Completion Report. Project Number: PAK Loan Number: 1294-PAK(SF) November Pakistan: Pehur High-Level Canal Project

Transcription

1 Completion Report Project Number: PAK Loan Number: 1294-PAK(SF) November 2005 Pakistan: Pehur High-Level Canal Project

2 CURRENCY EQUIVALENTS (as of 30 June 2005) Currency Unit Pakistan rupee/s (PRe/PRs) At Appraisal At Project Completion (30 November 1993) (30 June 2005) PRe1.00 = $0.033 $ $1.00 = PRs PRs59.66 For the purpose of calculation in this report, the rate of PRs50.00 to $1.00 is used. ABBREVIATIONS ADB Asian Development Bank ADC agriculture development component ASPL-II Agriculture Sector Program Loan II BME benefit monitoring and evaluation CBIO crop-based irrigation operations CCA cultivable command area CR cross regulators CRBC Chashma Right Bank Canal DAE Department of Agriculture Extension DOA Department of Agriculture DOFWM Directorate of On-Farm Water Management DOI Irrigation and Drainage Department EA executing agency EIRR economic internal rate of return FIDIC Fédération Internationale des Ingénieurs-Conseils (International Federation of Consulting Engineers) FO farmers organization FSC farmer services center FSU farmer support unit IBIS Indus Basin Irrigation System ICB international competitive bidding ISF irrigation service fee ISRIP International Sedimentation Research Institute, Pakistan IWMI International Water Management Institute LCB local competitive bidding LSC Lower Swat Canal M&E monitoring and evaluation NDSP National Drainage Sector Program NGO nongovernment organization NWFP North-West Frontier Province O&M operation and maintenance PC-1 Planning Commission Performa 1 PCR project completion review P&DD Planning and Development Department PHLC Pehur High-Level Canal PIDA Provincial Irrigation and Drainage Authority PPTA project preparatory technical assistance PRM Pakistan Resident Mission (ADB)

3 PSC project steering committee RD reduced distance SAWB Swat Area Water Board SCARP Salinity Control and Reclamation Project SDC Swiss Agency for Development and Cooperation SDR special drawing rights SMO SCARP Monitoring Organization (WAPDA) SSP Swabi SCARP Project SWHP Service Water Hydrology Project TA technical assistance TOR terms of reference TPA Topi Priority Area USC Upper Swat Canal WAPDA Water and Power Development Authority WC Watercourse WMED Watercourse Monitoring and Evaluation Directorate WO women s organization WSIPS Water Sector Investment Planning Study WUA water users association WEIGHTS AND MEASURES ft 3 /sec cubic feet per second GWh gigawatt-hour KWh kilowatt-hour m 3 /sec 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 (ii) In this report, $ refers to US dollars.

4 CONTENTS Page BASIC DATA iii MAP vii I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2 A. Relevance of Project Design 3 B. Project Outputs 6 C. Project Costs 6 D. Disbursements 6 E. Project Schedule 7 F. Implementation Arrangements 7 G. Conditions and Covenants 8 H. Consultants Recruitment and Procurement 9 I. Performance of Consultants, Contractors, and Suppliers 9 J. Performance of the Borrower and the Executing Agencies 9 K. Performance of the Asian Development Bank 10 III. EVALUATION OF PERFORMANCE 10 A. Relevance 10 B. Efficacy in Achievement of Purpose 11 C. Efficiency in Achievement of Outputs and Purpose 11 D. Preliminary Assessment of Sustainability 12 E. Environmental, Sociocultural, and Other Impacts 13 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14 A. Overall Assessment 14 B. Lessons Learned 15 C. Recommendations 15 APPENDIXES 1. Civil Works Contracts Project Scope (Appraised and Actual) Hydraulic Capacity Test Report Operational Issues and PCR Mission Recommendations Consulting Inputs Project Costs Annual Loan Disbursements Project Implementation Schedule Status of Compliance with Loan Covenants O&M Funding Subsurface Drainage System Performance Report Status of Compensation for Land Acquisition Economic Cost and Benefit Analysis Farm Budget Watercourse Discharge and Conveyance Efficiency Labor Data Groundwater and Soil Quality Data Socioeconomic Impact of the Project 81

5 BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number B. Loan Data 1. Appraisal Date Started Date Completed 2. Loan Negotiations Date Started Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness In Loan Agreement Actual Number of Extensions 6. Closing Date In Loan Agreement Actual Number of Extensions 7. Terms of Loan Interest Rate Maturity (number of years) Grace Period (number of years) 8. Terms of Relending (if any) Interest Rate Maturity (number of years) Grace Period (number of years) Second-Step Borrower 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 September September November November December June September November December June % per annum % per annum Government of North-West Frontier Province

6 iv 9. Disbursements a. Dates Initial Disbursement 27 December 1994 Effective Date 2 November 1994 b. Amount ($ as of 30 June 2005) Category or Subloan Original Allocation Last Revised Allocation Final Disbursement 15 November 2005 Original Closing Date 31 December 2002 Revised Closing Date 30 June 2005 Actual Closing Date 20 November 2005 Amount Canceled Net Amount Available Time Interval 130 months Time Interval 96 months Time Interval 138 months Time Interval 143 months Amount Disbursed Undisbursed Balance 01A Civil Works - Part A 81,970,221 74,863,299 83,435,968 a (8,571,169) 01B Civil Works - Part B 4,690,547 4,567,420 1,731,511 2, Equipment & Vehicles 3,764,219 3,775,358 1,568,846 2,206, Consulting Services 17,698,131 17,355,316 12,147,435 5,207,881 04C LOC Exp- Investigations and Surveys b 395, ,292 1,401,822 (1,051,530) 04F LOC Exp-Adaptive Research & Demo Program. 967, , , ,019 04G LOC Exp-IOC 6,801,294 6,750,404 1,321,390 5,429, Service Charge 5,001,803 4,693,467 4,693, Unallocated 11,396,294 11,466,434 11,466,434 Total 132,684, ,776, ,788,479 17,989,070 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 C. Project Data 1. Project Cost ($ million) Cost Appraisal Estimate Actual Foreign Exchange Cost Local Currency Cost Total

7 v 2. Financing Plan ($ million) Cost Appraisal Estimate Actual 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) Component Appraisal Estimate Actual A. Irrigation and Drainage B. Agriculture Development C. Land Resource Conservation 0.12 a D. Environmental and Benefit Monitoring and Evaluation Total Base Cost Physical Contingencies Price Escalation E. Service Charge during Construction Total Cost a Component C was awarded to Component B consultants and charged to Component B. 4. Project Schedule Item Appraisal Estimate Actual Date of Contract with Engineering Consultants Jan 1994 Dec 1994 Completion of Engineering Designs Dec 1995 Jun 1996 Civil Works Contract Date of Award Jun 1995 Nov 1996 a Completion of Work Sep 2001 Jun 2005 Equipment and Supplies Dates First Procurement (PCSS005) Jan 1995 Jan 1995 Last Procurement (PCSS0069) Sep 1996 May 2005 Completion of Equipment Installation Start of Operations Completion of Tests and Commissioning Jun 1999 Nov 2003 Beginning of Start-Up Jul 1999 Nov 2002 a 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.

8 vi 5. Project Performance Report Ratings Implementation Period Development Objectives Ratings Implementation Progress 1 October 1998 to 31 December 1998 Satisfactory Satisfactory 1 January 1999 to 31 December 1999 Satisfactory Satisfactory 1 January 2000 to 31 December 2000 Satisfactory Satisfactory 1 January 2001 to 31 December 2001 Satisfactory Satisfactory 1 January 2002 to 31 December 2002 Satisfactory Satisfactory 1 January 2003 to 31 December 2003 Satisfactory Satisfactory 1 January 2004 to 31 December 2004 Satisfactory Satisfactory 1 January 2005 to 28 April 2005 Satisfactory Satisfactory D. Data on Asian Development Bank Missions Name of Mission Date No. of Persons No. of Person- Days Specialization of Members a Fact-finding 14 Jun 6 Jul a,b,c,d,e Appraisal 9 Sep 1 Oct f,b,c,g,h,i,j,k Special Loan Administration 1 23 Jun 19 Jul a Special Loan Administration 2 30 Nov 10 Dec a Follow-up June a,m Review Dec a Special Loan Administration 3 5 7, Nov a,n Review , May o,p,n Review Oct o,e,q Mid-term Review 21 Feb 2 Mar p,m Review Dec p Review March p,r Review Aug p,r Review 7 28 Mar 5 Apr p,r Review Dec p,r Review July p,r Project Completion Review b 25 April to 6 May p,o,j = data not available. a 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. b The project completion report was prepared by Mian S. Shafi, Project Implementation Officer.

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10 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 systems extending 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) Project 1 (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 $ million (as of 30 June 2005), was approved on 22 December 1993, and became effective on 2 November Implementation was expected to take place over 9 years and the original loan closing date was 31 December The Water and Power Development Authority (WAPDA) the main Executing Agency (EA) of the Project was supported by the government of NWFP s 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. 1 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 The Asian Development Bank (ADB) contributed $118 million.

11 2 II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 5. The Project was consistent with the Government of Pakistan s (the Government s) development strategies and the Asian Development Bank s (ADB s) country strategy at appraisal. The Government s Seventh Five-Year Plan ( ) projected annual growth of 4.7% in agriculture 2 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 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 Government s 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 Project s innovative design and approach are still relevant and consistent with current policies and strategies of the Government and ADB. Under the Government s Poverty Reduction Strategy Paper 5, 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 ( ), 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 ADB s current country strategy outlined in Country Strategy Program Update , and the Government s 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 Based on the Report of the National Commission on Agriculture (March 1988). 3 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

12 3 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. WAPDA s 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 Project s technical assistance (TA) consultants based their design appraisal on the updated project proposal prepared by WAPDA in 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 SSP s 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 appraisal to increase irrigation supplies by about 100% in the cultivable command area of 35,800 ha in the far reaches of the USC has 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 Project s appraised and actual scope is in Appendix 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 (m 3 /sec) and 4.65 km length, compared with the appraisal proposal for a gravity tunnel with 28.3 m 3 /sec capacity and 3.9 km 6 Originally included in the Project s scope but financed by the SSP (footnote 5).

13 4 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 requirements with no increase in cost. The PHLC was constructed with a capacity of 27.1 m 3 /sec at the head of the canal as appraised (excluding 1.2 m 3 /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 system s 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 SSP considering 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 Crop-based irrigation operations (CBIO) designed to provide water (and reduce water wastage), based on crop requirement, faced problems (Appendix 3, paras. 7 9) because of breaks in the system s 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 CBIO s initial results are encouraging increased acceptance by farmers and DOI staff helped reduce water wastage by (40%) in 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 activities under 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 ADB s 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

14 5 maintenance requirement. Pilot FOs, established under the Project and other initiatives 7, 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 Monitoring and Evaluation (Part D). As envisaged at appraisal, a detailed environment and BME program was implemented by WAPDA s SCARP Monitoring Organization (SMO). This component was given additional support from the consultants because the SMO was downsized during project implementation, drastically reducing SMO s 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 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 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 PAK (ADB 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. 8 Loan No PAK(SF) (ADB 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 Construction supervision of works awarded in the Ballar area, under Loan No 976 PAK(SF), was transferred to PHLC consultants.

15 6 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 IWMI s 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 IWMI s contract. C. Project Costs 19. ADB provided a loan of SDR91.7 million ($ million) to finance about 78% of the total estimated project cost ($ 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 $ million 10 from ADB s contribution, financing 77.3% of the total project cost ($ million), comprising $47.33 million of the foreign exchange cost and 65.5% ($59.46 million equivalent) of the local currency cost. ADB s 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 Project s economic returns. D. Disbursements 20. The appraisal schedule of annual disbursements expected major expenditures in the first five years of the Project ( ). 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 $ million in 2001 but remained low during the last 2 years ( ) and relatively high during the remaining 6 years of the Project ( ). 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.

16 7 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 services 14 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 DOA through DOFWM and DAE were 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 Tunnel and Main Canal Contract WP 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.

17 8 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 , 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 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 Project s 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 consultant s accounts for the last 10 years, after the post-audit. Most of these issues were resolved with ADB s 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 contract 16 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 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 Interdependence was not taken into account in packaging different contracts.

18 9 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 ADB s 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 engineer s 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 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 government s 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 WAPDA s field staff was satisfactory, as they implemented the Project despite WAPDA management s 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.

19 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 audit 18 of consultants interfered with project activities and affected consultant s performance. 33. DOA s 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. ADB s 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 ADB s interventions, there were no major disruptions to project implementation. III. EVALUATION OF PERFORMANCE AND BENEFITS A. Relevance 36. The Project is rated relevant and consistent with ADB s country operation strategy/program at appraisal and the Government s development strategies in the water sector at PCR (paras. 5 8). The overall impact of the Project (paras ), shows that the majority of the appraised design aspects of the Project were relevant (paras ) 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.

20 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 % increase in water discharges in project areas under the command of USC, and 12 15% 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 % 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 Mission s revised estimates, the Project generated 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 Project to realize full agricultural potential of about 40,110 ha of agriculture land in the project area and 5,212 ha in the SSP area is 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.