PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB1145 Project Name. Sindh Water Sector Improvement Project Region

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB1145 Project Name Sindh Water Sector Improvement Project Region SOUTH ASIA Sector Irrigation and drainage (100%) Project ID P Borrower(s) GOVERNMENTS OF PAKISTAN AND SINDH Implementing Agency Government of Pakistan Pakistan Government of Sindh... Pakistan SIDA Pakistan Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Safeguard Classification [ ] S 1 [X] S 2 [ ] S 3 [ ] S F [ ] TBD (to be determined) Date PID Prepared October 5, 2004 Estimated Date of March 8, 2005 Appraisal Authorization Estimated Date of Board March 16, 2005 Approval 1. Key development issues and rationale for Bank involvement Agriculture plays a fundamental role in Pakistan s economy and is one of the main driver of poverty reduction objectives in the country. Agriculture contributes to 25% of the GNP, 50% of employment and 60-70% of exports. Irrigation along the Indus river is the backbone of the agricultural sector and uses 95% of the water available in the country. The development of the largest irrigation network in the world is one of the major achievements and asset of Pakistan and the Bank has been an active partner in this process since the negotiation of the Indus treaty in In 1997, the Government, with the support of the Bank, launched the National Drainage Program (NDP) 1 with the objective of improving the efficiency of the irrigation and drainage system in Pakistan and ensure its sustainability, through : (i) launching the first phase of policy and institutional reforms in the water sector; (ii) improving the irrigation and drainage infrastructure; and (iii) strengthening sector planning and research. The program was laid out over a period of 25 years and covered all the Provinces. 1 World Bank National Drainage Program Project Staff Appraisal Report. Report No PAK. Rural Development Sector Management Unit. South Asia. Region.

2 After six years of implementation the results of the project are mixed. Of all the Provinces, Sindh is the only one that has moved ahead in the implementation of the reforms and of the corresponding investments to improve the irrigation network. Sindh is the second largest province in the country, home of 30 million people and represents 25% of the agricultural production with 26% of the total irrigated area in Pakistan. The reforms implemented through NDP included the institutional transformation of the Irrigation Department into a decentralized organization at the Provincial level (SIDA); the enactment of the Sindh Water Management Ordinance; the creation of a pilot Area Water Board (AWB) at the canal command zone and the integration of Farmers Organizations (FOs) at the distributary level. The FOs operate and maintain the irrigation and drainage networks, collect the abiana (water charges) and participate in the decision making process of the water service delivery. So far, Sindh is the champion of the irrigation reform process in Pakistan. The Province has made progress in the Nara Canal and lately in four more canal commands that have been notified to SIDA with a total area of 3 million ha which represents 60% of the irrigated system in the Province. SIDA is operating at the Provincial level with independence from the Irrigation Department and has formed 195 FO who are now actively participating in the daily management of the system. These achievements and the continuous progress of the reform agenda is a long term process which needs sustained support and persistence. Still considerable resistance exists to the implementation of the reform program. Some positive results have been achieved, but much remains to be done to cope with the magnitude of the growing problems affecting the water sector. Conjunctive use of water, equity in the water distribution, environmental degradation and inefficiency in the water distribution are some of the most pressing problems. The reform agenda in Sindh is still fragile and requires the strong support of the Bank to develop deeper roots. The fight against rent seeking behaviors is recognized as one of the major constraints to improve service delivery and equity in Sindh. Because of the geological formation of the Province, most of the groundwater is not suited for agriculture, making the farmers dependant mainly on canal water. According to recent studies, water has become the major limiting factor to further growth. 2 The location of Sindh at the end of the Indus basin, makes drainage an integral element in water resource management and a basic element to solve the salinity and waterlogging problems. In the last years extreme meteorological events have affected the Province, from drought to flood, affecting principally the small farmers, sharecroppers and rural laborers. 3 Sea water intrusion damages the soils and the ecosystem in the coastal areas and fisheries. The pervasive water management vicious circle needs to be broken by a continuous effort to promote a change and a new water culture in Sindh based on a more responsible participation of the farmers and a sensible mix of investment and reform actions. This strategy is supported by the 2 Derek Byerlee World Bank. Strategic Issues in Environmental Sustainability in Pakistan. Box page 41. (SASES) 3 World Bank The impact of drought on rural communities in Pakistan. Annex A, op. cit.

3 government and represents an important step in the devolution of the traditional irrigation sector. The Bank has been promoting irrigation reform and has helped Sindh in building better lines of accountability between the users and the service providers as well as a more conscious attitude towards efficiency gains and water productivity. SIDA has produced a long term 2025 Water Issues and Options paper for the Province. 4 The Bank through NDP has also helped in the integration of several national planning studies pertinent to the integration of this planning process. 5 The proposed project supports the CAS goal of reducing poverty through pro-poor growth interventions such as improving water productivity, employment in the rural sector and increased food security in the country while diversifying the agricultural production. This project will help pursue the Bank dialogue on the better management of an international river, and to improve governance in the management of this vital natural resource together with a clear definition of water rights and entitlements. The overall strategy will be to unbundle at the provincial level the support initially provided under NDP, and support the provinces that have demonstrated initial results. 2. Proposed objective(s) The overall development objective is to improve water productivity trough the pursuit of a reform agenda and required investments leading to a better management system that links the canal command areas, the distributary and the watercourse level. The project interventions would: (a) define and implement an enforceable water rights system among users in the selected canal command areas; (b) devolve responsibility for water management including O&M to WUAs and FOs (c) improve the reliability, efficiency and equity of water distribution, among the agricultural users, (c) modernize the existing irrigation and drainage networks, and the on-farm technology to improve water service delivery and use and (d) strengthen the institutional capacity of the irrigation institutions in Sindh according to the existing Water Ordinance. 3. Preliminary description The Project aims at consolidating the institutional reform process initiated under NDP and expand its scope to an additional number of canal command areas. This will include a mix of 4 FAO Pakistan. Sindh Water Resources Management. Issues and Options. Investment Center Division. FAO/World Bank Cooperative Programme. 5 Several efforts and studies have been promoted through NDP: The National Surface Drainage System, The Master Drainage Plan, The National Water Policy all from MWP, WAPDA Water Vision Also the National Water Strategy and Investment Plan MWP and ADB.

4 institutional and infrastructure interventions. Progress on the institutional reform agenda and on the irrigation devolution strategy will be subject to political commitment and is likely to be a long term process. It is recommended that the project be designed as an APL. The triggers in the process will allow, once the conditions are met, to introduce the reform process and Bank support to other canal commands and expand horizontally the scope of the program to the whole Province. The basic elements that will trigger expansion are: a) transfer of the water allocation responsibilities at the barrage and canal level to SIDA; b) notify and commission the canal commands to AWBs; c) devolution to WUA/FO operations and maintenance of the distributary and minor canal level, d) identification of infrastructure improvement needs. Through an APL the pace at which the program would unfold would be subject and adjusted to the prevailing political and economical conditions in the Province. The APL allows for more flexibility than the present NDP strategy given that additional Bank support would only be triggered after evidence that the preconditions for success are in place. Over the medium term, the program will support the development of SIDA into a Provincial Water Management Organization capable of managing the water resources in a sustainable way with equity and with technical and financial capabilities. This will be achieved at the end of the process through the operation of 3 main barrages, establishment and operation of 14 AWB to deliver water by volume to around 1,500 FOs, and organization of a better system of water charges collection. At the same time the dialogue will be pursued with the Irrigation Department so as to support its transformation into a Provincial Water Authority institution with responsibility for administration and oversight of inter-provincial water rights, regulatory and enforcement issues. In order to reach this stage of maturity the APL will be organized in three phases, the first one has interventions in one barrages and 5 Canal Commands; the second could include a second barrage and five additional canal commands areas, and finally the third phase could include the last barrage and the remaining perimeter of four canal commands. During project preparation the phases will be defined with more precision and in consultation with the stakeholders. The social, environmental and institutional triggers will also be clarified. The first phase of this long term process under the present APL I project will cover the five canal commands already transferred to SIDA under NDP. It will require the transfer to SIDA of the Gudu barrage that regulates the water flow of the targeted command areas and further support the modernization 6 and rehabilitation of the distribution infrastructure together with the institutional strengthening of AWBs, FOs and WUAs. The following components are envisaged in the proposed project. 3 Capacity building. Supporting SIDA to develop the local capacity for integrated planning and water management in the Province. Establishment of Water Rights and allocation of water in Sindh. Transforming the present system of water distribution to a volumetric 6 Modernization is a process of improvement of the irrigation and drainage infrastructure according to the new demands of stakeholders for a more reliable, timely and efficient water service delivery, it includes interventions in the physical and also in the managerial components of the service. Includes the use of benchmarking indicators and techniques to evaluate the performance of the systems and compare it with other similar ones at the national and international level.

5 3 3 3 delivery according with the water entitlements and water allocation rules. The process will include the conjunctive use of surface and underground water in line with the needs of the different users and the quality of water available. This component will also support the existing capacity for social mobilization, formation of AWBs, FOs and women groups. The project will address the need to regulate the direct outlets that in some cases (like in the Nara Canal) represent 30% of the volume of water diverted to the farms. Civil Works. This component will support the modernization and improvement of the irrigation and drainage network, construction of metering devices, communication, water distribution structures and fund for the maintenance works required for the sustainability of the system specially drainage. When needed and justified the project will introduce the modernization and improvement of the irrigation and drainage infrastructure in relation with agriculture diversification projects Agriculture and irrigation technology. The project will promote delivery of water to the WUAs according to water delivery contracts and support the necessary infrastructure improvements to achieve a more timely and reliable water distribution. In this way the project will foster the introduction of modern irrigation practices and the installation of pressurized irrigation systems which will represent a major technological innovation for Pakistan agriculture. The project will also pursue coordination with the Sindh OFWMP project in the execution of the investments at the off-farm and on-farm level to establish the required articulation with agriculture productivity objectives. Management and administration. The project will support the transition towards a more efficient system of water and irrigation management including the professionalization of service delivery through SIDA, the devolution of operations and maintenance to AWBs, FOs and WUAs, and the revision of the role of the Irrigation Department. 4. Safeguard policies that might apply [Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project and in what ways? What actions might be needed during project preparation to assess safeguard issues and prepare to mitigate them?] 5. Tentative financing Source: ($m.) BORROWER/RECIPIENT 30 INTERNATIONAL DEVELOPMENT ASSOCIATION 140 Total Contact point Contact: Manuel Contijoch Escontria Title: Sr Water Resources Spec. Tel: (202) Fax: mcontijoch@worldbank.org

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