maize Sugarcane Fodder Tobbaco Orchards Rabi Wheat Fodder Vegetables Total Production Cost (PRs/ha) Kharif Maize Sugarcane Fodder Tobbaco Orchards Rabi Wheat Fodder Vegetables Total Gross Margin (PRs)

6,358 169 38 5,203 1,135

6,959 334 51 11,824 1,253

8,317 368 57 13,034 1,381

33,094 812 81 18,493 2,070

3,179 152 38 3,122 1,135

3,480 301 51 7,095 1,253

4,158 331 57 7,820 1,381

16,547 731 81 11,096 2,070

11,221 159 237 24,521

15,005 743 4,942 41,111

16,540 820 5,464 45,980

30,063 1,339 9,528 95,480

5,611 159 237 13,633

7,502 743 4,942 25,366

8,270 820 5,464 28,301

15,032 1,339 9,528 56,423

5,686 139 10 881 231

4,193 259 33 2,094 267

4,277 264 33 2,136 272

5,015 309 39 2,505 319

2,616 92 10 766 231

1,929 171 33 1,822 267

1,968 174 33 1,858 272

2,307 204 39 2,179 319

5,862 316 1,105 14,229 10,292

5,917 330 1,102 14,193 26,918

6,036 336 1,124 14,479 31,501

7,078 394 1,318 16,977 78,503

5,862 316 1,105 10,996 2,637

5,917 330 1,102 11,569 13,797

6,036 336 1,124 11,802 16,499

7,078 394 1,318 13,838 42,585

CI = cropping intensity, Dev = development

Source: PCR Mission findings, data provided by DOA.

Appendix 15

75

WATERCOURSE DISCHARGE AND CONVEYANCE EFFICIENCY Table A15.1: Outlet Discharge of Original Watercourses (Domain I)
WC Code DI-1 DI-2 DI-3 DI-4 DI-5 DI-6 DI-7 DI-8 DI-9 DI-10 DI-11 DI-12 DI-13 DI-14 DI-15 Minimum Maximum Mean Kharif 1997 1.40 1.10 0.77 0.70 1.16 1.00 0.54 0.71 1.20 0.50 0.40 0.30 1.13 0.71 1.00 0.30 1.40 0.84 Rabi 199798 1.38 1.20 0.69 0.73 1.16 0.90 0.57 0.80 1.19 0.43 0.45 0.34 1.43 0.68 1.05 0.34 1.43 0.87 Kharif 2001 2.11 1.41 1.28 1.31 2.13 1.15 1.14 1.33 2.60 1.69 2.17 0.86 1.20 0.50 1.89 0.50 2.17 1.51 Rabi 200102 1.99 1.46 1.79 0.96 1.94 1.46 1.37 1.61 1.55 1.63 1.38 0.82 1.03 1.15 1.66 0.82 1.99 1.46 Kharif 2002 1.84 1.60 1.99 1.51 0.97 1.44 4.67 2.12 1.49 2.49 4.01 0.95 2.38 1.87 3.67 0.95 4.67 2.20 Rabi 200203 2.05 0.86a 1.92 1.48 1.23 1.25 4.28 2.03 1.19 2.17 3.62 0.93 2.19 1.90 2.92 0.86 4.28 2.00 Kharif 2003 3.30 1.83 2.05 3.28 1.87 2.05 3.41 1.93 2.00 2.30 6.11 1.00 2.83 3.01 4.34 1.00 6.11 2.75 Rabi 200304 2.88 1.68 1.58 2.71 2.04 2.31 6.72 2.12 2.14 2.67 8.74 1.35 2.3 3.15 10.98 1.35 10.98 3.56

Average 79.76 67.82 161.90 129.88 227.38 309.20 increase over base year Increase in maximum discharge 55.00 39.16 233.57 299.30 336.43 667.80 over base year WC = watercourse Note: Abnormally high discharge in Domain I (DSA) may have been the cause of water-logging reported in the area during the PCR Mission. .a Less discharge is due to low supply in the canal. Source: PCR Mission findings, data provided by IWMI.

76

Appendix 15

Table A15.2: Outlet Discharge of Original Watercourses (Domain III)

WC Code DIII-1 DIII-2 DIII-3 DIII-4 DIII-5 DIII-6 DIII-7 DIII-8 DIII-9 DIII-10 DIII-11 DIII-12 DIII-13 DIII-14 DIII-15 Minimum Maximum Mean Average increase over base year Increase in maximum discharge over base year Kharif 1997 0.92 2.30 0.80
b

Rabi 199798 0.90 3.00 0.85

b

Kharif 2001 0.91 2.91 1.09 1.20 1.14 2.76 1.65 2.82 3.93 1.94 0.65 1.09 1.27 1.93 0.42 0.42 3.93 1.71 18.75

Rabi 200102 1.01 1.71a 1.41 1.01 0.94 a 3.48 2.01 2.83 3.92 2.05 0.95 1.02 1.38 1.89 0.61 0.61 3.92 1.75 8.70
a

Kharif 2002 0.83 2.32 1.06 1.78 0.96 a 2.98 1.42 2.53 4.37 2.10 1.39 1.83 1.47 1.95 0.89 0.83 4.37 1.86 29.17

Rabi 200203 1.11 1.67a 1.15 2.15 0.96 a 2.89 1.00 2.19 3.58 2.07 1.70 1.46 1.51 1.95 0.67 0.67 3.58 1.74 8.07
a

Kharif 2003 1.22 2.62 1.26 1.30 1.10 3.61 1.32 2.23 5.41 2.29 1.13 2.70 1.88 2.09 0.48 0.48 5.41 2.04 41.67

Rabi 200304 1.25 3.00 1.19 1.88 1.13 3.21 1.58 2.51 4.43 2.33 1.11 2.07 2.21 2.65 1.06 1.06 4.43 2.11 31.06

1.00 2.50 1.07 1.46 2.76 1.95 0.68 1.06 1.01 2.06 0.54 0.54 2.76 1.44

1.50 2.60 2.06 1.60 2.71 1.93 0.70 1.04 1.04 2.11 0.57 0.57 3.00 1.61

42.39

30.66

58.33

19.33

96.02

47.66

data not reported, WC = watercourse a Less discharge is due to low supply in the canal. b Not observed due to no supply of water to the watercourse. Source: PCR Mission findings, data provided by IWMI.

Appendix 16

77

LABOUR DATA

1. This appendix provides data on labor days generated during and after construction period of the Project. Table 16.1: Person Days Generated During Construction
Contract No./Name Contract Cost A. Irrigation and Drainage Component WP-01 3,664,574,784 WP-02 101,774,387 WP-03 541,456,737 WP-05 216,585,124 WP-08 69,177,885 Additional works 39,253,820 Labor days on pipes used for WP-02 contract. Labor days on pipes used on additional civil works Subtotal 4,632,822,737 Labor Cost 1,099,372,435 30,532,316 162,437,021 64,975,537 20,753,366 7,850,764 Mason Cost 274,843,109 7,633,079 40,609,255 16,243,884 5,188,341 1,570,153 15,970,185 3,044,625.00 1,385,921,439 365,102,632 days 1,099,372 30,532 162,437 64,976 20,753 6,281 63,881 12,178.50 1,460,411 Unskilled Labor Cost Days 824,529,326 22,899,237 121,827,766 48,731,653 15,565,024 6,280,611 5,323,395 1,014,875.00 1,046,171,888 8,245,293 228,992 1,218,278 487,317 155,650 62,806 53,234 4,059.50 10,455,630

B. Agriculture Development Component Area TPA direct outlet 857,320 3,429.28 833,876 TPA Maini & pipe minor outlets 1,574,790 6,299.16 1,485,277 Narranji Disty 521,620 2,086.48 511,480 Kalu Khan minor 368,480 1,473.92 415,760 Regular Area 1,768,256 7,073.02 1,589,916 Labor days calculated for PCLPs 7,202,592.00 28,810.37 1,800,648.00 Labor days calculated for Naccas 3,470,884.00 13,883.54 867,721.00 Subtotal 15,763,942.00 63,055.77 7,504,678.00 Total 1,523,466 Total Labor Days (Skilled and Unskilled) Disty = distributory, TPA = topi priority area Source: Report and recommendations of president, data collected by project completion review mission

8,338.76 14,852.77 5,114.80 4,157.60 15,899.16 18,006.48 8,677.21 75,046.78 10,530,676 12,054,143

2. The project generated an additional farm labor requirement of 0.9 million labor days annually in 2003-04 worth PRs.54.518 million against the appraisal estimate of 0.90 million labor days annually at the completion of the project i.e. 2005. Thus, the project achieved its additional farm labor requirement a year earlier than anticipated at the time of appraisal. Table A16.2 shows the incremental labor days generated domain wise. Table A16.2: Person-days Generated after Construction
Area Increased Labor Days (200304) 195,050 189,658 482,662 41,272 908,642 Labor Rate per Day (PRs.) 60 60 60 60 Incremental Labor Value (PRs.) 11,703,025

Domain I Domain II 11,379,465 Domain III 28,959,707 Domain IV 2,476,305 Total 54,518,502 PRs = Pak rupees Source: Report and recommendations of president, data collected by project completion review mission

78

Appendix 16

3. Additional farm labor days are calculated based on the data reported in the farm budgets of WAPDAs agro-economic survey reports for years 1998-99 to 2003-04. The additional farm labor is calculated by taking the total person hours consumed for each crop and then multiplying these by the total cropped area of that particular crop in each domain. A standard labor rate of PRs.60 per day or PRS. 7.5 per hour is assumed for calculating the incremental labor value. This rate has been adjusted as per the existing market rate of agriculture labor in the area and the figure reported in WAPDAs agro economic report of PRs.56 per day or PRs.7 per hour.

Appendix 17

79

GROUNDWATER AND SOIL QUALITY DATA Table A17.1: Groundwater Levels in Sample Watercourses (PHLC Domain I) (Percent of watercourse reaches with depth to water table at critical levels) (%)
Month April >90 cms >150 cms >90 cms >150 cms 1998 47 84 20 47 1999 49 84 20 49 2000 16 49 13 49

June

>90 cms 44 18 44 >150 cms 78 51 82 cm = centimeter, D = , PHLC = Pehur High-Level Canal, SMO = SCARP Monitoring Organization. Source: SMO agro-economic reports from 1997 to 2000.

October/D

Table A17.2: Groundwater Levels in Sample Squares (PHLC Domain II) (Percent of watercourse reaches with depth to water table at critical levels) (%)
Month April >90 cms >150 cms >90 cms >150 cms 1998 23 53 10 23 1999 27 60 10 23 10 23 2000 10 23 10 23 30 57

June

>90 cms 30 >150 cms 57 Source: SMO agro-economic reports from 1997 to 2003.

October/D

Table A17.3: Comparison of Surface Salinity in PHLC Project Area

Agency/Survey Period NonSlightly Moderately Strongly Misc. Area Saline Saline Saline Area Saline Area Type Area (SI) Area (S2) (S3) (S4) MP&RD,WAPDA 159,105 152,253 1064 ha 2914 ha 295 2579 ha 197779 ha % 95.7 0.7 1.8 0.2 1.6 SMO WAPDA 159,105 151,253 974ha 508 ha 6370 ha (2003) ha % 95.1 0.6 0.3 4.0 MP&RD = master planning and review division, PHLC = Pehur High-Level Canal, S1= non-saline, S2 = slightly saline, S3 = moderately saline, S4 = strongly saline, SMO = SCARP Monitoring Organization, WAPDA = Water and Power Development Authority. Note: Overall, there is a 1.8% decrease in the salt affected profile, showing that the total salt affected area has reduced from 2.7% to 0.9% in the project area. Source: SMO report on soil salinity and sodicity in the Project area (May 2005). Total Area (ha)

80

Appendix 17

Table A17.4: Comparison of Salinity/Sodicity Status of Soil Profile

Agency/Survey Period MP&RD,WAPDA 197779 S&R SMO WAPDA (2003) Total Profiles 248 % 100 ha NS-NS 237 ha 95 98 ha S-NS 1 ha 0.4 1 ha S-S 7 ha 2.8 NS-S 2 ha 0.8 1 ha Missing Data 1 ha 0.4

% 98 1.0 1.0 MP&RD = master planning and review division, NS-NS = non saline non sodic-normal soils, S-NS = saline non sodic-salt affected soils, NS-S = non saline sodic - salt affected soils, S-S = saline sodic-salt affected soils. Results: As a whole there is 2 % decrease in the saline/sodic profile, showing that in the Project area (PHLC) total non-saline/non sodic soils area has increased from 95 to 98%. Source: SMO report on soil salinity and sodicity in the project area (May 2005).

Table A17.5: Soil Salinity and Sodicity Status 199697 to 200405 (Domain I)
Term/Year Total (WCs) NS-NS (WCs) No. % 7 46.67 7 46.67 7 46.67 8 53.33 9 60.00 9 60.00 10 66.67 NS-S (WCs) No. % 5 33.33 4 26.67 6 40.00 7 46.67 6 40.00 5 33.33 2 13.33 S-S (WCs) No. % 3 20.00 4 26.67 2 13.33 0 0.00 0 0.00 1 6.67 3 20.00 Total Salt Affected (WCs) No. % 8 53.33 8 53.33 8 53.33 7 46.67 6 40.00 6 40.00 5 33.33

1/199697 15 2/199899 15 3/199900 15 4/200001 15 5/200102 15 6/200203 15 7/200405 15 WCs = water courses NS-NS = Non Saline Non Sodic Normal Soils NS-S = Non Saline Sodic Salt Affected Soils S-S = Saline Sodic Salt Affected Soils[WB354] Source: SMO report on Soil Salinity and Sodicity in the Project Area (May 2005)

Table A17.6: Soil Salinity and Sodicity Status 1996-97 to 2004-05 Domain II (Ballar DSA)
Term/Year Total (WCs) NS-NS NS-S S-S Total Salt Affected No. 25 23 22 19 15 15 18 % 83.33 76.67 73.33 63.33 50.00 50.00 60.00

No. % No. % No. % 1/199697 30 5 16.67 14 46.67 11 36.67 2/199899 30 7 23.33 17 56.67 6 20.00 3/199900 30 8 26.67 16 53.33 6 20.00 4/200001 30 11 36.67 9 30.00 10 33.33 5/200102 30 15 50.00 7 23.33 8 26.67 6/200203 30 15 50.00 10 33.33 5 16.67 7/200405 30 12 40.00 14 46.67 4 3.33 NS-NS = Non Saline Non Sodic Normal Soils NS-S = Non Saline Sodic Salt Affected Soils S-S = Saline Sodic Salt Affected Soils Source: SMO report on Soil Salinity and Sodicity in the Project Area (May 2005)

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83

SOCIOECONOMIC PROFILE OF THE PROJECT AREA 1. The socioeconomic profile is based on review of secondary data from the Department of Agriculture, Department of Irrigation (DOI), Water and Power Development Authority (WAPDA), and Statistical Department of the North-West Frontier Province (NWFP) government. 2. According to NWFP Development Statistics 2004, on average 86% of farms are less than 2 hectares (ha), compared with the appraisal estimate of 72%. The most dominant size class comprises farms up to 1 ha, representing about 63.9% of all farm sizes against the appraisal estimate of 44%. However, farms under 5 ha remain more or less as envisaged at appraisal (96% at appraisal vs 98.5% in 2004). The dominance of small holdings reflects rapid population growth and local inheritance laws, as farm size has further reduced from appraisal estimates. Table A18.1: Operational Farm Holdings (%)
Size (ha) Appraisal Percent of Farms 44 28 24 3 1 Actual Percent of Farms 63.9 22.2 12.4 1.3 0.2

Less than 1 1.0 to 2.0 2.0 to 5.0 5.0 to 10.0 Above 10.0 ha = hectare. Source: North-West Frontier Province Development Statistics, 2004

3. According to WAPDAs Agro-Economic Survey Reports, about 52.6% of the farms are tenant-operated, 38.8% are owner-operated, and the remaining 8.6% are owner-cum-tenant operated, compared with 55% owner-operated, 30% tenant-operated, and 15% tenant-cumowner operated farms reported at appraisal. This shows that further reduction in farm sizes are forcing owners to move to nonfarm employment. Tenancy arrangements in the project area without drainage have remained the same. In the drainage area, owners have increased their share from 25% or 33% of the produce to 50% of the produce depending on the level of improvement brought about by the Project. Similar revision in tenancy arrangements has been noted in the new areas, which have been provided irrigation water (Topi Priority Area [TPA] and Ballar Drainage Area). 4. The income and social condition of farmers have registered an improvement in terms of health, education, reduction in conflict, and access to services, with improvement in agriculture practices, higher agricultural income, improved water availability, and drainage conditions in the project area. Increased household income, as a result of the Project, is likely to benefit farmers by allowing higher expenditure for food, health care, and education. In the case of drinking water, water supply in the project area is now available to 83.18% of the rural households as compared to the appraisal status of 40%. The major sources of energy for cooking and heating remain the same, i.e., trees, crop residues, cow dung cakes, and kerosene oil. 5. Current education estimates show that 8090% of boys and 5060% of girls aged 611 years are going to school. This shows no change in the percentage of boys and girls going to school compared with appraisal estimates. However, it can be assumed that the number in absolute terms has slightly increased in comparison to appraisal estimates, as the actual number of boys and girls currently going to school has increased. Nonetheless, the percentage

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remains unchanged because the total population of girls and boys in the project area has also increased. 6. Currently, there are about 714 boys and 458 girls schools in the project area with enrollment of 119,828 boys and 68,592 girls. No statistics for these indicators were reported at appraisal so comparison is not possible. 7. Health care to most people in the project area is provided by traditional healers. The government health care infrastructure in the project area consists of 41 basic health units (against the appraisal figure of 28), 2 rural health centers (against the appraisal figure of 2), 9 medical dispensaries (against the appraisal figure of 11), and 4 hospitals in Swabi district (against the appraisal figure of 2). In addition, 2 TB clinics and 3 additional mother and child health centers were reported in the NWFP Development Statistics 2004 in the project area, which were not reported at the time of appraisal. This shows improvement in health facilities in the project area compared with appraisal, specifically in the case of basic health units, which have increased substantially. However, most of these facilities are poorly staffed because there are only 77 doctors in Swabi and , 105 nurses, and 43 female health workers in these health facilities. This makes the doctor to patient ratio 1:13,335. The situation becomes dismal when compared to the current ratio of 1:8,115 persons per hospital/dispensary beds in Pakistan. A. Impact of Project Components

8. The Project has resulted in an overall increase in cropped area, yield improvements, changes in the cropping pattern, and increased cropping intensities. It has also improved social mobility through creation of womens organizations (WOs), which promote awareness on the status and empowerment of rural women. Development of water users associations (WUAs) has improved the delivery of extension services and can further open rural development opportunities. Development of social capital will enable farmers to play a greater role in irrigation system management in the future. Another key outcome is an overall increase in the farm incomes of the majority of 60,000 farm families located in the project area. Some project benefits are elaborated below. 1. Increased Water Delivery Efficiency a. Increase in Water Supplies and Reduction in Water Losses

9. WAPDAs Agro-Economic Survey Report (April 2005) indicates that the Project has helped to increase the overall conveyance efficiency of watercourses (WCs) by 12%. The water conveyance efficiency in Domain I has increased from 66% to 81% and in Domain II from 75% to 87%. This has also helped to increase cropping intensity and crop yields in the project area. b. Reduction in Labor

10. Lining of WCs and increased water supplies have reduced water losses from the channel, watercourse maintenance cost and labor, and conflicts over water sharing (because of WC control structures). The main savings resulted from lower labor needs for managing an irrigation turn, less silt to be removed from the WC, and fewer repairs. Farmers reported that irrigation management now takes one person where two to three had been needed in the past.

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c.

Reduction in Conflicts

11. Many farmer groups reported a reduction in disputes over irrigation supplies to the Project Completion Review (PCR) Mission. This helps reduce demands on farmers time. Theft of water from a lined channel is more difficult and easier to detect if attempted than with an unlined WC. Greater water availability has also drastically reduced the need to steal water. Damages due to unplanned flooding in unlined WCs have also been almost eliminated. 2. Increased Crop Production

12. A significant impact with clearly quantifiable benefits to farmers is the increase in farm productivity compared to baseline years. While the cultivable command area (CCA) may have shown some increase in land use intensity, principal gains are from increased cropping intensity, continuing change in the cropping pattern in favor of more high value crops, and higher yields per unit of cropped area (Appendix 14). a. Increased Command Area

13. DOI has reported changes in the command area of Domain II (Ballar Drainage Area) and Domain IV (Topi Priority Area) of the Project in comparison to appraisal estimates. The Project has allowed additional irrigation development in 5,212 ha of mainly rain-fed area in Domain II against 4,000 ha envisaged at appraisal. However, there has been a reduction in the command area of Domain IV. The Project has provided irrigation in 4,310 ha of mainly rain-fed area in Domain IV against 4,500 ha envisaged at appraisal. Although DOI has not reported any change in the CCA, farmers reported to the PCR Mission that availability of extra water has allowed them to irrigate land outside the CCA from canal water. b. Increased Production

14. The Project has resulted in increasing incremental production in the area for the majority of crops. Appraisal estimates of annual incremental production at full development were 25,670 metric tons (t) of maize, 360,000 of sugarcane, 10,400 t of Kharif (summer crop) fodder, 14,281 t of tobacco, 23,459 t of wheat, 16,950 t of Rabi fodder, and 6,200 t of Rabi vegetables. Agriculture incremental production at full development (according to PCR estimate) is 97,136 t of maize, 96,594 t of sugarcane, 7,238 t of Kharif fodder, 15,284 t of tobacco, 36,104 t of wheat, 88,848 t of Rabi (winter crop) fodder, and 31,886 t of Rabi vegetables. Rice production was not assumed at appraisal as a major crop but became one of the main crops in Domain I and II, according to WAPDAs Agro-Economic Survey Reports. Its incremental production in all four domains at full development is 2,464 t. Orchard production was taken to remain constant at appraisal but its incremental production according to PCR estimates at full development is 3,959 t. The basis for increased incremental production is the increase in cropped area (Table A18.7) of the Project and the increase in potential yields (Table A18.5). Table A18.2 compares incremental crop production as estimated at appraisal and at full development.

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Table A18.2: Appraisal and PCR Incremental Production Comparison (t)

Crops Inc. Prod. Appraisal Total Kharif Maize Sugarcane Fodder Tobacco Rice Orchards 25,670 360,000 10,400 14,281 Inc Prod. at Full Dev With Surface Without Surface Drainage Drainage DI 7,650 37,346 (619) 716 756 DII 5,726 23,203 (6,132) 152 1,708 DIII 71,653 34,735 13,829 13,471 3,729 DIV 12,107 1,310 160 945 230 Total 97,136 96,594 7,238 15,284 2,464 3,959 Change from Appraisal Estimate

71,466 (263,406) (3,162) 1,003 2,464 3,959

Rabi Wheat 23,459 7,978 8,905 Fodder 16,950 17,827 23,407 Vegetables 6,200 973 780 = data not reported. Source: WAPDA Agro-Economic Survey Reports for 1998 to 2005.

15,299 45,526 28,839

3,922 2,088 1,294

36,104 88,848 31,886

12,645 71,898 25,686

15. Incremental production of major crops at full development on a domain-wise basis (Table A18.3) indicates that farmers would give greater preference to increasing production and productivity of cash crops (such as maize and tobacco) in the summer, and vegetables and fodder in the winter, due to water availability. Fodder will also be continually grown in the area as it satisfies the livestock feed needs of the farmers. However, production of sugarcane will decrease substantially from appraisal estimates as there is no sugar mill in the project area and its potential yield in the area will also remain far below yields demonstrated in other agroeconomic zones. At the same time, the food security aspect will not be so easily dismissed by farmers and they will not produce fewer grains. This is partly due to lack of an alternate winter cash crop to replace wheat and partly due to fears of water shortages, similar to those experienced in the recent past. Table A18.3: Incremental Production at Full Development Domain-Wise
(t)
Crops Domain I (With Surface Drainage) Base Year (1998-99) Prod. Full Dev (2008-09) inc. Prod. Increase as per Appraisal at Full Dev. Change from Appraisal Estimate at Full Dev. 3,590 (18,768) 4,041 (1,152) 1,309 Domain II (With Surface Drainage) Base Year (1998-99) Prod. Full Dev (2012-13) inc. Prod. Increase as per Appraisal Change from Appraisal Estimate at Full Dev. 726 (54,797) (6,132) (2,275) 1,708

Kharif Maize Sugarcane Fodder Tobacco Rice Rabi Wheat Fodder Vegetables

940 21,886 4,660 560 553

8,590 59,232 4,041 1,275 1,309

5,000 78,000 2,427

559 3,618 8,487 123 402

5,726 23,203 (6,132) 152 1,708

5,000 78,000 2,427

1,908 9,074 a 538

7,978 26,900 973

4,833

3,145 26,900 973

2,145 5,496 58a

8,905 23,407 780

4,833

4,072 23,407 780

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Crops

Domain III (Without Surface Drainage) Base Full Dev Increase Change Year (2010-11) as per from (2000-01) Inc. appraisal appraisal Prod. Prod. estimate at full dev.

Domain IV (Without Surface Drainage) Base Full Dev Increase Change Year (2012-13) as per from (2002-03) Inc. Prod. appraisal appraisal Prod. estimate at full dev. 7,107 (76,690) 160 (1,482) 230 (1,120) 2,088 1,294

Kharif Maize 22,171 71,653 10,670 60,983 2,522 12,107 5,000 Sugarcane 40,455 34,735 126,000 (91,265) 417 1,310 78,000 Fodder 6,408 13,829 10,400 3,429 174 160 Tobacco 6,238 13,471 7,000 6,471 430 945 2,427 Orchards 10,144 3,729 3,729 359 230 Rabi Wheat 30,684 15,299 6,339 8,960 5,042 3,922 4,833 Fodder 85,546 45,526 16,950 28,576 3,485 2,088 Vegetables 22,020 28,839 6,200 22,639 1,821 1,294 = data not reported, dev = development, Inc. Prod = incremental production. a The base year for vegetables is taken as 200102, as previously no vegetable production was reported. Source: WAPDA Agro-Economic Survey Reports for 1998-99 to 2003-04 and PCR Mission estimates.

c.

Increase and Changes in Cropping Intensity

16. In the case of the PCR Mission, the full cropping intensity in Domain I of 149% will be achieved in 200607 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain I in 200304 stands at 126%. In Domain II, the full cropping intensity of 149% will be achieved in 200506 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain II in 200304 stands at 141%. In Domain III, the full cropping intensity of 162% was achieved in 200203 against the appraisal estimate of 157% in 2005. The cropping intensity in Domain III in 200304 stands at 167%. In Domain IV, the full cropping intensity of 148% was achieved in 2004-05 against the appraisal estimate of 148% in 2005. The cropping intensity in Domain IV in 200304 stands at 147%, which is very close to the appraisal estimate. Thus, cropping intensities in Domain III and IV were achieved earlier than anticipated at appraisal, and in Domain II as envisaged at appraisal. Only Domain I will achieve its full cropping intensity with a delay of 1 year because of the satisfactory performance of Department of Agriculture (DOA), which completed most of the activities on time. Cropping intensities were adjusted to avoid double counting of perennial crops, i.e., sugarcane and orchards. Table A18.4 shows the cropping intensities until they reach their full potential as assumed in the PCR mission. Table A18.4: Cropping Intensity at Full Potential in Four Project Domains
(%)
Year 199899 199900 200001 200102 200203 200304 200405 200506 200607

(a) with surface drainage Domain I Domain II 92 110 88 113 88 115 103 119 112 110 126 141 135 147 141 149 149

(b) without surface drainage Domain III 147 Domain IV Source: Data provided to PCR Mission by DOA. 156 162 130 147

148

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d.

Increase in Crop Yields

17. The maximum possible yields used in the analysis have been changed in comparison to appraisal estimates. Table A18.5 presents the comparison between maximum possible yields assumed at the time of appraisal, maximum yields expected to be achieved in the project area, and current average yields achieved in the project area. Table A18.5: Crop-Wise Yield in the Project Area (t/ha)
Crops Maximum Yield assumed at Appraisal Maximum Yield assumed in the PCR Average yield achieved in the Project area

Kharif (summer) Maize Tobacco Fodder Sugarcane Rice Orchards Vegetables Rabi (winter) Wheat 3.0 3.1 2.7 Oilseed 1.3 Fodder 55.8 55.8 51.5 Vegetables 17.5 17.5 12.6 = data not reported. Source: Department of Agriculture Extension, WAPDA Agro-Economic Survey Reports for 1998-99 to 2003-04, and appraisal estimates. 2.5 2.8 28.0 60.0 10.0 13.0 5.2 2.8 30.0 48.3 2.3 11.0 4.9 2.7 29.9 48.3 1.9 9.1

18. The potential yield for maize has been drastically increased in comparison to appraisal estimates because the Department of Agriculture Extension (DAE) has reported that synthetic maize (current average yield 2.2 t/ha) is being replaced by hybrid maize (current average yield 4.9 t/ha) in the project area. 19. Data on maximum yields for Kharif fodder, Rabi fodder, and Rabi vegetables was not available from DAE and is assumed based on the appraisal estimates and PCR mission estimates. The crop yield for rice is assumed based on maximum yields achieved in the Swabi Salinity Control and Reclamation Project (SCARP) Project (SSP) area for these crops. Kharif vegetables and oilseed have not been considered in the PCR analysis as these were not major crops reported by WAPDAs Agro-Economic Survey Reports. 20. The crop yield for sugarcane as explained by DAE was lower (46.1 t/ha) than what has already been achieved in the project area (48.37 t/ha). Thus, the maximum sugarcane yield achieved in the project area has been assumed as sugarcanes maximum potential yield (48.37 t/ha compared with the appraisal estimate of 60 t/ha). The chances of increase in sugarcane yield are also less, as farmers might tend to reduce its cultivation because there is no sugar mill in the project area. However, sugarcane will not be completely wiped out in the area and will remain one of the main crops as it is used to prepare indigenous sugar that is sold in neighboring districts.

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21. PCR analysis shows that crop yields will attain their maximum possible yield or reach full development potential in each domain as follows. In Domain I, full development will be achieved by 200809 against the appraisal estimate of 2009. In Domain II, full development will be achieved by 2012-13 against the appraisal estimate of 2009. In Domain III, full development will be achieved by 2010-11 against the appraisal estimate of 2009. In Domain IV, full development will be achieved by 2012-13 against the appraisal estimate of 2009. The reason for delayed achievement of full development against appraisal estimates is lower crop yields in the baseline year compared with baseline year estimates of appraisal, and delayed completion of the Project. The increase in crop yield is also based on the 7.5% growth rate achieved in the agriculture sector this year (200506) and targeted annual growth rate of 8.5% in the next 5 years through an improved outreach program for agriculture extension and research in provinces funded from the Agriculture Sector Program Loan II (ASPL-II). Table A18.6 summarizes the projections of the PCR Mission for crop yields. Table A18.6: Average Yields of Different Crops (t per ha)
Crops Domain I (With Surface Drainage) Base 200304 Full CI Full Dev. Year (200607) (200809) (199899) Domain II (With Surface Drainage) Base Year 200304 Full CI Full Dev. (199899) (200506) (201213)

Kharif (summer) Maize 1.6 Sugarcane 29.0 Fodder 12.4 Tobacco 1.6 Rice 1.6 Rabi (winter) Wheat Fodder Vegetables

2.0 48.4 29.9 2.3 1.9

3.5 41.2 30.0 2.8 2.4

5.2 48.4 30.0 2.8 2.4

1.6 29.0 12.4 1.6 1.3

1.3 26.2 23.3 2.7 1.4

1.8 30.0 26.7 2.8 1.7

5.2 48.4 30.0 2.8 2.4

1.6 23.6

2.4 51.5 12.6

2.9 55.8

3.1 55.8 17.5

1.6 23.6

1.4 42.8 12.0

1.8 49.0 13.7

3.1 55.8 17.5

Crops

Domain III (Without Surface Drainage) 200304 Full CI (200203) Full Dev. (201011)

Domain IV (Without Surface Drainage) Base Year (200203) 200304 Full CI (200405) Full Dev. (201213)

Base Year (200001) Kharif (summer) Maize 1.4 Sugarcane 33.5 Fodder 12.9 Tobacco 1.1 Orchards 8.4

2.0 27.1 25.6 2.5 9.1

1.4 32.3 13.4 2.3 8.8

5.2 48.4 30.0 2.8 11.0

1.3 22.0 23.0 2.3 8.6

1.4 26.0 24.9 2.3 8.7

1.7 27.8 26.6 2.5 9.3

5.2 48.4 30.0 2.8 11.0

Rabi (winter) Wheat 2.6 2.7 2.6 3.1 1.9 Fodder 43.9 48.2 44.2 55.8 38.5 Vegetables 11.3 12.0 12.0 17.5 11.3 = data not reported. CI = cropping intensity, Dev = development Source: WAPDA Agro-Economic Survey Reports for 1998-99 to 2003-04.

2.0 40.5 11.9

2.2 43.3 12.7

3.1 55.8 17.5

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22. Table A18.7 presents the change in cropped area for different crops by comparing the cropped area at baseline and full development in each domain. Table 18.7: Change in Cropped Area Domain-Wise (ha)
Crops Domain I (With Surface Drainage) Base Year (199899) Prod. Kharif (summer) Maize Sugarcane Fodder Tobacco Rice Rabi (winter) Wheat Fodder Vegetables Crops 588 756 376 350 346 Full Dev. (200809) inc. Prod. 1,649 1,225 135 456 557 Inc. Area Domain II (With Surface Drainage) Base Year (199899) Prod. 349 125 684 77 310 Full Dev. (201213) inc. Prod. 1,206 554 79 98 898 Inc. Area

1,061 469 (241) 106 212

857 430 (606) 21 588

1,192 384

3,189 482 56

1,997 98 56

1,340 233

3,565 518 45

2,224 285 45

Domain III (Without Surface Drainage) Base Year (200001) Prod. Full Dev. (201011) inc. Prod. Inc. Area

Domain IV (Without Surface Drainage) Base Year (200203) Prod. Full Dev. (201213) inc. Prod. Inc. Area

Kharif (summer) Maize Sugarcane Fodder Tobacco Orchards

15,836 1,208 497 5,654 1,208

18,008 1,554 675 7,039 1,261

2,172 347 178 1,385 54

1,919 19 8 186 42

2,808 36 11 491 54

889 17 4 305 12

Rabi (winter) Wheat 11,802 14,833 3,032 2,618 2,892 274 Fodder 1,949 2,349 400 90 100 9 Vegetables 1,949 2,906 958 161 178 17 = data not reported. Source: WAPDA Agro-Economic Survey Reports for 199899 to 200304 and PCR mission projection estimates.

e.

Additional Farm Labor generated

23. In accordance with PCR estimates, there is a substantial increase in the farm labor requirement in the project area. The Project is generating an additional farm labor requirement of 0.9 million person-days annually in 200304 against the appraisal estimate of 0.90 million person-days annually at completion of the Project (2005).

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f.

Nonfarm Income

24. Reports prepared by the SCARP Monitoring Organization (SMO) show a general decrease in nonfarm income. The key reason may be increased opportunity in the agricultural sector and dependence of the majority of the population on agriculture and farm income. On average, the total population of the project area was estimated at 400,000 people at appraisal. If this population is projected to grow by 3% per year, the current population of the project area would be around 560,000 people, with 60,000 households directly or indirectly (farm labor) targeted under the Project. The population served is around 87% (at 8 persons per household, although SMO quotes 12 persons per household). If these figures are assumed to be correct, the majority of the population in the project area is rural and predominantly dependent on farm income. The Project also created 0.9 million person-days of additional farm labor (para. 23). A major part of this additional opportunity could be used by employing labor from sources other than farm owners and tenants. SMO data also shows that there was an increase in the use of modern agricultural implements. There is no evidence to suggest that the Project contributed to increased nonfarm income in the project area. However, increased agricultural activity should have increased employment opportunities in transportation, agri-processing industry, storage and marketing, agriculture input markets, and others. These impacts were not monitored during the Project or by the PCR Mission. 4. Improvement in Farming Support Services

25. There was considerable improvement in the farmer support services through the Department of Agriculture (DOA) by extending agricultural and adaptive research related support. This component of the Project aimed at enhancing farm productivity by helping farmers to take full advantage of increased water supplies. DOA is also providing agriculture extension and research services to farmers through its extension staff and partly through farmer service centers (FSCs). The FSCs are farmer managed membership organizations, which were established under the SSP and strengthened/supported through the Project. Support for these activities will be further provided under the ASPL-II through the Provincial Trust Fund for the Joint nongovernment organization (NGO) and extension agent program for small farmers, and an ASPL-II funded improved outreach program for agriculture extension and research in provinces. a. Agricultural Extension Component

26. Agriculture extension services in the project area were extended to farmers through farm demonstrations that improved agronomic practices, including modern planting techniques, better tillage practices, proper irrigation scheduling, improved system for water conveyance, and land development. A total of 592 farm demonstration plots were established against the target of 566. The owner farmers of these demonstration plots were fully involved in carrying out all the operations. When the crop matured on all the successful demonstration centers, field days were organized where farmers from the project area were invited to show the effect of the demonstration technology on crop yields. A total of 125 farmer field days were organized against the target of 132. A total of 7 agricultural fairs were arranged against the target of 9 at central locations in the project area to raise the general awareness of farmers regarding project activities. 27. Apart from these, 490 DOA staff members/extension workers were trained in improved production technologies. This improved their capacity to carry out the extension activities more effectively.

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28. In organizing these highly targeted farming support services, DOA and the Directorate of On-Farm Water Management (DOFWM) have been vital. Both departments were able to use the social capital developed by the Project as a medium to meet its target. All of these activities were undertaken in direct consultation with WUAs. b. Adaptive Research Component

29. Under the adaptive research component, a total of 347 adaptive research trials were conducted through the participation of farmers. These trials demonstrated the effect of improved crop production technologies on crop yields/production. 30. Action research studies were also carried out on 1,766 acres of land in the project area through the participation of the farmers. These studies provided a basis for facilitating the farmers in the procurement of quality inputs, application of the improved irrigation and agronomic practices, and training to help promote the adoption of new technologies. 31. About 484 farmers were trained in fruit plant nursery training, potato and onion seed production techniques, off-season vegetable production, orchard management, and biological control of stem borer in sugar cane under the adaptive research component. c. Land Development

32. The Project successfully completed land development demonstration on an area of 8.41 ha in the Narranji distributaries command and 84 ha in the TPA command, whereas originally the land development program was targeted at 100 ha of TPA area having erodible soils with relatively steep slopes. The impact of this demonstration was that farmers leveled about 1,000 ha of land through their own resources. 5. Build up of Social Capital

33. The Project made a major investment in building social capital in the form of mobilizing, organizing, and strengthening WUAs and WOs. This increased the capacity of farmers to access farming support services and other basic services and operate and maintain project infrastructure in a sustainable manner. It also increased the capacity of women to become more active in income-generating activities. a. Water Users Associations

34. The participation of farmersindividually and collectivelyin renovating WCs was considered necessary to optimize immediate benefits and introduce elements of cost sharing and greater ownership and sustainability of investments. Therefore, creation of WUAs at each WC was an integral part of the process of WC renovation. A total of 444 WUAs were organized and registered with the DOFWM. These WUAs were quite functional during WC remodeling/construction and for carrying out all required activities and providing assistance in cost recovery. However, they tended to lose interest as soon as the civil works were completed after a year or so. The sustainability of about 66% of these WUAs is doubtful beyond project closure, as the remaining 33% have been integrated into farmers organizations (FOs). One of the key assumptions under the Project was that support would be extended to WUAs through

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the National Drainage Sector Program (NDSP) (Loan No. 1413)1 for integrating all WUAs in FOs. However, the slow implementation of NDSP has affected the sustainability of the remaining 66% WUAs. The other option was to network the WUAs into FSCsmanaged by farmers and providing extension services. However, the NWFP government chose to form FSCs as individual membership organizations to avoid the massive task of developing WUAs across the province, so WUAs are not represented in FSCs. Only some wealthy farmers who can individually afford the membership fee are represented in FSCs. The third and the most important common ground for continued WUA interaction was to form a body, which would resolve all water related issues on the WC, including maintenance. The Project provided hydraulically efficient parabolic sections for watercourse lining, and provided control structure and major increase in water allowance. The WUA informed the PCR Mission that increase in water and control structures on WCs had drastically reduced water disputes, and the parabolic section is very efficient and requires very little maintenance, so there are no water-related issues to meet and discuss anymore. The PCR Mission observed that almost all the lined WCs visited were in good working condition. 35. A total of 14 pilot FOs were established in the project area for the smooth transfer of management, and operation and maintenance of the distributaries from the Government to the WUAs. Two of these organizations were supported by the Project. Only five pilot FOs have had complete management responsibility transferred to them. These organizations are functioning in accordance with the Provincial Irrigation and Drainage Authority Act and cover about 33% of the project WUAs. b. Womens Empowerment

36. A total of 20 WOs were formed in the project area and women in these organizations were trained in community mobilization, financial management and record keeping, livestock management, poultry management, mushroom production, kitchen gardening, and grain storage. These WOs were also registered with the Social Welfare Department to give them legal status. In order to sustain and continue their activities, the WOs were linked with NGOs such as the Aurat Foundation, Trust for Volunteer Organization, and Strengthening Participatory Organizations. At present, WO members are actively involved in a variety of schemes with these NGOs, including activities related to income generation, social forestry program, running skills centers, establishing human resource development center, and establishing womens information resource centers.

See footnote 6 of main text.