Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD & 74540) ON THE SECTOR DEVELOPMENT POLICY LOANS

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD & 74540) ON THE SECTOR DEVELOPMENT POLICY LOANS IN THE AMOUNT OF JP 11,780,000,000 US$ 100 MILLION EQUIVALENT and IN THE AMOUNT OF US$ 100 MILLION TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR PUNJAB IRRIGATION SECTOR DEVELOPMENT POLICY LOAN Agriculture and Rural Development Unit South Asia Region FOR THE PROVINCE OF PUNJAB December 25, 2010 Report No: ICR

2 CURRENCY EQUIVALENTS (Exchange Rate Effective October 27, 2010) Currency Unit = Pak Rupee (PKR) US$ 1.00 = PKR JP 1.00 = US$ FISCAL YEAR July-June ABBREVIATIONS AND ACRONYMS AAA ADB AMP AWB CAS CSR CWRAS DAC DPC DPL DPR EIA FGW FO GDP GIS GOP GOPunjab GST IBRD IEE IDA IDSC IMF IMIS IMTA IPD IRSA ISA ITPS JICA JBIC M&E Analytical & Advisory Assistance Asian Development Bank Asset Management Plan Area Water Board Country Assistance Strategy Composite Schedule of Rates Country Water Resources Assistance Strategy Departmental Accounts Committee Development Policy Credit Development Policy Loan Delivery Performance Ratio Environmental Impact Assessment Fresh Groundwater Farmer Organization Gross Domestic Product Geographic Information System Government of Pakistan Government of Punjab General Sales Tax International Bank for Reconstruction and Development Initial Environmental Examination International Development Association Inter-departmental Steering Committee International Monetary Fund Irrigation Management Information System Irrigation Management Transfer Agreement Irrigation and Power Department Indus River System Authority Initial Social Assessment Independent Third Party Surveys Japan International Cooperation Agency Japan Bank for International Cooperation Monitoring & Evaluation M&R NFC NWC NWP O&M PAC PC P&D PEDPC PEFA PER PFM PFMA PIDA PIDS PIFRA PISRP PMO PRGF PRMP P-PRSP SBP SEMU SCEA SGW TFP TWs WAPDA WPC WOMC WRS Maintenance & Repairs National Finance Commission National Water Council National Water Policy Operation & Maintenance Public Accounts Committee Provincial Cell Planning & Development Punjab Education Development Policy Credit Public Expenditure and Financial Accountability Public Expenditure Review Public Financial Management Provincial Financial Management & Accountability Punjab Irrigation & Drainage Authority Provincial Irrigation Departments Project to Improve Financial Reporting &Accounting Punjab Irrigation Sector Reform Program Project Management Office Poverty Reduction & Growth Facility Punjab Resource Management Program Punjab-Poverty Reduction Strategy Paper State Bank of Pakistan Social and Environmental Management Unit Strategic Country Environmental Assessment Saline Groundwater Total Factor Productivity Tube wells Water & Power Development Authority Water Policy Cell Website Oversight & Management Committee Water Resources Strategy Vice President: Isabel M. Guerrero Country Director: Rachid Benmessaoud Sector Manager: Simeon Ehui Task Team Leader: Masood Ahmad ICR Team Leader: Tahira Syed

3 COUNTRY PUNJAB IRRIGATION SECTOR DEVELOPMENT POLICY LOAN CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Program Performance in ISRs H. Restructuring 1. Program Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risks to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1 Bank Lending and Implementation Support/Supervision Processes Annex 2 Beneficiary Survey Results Annex 3 Stakeholder Workshop Report and Results Annex 4. Summary of Borrower s ICR and/or Comments on Draft ICR Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders Annex 6. List of Supporting Documents MAP... 61

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5 A. Basic Information Program 1 Country Pakistan Program Name Punjab-Irrigation Sector Development Policy Loan Program ID P L/C/TF Number(s) IBRD ICR Date 12/16/2010 ICR Type Core ICR Lending Instrument DPL Borrower GOVERNMENT OF PAKISTAN Original Total Commitment USD 100.0M Disbursed Amount USD 102.8M Implementing Agencies Irrigation & Power Dept. (IPD) Government of Punjab Cofinanciers and Other External Partners None Program 2 Country Pakistan Program Name Punjab-Irrigation Sector Development Policy Loan II Program ID P L/C/TF Number(s) IBRD ICR Date 12/16/2010 ICR Type Core ICR Lending Instrument DPL Borrower GOVERNMENT OF PAKISTAN Original Total Commitment USD 100.0M Disbursed Amount USD 100.0M Implementing Agencies Irrigation and Power Department Government of Punjab Cofinanciers and Other External Partners None

6 B. Key Dates Punjab-Irrigation Sector Development Policy Loan - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 09/06/2005 Effectiveness: 06/09/ /09/2006 Appraisal: 04/05/2006 Restructuring(s): Approval: 06/01/2006 Mid-term Review: Punjab-Irrigation Sector Development Policy Loan II - P Closing: 06/30/ /30/2007 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 12/18/2006 Effectiveness: 06/14/ /14/2007 Appraisal: 03/26/2007 Restructuring(s): Approval: 06/07/2007 Mid-term Review: Closing: 12/31/ /31/2007 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Risk to Development Outcome Bank Performance Borrower Performance Satisfactory High Satisfactory Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Agency/Agencies: Satisfactory Overall Bank Performance Satisfactory Overall Borrower Performance Satisfactory

7 C.3 Quality at Entry and Implementation Performance Indicators Punjab-Irrigation Sector Development Policy Loan - P Implementation QAG Assessments (if Indicators Rating: Performance any) Potential Problem Program No Quality at Entry (QEA) None at any time (Yes/No): Problem Program at any Quality of Supervision No None time (Yes/No): (QSA) DO rating before Highly Satisfactory Closing/Inactive status Punjab-Irrigation Sector Development Policy Loan II - P Implementation Performance Indicators QAG Assessments (if any) Rating: Potential Problem Program at any time (Yes/No): No Quality at Entry (QEA) None Problem Program at any time (Yes/No): No Quality of Supervision (QSA) None DO rating before Closing/Inactive status Highly Satisfactory D. Sector and Theme Codes Punjab-Irrigation Sector Development Policy Loan - P Original Actual Sector Code (as % of total Bank financing) Irrigation and drainage Theme Code (as % of total Bank financing) Public expenditure, financial management and procurement Rural policies and institutions Rural services and infrastructure Water resource management Punjab-Irrigation Sector Development Policy Loan II - P Original Actual Sector Code (as % of total Bank financing) Irrigation and drainage Theme Code (as % of total Bank financing) Administrative and civil service reform 17 17

8 Environmental policies and institutions Rural policies and institutions Rural services and infrastructure Water resource management E. Bank Staff Punjab-Irrigation Sector Development Policy Loan - P Positions At ICR At Approval Vice President: Isabel Guerrero Praful Patel Country Director: Rachid Benmessaoud John Wall Sector Manager: Simeon Ehui Adolfo Brizzi Task Team Leader: Manuel Contijoch/Usman Qamar Manuel Contijoch/Usman Qamar ICR Team Leader: Tahira Syed Tahira Syed ICR Primary Author: Aslam Rasheed Aslam Rasheed Punjab-Irrigation Sector Development Policy Loan II - P Positions At ICR At Approval Vice President: Isabel Guerrero Praful Patel Country Director: Rachid Benmessaoud Yusupha Crookes Sector Manager: Simeon Ehui Adolfo Brizzi Task Team Leader: Masood Ahmad Manuel Contijoch/Usman Qamar ICR Team Leader: Tahira Syed Tahira Syed ICR Primary Author: Aslam Rasheed Aslam Rasheed

9 This Implementation Completion and Results Report (ICRR) covers the implementation of two programmatic operations, the Punjab Irrigation Sector Development Policy Loan and the Second Punjab Irrigation Sector Development Policy Loan. 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal At the time of the preparation of the first Punjab Irrigation Development Policy Loan, Pakistan s economy seemed to be well on the path to sustained economic growth. After a long history of wavering commitment to, and poor implementation of, economic and structural reforms, which led to implementation delays or pre-mature termination of a number of International Monetary Fund (IMF) programs, 1 the Government was able not only to fully implement the reform program supported by the Fund under the Poverty Reduction and Growth Facility (PRGF), but in many areas surpassed the targets set under the program. Successful implementation of structural and economic reform program helped transform the economy from a highly regulated to a more open, market economy. This, together with more transient factors like good weather conditions, contributed to a sharp acceleration in economic growth. The economy showed a healthy growth performance in 2003/04 as the GDP growth reached 6.4%. The IMF 2 reported that medium term outlook for Pakistan s economy remained favorable with a national growth rate projected at 6% in the short to medium run. With a relatively sound macroeconomic environment, the province of Punjab took a bold decision to undertake key policy reforms for improving governance by enhancing the accountability of state institutions; improving social service delivery systems; accelerating growth and generating employment through enhanced focus on productive sectors; and enhancing the effectiveness of public expenditures through budgetary and institutional reforms 3. This commitment set rolling a comprehensive and multi-sector reforms process for fiscal and financial management, taxation, procurement, education, and agriculture and irrigation. Agriculture being the mainstay of Punjab s economy accounting for 26% of its output and providing employment to 45% of its workforce received serious attention. In particular, the province recognized that the uneven growth pattern was partly contributed by the serious challenges faced in agriculture sector including: (i) input intensification for only a few crops leading to serious environment and health impacts; (ii) low productivity with the rate of total factor productivity (TFP) growth at a mere 1.5% in comparison to other countries of the region; and (iii) significant decline in water productivity and increased land degradation due to poor water quality and mono-cropping. However, over 90% of Punjab s agricultural production is dependent upon irrigation system. As in the rest of the country, Punjab also faced several challenges in the irrigation and drainage systems limiting its full potential in contributing to the agricultural productivity. Punjab s commitment to reform water sector had enjoyed a rich history of initiatives and policy changes starting with the National Drainage Program (NDP) jointly financed by the World Bank, Asian Development Bank (ADB) and Japan Bank for International Cooperation (JBIC). Although the program achieved modest results, it set forth a series of reforms in Punjab in particular for the Irrigation and Power Department (IPD). In 2004, the reforms agenda received an added boost with the change in provincial 1 During IMF supported ten programs in Pakistan. All of these, except the last two, suffered from substantial policy slippages. Of the SDR 4.7 billion committed during , 55 percent was not drawn as programs went off-track soon after their start. Programs were either extended to accommodate delays in the completion of reviews, or were ended prematurely, to be replaced by new arrangements. In contrast, both the 2000 Stand-by Arrangement (SBA) and the 2001 three-year arrangement under the Poverty Reduction and Growth Facility (PRGF) were successfully completed without any extensions. 2 IMF s Staff Report for 2005, Article IV Consultation, October 11, As outlined in the Punjab Poverty Reduction Strategy Paper 1

10 leadership and a new reform minded team placed the water sector amongst the province s key development priorities. The Chief Minister appointed a senior level Committee with Chairman Planning and Development Board as its head and key members of the provincial departments including Finance, Agriculture, Environment and Irrigation to develop a comprehensive Irrigation Sector Reforms Program along with an implementable action plan. The Committee s key achievement was setting out a long-term vision for the irrigation sector and finalizing a strategy for implementation of the Punjab Irrigation Sector Reforms Program (PISRP). The PISRP built on extensive consultations with a range of stakeholders within and outside of the government as well as the World Bank and other multi- and bi-lateral donors active in the sector. The strategic vision for PISRP supported both a focus on institutional and policy reforms as well as on critical investment for rehabilitation and system improvement. The PISRP was designed to address the key fiscal, institutional and sector issues and was aligned with the Bank s Country Water Resources Assistance Strategy (CWRAS) for Pakistan (Grey cover Report No PK, dated November 14, 2005). To support the GOPunjab in its major reforms agenda for improving fiscal management and service delivery, the World Bank agreed to support a series of Development Policy Loans (DPL) over a period of three years from 2006 to Based on the past experience, both GOPunjab and the Bank agreed that new approaches and instruments will be needed to meet the diverse set of challenges facing the water sector. The DPL instrument was therefore considered a more suitable instrument for supporting the reform agenda set out in the PISRP. In addition, the DPL series was in line with the priorities of the Bank s Country Assistance Strategy (CAS) for the period 2006 to The DPL was informed by the lessons learnt during the previous CAS period, including among others: the need for a programmatic approach which provides the flexibility to support reforms while managing risk; greater attention to capacity building; and the need to focus on results. The CAS sought to deliver a substantial increase in the volume of lending to Pakistan based on the Government s priorities for sustaining growth and accelerating poverty reduction. The Irrigation Sector DPL was specifically identified in the CAS and directly contributed to the following CAS outcomes: (i) improved management of irrigation and drainage infrastructure; (ii) improved irrigation service delivery through increased participatory management and cost recovery; (iii) and transparent and more equitable water allocation and distribution. The specific CAS milestones and indicators of progress towards the above outcomes included: (i) preparation of Asset Management Plan with increased funding for M&R; (ii) establishment of Farmer Organizations and collection of Abiana 4 ; and (iii) reduction in water losses at on-farm channels. These CAS outcomes and indicators were directly supported by the DPL and were included in Policy Matrix along with baselines and targets. 1.2 Original Program Development Objectives (PDO) and Key Indicators The purpose of the Punjab Irrigation DPL series was to support the Government of Punjab s medium term Irrigation Sector Reform Program (PISRP). The key pillars of the PISRP were: (i) Institutional and policy reforms to improve the management and maintenance of the irrigation system to ensure its long term sustainability; (ii) Water resources management reforms to make intra-province water allocation and distribution more transparent; (iii) Irrigation service delivery reforms to improve the quality, efficiency and accountability with which irrigation services are delivered; and (iv) Reforms to improve water use efficiency and on-farm productivity. The key pillars and objectives of the reforms program supported through DPL series are described in section Irrigation water charges 2

11 The key elements of the PISRP that were supported under the DPL included: (i) public finance reforms to increase public spending and its efficiency for key priority sectors while ensuring fiscal sustainability; (ii) reforms that strengthen devolution and service delivery, and (iii) reforms that improve the fiduciary and governance environment. Achievements against indicators and targets for DPL 1 and 2 are given in Tables 1 and 2 in Section 2.1 below. 1.3 Revised PDO and Key Indicators, and Reasons/Justification The Development Objectives were not revised during implementation. 1.4 Original Policy Areas Supported by the Program The series of two DPLs supported GOPunjab s PISRP under the following four pillars: Pillar I: Institutional and Policy Reforms: to improve the management and maintenance of the irrigation system to ensure its long term physical and financial sustainability Outcomes: Hydraulic infrastructure progressively made safer and sustainable; enhanced financial accountability of the executive assured. Pillar II: Water Resource Management Reforms: to emphasize the nexus of entitlements, measurements and transparency and build on Punjab s existing platform of water entitlements to make intra-province water allocations and distribution more transparent, and to ultimately extend the system of entitlements to groundwater as well. Outcomes: Capacity and system created for transparent administration of water entitlements and sustainable management of water resources. Pillar III: Irrigation Service Delivery Reforms: to improve the quality, efficiency and accountability with which irrigation services are delivered. Outcomes: Improved equity of water distribution in accordance with entitlements. Delivery Performance Ratio DPR (ratio of authorized and actual discharges at the head and tail outlets increased from 50% (baseline in FY06) to 75% by FY08 for distributary canals for which IMTAs were signed and physical improvements implemented. Pillar IV: Reforms: to encourage new technology to improve water use efficiency and on-farm productivity Outcomes: Increase in water productivity, employment and incomes of participating farmers. Water use efficiency (field application efficiency) 25% to 40% increase, depending on the kinds of technologies applied on the plots in FY08; Diversification and shift into high-value crops. 1.5 Revised Policy Areas None of the policy areas were revised during the implementation of the DPL program. 1.6 Other significant changes Originally a series of 3 DPLs were envisaged. DPL 1 was followed by DPL 2 as planned, however DPL 3 did not materialize due to adverse changes in Pakistan s macro economic conditions. 2. Key Factors Affecting Implementation and Outcomes 3

12 2.1 Program Performance Since the start of PISRP in FY05/06, there has been good progress in reducing the back-log of deferred maintenance, making intra-province water allocation and distribution more transparent; and improving service delivery in canals with O&M transferred to farmers. The first two years of the PISRP supported under the DPL 1 and 2 witnessed progress under all pillars. Below are the highlights of key achievements: (i) (ii) (iii) (iv) (v) (vi) (vii) A complete inventory of the IPD s assets and assessment of deferred maintenance and rehabilitation needs was prepared; Yardsticks for estimating budget requirements for routine and preventive maintenance were rationalized; Against a target of 5% reduction in deferred maintenance, the DPL 1 achieved 6.6% reduction while by the end of DPL 2 the cumulative reduction in deferred maintenance reached 14.5%. Subsequently, during FY Rs 7.41 billion were spent on rehabilitation of irrigation and drainage systems and barrages, and Rs 2.06 billion on M&R, which together constituted approximately 7.9% of the accumulated deferred maintenance. During FY Rs 6.32 billion were spent on rehabilitation of irrigation and drainage systems and barrages, and Rs 2.65 billion on M&R, which together constituted about 7.5% of the accumulated deferred maintenance. More recently, in the FY , Rs 4.53 billion have been spent on rehabilitation and Rs 2.8 billion on M&R, which together constituted approximately 6.1% of the accumulated deferred maintenance. With this performance, the total reduction in deferred maintenance has amounted to around 21.5%; A two-fold increase was achieved in maintenance and repair (M&R) budget. There has been a continued trend in M&R allocation over the past three years after completion of the DPL series the allocation for FY was Rs billion; for FY the allocation was Rs 3.04 billion and for FY Rs billion; The M&R cost sharing policy was formulated with public sector financing and users contribution; Delivery Performance Ratio DPR (ratio of actual and authorized discharge at the head and tail outlets) of distributaries were being measured by Program Monitoring and Implementation Unit (PMIU). DPR values showed improvement in equity of distribution of water. DPR values in LCC East & West, LBDC, Eastern Sadiqia, and CRBC showed improvement, and average relative DPR was 0.87 for Kharif 2007 as compared to 0.78 for Kharif 2006 The non performing saline groundwater tubewells were closed and divesture of public sector owned tubewells and their closure/ transition was achieved; (viii) Electricity billing for the year reduced by Rs. 462 Million as compared to (ix) A system for M&R performance evaluation was established and made operational; 4

13 (x) (xi) (xii) (xiii) IPD launched a website and prepared a communications strategy to ensure that reforms are better understood and supported; beneficiary feedback, especially from tail-end users, was incorporated in IPD media campaigns; A new procurement unit to oversee implementation of new projects was established; The financial management capacity and accountability of IPD was enhanced; and Substantial reduction (45%) in the backlog of advance audit observations was achieved. Table 1 below provides details of the consolidated information on achievements under DPL series: 5

14 Table 1: Baseline, Targets and Achievements of DPL 1 and 2 Outcome Indicator Baseline Actual (DPL 1) 1. Ensuring Integrity and Sustainability of Punjab s Irrigation System 5% reduction in accumulated deferred maintenance each year. (Baseline of deferred maintenance = Rs 120 billion in FY06) Rs 6 billion in FY05-06 The inventory of IPD s assets was completed; setting out all inventories and estimated costs for rehabilitation works; both for key irrigation and drainage infrastructure as well as for supporting assets. The analysis of the inventory included: (i) technical specifications, (ii) historical and replacement costs/values, (iii) physical condition based on rating scale of 1-5 and non-functional assets, (iv) estimated annual O&M cost (establishment and variable M&R costs). The assets of the IPD were estimated to have an overall Replacement Value of Rs 1,170, 311.1Million (about US $ 19,505 million) at 2006 price level. Actual (DPL 2) An Asset Management Plan (AMP) was prepared for a period of ten years ( ). The AMP included rehabilitation as well M&R plans, institutional arrangements and financing plans. The cost of AMP was estimated at Rs 132 billion (per 06/07 prices). During Rs 7.41 billion were spent on rehabilitation of irrigation and drainage systems and barrages, and Rs 2.06 billion on M&R, which together constitutes about 7.9% of the accumulated deferred maintenance. Under the two DPLs a cumulative reduction of 14.5% was achieved in accumulated deferred maintenance. During , GOPunjab spent Rs 6.45 billion on rehabilitation of irrigation and drainage systems and barrages and Rs 2 billion on M&R, which together constitutes about 6.6% of the accumulated deferred maintenance. Budget allocated for M&R in accordance with MTBF. for(m&r 66% increase for DPL I; >10% and DPL II; Rs 1.2 Million in The original M&R budget allocation for FY05/06 was Rs 1.23 billion based on the Composite Schedule of Rates (CSR). On February 2, 2006 GOPunjab approved and released a supplementary grant of Rs billion (based on revised yardsticks reflecting market rates), thus increasing the total amount released for M&R during Rs billion allocated in the FY06/07 M&R budget in accordance with revised yardsticks. The M&R budget allocations have continued in the last 3 years after completion of DPL. The budget allocation for FY was Rs

15 Outcome Indicator Baseline Actual (DPL 1) FY05/06 to Rs 2.0 billion. The Punjab Government prepared a draft of Performance Evaluation System for M&R works. Actual (DPL 2) billion; for FY the allocation was Rs 3.04 billion and for FY Rs billion. IPD s annual expenditure on electricity bills for government TWs (Rs 792 million/year in FY06- baseline) reduced to Rs 200 million by FY08. Rs 792 million The initial assessment of a transition plan was completed. It was agreed that IPD shall develop a plan setting out transfer of FGWs. For the functioning SGWs, a study was carried out to confirm the need for continued operation, and prepare a plan for possible replacement/repairs for those confirmed to be operated continuously and closure/transition of redundant tubewells. 1,617 non performing saline tubewells were closed as of February 2007 and transition of FGW tubewells started (which was completed after DPL 2). The annual electricity payment in was reduced by Rs million. Abiana collection performance of FOs enhanced from 70 % (of the assessed amount in FY05- baseline) to 85% of the assessed amount by FY08; In non-fo areas Abiana collection (current dues) enhanced from 52% in FY04 to 65% by FY08 The IPD prepared a draft policy on sharing of M&R costs. FOs in LCC East were authorized to collect and retain part of the Abiana. Collection performance of FOs for Rabi was 78%, and 79% in Kharif Abiana collection in non-fo areas for was 47%. For Rabi the collection increased from 52% to 58% of the assessed amount. Collection performance of FOs for Kharif 2007 was 63.56% and for Rabi it was 59.02%. Abiana collection in non-fo areas for improved to 70% Budget execution statements produced quarterly Quarterly budget execution statements on M&R are being produced by XENs and monitored by SEs. The Department utilized 97% of the M&R budget during Quarterly budget execution statements on M&R are being produced by XENs and monitored by SEs. The Department utilized 94% of the M&R Budget during Winter crop season (November March) 6 Summer crop season (April October) 7

16 Outcome Indicator Baseline Actual (DPL 1) Actual (DPL 2) Progressive reduction in back-log of audit observations 2. Making Water Allocation and Distribution More Transparent. Number of canal systems equipped with calibrated water measuring devices and linked with the IMIS, increased from zero (baseline) to 12 (50% of the entire irrigation system) by the end of FY08. Zero Meetings of the DAC were held regularly. Out of 6,666 advance audit paragraphs, about 20.7% were fully resolved by March 15, Capacity and system was created for transparent administration of water entitlements and sustainable management of water resources. The PMIU was strengthened with 12 Mobile Teams (two for each Irrigation Zone). Water accounts for all 24 main canals with entitlements, deliveries & balance shares were posted on the website. Data on the website is being updated on 10day basis. Water accounts for the distributary canals in LCC East Canal Command area were also posted on the website. Warabandi 7 in the LCC East Canal Command area was publicized by the FOs. Installation and calibration of gauges in LCC East System was completed. # of hits on IPD website Zero Not Applicable. The counter was added to the website during DPL 2. Meetings of the DAC were being held regularly. Out of 6,666 advance audit paragraphs, about 25% (45% cumulative) of the back-logs of advance audit observations were reviewed and resolved. Water accounts for all the 24 main canals with entitlements, deliveries & balance shares continue to be posted on the IPD website. Data on the website is being updated on 10 daily basis. Warabandi in the LCC East Canal Command area continues to be publicized by the FOs. The website was updated and made more users friendly. The Site was linked to Punjab Government Portal and a visitor 7 Rotational system for water distribution 8

17 Outcome Indicator Baseline Actual (DPL 1) Actual (DPL 2) counter was added. 22,286 (about hits/day) were registered as of July 30, Over abstraction of groundwater in critical areas mitigated (ascertained by physical monitoring). Key water quality parameters in critical areas posted on IPD website. 3. Improving Irrigation Services Delivery The draft Ground Water Management Strategy was prepared and refined in light of follow up studies and recommendations, including those from the GWMATE mission and GW Consultants. Water quality monitoring plan for surface water was developed and water sampling and laboratory testing of the samples was started. A Toll Free number was made operational for registration of complaints. 1,551 complaints were registered on the Toll Free number, which were registered on the website of these 1,089 complaints were responded. The draft Ground Water Management Strategy and action plan was prepared and GW information was made available on IPD website at: FOs in LCC East started water depth and groundwater quality monitoring. Pilot groundwater management schemes were formulated, including: stakeholder participation; economic incentives; strengthening of knowledge base and regulatory measures. Implementation of Surface Water Quality Monitoring Plan (including water quality checks for domestic use) was started in priority areas. Information on water quality and sources of pollution disseminated locally and was posted on the IPD website. 9

18 Outcome Indicator Baseline Actual (DPL 1) DPRs The observations by PMIU indicate that the average DPR for April to September 2006 was 0.64 in Burala Division; 0.65 in Upper Gugera; 0.85 in Lower Gugera and 0.68 in Khanki Division. The overall average DPR in LCC East system was Joint measurement of discharges at head of distributaries by IPD and FOs has started. Number of FOs with IMTAs signed Baseline: 83 FOs by DPL I; 183 FOs by DPL II; 283 FOs by DPL III. 83 FOs were established and Irrigation Management Transfer Agreement (IMTA) were signed with the FOs in LCC East. Actual (DPL 2) The observations by PMIU indicate that the average DPR values in various canals were as follows: Division Rabi Kharif 2008 Burala Upper Gugera Lower Gugera Khanki LCC (East) Joint measurement of discharges at head of distributaries by IPD and FOs is carried out. 186 FOs established and IMTA signed (83 FOs in LCC East; 64 FOs in LCC West; 6 FOs in LJC; 30 FOs in CRBC and 3 FOs in Bahawalnagar.) Changes in skill and gender mix. Number of staff with higher qualifications. Skill mix in IPD improved. IPD carried out a preliminary institutional /functional analysis of the present problems of the Department. A SWOT analysis for the HR functions of each wing of IPD was also undertaken, which highlighted the need for strategic planning of the Department in response to the changing role and vision of the Department. IPD prepared the proposal for the Skill mix in IPD has improved. Staffing of IPD SPRU is completed. The staff engaged in IPD s SPRU has the requisite skill mix and is highly qualified. Similarly, the staff engaged in PMIU is highly qualified with the requisite skills. 10

19 Outcome Indicator Baseline Actual (DPL 1) establishment of the Strategic Planning and Reform Unit (SPRU) responsible for undertaking various studies/actions required under the DPL. The SPRU was to include experts in Engineering, Agro-economics, and Social Studies and Environment and Institutions/HRD. Highly qualified staff, having the required skills was engaged in PMIU. Actual (DPL 2) Number of IPD, FO staff trained. Members of General Body of 84 FOs trained. On job training conducted for 2,379 FO staff and 26 IPD Staff. Approved guidelines for management of environmental and social risks available on website. The Social Environmental Management Unit (SEMU) was established under SPRU. The SEMU had a broad mandate for environmental and social issues and will develop Guidelines for management of environmental and social risks. Guidelines for management of environmental and social risks prepared and placed on IPD website. # of IEE and EIA prepared under applicable legislation, approved by EPD and disseminated. EMPs funded and implemented. IEE or EIA (as required) were made part of PC1. SEMU reviewed the EIA reports of following projects: Kot Fateh Khan Project (Small Dam) Feasibility Study of Mailsi Siphons Rehabilitation of Ravi Siphon Reviewed 83 PC-1s of IPD received from the field officers for approval in the DDSC meeting. 11

20 Outcome Indicator Environmental and social risks in operation, maintenance and rehabilitation identified and addressed. Baseline Encouraging New Technology to Increase Productivity 4000 w/c improved in FY07 & FY08. Actual (DPL 1) IEE or EIA (as required) were made part of PC1. Actual (DPL 2) Guidelines for management of environmental and social risks in operation, maintenance and rehabilitation identified and made an integral part of PC1 for approval of schemes. SEMU staff carried out field visits to different ongoing projects to monitor implementation of social and environmental guidelines. 5,011 w/c improved in FY ,004 w/c improved in FY ,000 Ha leveled in each year Ha under pressurized irrigation system by FY Laser units were provided to the service providers during Land leveling of 29,500 acres (11,938 ha) was carried out during ). Project proposal prepared for promoting pressurized irrigation systems LASER units were provided to the service providers during As of June 30, 2007, land leveling of 634,613 acres (256,928 ha) acres was carried out. High efficiency irrigation systems (drip/ sprinkler) installed on 9,964 acres (4,034 ha). 12

21 The Table 1 above shows that overall good progress has been made towards the program targets set under the GOPunjab s PISRP. In summary, it is now evident that: There was an increased emphasis on moving away from past policy of build-neglect-rebuild, which resulted in gradual deterioration of the hydraulic infrastructure in the past. The budget for M&R and for rehabilitation as well its utilization increased substantially and the Asset Management Plan was fully funded. Some of the interventions covered the entire system like improved transparency in water distribution, metering/monitoring of the entire canal system; increased budget allocation for M&R; Quality control on implementation of M&R works, reduction in backlog of audit paras, management of environmental and social risks, watercourse improvement etc. While the implementation of Asset Management Plan over the entire system may take more than 10 years, rehabilitation works have been completed on (i) Taunsa Barrage; and (ii) LCC East Canal. Further rehabilitation works are under progress on: (i) Balloki Barrage; (ii) LCC West; (iii) Lower Bari Doab; and (iv) Bahawalpur, DG Khan and Faisalabad zone. In addition, rehabilitation and up gradation of Jinnah Barrage is about to start while rehabilitation/up gradation of following structures is in the pipeline: (i) Islam Barrage; (ii) Khanki Barrage; (iii) Suleimanki Barrage; (iv) Trimmu Barrage; (v) Panjnad Barrage; (vi) Pakpattan Canal; and (vii) Thal Canal system. The intra-province water entitlements were made more transparent. Punjab embraced the principle of what is not measured is not managed and the province embarked on the process to make administration of water entitlements progressively more transparent with information on entitlements and actual delivery made readily available for distributary canals. The IPD s communication strategy focused on internal and external communications of the reforms program and IPD s ability to seek and incorporate feedback of stakeholders in particular farmers at the tail-end of the system. The quality, efficiency and accountability of irrigation services improved in the areas served by canals where reforms were implemented. The number of FOs increased dramatically from 3 in FY05 to 186 and the DPR values improved. However, The Abiana collection performance in non FO areas improved to 70% of the assessed amount. While in the FO areas there was a downward trend. This was due to a number of factors including the sociopolitical setting and a general lack of recognition of the FOs by the local administrative set-up and support from local administration and police. Another factor contributing to decline in Abiana collection in FOs areas was the overall shortage of water; when farmers did not receive allocated share there was an increased reluctant to pay Abiana. Investments in water conservation technologies proceeded on or were ahead of targets with visible improvement in water use efficiency and productivity. Status of progress against implementation of prior actions and milestones under each of the four pillars is provided in Tables 2 and 3 below. 13

22 Table 2: Prior Actions and Milestones for DPL 1(Prior actions highlighted as bold) Pillar I: Ensuring Integrity and Sustainability of Punjab s Irrigation System Objectives (i) preparing and implementing a policy framework for an Asset Management Plan; (ii) establishing a cost sharing policy that makes financing of O&M explicit in terms of public sector and users contribution; (iii) ensuring adequate budgetary allocations for M&R; (iv) divesting to the private sector a number of activities currently carried out by the public sector; (v) establishing efficient institutional arrangements for asset management; and reinforce accountability in the sector. Prior Actions/Milestones Status 1. Inventory and cost of assets prepared Completed 2. M&R Yardsticks revised to reflect market rates to provide a realistic basis for M&R budget estimates. Completed 3. M&R budget increased from Rs billion in FY05 to Rs 2.0 billion in FY06. Completed 4. Performance Evaluation System for M&R defined (draft). Completed 5. A project management organization (PMO) for barrage rehabilitation program established. Completed 6. Assessment of government owned TWs in fresh (FGW) and saline groundwater (SGW) areas completed, and a Completed transition plan prepared (transfer to farmers, write-off or replace with tile drains). 7. Preparation of divestiture program for workshop(s) started. Completed 8. A system of posting procurement notices on IPD website adopted. Completed 9. A system of fortnightly Departmental Accounts Committee (DAC) meetings instituted to settle audit observations. Completed 10. FOs authorized to retain Abiana. Completed 10A. Prepare strategy to improve Abiana collection for canals where no FOs exist Completed 11. A draft policy for O&M cost sharing that makes the O&M financing plan explicit about the requirements of public Completed sector financing and (Abiana) prepared and submitted for Government approval. 12. FOs Business plans (BPs) developed. Completed Pillar II: Making Water Allocation and Distribution More Transparent. Objectives: Emphasizing the Nexus of Water Entitlements, Measurements and Transparency Building on the Existing Platform of Water Entitlements; and Promoting Sustainable Groundwater Management. Prior Actions/Milestones 1. Water Accounts (entitlements, actual diversions, and balance water shares) of all 24 main canals in Punjab posted on IPD website and publicized through other means as well, and updated on 10 daily basis. An irrigation management information system (IMIS) developed. Status Completed 2. Installation and calibration of flow gauges for monitoring canals started. Completed 3. Service delivery staff equipped with transport and communication equipment (wireless sets). Completed 4. Groundwater Management Strategy revisited. (groundwater mapping, monitoring of trends, analysis of feasible Completed interventions --regulatory framework, user participation, economic incentives, perverse and virtuous subsidies, efficient use of water and introduction of modern irrigation technology). 14

23 5. Water accounts for the distributary canals in LCC East Canal command area publicized by FOs. Completed 6. A website oversight committee formed including FOs representatives, NGOs, scholars, other users and IPD officials to Completed ensure that information on the website is responsive to the users needs, accessible, user friendly, clear, accurate and timely. 7. Publication of the Warabandi in the LCC East Canal command area (in Villages, FOs and WUA offices). Completed 8. Finalize terms of reference for the preparation of a decision support model for water allocation. Completed Pillar III: Improving Irrigation Services Delivery Objectives: (i) transparent and efficient system of irrigation service delivery in accordance with water entitlements; (ii) facilitating the entry of new players in the system to help professionalize and making irrigation services more efficient; (iii) devolving responsibility for O&M and Abiana collection to water users (FOs); (iv) promoting contractual arrangements that clearly specify the rights and obligations of bulk water suppliers and users; (v) benchmarking for all irrigation services. Prior Actions/Milestones Status 1. Institutional analysis of IPD initiated to identify a set of sequenced reform actions for cost centers (in conjunction with Completed Pillar 1). 2. IPD Units covering key functions for reform, including strategic planning, and M&E (including third party monitoring) Completed planned. 3. Preparation of communication strategy that would inform and win stakeholders support for the reforms at levels started. Completed 4. Area Water Board (AWB) in LCC (East) formed, Rules notified, and capacity building started. Completed 5. Irrigation Management Transfer Agreements (IMTAs) signed with all 83 FOs in LCC AWB. Completed 6. Social mobilization capacity expanded to start social mobilization in next canal command on a fast track (social Completed mobilization started in LCC West canal. Approval of competent authority being sought to deploy additional social mobilization teams). 7. A system of monitoring, benchmarking and reporting instituted on FO monitoring and benchmarking. Completed 8. Water discharge measurements on main, branch and distributary canals carried out on daily basis in LCC East canal Completed command. 9. Joint measurement of discharges at head of distributaries by IPD and FOs. Completed 10. Monitoring of discharges at watercourse outlets/moghas 8 by FO and periodically by PIDA/AWB in LCC East canal Completed command. 11. An interdepartmental steering committee comprising: Chairman P&D, Secretary Finance; Secretary Irrigation; DG Completed OFWM established to monitor the progress and provide overall guidance. 12. IPD Reform Unit (proposed to be staffed with professionals recruited from the market) being established. Completed 8 Ungated outlet from distributary or minor canal 15

24 13. Environmental Management Unit (EMU) established with a mandate to build awareness and capacity for environmental and social risk management in FOs, AWBs, and IPD. Completed Pillar IV: Encouraging New Technology to Increase Productivity Objectives: (i) promotion of new technologies that enhance agricultural productivity and water use efficiency by supporting private-public partnerships; and (ii) encouraging private sector agri-business Prior Actions/Milestones 1. Formulate strategy for expanding private-public sector partnerships for the introduction of improved technologies for irrigated agriculture (land leveling, zero tillage, bed & furrow, crop diversification etc.), including incentives (e.g. virtuous subsidies, matching grants). Status Completed 2. Prepare a program for implementing the strategy. Completed 3. Approve the strategy and program that uses private-public sector partnerships to deliver services to farmers. Completed 4. Formulate and implement a program aimed at minimizing conveyance losses in tertiary level irrigation systems, mainly Completed through watercourse improvement. 16

25 Table 3: Prior Actions and Milestones for DPL 2 (Prior actions highlighted as bold) Pillar I: Ensuring Integrity and Sustainability of Punjab s Irrigation System Objectives: (i) preparing and implementing a policy framework for an Asset Management Plan; (ii) establishing a cost sharing policy that makes financing of O&M explicit in terms of public sector and users contribution; (iii) ensuring adequate budgetary allocations for M&R; (iv) divesting to the private sector a number of activities currently carried out by the public sector; (v) establishing efficient institutional arrangements for asset management; and reinforce accountability in the sector. Prior Actions/Milestones Status 1. A 5-10 year Asset Management Plan (AMP) prepared, including rehabilitation as well as annual M&R plans, Completed institutional arrangements, and financing plans (to be updated annually). The AMP will integrate the social and environmental guidelines prepared by IPD (see Pillar 3, item 13) to ensure that environmental effects of M&R and rehabilitation on wetlands, forests and other natural resources will be adequately managed and addressed. 2. M&R Yardsticks updated according to: i) inflation and ii) physical requirements of each Zone. Completed 3. M&R Budget allocated according to revised yardsticks. (M&R expenditure to reflect the progress of the reform Completed e.g. IMTAs with farmer organizations (FOs); government tubewells (TWs) transition. 4. Performance Evaluation system for M&R approved by GOPunjab and its implementation started. Completed 5. 50% of the existing 1,200 FGW TWs transitioned; and transition of 2,700 SGW TWs started. Completed 6. A procurement unit established to assist and advise on procurement of goods, services, works and contract Completed management. 7. System of fortnightly (twice monthly average) meetings of the Departmental Accounts Committee (DAC) Completed institutionalized, with at least 20% of the back-logs of advance audit observations reviewed and resolved (baseline of March 31, 2006). 7A. Quarterly budget execution statements on M&R produced and monitored. Completed 8. Capacity building of FOs to further improve Abiana collection performance Partly Completed. Despite capacity building, Abiana collection by FOs declined 8 A. Performance on Abiana collection in non-fo canals improved (as a % of the assessed amount of current Completed dues). 9. Policy for O&M cost sharing approved Completed 10. FOs Business plans (BPs) implemented. Completed Pillar II: Making Water Allocation and Distribution More Transparent. Objectives: Emphasizing the Nexus of Water Entitlements, Measurements and Transparency --Building on the Existing Platform of Water Entitlements; and Promoting Sustainable Groundwater Management. Prior Actions/Milestones Status 17

26 1. Monthly water accounts (allocations and deliveries, balance shares, etc.) posted on IPD website. Completed 2. Installation and calibration of gauges completed for at least LCC East System. And, distributary discharge Completed data posted on IPD website. 3. Surface Water Quality Monitoring Plan defined and approved. Completed 4. Groundwater Strategy defined, and an Action Plan approved. Groundwater depth and quality monitored and Completed critical areas (with falling water tables or saline intrusion) identified and mapped, information disseminated locally and posted on the web. FOs involved in monitoring groundwater. 5. Criteria for : i) allocating additional water that becomes available under the Accord, and ii) sharing water shortages Completed among canal commands, made public and notification of new water entitlements made public. 6. Publication of water accounts for all distributary canals where reforms commence on IPD website and updated Completed every 10 days. 7. Publication of warabandi on watercourses of further distributary canals where IMT agreements are signed. Completed Dissemination to all users and campaign in the media. 8. Decision support model prepared. Partly Completed. Consultants appointed by GOPunjab did not complete the assignment. Pillar III: Improving Irrigation Services Delivery Objectives: (i) transparent and efficient system of irrigation service delivery in accordance with water entitlements; (ii) facilitating the entry of new players in the system to help professionalize and making irrigation services more efficient; (iii) devolving responsibility for O&M and Abiana (water charges) collection to water users (Farmers Organizations--FOs); (iv) promoting contractual arrangements that clearly specify the rights and obligations of bulk water suppliers and users; (v) benchmarking for all irrigation services. Prior Actions/Milestones 1. IPD modernization plan developed, including strategy and action plan, approved by GOPunjab (in conjunction with Pillar 1). 2. IPD Reform Unit fully functional and M&E reports prepared. Completed 3. Communication strategy prepared, approved and launched. Completed 4. LCC (East) AWB fully operational (capacity building continued), and two further AWBs (or equivalent) notified. Completed 5. Rehabilitation of FO managed channels under ongoing programs. Completed new FOs established in new AWBs and IMTAs signed. Capacity building of FOs continued. Completed 7. Introduction of Benchmarking system. Water measurement, monitoring and benchmarking expanded to cover new AWBs and FOs. 8. To raise awareness of environmental and social risks, guidelines developed for their identification and control in operation, maintenance and rehabilitation of irrigation infrastructure. And, a Program approved to Status Partly Completed. The Plan was developed with TA from ADB but no strategy and action plan was approved. Completed Completed 18

27 build capacity in FOs, AWBs, and IPD for application of environmental and social risk management guidelines. Pillar IV: Encouraging New Technology to Increase Productivity Objectives: to improve water use efficiency and on-farm productivity. Prior Actions/Milestones 1. Water conservation programs and initiatives implemented based on approved strategy; The following targets set for FY06/07: 4000 Water Courses 1000 Laser Leveler Units Project proposal prepared for promoting pressurized irrigation systems Completed Status 19

28 2.2 Major Factors Affecting Implementation: There was high level of political and administrative commitment towards the reform program and the implementation of the DPL program proceeded smoothly. As the DPL series culminated, there were significant changes including the political transitions at federal and provincial levels and a sizeable downturn in the country s economic growth rate the later leading to abandonment of the third DPL. The good implementation progress of the DPL series resulted from a combination of factors: Commitment of the government for reforms program: The PISRP was an ambitious agenda, but one with equally high level of commitment within the bureaucracy as well as in the political leadership and the farming community. The GOPunjab s ownership of the reforms was evident from a number of steps taken to support the program including formulation of a high level Inter-Departmental Reforms Steering Committee headed by the Chairman Planning and Development and reporting directly to the Chief Minister s office. This raised not only the profile of the reforms program but also steered high impacts decisions including scaling up of irrigation management transfers to farmer organizations from one to three new canal systems and a near doubling of resources allocated for maintenance and repairs as well as system rehabilitation and performance audits. From the outset of the PISRP, there was an alignment in the senior political management and bureaucracy, which facilitated implementation. The interest from the highest level official including Chief Minister, Chief Secretary and the Chairman Planning and Development Board kept the momentum of reforms. The IPD and PIDA teams were forward looking and continuity of management teams at the IPD/PIDA and at Planning and Development Board amplified government s seriousness towards the reforms. At the same time, high level interest by the Finance Department helped maintain the integrity of the reforms program. Also resulting from the seriousness of government s commitment was the emerging transparency of water entitlements with a robust communication and MIS system that sought and incorporated feedback from farmers at tail-end of the system to evaluate program effectiveness. Similarly, the GOPunjab in its efforts to support the reforms program took note of the federal government s announcement of a perverse subsidy for electric tubewells that required 50% of the costs to be borne by provincial governments. The GOPunjab took a bold step by suspending the tubewells power subsidy and making a detailed revision of its implementation in the province. Regularity of dialogue with the stakeholders: The reforms program experienced a continuous and transparent exchange of issues and information at all levels not only with the IPD and PIDA officials but also with the AWBs and FOs. This ensured credibility and predictability of Bank s financing. Participation of stakeholders remained central to the reforms with an extensive consultation process undertaken from the design stages of PISRP. Open dialogue with water users/farmers, during the process of social mobilization for establishing FOs and capacity building activities, and implementation of a comprehensive communication strategy was an integral part of the reform process. Similarly, a valuable relationship between the Bank and the GOPunjab was enabled as the DPL series allowed for focus on policy level discussions, and adding value on the direction of reforms rather than the micro aspects of implementation. The regular dialogue also created an enabling environment for donor harmonization and facilitated the inter-agency donor coordination amongst the Bank with other donors including ADB, Japan and the Netherlands Government. The Bank closely coordinated with full alignment on the sector assistance strategy, with these partners resulting in complementary programs such as the ADB financed multi tranche financing facility (MFF) for a Punjab Irrigated Agriculture Improvement Program (PIAIP) with 20

29 an estimated cost of US$900 million. Similarly, in 2005, the Netherlands Government approved a Pakistan- specific free standing trust fund for supporting Bank Group s advisory services and technical assistance in the water sector, which also contributed to technical assistance for Punjab s irrigation reforms program. The PISRP also benefited from the reforms supported by ADB under the Punjab Resource Management Program. In addition, ADB provided technical assistance for preparation of IPD s Modernization Program and preparing the framework for Integrated Water Resource Management. Design appropriateness of the reforms program: The four reforms pillars were responsive to the prevailing challenges of water and irrigation sector in Punjab and were designed with a focus to address development priorities of the provincial government. In particular, the challenge of long term physical and financial sustainability of Punjab s irrigation infrastructure guided the PISRP strategy of improving asset management and progressively reducing the accumulated deferred maintenance; reducing operating and administrative costs; rationalizing and improving recovery of Abiana through user participation in assessment and collection; implementing a more transparent policy for sharing cost of M&R (budgetary allocations and user charges); and developing institutional capacity for efficient M&R with due regard to social and environmental aspects. Similarly, with the aim to improve irrigation service delivery, the PISRP adopted measures such as decentralization of responsibilities to FOs as well as contractual arrangements for delivery of bulk water supplies, whereby rights and responsibilities were clarified and accountability mechanisms improved, and an effective strategy to communicate with stakeholders both within and outside the IPD. In addition, the Bank financed DPL series was designed to contribute towards the outcomes specified in the Country Assistance Strategy for and was specifically identified therein. The CAS milestones and indicators for progress assessment included preparing asset management plans with increased allocations for maintenance and repairs; establishing FOs and collection of Abiana; and visible reduction in water losses at on-farm channels. These CAS milestones were directly supported by the DPL and were part of the Policy Matrix along with baselines and targets. This alignment provided reciprocity to the GOPunjab s reform program and strengthened its implementation arrangements. Assessment of risks to the program and effectiveness of mitigation measures: The reforms program remained cognizant to a number of sectoral challenges and designed specific strategies to mitigate key risks. At the time of processing of the first development policy loan the history of uneven high level support to the irrigation reform agenda was identified as a high risk. However, GOPunjab remained strongly committed to the reform program, which continued to receive strong political support. Water users/farmers also continued to participate in the implementation of reforms with enthusiasm and witnessing the positive outcomes of participatory irrigation management. The change of political government in 2008 and the subsequent abolition of local governments did create a slowdown effect on the reforms program. However, the current government in Punjab retains commitment to prioritizing irrigation investments. Nevertheless, while there have not been any public statements against the reforms in particular the PIDA no further expansion of decentralized irrigation management took place and the FOs formation process has also stalled. Similarly, a significant risk at appraisal was related to staff redundancies resulting from the devolution of O&M responsibilities to FOs coupled with anti-reform lobbying by those who may stand to lose as a result of the reforms (e.g. farmers who benefit from the current inequities in water deliveries) may bring to bear political pressures on the government to slow down the process of change. The GOPunjab mitigated this risk by adopting a strategy of natural attrition as well as retraining and redeployment. The redundant staff were not to lose employment rather they would either be absorbed in other vacant positions within IPD or transferred to the provincial surplus pool where they would continue to receive salaries and benefits until retirement. In addition, another significant risk was IPD s capacity for managing social and environmental issues associated with asset management activities. This risk was 21

30 partly addressed through training inputs for strengthening IPD s, AWB s and FOs institutional capacity on these issues. Particular attention was given to addressing issues associated with canal closures required for maintenance and rehabilitation activities. The Social and Environmental Management Unit (SEMU) was provided with additional staff for conducting initial social assessments (ISAs) and social screening of M&R and rehabilitation works. The screening procedures and guidelines for ISAs were developed by SEMU as part of the social and environmental guidelines. External factors contributing to continuation of program: Deterioration of macroeconomic conditions placed heavy burden on continuation of all provincial reforms and became the basis for discontinuity of the third year program. Although the policy stance of the government has remained appropriate, inflation and external trade deficit indicate significant excess liquidity in the economy, and call for resolute actions to contain money supply and improve export competitiveness. While evaluating the performance of the DPL program, the wider economic context needs also to be considered, as a combination of factors that impacted the economic conditions in the country. The period between 2007 and 2010 witnessed mounting economic problems with fiscal deficits and an energy crisis followed by the recent massive floods.. Given the resource constraints, and the low levels of revenue generation, there could be renewed pressure on the irrigation management system to raise Abiana rates, as well as collection efficiency and intensity. Moreover, the 2010 floods added to the challenges of water infrastructure across the country. The floods Damage Needs Assessment 9 estimated that an expenditure of approximately US$ 10 billion will be required for the recovery, rehabilitation and medium- to long-term reconstruction process. The cumulative irrigation and flood management reconstruction costs are estimated at US$ 982 million with approximately US$ 51 for reconstruction in Punjab. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: M&E Design In accordance with the government s program approach, the government of Punjab selected a few relevant and focused outcome indicators corresponding to each of the four Pillars. The outcome indicators had set targets against which baseline information was identified. Progress monitoring against the outcome indicators was carried out through various means including: i. Monitoring by the Strategic Planning and Reform Unit (SPRU): The SPRU was established consisting of four teams, one each for the oversight of the four pillars. These pillar teams were responsible for day to day monitoring and follow up actions. The SPRU was primarily responsible for: (a) strategic planning and implementation of the reform program; (b) monitoring and reporting on the key performance monitoring indicators; (c) maintaining close oversight of the progress of all aspects of the reform program, including among others: - Arrangements for M&E, including third party validation; - Expansion of capacity for social mobilization for establishing FOs; - Preparation of a communication strategy and its implementation; - Building capacity for social and environmental assessment; - Operationalizing the Irrigation Management Information System (IMIS); - Preparation and implementation of a groundwater strategy; - Surface water quality monitoring program; and - Preparation of progress reports. 9 Pakistan Floods Preliminary Damage and Needs Assessment, Government of Pakistan, ADB and World Bank 22

31 ii. Monitoring by a Website Oversight and Monitoring Committee (WOMC) The WOMC was headed by the Secretary IPD and included representatives of Agriculture Department, FOs, RSPs, representatives of the academia and civil society, and PIDA officials involved in social mobilization for establishing FOs. The WOMC ensured that the information provided on IPD website is easily accessible, user friendly, clear, accurate and regularly updated. iii. Monitoring by the Inter-Departmental Steering Committee (IDSC) The IDSC was headed by the Chairman, Planning and Development Board (P&D) with Senior Member Board of Revenue, Secretaries of Finance, Irrigation, Agriculture and Environment Protection Departments, and Member Engineering (P&D), as its members. The IDSC provided strategic and policy guidance and monitored the overall outcomes of the DPL program. The Secretary IPD was the secretary to the IDSC and the forum met at least once every quarter or more frequently if the issues requiring resolution were submitted for its consideration. iv. Independent Third Party Surveys (ITPS) The SPRU commissioned independent consultants to conduct Third Party Surveys to verify implementation of program interventions and evaluate outputs and outcomes through random surveys as well as case studies, including the following monitorable indicators, inter alia: - The equity (measured by the delivery performance ratios DPR), timeliness of water distribution amongst members of FOs, cost sharing and O&M arrangements, and performance on collection of Abiana; - The performance of IPD/AWBs and FOs in M&R of the irrigation system; - Performance Evaluation/Engineering Audit of M&R works - Functioning of FOs (meeting, participation, performance of executive committees; how decisions are made; internal information flows; book keeping), financial viability and sustainability; and - Impact on small farmers, women, tenants, and landless. v. Monitoring by the Agriculture Department The Agriculture Department was involved in implementation of the Pillar IV of the DPL program and collected data for monitoring indicators set for Pillar IV. The information collected and assessment of progress and results was collated with the progress reporting for the remaining of the program by providing details to the SPRU that was responsible for preparing progress reports for the overall reforms program. M&E Implementation The SPRU continued to perform its key monitoring responsibilities for regular progress reporting including preparation of: (i) an annual internal monitoring and evaluation report; (ii) annual O&M evaluation report for M&R works; and (iii) quarterly progress reports for DPL reforms activities. In addition, a Program Monitoring and Implementation Unit (PMIU) was established which continues to monitor equity and transparency in water allocations and distributions. A key achievement of the PMIU has been establishment of a website linked under the IPD s website which provides information about accounts of 24 main canals regarding entitlements, deliveries and balance shares. This has enhanced IPD s capacity for transparent administration of water entitlements and sustainable management of water resources. The data on the website continues to be updated every 10 days. The website also provides online complaint tracking facility. PMIU is also managing a Toll Free Number for the water shareholders to register their complaints regarding water distribution, water theft and other related issues. The WOMC, headed by the Secretary IPD with representatives from FOs and 23

32 other water users, is also continuing to function and monitors quality of the information provided on the IPD website so that it is readily accessible, user friendly, clear and accurate. Another key achievement of the DPL program was establishment of the Inter-Departmental Steering Committee (IDSC). During the DPL series this Committee convened several meetings and actively participated in providing policy guidance and monitored overall outcomes of the DPL Program. M&E Utilization The data collected through the PMIU and SPRU monitoring system served several purposes. For the first time IPD was able to win the trust of farmers and other water users by making available on the IPD website the delivery performance ratio (DPR) at the head and tail outlets of distributaries in LCC East. The data was collected by PIDA and PMIU and verified by Third Party Consultants. As a result the DPR values in head and tail reaches indicated increases in supplies to tail end farmers. IPD is continuing the good practice of joint measurement of discharges at head of distributaries by IPD and FOs where FOs are regularly monitoring the discharges of outlets. PIDA and PMIU officials consult with FOs whenever corrective measures are needed. These steps have resulted in improved equity of water distribution. FOs resolved more than 2,800 disputes including some 1,758 disputes related to unauthorized water use/ water theft. IPD also commissioned independent third party surveys to verify implementation of program interventions and assess improved equity of distribution. In this regard, Third Party Monitoring of DPR values in FO managed channels, case studies of FOs, and performance evaluation engineering audits of M&R works were carried out by the independent consultants. 2.4 Expected Next Phase/Follow-up Operation: Originally a series of 3 DPLs were envisaged. The Third DPL was under preparation in 2008 when deterioration in the macro-economic situation of Pakistan, warranted a re-evaluation of continuing with the DPL series and ultimately resulted in the cancelation of the third DPL in June However, dialogue with the GOPunjab continued on the need for furthering the reforms program by exploring options for replacing DPL with a Results-Based Lending operation. A Bank mission visited Punjab in December 2008 to discuss the status of GOPunjab's Irrigation Sector Program, and identify a framework for Bank's support for a medium term sector program building on the achievements already made under past programs, including the DPL series. The GOPunjab and Bank team agreed that while the implementation of first phase of the reform has brought about significant positive changes and outcomes, numerous challenges remain, and Punjab is still far from realizing the full potential of its water resources and irrigation infrastructure. In particular, the areas for future programming need to include: Strengthening the overall institutional architecture for water management in the province to make it conducive for integrated planning and management of water resources; Whereas a modest start has been made in addressing water quality and groundwater issues, these technical areas need further concerted attention; The irrigation/water research institutions need to be strengthened to bridge the current knowledge gap in this vital area; and Exploring the scope for increased water use efficiency and productivity through policies and incentives for water markets and public private partnerships (PPP). 24

33 While the DPL series achieved progress in strengthening irrigation institutional management, during the renewed dialogue with GOPunjab, the proposed framework was overshadowed by the Government s focus on elections and later the new Government s need to win broad-based political support and the rising security threats in the country. The discussion on policy-based lending program for Punjab irrigation had to be deferred as project preparation slowed down during the political transition and creditworthiness considerations eliminated Pakistan s access to IBRD financing. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation The objectives, design and implementation of the DPL program remained valid throughout the program. The past experience of Bank with investment projects including the National Drainage Program had shown that policy reforms require support beyond sector line ministries. Development Policy Loan served as an appropriate instrument to facilitate policy dialogue, attention, and decisions at the highest levels of government. The GOPunjab s PISRP required significant financing; and the DPL instrument managed to influence government s financing levels for the sector by providing the necessary budget support in a timely manner. In addition, the Irrigation Sector DPL was specifically identified in the CAS, which sought to deliver a substantial increase in the volume of lending to Pakistan during the next four years. The DPL contributed to the following outcomes in line with the Bank s CAS: improved management of irrigation and drainage infrastructure; improved irrigation service delivery through increased participatory management and cost recovery; and transparent and more equitable water allocation and distribution. The milestones and indicators of progress towards the above outcomes included: preparation of Asset Management Plans and increased funding for M&R; establishment of Farmer Organizations and collection of Abiana; and reduction in water losses at on-farm channels. These CAS outcomes and indicators were directly supported by the DPL. 3.2 Achievement of Program Development Objectives Punjab Irrigation Development Policy Loan (DPL 1) The initial monitoring of the DPL Program indicated that the hydraulic infrastructure was progressively being made safer and sustainable; there was a sizable increase in M&R budget and investments to take care of deferred maintenance of irrigation and drainage infrastructure. Operation and maintenance of distribution system in LCC East; LCC west and CRBC were handed over to FOs, who were also made responsible for collection of Abiana. The collection of Abiana in FO areas was initially higher as compared to non-fo areas, which was envisaged to contribute to financial sustainability. FOs in LCC East carried out maintenance and repairs work of distributaries out of their 40% share of water charges and are reported to have spent over Rs. 12 Million on O&M. However, later the Abiana collection performance in non FO areas improved to 70% of the assessed amount. While in the FO areas there was a downward trend. This was due to a number of factors including the socio-political setting and a general lack of recognition of the FOs by the local administrative set-up and support from local administration and police. Another factor contributing to decline in Abiana collection in FOs areas was the overall shortage of water; when farmers did not receive allocated share there was an increased reluctant to pay Abiana. Capacity and system was created for transparent administration of water entitlements and sustainable management of water resources. Water accounts for 24 main canals regarding entitlements, deliveries & 25

34 balance share were posted on the website. Data on the website was being updated on 10 daily bases. Distributary discharge data was posted on the IPD website. Delivery Performance Ratio (DPR) of distributaries in LCC East were measured by PIDA and PMIU and verified by third party consultants. PIDA completed the baseline pre condition survey of all channels in LCC (East) Circle. The observations by PMIU indicated that the average DPR for April to September 2006 was 0.64 in Burala Division; 0.65 in Upper Gugera; 0.85 in Lower Gugera and 0.68 in Khanki Division. The overall average DPR in LCC East system was In addition, unnecessary burden of operating public sector drainage tubewells was reduced through an Action plan based on the assessment of the field conditions and TW performance. Joint measurement of discharges at head of distributaries by IPD and FOs was started. The FOs started regular monitoring of the discharges of outlets and coordinated with PIDA M&E staff for corrections. These practices only improved equity of water distribution but also strengthened FOs to themselves address the issues of unauthorized water use/ water theft. Preliminary Department of Agriculture (DoA) estimates indicated that 5014 watercourses improved in saved about 0.81 MAF, which was estimated to have resulted in 15% increase in cropped area and 26% increase in cropping intensity in the command of improved watercourses. About 3.23 million person months of direct and 3.9 person months of indirect employment were created due to the National Program for Watercourse Improvement. An average increase of 24% in yield is attributed to improvement of watercourses. 500 Laser units were provided to the service providers during which carried out leveling of 29,419 ha up to end October The land leveling is estimated to increase the irrigated area by 2% (588 ha) due to reduced length of field ditches and dikes. A 20% increase in crop yields is estimated for the leveled area. The specific achievements under various pillars of DPL 1 included: Pillar I: Institutional and Policy Reforms: (i) M&R Budget was allocated according to revised yardsticks. Rs billion was allocated in the FY06/07 M&R budget on the basis of revised yardsticks as compared to the allocation of Rs 1.2 billion in FY05/06. (ii) 1,617 saline tubewells were closed as of February Notice for closure of 550 FGW tubewells as of October 2007 was issued. The annual electricity payment for electricity in was reduced by Rs million as compared to Rs million in (iii) System of fortnightly (twice monthly average) meetings of the Departmental Accounts Committee (DAC) was institutionalized. 20.7% of the back-logs of advance audit observations were reviewed and resolved during the DPL 1. (iv) Performance on Abiana collection in non-fo canals for Rabi increased from 52% to 58% of the assessed amount. In FO managed areas the Abiana collection for Rabi was 78%. (v) During GOPunjab spent Rs 6.45 billion on rehabilitation of irrigation and drainage system and barrages, which constitutes about 6.6% reduction in the accumulated deferred maintenance of Rs 120 billion in FY06. (vi) Performance Evaluation system for M&R was approved by GOPunjab and its implementation started. (vii) A realistic and transparent policy for M&R cost sharing between budgetary allocations and user charges for various tiers of the system was approved by the Government. Pillar II: Water Resource Management Reforms: (i) IPD posted water accounts for 24 main canals regarding entitlements, deliveries & balance share on the websites on its website and Data on the website is updated on 10 daily basis. 26

35 (ii) (iii) (iv) (v) (vi) Installation of flow metering gauges in the LCC East AWB was completed. Distributary discharge data was posted on IPD website. Surface Water Quality Monitoring Plan defined and its implementation started. A GW Management Plan was completed. The plan envisaged pilot groundwater management schemes including: stakeholder participation; economic incentives; strengthening of knowledge base and regulatory measures. GW information was made available on the web site of Government of Punjab FOs in LCC East started water depth and quality groundwater monitoring. Monitoring of biological and toxic parameters was introduced in the monitoring of groundwater quality in the pilot zones to anticipate possible health hazards and undertake resource protection measures. Criteria for : i) allocating additional water that becomes available under the Accord, and ii) sharing water shortages among canal commands, was prepared and made public. Water accounts for all distributary canals in LCC east were posted on IPD website and updated every 10 days Pillar III: Irrigation Service Delivery Reforms: (i) A Strategic Planning and Reform Unit (SPRU) was established in IPD. The Unit prepared internal M&E reports of the Reform Program. (ii) A Communication strategy was prepared. (iii) IMTAs were signed with 103 FOs. (iv) To raise awareness of environmental and social risks, guidelines were developed for their identification and control in operation, maintenance and rehabilitation of irrigation infrastructure. (v) LCC (East) AWB was made operational and two new AWBs (LCC West and LBDC) were notified. (vi) Rehabilitation of 80 channels in LCC east AWB managed by 27 FOs was carried out. (vii) Benchmarking system for FOs was introduced by PIDA. Pillar IV: Reforms to encourage new technology to improve water use efficiency and on-farm productivity: (i) Water conservation programs of watercourse improvement and provision of Land Laser Leveling continued and following targets were met: 5,014 Water Courses were improved 500 Laser Leveler Units delivered x Project proposal prepared for promoting pressurized irrigation systems x The actions relating to Amendment of the Punjab Agricultural Produce Ordinance, 1978; Restructuring of research and preparation of models of economic incentives (cost sharing, matching grant, regulations, policies, institutions) were pursued outside the ambit of DPL. Second Punjab Irrigation Development Policy Loan (DPL 2) The initial monitoring of the DPL Program indicated that the hydraulic infrastructure is progressively being made safer and sustainable; there was a sizable increase in M&R budget and investments to take care of deferred maintenance of irrigation and drainage infrastructure. Capacity and system has been created for transparent administration of water entitlements and sustainable management of water resources. Water accounts for main and distributary canals regarding entitlements, deliveries & balance share continued to be posted on website. Data on the website was updated on 10- daily basis. Delivery Performance Ratio DPR (ratio of actual and authorized discharge at the head and tail outlets) of distributaries were being measured by Program Monitoring and Implementation Unit (PMIU). DPR 27

36 values showed improvement in equity of distribution of water. DPR values in LCC East & West, LBDC, Eastern Sadiqia, and CRBC showed improvement, and average relative DPR was 0.87 for Kharif 2007 as compared to 0.78 for Kharif The DPR values were verified by third party consultants. Based on the pragmatic assessment of the field conditions and existing drainage needs; 2,777 public sector tubewells were closed/transitioned. The operative tubewells were transferred to the farmers at token price as virtuous incentive - for supplementing irrigation supplies from canals. The impact of physical and management interventions on irrigation systems was monitored using RS/GIS tools.the preliminary findings of the study included: Improvement of overall ETa in cropping year Low spatial coefficient of variation (CV) in the cropping year which depicted better equity in the water distribution due to Reforms. Department of Agriculture (DoA) estimates indicate that improved watercourses have resulted in improved delivery of irrigation water supplies to the farmers fields thereby leading to enhanced agricultural production. DoA has estimated that improvement of watercourses has resulted in reducing seepage losses by about MAF. Additional crop production due to watercourse improvement has been estimated by DoA as follows: Wheat 928,000 Tons, Rice 175,000 Tons, Cotton Tons, Sugarcane 1.56 million Tons and Maize 128,000 Tons. About 3.23 million person months of direct and 3.9 person months of indirect employment were reported to have been created as a result of implementation of the National Program for Watercourse Improvement. Some 1500 Laser units were provided to the service providers since the start of the Program in FY 05/06. As of June 30, 2007, land leveling of 634,613 acres (256,928 ha) acres was carried out. DoA estimated that land leveling resulted in saving of about 140,000 AF in field losses due to reduced length of field ditches and dikes and is estimated to increase the irrigated area by about 3750 ha and additional crop production of about 138,000 Tons. The specific achievements under various pillars of DPL 2 included: Pillar I: Institutional and Policy Reforms: (i) A 10 - year Asset Management Plan (AMP) was prepared and its implementation started for improving the integrity of existing assets of IPD by progressively reducing, and ultimately eliminating the large back log of deferred maintenance through (a) allocation of adequate resources for M&R, reflecting realistic yardsticks, for improved upkeep of the system; (b) allocation of adequate resources for system rehabilitation in the development budget in accordance with the MTFB; and (c) making efficient, transparent, and judicious use of resources from both sources, in accordance with priorities. The total cost of AMP was estimated as Rs 132 billion. As per requirements of the AMP, the government spent Rs 8.8 billion during and Rs 11 billion in FY 05/07 and allocated Rs 15.9 billion in FY 07/08. The cumulative expenditure by the end of FY 08 will amount to Rs 35.7 billion (27%) of the total requirements of AMP. Punjab Government assured that adequate funding will continue to be provided for implementing the Asset Management Plan through ADP, PSDP and funding from the World Bank, ADB and JBIC. (ii) Yardsticks for allocation of M&R budgets were revised and approved by government. The revised yardsticks were based on market prices instead of the CSR, as was the case earlier and are to be revised annually on the basis of market rates. Budgetary allocations for M&R for FY05/06 were increased from Rs 1.2 billion to Rs 2 billion; an amount of Rs. Rs billion were allocated for M&R during FY07/08. 28

37 (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) 1,577non-performing saline tubewells and about 1200 FGW tubewells were closed. 418 FGW TWs were transitioned through transfer mode. The annual electricity payment in was reduced by Rs million as compared to Rs million in System of fortnightly (twice monthly average) meetings of the Departmental Accounts Committee (DAC) continued. In the two years of the DPL Program 45% of the cumulative backlog of advance audit observations was reviewed and resolved. As part of its policy to decentralize and improve irrigation service delivery, 183 FOs on distributary canals in 4 canal systems were established and irrigation management transfer agreements (IMTAs) signed with each of them. FOs were empowered to collect and retain a part of the Abiana. IPD continued with capacity building of FOs on various skills and activities (O&M/M&R planning, contract management, water measurement, business planning, Abiana collection, accounting and conflict resolution, etc). The government prepared a strategy for improving Abiana collection in areas where FOs had not been established. As a result not only the declining trend was arrested but also Abiana collection improved to 70% in Kharif 2006 as compared to 47% in The government introduced a more realistic and transparent policy for M&R cost sharing between budgetary allocations and user charges for various tiers of the system. The IPD developed institutional arrangements for implementation of rehabilitation and M&R works. A Performance Evaluation System for M&R works prepared during was implemented. IPD appointed consultants for third party monitoring of M&R works. IPD carried out a detailed institutional analysis to review the organizational setup, functions, procedures and human and financial resources required, and to identify key areas for institutional reform. Preparation of a modernization Plan for the Department was started with technical assistance from ADB. IPD established Units for financial monitoring and procurement. Notices of contracts worth Rs 0.5 million for M&R works and Rs 10 million for ADP works were placed on the website. Pillar II: Water Resource Management Reforms: (i) Water accounts for 24 main canals regarding entitlements, deliveries & balance share were posted on the websites and Data on the website was updated on 10 daily bases. The web site was improved and made more users friendly. (ii) (iii) The Irrigation Management Information System (IMIS) for monitoring of key indicators of the system, including designed and actual discharges in the system continued to function. Distribution program for entitlements and deliveries of distributary canals continued to be posted on the website. Preparation of a decision support model was started. The Model would provide support to the senior management to monitor the key indicators of the system including the discharges at various canals and distributaries and take water allocation decisions more transparently. 29

38 (iv) (v) (vi) (vii) (viii) Installation of flow metering gauges and calibration on 12 canal systems was completed and linked with the IMIS. The canal discharge data for the system continued to be posted on the website. An IPD website oversight committee was formed to ensure that information provided on the website is responsive to the users needs, accessible, user friendly, clear, accurate and timely. IPD analyzed feasible interventions to make groundwater use sustainable. Activities undertaken included: selection of three pilot areas for participatory GW management, preparation of inventory of TWs, arrangements for monitoring groundwater table depth and quality, review of a draft regulatory framework prepared earlier, incentives for user participation, conjunctive use of surface and groundwater, and introduction of modern and more efficient irrigation technology. Groundwater level and quality data have been placed on and The implementation of groundwater strategy in critical areas for participatory groundwater management through awareness and involvement of farmers continued even after the DPL Program was terminated. A program for surface water quality monitoring program was developed, approved and implementation started. The program included tests for drinking water quality in brackish groundwater areas where canal water is also used for drinking purpose. The monitoring parameters also include residues of commonly used pesticides and fertilizers. Criteria were developed for allocating any additional water that became available under the Interprovincial Water Accord (as well as for sharing water shortages) and was posted on the website. All new water allocations are made public. Pillar III: Irrigation Service Delivery Reforms: (i) An IPD Reform Unit covering key functions of strategic planning and M&E of the PSIRP was established which included qualified and experienced staff recruited on market based salaries. (ii) (iii) (iv) (v) (vi) IPD started decentralization. Three Area Water Boards (AWBs) were established. 300 FOs were established on distributary canals, and Irrigation Management Transfer Agreements (IMTAs) were concluded with these FOs. Rehabilitation of FO managed distributary canals was carried out to ensure that FOs get these canals in a functional state. This resulted in improved water distribution equity as well as better M&R. Consultants were appointed for third party monitoring of the PISRP. To raise awareness of environmental and social risks within IPD, AWBs, and FOs, social and environmental guidelines were developed for their identification and control in operation, maintenance and rehabilitation of irrigation infrastructure. A Social and Environmental Management Unit (SEMU) was established to ensure compliance with social and environmental guidelines. A communication strategy was prepared and launched to publicize the reform impact and win stakeholders support at all levels Pillar IV: Reforms to encourage new technology to improve water use efficiency and on-farm productivity: 30

39 (i) (ii) (iii) (iv) (v) (vi) The government encouraged investments in on-farm water management and services (land leveling, watercourse lining, and new technologies) which are essential for agricultural diversification, for improving the amount of crop, income and jobs and for reducing overall costs. 5,004 water courses were improved in FY Land Laser Leveling equipment were given to service providers by June 2007 and another 1000 units were planned to be provided by end of FY 08. A project for promoting pressurized irrigation systems was started. High efficiency irrigation systems (drip/ sprinkler) have been installed on 9,964 acres (4,034 ha). Separate Agriculture marketing department was created to formulate and implement strategies for market reforms. A private sector led Punjab Agri-Marketing Company (PAMCO) was established to promote private investment in this sector. GO Punjab continued to pursue reform of agricultural markets and is processing a Punjab Agricultural Produce Markets Act. Punjab Agriculture research Board (PARB) was reactivated. Five (5) corporate research bodies were established. Sustainability of Reforms Program The DPL 1 had 6 prior actions and 31 milestones. The policy matrix for DPL 2 was rationalized on the basis of experience gained during DPL 1 and it included 10 prior actions with 19 milestones. Some of the important milestones of DPL 1 were converted to prior actions while some were eliminated. Most of the interventions of DPL 1 and DPL 2 were sustained at completion of the DPL program. A summary of the sustainability of various agreed prior actions/milestones is shown in Table 4 below. Table 4: Summary of Sustainability Status of DPL Prior Actions and Milestones Interventions Total Sustained Partly Sustained Not Sustained Punjab Irrigation Development Policy Loan (DPL 1) Prior Actions Milestones Total DPL Second Punjab Irrigation Development Policy Loan (DPL 2) Prior Actions Milestones Total DPL The milestones not sustained during DPL 1 included: i) preparation of divestiture program for workshop(s), which was prepared but action on its implementation stopped after completion of DPL Program and ii) Approval of the strategy and program that uses public private partnerships to deliver services to farmers, which was not prepared. 31

40 The partially sustained milestone during DPL 1 included A draft policy for O&M cost sharing that makes the O&M financing plan explicit about the requirements of public sector financing and (Abiana) prepared and submitted for Government approval. A draft policy for O&M cost sharing was prepared and approved but is not being followed after completion of DPL Program. After completion of DPL 2 the two prior actions which were partially sustained included: (i) communication strategy prepared, approved and launched; and (ii) 100 new FOs established in new AWBs and IMTAs signed. The communication strategy was prepared, approved and launched but lost momentum after the end of DPL 1. However, 100 new FOs were established and IMTAs signed during DPL 2. The Process of FO formation and transfer of management slowed down considerably and little progress was made after completion of DPL series. The two milestones which were partially sustained included: i) approval of Policy for O&M cost sharing. The policy for O&M cost sharing was approved but is not being followed after completion of DPL Program and ii) IPD modernization plan developed, including strategy and action plan, approved by GOPunjab. An IPD Modernization Plan was developed with technical assistance from ADB but was not implemented. Proportion of Punjab s Irrigation System Covered under DPL Series Interventions covered under the DPL program that extended to the entire province s irrigation system included: (i) improved transparency in water distribution; (ii) metering/monitoring of the entire canal system; (iii) increased budget allocation for M&R; (iv) quality control on implementation of M&R works; (v) reduction in backlog of audit paras; (vi) management of environmental and social risks; and (vii) watercourse improvement. While the implementation over the entire system of the Asset Management Plan developed under the DPL series may take more than 10 years, key rehabilitation works that have been completed include: (i) Taunsa Barrage; and (ii) the LCC East Canal system rehabilitation. Further rehabilitation works are under progress on: (i) Balloki Barrage; (ii) LCC West; (iii) Lower Bari Doab; and (iv) Bahawalpur, DG Khan and Faisalabad zone. In addition, rehabilitation and up gradation of Jinnah Barrage is about to start while rehabilitation/up gradation of following structures is in the pipeline: (i) Islam Barrage; (ii) Khanki Barrage; (iii) Suleimanki Barrage; (iv) Trimmu Barrage; (v) Panjnad Barrage; (vi) Pakpattan Canal; and (vii) Thal Canal system. Budget Allocation for M&R One of the key reforms was reduction in deferred maintenance and a visible trend in continued budget allocation for M&R. While these actions were fully achieved during the DPL series, the M&R budget allocations have continued in the last 3 years after completion of DPL program. The budget allocation for FY was Rs billion; for FY the allocation was Rs 3.04 billion and for FY Rs billion. The accumulated deferred maintenance also continued to show a reduction trend as during FY Rs 7.41 billion were spent on rehabilitation of irrigation and drainage systems with Rs 2.06 billion on M&R, which together constituted about 7.9% of the accumulated deferred maintenance. In FY the rehabilitation expenditure amounted to Rs 6.32 billion with Rs 2.65 billion on M&R, which together constituted about 7.5% of the accumulated deferred maintenance. More recently, in FY , a total of Rs 4.53 billion have been spent on rehabilitation of irrigation and drainage systems while Rs 2.8 billion on M&R, which together constituted approximately 6.1% of the accumulated deferred maintenance. With these the total reduction in deferred maintenance has amounted to approximately 21.5%. 32

41 Sustainability of FOs and Abiana Collection While the targets for formation of 100 new FOs was successfully completed and IMTAs were signed with these FOs during the second DPL program, the process of FO formation and transfer of management slowed down after completion of DPL series. There have been several contributing factors to this downward trend in participatory irrigation management. The IPD completion report also pointed to these factors including a significant decline in Abiana collection by the FO as compared to non-fo areas; weak institutional capacity of FOs in maintaining accounts and records; and increasing inequity and elite capture. Another key issue contributing to the difficulty in sustaining Abiana collection by FOs, was their inability to deal with water theft and defaulters. The soio-political conditions partly contributed to this challenge however a major reason was a general absence of FOs recognition by the local administration system. Similarly, the lack of prioritization of rehabilitating FO-managed channels also weakened their stance in Abiana collection as the dilapidated channels seriously constrain their ability to efficiently operate the system. The sustainability challenges therefore was that of optimizing the timing of system modernization and the management transfer and the improvement strategies should have addressed the need for capacity building and mainstreaming of FOs, closer coordination and support by AWB / PIDA, and improved monitoring systems for identification of problems and timely course corrective measures. Another strategy for improving Abiana collection should have considered the on-job training to FOs for Abiana assessment and maintaining clear record of collection and recovery of Abiana with some incentives for good performers as well as mass awareness and communications program. 3.3 Justification of Overall Outcome Rating Overall Rating: Satisfactory The overall assessment of the program s objectives for the series of the two annual DPLs is rated as Satisfactory for the two year period as compared to the Highly Satisfactory in the interim status reports. This change in rating is based on: (i) sustainability performance of prior actions and milestones under DPL 2; and (ii) cancelation of the DPL 3. The DPL program resulted in: (i) improved efficiency and sustainability of hydraulic infrastructure, (ii) greater transparency and equity of water distribution in accordance with entitlements; (iii) greater participation and empowerment of water users in irrigation service delivery; (iv) improved capacity in the Irrigation and Power Department (IPD), and farmer organizations (FOs) for dealing with social and environmental issues; and (v) improved productivity. There were good progress and positive outcomes since the launch of PISRP in FY05/06. A 10-year Asset Management Plan (AMP) was prepared and its implementation started for improving the integrity of existing assets of IPD by progressively reducing, and ultimately eliminating the large back log of deferred maintenance through: (a) allocation of adequate resources for M&R, reflecting realistic yardsticks, for improved upkeep of the system; (b) allocation of adequate resources for system rehabilitation in the development budget in accordance with the MTFB; and (c) making efficient, transparent, and judicious use of resources from both sources, in accordance with priorities. The cumulative expenditure by the end of FY 08 amounted to Rs 35.7 billion (27%) of the total requirements of AMP. The monitoring and evaluation mechanism was introduced for M&R works to ensure judicious use of M&R budget. Non performing saline groundwater tubewells, which were no longer required, were closed and fresh groundwater tubewells were transitioned. As a result the annual electricity payment in was reduced by Rs million as compared to Rs million in Collection performance of 33

42 FOs was 78%, for Rabi and 79% in Kharif Abiana collection in non-fo improved to 70% in Kharif 2006 as compared to 47% in In addition, water accounts for main and distributary canals continued to be posted on website and data was updated on 10-daily basis. Finally, the DPR of distributaries was regularly monitored and showed a relative improvement in equity of water distribution. 3.4 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development In Punjab, most rural livelihoods and household incomes depend directly or indirectly on agriculture, and agriculture productivity depends importantly on the availability of water for irrigation specifically the public provision of canal water. The poverty count increases manifold in those rural areas which are suffering from inefficiencies and inequalities of the irrigation system. Tail-end farmers generally receive less than a third of the water compared to the framers at the head of the canal. As a consequence, farmer income is considerably higher at the head reaches and it reduces significantly at the lower reaches of the canal. The incidence of income poverty in some irrigation system of Punjab is as high as 40 to 77% 10. The reforms under DPL series focused on improved asset management, water resource management, irrigation service delivery and productivity, with envisaged positive impacts on poverty reduction and social development. Increased availability of irrigation water, especially at the middle and tail reaches directly supported agricultural productivity thus benefiting the rural poor. While preparatory work for the Poverty and Social Impact Analysis (PSIA) of the policy and institutional reforms was planned as part of the third DPL operation, this was not formerly carried out due to cancelation of the DPL 3 operation. However, informal assessment indicated that the interventions under DPL resulted in improved asset management, water resource management, irrigation service delivery and productivity thus significantly contributing to social outcomes from the reforms process. In addition, the Pakistan Poverty Assessment undertaken by the Government and the World Bank in September 2002 had found that: x Ownership of a plot within a watercourse command area conferred access to irrigation water, but did not guarantee canal water availability. x Water use varied systematically with the location of the watercourse along the main channel (distributary or minor) as well as the location of the farmer s plot on the watercourse command area specifically, water availability decreased significantly if the watercourse was located near the tail of the distributary or minor, and/or if the plot was located near the tail end of the watercourse. This location effect has been well known, but the Assessment suggested that the interplay of at least two factors was important in affecting water availability: (i) deteriorated and silted condition of many distributaries, minors and watercourses, and their related structures such as gates and outlets seepage losses along these canals remained often high and their hydraulic performance low with the result that the system did not function as it was designed or intended; and (ii) availability of canal water increased significantly where farmers reported informal payments for water; where there was less inequality of land ownership, and where the land holdings of the largest cultivators on the watercourse was high. The DPL Program resulted in better management and distribution of water as capacity and system created for transparent administration of water entitlements and sustainable management of water resources, contributed to more equitable distribution. In addition, while the improvement in Abiana recovery could have been seen as imposition of an additional burden on farmers 11 ; the increased farmer participation in 10 IMMI, Pro Poor Interventions in Irrigated Agriculture. Issues, Options and Proposed Actions, Pakistan, August There is anecdotal evidence that small and marginal farmers generally pay Abiana, and the defaulters are mainly influential farmers 34

43 management of irrigation services was also envisaged to reduce hidden costs of water that farmers had to pay for thus directly resulting in a single payment which is less than the informal payments farmers were making. The impact of physical and management interventions on irrigation systems was also monitored with remote sensing and GIS tools and the study findings suggested that: x There was net improvement of overall ETa in cropping year x The low spatial coefficient of variation in the cropping year depicted better equity in the water distribution due to Reforms. The Agriculture Department estimated that improved watercourses had resulted in improved delivery of irrigation water supplies to the farmers fields thereby leading to enhanced agricultural production and reduced seepage losses by about MAF. In addition, incremental crop production as a result of watercourse improvement was estimated as follows: Wheat 928,000 Tons; Rice 175,000 Tons; Cotton Tons; Sugarcane 1.56 million Tons and Maize 128,000 Tons. About 3.23 million person months of direct and 3.9 person months of indirect employment were reported to have been created as a result of implementation of the National Program for Watercourse Improvement. Similarly, the provision of 1500 Laser units to the service providers since the start of the Program in FY 05/06 resulted in land leveling of 634,613 acres (256,928 ha) as of June 30, The Agriculture Department reported that the land leveling resulted in saving of about 140,000 AF in field losses due to reduced length of field ditches and dikes which was estimated to have increased the irrigated area by about 3750 ha and an additional crop production of about 138,000 Tons. (b) Institutional Change/Strengthening The series of DPLs supporting the GOPunjab s PISRP was based on and led to a number of integral institutional changes in the IPD in particular. The introduction of new business processes and improved access to information by farmers and other water users available through the IPD website has contributed to similar interventions being planned in other provinces as well as departments. Similarly, as part of its policy to decentralize and improve irrigation service delivery, Punjab established 186 FOs on distributary canals in 3 canal systems and all of these FOs signed Irrigation Management Transfer Agreements (IMTAs). In addition, the reforms program empowered FOs to collect and retain a part of the Abiana collected. IPD continued to build capacity of FOs in a wide range of skills and activities (O&M/M&R planning, contract management, water measurement, business planning, Abiana collection, accounting and financial management, conflict resolution, etc). The key revamped business processes, institutional changes and results under the reforms program are as following: i. IPD developed efficient institutional arrangements for implementation of rehabilitation and M&R works. A Performance Evaluation System for M&R works was prepared and was being followed. IPD has appointed consultants for third party monitoring of M&R works. ii. iii. IPD carried out a detailed institutional analysis to review the organizational setup, functions, procedures and human and financial resources required, and to identify key areas for institutional reform. A modernization Plan for the Department was prepared. IPD started decentralization. Three Area Water Boards (AWBs) were established. 186 FOs established on distributary canals, and Irrigation Management Transfer Agreements (IMTAs) concluded with these FOs; and capacity building programs for FOs implemented. 35

44 iv. IPD established Units for Strategic Planning, Financial Management and Procurement. Notices of contracts worth Rs 0.5 million for M&R works and Rs 10 million for ADP works were posted on the website. v. IPD introduced the system of fortnightly Departmental Accounts Committee (DAC) meetings to progressively reduce the back log of audit observations and enhance financial accountability. vi. IPD prepared an Irrigation Management Information System (IMIS), which allowed monitoring of key indicators of the system, including designed and actual discharges in various parts of the system. Distribution program for entitlements and deliveries of distributary canals have been posted on the website. Water accounts for 24 main canals are also posted on the website and data is updated on 10 daily bases. A system for registering complaints on toll free number and monitoring the status of these complaints has also been introduced. (c) Other Unintended Outcomes and Impacts The irrigation reforms program in Punjab initiated a major shift in business processes and institutional changes in the province. The following impacts are specifically mentioned: The PISRP reforms process not only made a significant impact on the irrigation management in Punjab but also had a demonstration effect in other provinces. In particular, the province of Sindh is following a similar program structure for the irrigation sector improvement which is based on the principles of decentralizing irrigation management, formation and capacity building of FOs and introducing transparency in water distribution and sharing. Another specific intervention supported by the reforms which directly contributed to the prevalent issue of salinity was the closure of saline groundwater tubewells. This step was envisaged to contribute to improvement of soil quality as well as larger impact on the water quality and ecosystem. The effectiveness of inter-departmental coordination under the reforms program resulted in an enhanced understanding between IPD and the Finance Department over the issue of perverse subsidy for electric tubewells. Under this subsidy the provincial governments were required to cover 50% of the costs of agricultural tubewells. This subsidy had serious implications for the groundwater policy approved by the GOPunjab under the reforms as it was: (i) promoting excessive pumping by the farmers not only for their own use but also for sale to other farmers; (ii) benefitting primarily large land holders and thus enhancing inequities; (iii) placing an unnecessary financial burden (>Rs billion per year) on the provincial budget; and (iv) representing a major retrograde step in the sector policy environment as well as increasing the power deficit in Punjab. The GOPunjab took a bold step by suspending the tubewells power subsidy and making a detailed revision of its implementation in the province. Later the Government decided to completely withdraw this subsidy on all agriculture tubewells with a retroactive effect from July 1, The federal Ministry of Water and Power carried out consultations with the provincial governments to do away with this subsidy. While the governments of Khyber Pakhtunkhwa, Balochistan and the federal Ministry of Food and Agriculture opposed discontinuity of the subsidy, the finance bill of FY is finalized with an envisaged zero subsidy on power sector to take retroactive effect as of beginning of the financial year Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops In 2008, IPD carried out a Perception Survey with a cross section of stakeholders in FOs and non-fo areas. Another study was carried out by the IPD in Muzaffargarh in FY , which was the area of major tubewells transition. 36

45 The Perception Survey concluded that while the reforms program is viewed as a positive sign by the external stakeholders there are mixed views as to the proportion of Departments interference and PIDA s joint management. While a small number of respondents expressed they were in favor of total autonomy of FOs, the majority of respondents were in favor of retaining joint management of PIDA and FOs. In addition, the Survey also found that water availability has increased and incidences of water thefts have reduced to a considerable extent which reflects highly successful impact of the reforms program. The Survey also concluded that whereas the spillover of long-term impacts from the reforms program is gradual, but given the consistent support of the IPD and law enforcement agencies including the police, there is a greater scope for improvement in the overall irrigation system. The groundwater management aspects of the IPD study in Muzaffargarh in FY concluded that in the area of major tubewells transition, the general perception of the farmers had improved towards IPD s performance. In particular, the farmers felt satisfied with the transfer of tubewells as it provided them with a direct control on the fresh groundwater (FGW) tubewells. The farmers felt they now had a choice of using these tubewells as an alternative when required. Details of findings and conclusions from the Perception Survey are provided in Annex Assessment of Risks to Development Outcome Rating: High The Program Documents for DPL 1 and 2 indicated several risks that could affect program implementation. These included amongst others: the history of uneven high level support to the irrigation reform agenda; staff redundancies resulting from the devolution of O&M responsibilities to FOs coupled with anti-reform lobbying by those who may stand to lose as a result of the reforms; weak financial management capacity of IPD; continuing with conventional methods for consulting with, and informing stakeholders, which are not fully effective; and limited capacity of IPD for managing social and environmental issues associated with asset management activities. A number of risk mitigating arrangements were built in the program to respond to these risks. It was noted that at the time of DPL series were designed and as the implementation of first DPL progressed the irrigation reforms continued to receive strong political support, and water users/farmers participated in the implementation of the reforms program with great enthusiasm and witnessed the initial positive outcomes of participatory irrigation management. While there was an inherent risk that a change in political leadership could affect the reform momentum or shift priorities, it was concluded that the reforms have reached a take-off point and there would be pressures to move ahead. This risk did not materialize during the implementation of both DPL 1 and DPL 2 and the irrigation reforms continued with high level political support. Similarly, while responding to the risk of staff redundancies, GOPunjab adopted a strategy of natural attrition of redundant staff. The establishment of Program Monitoring and Implementation Unit (PMIU) in IPD directly contributed to mitigation of weak financial management capacity as IPD embarked upon transparent fiduciary management and increasing level of computerization of financial transactions under the PIFRA regime. In improving its consultations process, the IPD carried out close monitoring, benchmarking and reporting on the positive outcomes of the reforms were used as a countervailing force to neutralize adverse publicity. An effective communication strategy for IPD was developed as part of the reform program to more effectively communicate with both internal and external stakeholders and build 37

46 greater awareness of change management as the reforms proceed. The capacity gap for managing social and environmental issues was mitigated by strengthening IPD s and FOs institutional capacity in these areas through training and capacity building. A Social and Environmental Unit (SEMU) was established to prepare and ensure compliance with social and environmental guidelines. Another moderate risk identified was related to the uncertainty whether adequate level of funding for M&R and other elements of IPD s asset management plan would be sustained. However, as Punjab s fiscal situation had improved, there was a much greater realization that vital hydraulic infrastructure must be well maintained to reduce risks of failure. In addition, the M&R yardsticks were revised to reflect market rates and budgetary allocation for M&R were made in accordance with the revised yardsticks and Province s MTBF. In addition, the risk that IPD s limited capacity may impact effective utilization of M&R resources was addressed as part of the Asset Management Planning, which among others allocated M&R funds taking into account the local needs as well as implementation capacity. A system of performance evaluation was initiated to ensure that M&R funds are judiciously allocated, properly utilized in a transparent manner with full regard to procurement and fiduciary safeguards, downwards accountability to farmers. The outcomes and impacts were closely monitored. Another risk related to riparian issues. Construction of new, as well as remodeling of existing hydraulic infrastructure, involved careful consideration of downstream water rights/entitlements and this risk was mitigated under the existence of Inter-provincial Water Accord being administered by the Indus River System Authority (IRSA). The intra-province water allocations and entitlements were also covered by the Accord, and one of the pillars of the reforms specifically focused on greater transparency in administration of intra-province water entitlements. Finally, there was the risk related to macroeconomic management. Although the policy stance of the government remained appropriate, continued high inflation and external trade deficit indicated significant excess liquidity in the economy, and called for resolute actions to contain money supply and improve export competitiveness. However, while the Government was committed to take necessary steps to ensure macroeconomic stability, this risk was not fully mitigated due to subsequent external shocks and the as result the preparation of the third DPL was first deferred and later abandoned due to deterioration in the macroeconomic conditions in FY Since completion of DPL Program the period witnessed a sizeable downturn in the country s economic growth rate, with mounting economic problems. There have been high fiscal deficits, as well as an energy crisis. The resource constraints have led to a squeeze in development expenditures. The situation has been further compounded by the recent nationwide floods. Given the resource constraints, and the adverse record of very low levels of revenue generation, there could be renewed pressure on the irrigation management system to raise abiana rates, as well as collection efficiency and intensity. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Punjab Irrigation Development Policy Loan (DPL 1) Rating: Satisfactory The World Bank performance at entry is rated as satisfactory. The Bank team remained proactively engaged with the Government on the program design and implementation. During initial phase the Bank 38

47 held regular policy dialogue with GOPunjab. In addition to working closely with the IPD and Agriculture Department, the Bank team maintained regular interaction with the Planning and Development Board and the Department of Finance, which raised the profile and seriousness of the reforms program. In addition, the Bank provided technical support to IPD and Agriculture Department through senior technical experts who provide guidance and best practice knowledge in various areas including preparation of the assets inventory, functional analysis, setting of IMIS, revision of yardsticks, performance evaluation of public sector tubewells and field conditions for the assessment of need to continue or transition FGW and SGW redundant tubewells, amongst others. At the time of DPL 1, the Pakistan s economy was starting to grow after a period of stagnation and the irrigation reforms program enjoyed strong championship from the political leaders and top administrative officers of the province which made it possible to implement institutional and fiscal reforms. Second Punjab Irrigation Development Policy Loan (DPL 2) Rating: Satisfactory The performance of the World Bank at entry is rated as satisfactory. The Bank team continued to take keen interest and worked together with IPD for the design and support of the Loan program. The Bank continued regular policy dialogue with GOPunjab in particular the Planning and Development Board and the Department of Finance, which strengthened highest level support for the reforms program. The Bank team worked closely with the IPD and Agriculture Department and provided technical assistance through senior national and international experts in different technical areas including Groundwater Management Strategy, Development of Social and Environmental Guidelines, and the preparation of IPD s Communication Strategy under DPL 2. The Bank also contributed through a GWMATE team of experts for refining the IPD s Groundwater Management Strategy and coordinated closely with the Asian Development Bank (ADB), which at the time was also assisting GOPunjab through public finance and irrigation reforms including preparation of the IPD Modernization Plan and introduction of Integrated Water Resources Management (IWRM) principles in the Province. (b) Quality of Supervision Punjab Irrigation Development Policy Loan (DPL 1) Rating: Satisfactory The quality of supervision is rated as satisfactory for the first DPL. The Bank task team was composed of members from Sustainable Development, PREM, Financial Management, Procurement, Environment and Social Development teams with in-depth country as well as sector knowledge. A sound and professional relationship with the provincial agencies including IPD and Agriculture Department was sustained throughout the preparation, appraisal and supervision stages. There was strong continuity of Bank task team members, PMIU counterparts, as well as key policymakers in the provincial government. The Bank team also undertook supervision missions and each supervision missions and field visit of irrigation system in districts. Second Punjab Irrigation Development Policy Loan (DPL 2) Rating: Satisfactory The quality of supervision for the second DPL is also rated as satisfactory for the Bank. The Bank team undertook regular supervision missions and field visits. Each aide memoire from the supervision mission updated the status of prior actions and milestone as well as recommended the critical issues needed to be 39

48 followed up and suggestions for the GOPunjab. At the operational level, consistent engagement with the IPD and Agriculture Department teams enabled effective review of progress and discussion on areas needing acceleration. Coordination with other donors including ADB and Japan International Cooperation Agency (JICA) was effective and enabled better alignment between available technical expertise and resources and with the needs of the reforms program. (c) Justification of Rating for Overall Bank Performance Ratings: Satisfactory The Bank s overall performance is rated satisfactory for the DPL series. The justification for the rating is as follows: The Bank team remained engaged in the design of the program with the GOPunjab and acted as a catalyst during the implementation working closely with the IPD for the support of the reforms program while maintaining strong dialogue with key policy makers, not only in the IPD and Agriculture Department but also with the Department of Finance and the Planning and Development Board. The Bank team consisted of senior staff from various sectors of the Bank to maintain efficient supervision and monitoring of the various components of the program. The team also consisted of senior national and international technical experts. The Bank team undertook regular supervision missions and held field visits to interact with the Farmers Organizations (FOs) and the members of the Area Water Board (AWB) to assess the on ground progress and impacts of the institutional reforms as well as the performance of FOs. 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory Borrower performance has been fully satisfactory during the DPL series. The GOPunjab remained engaged with the reforms agenda and had strong championship from the political leaders and senior administrative officers of the province that made it possible to implement institutional and fiscal reforms and improved service delivery. At the provincial level, the good progress and satisfactory achievement of objectives has been based on alignment of vision and strategy among the key set of policy makers, and intensive monitoring and oversight by the dedicated operational teams. The PMIU played a key role in monitoring discharges and making the distribution transparent by posting the discharge date on the IPD website. The GOPunjab has sustained the reforms and all prior actions agreed as part of the DPL program are continuing. The GOPunjab implemented the required prior actions in a timely manner including preparation of the assets inventory, functional analysis, setting of IMIS, revision of yardsticks during DPL 1 and preparation of asset management plan, groundwater management strategy, development of social and environmental guidelines, and communication strategy under DPL 2. (b) Implementing Agency or Agencies Performance Rating: The government and implementing agency are the same. Performance discussion is given in above in section (a). 40

49 (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory The Borrower s overall performance is rated satisfactory for DPL series. The justification for the rating is as follows: The program had strong championship from the political leaders and senior most administrative officers of the province which made it possible to implement institutional and fiscal reforms and improved service delivery; The GOPunjab implemented the required prior actions in a timely manner; Though the DPL Program ended in 2007 yet majority of actions started during the Program are being sustained; The IPD website, the Program Monitoring and Implementation Unit, the Strategic Planning and Reforms Unit, and the Social and Environmental Unit are still functioning; After a brief interval at the end of DPL 2, the establishment and management transfer to FOs is resumed; and The Third Party Monitoring is continued. Implementation of Groundwater Strategy is being implemented in critical areas. M&R Budget continues to be allocated as per revised yardsticks. Allocation in was Rs billion and Rs 3.04 billion in ADP allocations for rehabilitation were in line with AMP requirements.adp allocation for rehabilitation was Rs 7.82 billion during ; Rs 6.32 billion during and Rs 4.53 billion, during Lessons Learned Key lessons learned from past Bank operations in the water sector and the experience with the Punjab Irrigation Sector DPL series, are that successful implementation of reforms requires: Focus on instruments and incentives for reforms rather than simply on organizations, programs and projects. Based on the past experience, both GOPunjab and the Bank agreed that new approaches and instruments will be needed to meet the diverse set of challenges facing the water sector. The DPL instrument was therefore considered a more suitable instrument for supporting the reform agenda set out in the PISRP. The choice of DPL for the irrigation sector reforms was driven by the need for engagement at the highest level of decision making. Should the Bank s support for irrigation reforms had been through a specific investment loan as instrument of financing, the detailed engagement would have remained with the implementing agency instead of the policy drivers. This strategic choice of instrument brought momentum to the reforms and created incentives for the policy makers to directly support implementation of their decisions. The level of engagement started at the highest decision making level from the Chief Minister and Chief Secretary to the Planning and Development Board, Finance Department and the Agriculture and Irrigation departments and provided an added thrust to timely implementation of the agreed actions. An approach based on principled pragmatism which recognizes that reforms and investments must proceed in parallel. The past investments in irrigation system rehabilitation no doubt brought benefits of reduced incidences of canal breaches and resolved siltation and erosion problems. However, without institutional changes and adequate O&M, the system reverted to pre-rehabilitation situation. The DPL series aspired to address this through a principled approach where investments in system 41

50 restoration should be seen as complementary to the fundamental institutional change with greater farmer participation and accountability at its core. Strong political championship, government ownership, and commitment are essential for the success and continuity of reform programs. Formation of the Inter-Departmental Reforms Steering Committee headed by the Chairman Planning and Development and reporting directly to the Chief Minister s office not only raised the profile of the reforms but also steered high impact decisions. This led to high level monitoring and oversight, and created an interest in focusing on outcomes. Financial and technical support of the Bank became more meaningful with these conditions in place. Analytical work prior to the program. The Bank s support to Punjab s ISRP was designed on the basis of extensive analytical work undertaken by the federal and provincial governments as well as by the Bank. At the federal level the Pakistan Planning Commission prepared the Ten-Year Perspective Plan (September 2001); the Ministry of Water and Power (MOW) prepared a Water Resources Strategy (WRS) with the assistance of the AD3 in 2002, and a draft national Water Policy)in 2005 with resources provided under NDP. At the provincial level the GOPunjab updated the provincial Poverty Reduction Strategy Paper underscoring irrigation section reforms, and prepared a medium term budget framework. While the Bank carried out a systematic review of public spending in water sector as part of the 2002 Public Expenditure Review and in 2005 prepared the Country Water Resources Assistance Strategy (CWRAS) for Pakistan which provided the underpinning for water sector elements of the Country Assistance Strategy. The successful implementation of irrigation DPL series specifically points to the following lessons learnt from the program: Keep it simple: This lesson was specifically learnt from the implementation of the National Drainage Program and was applied to the DPL Program. The Program was simple and had one main implementation agency (IPD) which made its implementation easy. Given this the program was strategically designed to engage the highest decision making officials through an Inter-Departmental Reforms Steering Committee which provided oversight and guided decision making as well as their quick implementation. Any program that generates demand can be considered a success: The irrigation reforms program created a significant interest and desire to follow the same model as has been the case in Sindh. The institutional architecture that evolved under the PISRP in affect provided strong bases for farmers participation and decentralized irrigation management responsibilities. A well-designed communication plan ensured that all stakeholders especially farmers are aware of the steps being taken through the reforms. This not only created the demand for transparency in information sharing, it also challenged the IPD to keep pace with increased demand for timely and accurate information. Strong political support and government ownership is essential for any program to succeed: The program had strong championship from the political leaders and top administrative officers of the province, which made it possible to implement institutional and fiscal reforms and improved service delivery. The interest generated at the highest level of decision making not only raised the profile of the reforms but also created space that kept different departments informed of the outcomes of their decisions and how these affected the implementation of reforms. Institutional change needs time to take roots: This was demonstrated by the pace of implementation of institutional reforms and performance of new FOs during DPL, which slowed down after DPL program. If DPL 3 had materialized, the institutional changes would possibly have 42

51 taken roots. The short lifespan of the DPL series was designed for quick outcomes in setting forth the reforms processes, however there remains the need to follow up with invest programming that is based on the reforms that were sustained and re-contextualize those reforms that were partially sustained. Capacity building of new organizations is essential: The performance of the FOs showed mixed results; some FOs performing well and some FOs performing poorly. The Abiana collection by FOs was initially high but declined. There is a continual need to build capacity of new organizations for ensuring success of the institutional reforms. These include not only the farmer organizations and the Area Water Boards but also the units created within IPD to address social, environmental, monitoring and evaluation and communication aspects. Refinement in the irrigation system: In particular, issues such as the groundwater management have to be a continuous process as groundwater reservoir is dynamic. However, refinement can be attained with the awareness and active participation of water users. The PISRP reforms program built on past lessons of going beyond delivery of water services and including investments in on-farm services such as land leveling and high efficiency irrigation to influence agricultural productivity. Any future programming in water sector will have to continue building upon the irrigation-agriculture nexus for deriving economic benefits from water. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies None (b) Cofinanciers None (c) Other partners and stakeholders 43

52 Annex 1 Bank Lending and Implementation Support/Supervision Processes (a) Task Team members P Punjab-Irrigation Sector Development Policy Loan I Names Title Unit Lending Manuel Contijoch Co Team Leader SASAR Usman Qamar Co Team Leader SASDA Akhtar Hamid Lead Counsel, LEGES Sheila Braka Musiime Senior Counsel, LEGES Supervision Manuel Contijoch Co Team Leader SASAR Usman Qamar Co Team Leader SASDA Ali Awais ET consultant LEGMS Asif Ali Senior Procurement Specialist SARPS Pramod K. Agrawal Senior Social Development Specialist EASVS Anwar Ali Bhatti Disbursements SACPK Ismaila Ceesay Senior FM Specialist SARFM Tekola Dejene Lead Operations Officer SASAR David Hanrahan Lead Environmental Specialist Qazi Azmat Isa Sr Community Development Specialist SASES Paul Jonathan Martin Sr Environmental Spec. SASES Hanid Mukhtar Senior Economist SASPR Toru Konishi, Senior Economist ECA Shahzad Sahrjeel EXT Winston Yu Water Resources Specialist SASAR Lilac Thomas Program Assistant SASDO Aslam Rasheed Water Resources Engineer-consultant M. Ehsan M&R Specialist-consultant Rosario Angulo M&R Specialist- consultant Vaqar Zakaria Environmental Specialist- consultant Shamshad Gohar Groundwater Specialist-consultant Andleeb Abbas Institutional & HRD consultant Ambreen Malik Operations Analyst SASAR Shabir Ahmad Program Assistant SASDO Ghulam Ali Program Assistant SASDO Peer Reviewers: Douglas Olson, Claudia Saddof, and Dan Morrow Responsibility/ Specialty 44

53 P Punjab-Irrigation Sector Development Policy Loan II Names Title Unit Lending Manuel Contijoch Co Team Leader SASSD Usman Qamar Co Team Leader SASDA Martin Serrano, Senior Counsel, LEGES Sheila Braka Musiime, Senior Counsel, LEGES Supervision Manuel Contijoch Co Team Leader SASAR Usman Qamar Co Team Leader SASDA Asif Ali Senior Procurement Specialist SARPS Jawaid Afzal Environment SASDI Pramod K. Agrawal Senior Social Development Specialist EASVS Anwar Ali Bhatti Disbursements SACPK Ismaila Ceesay Senior Financial Management Specialist SARFM Hanid Mukhtar Senior Economist SASPR Shahzad Sahrjeel EXT Walter Garvey Environmentalist - consultant Aslam Rasheed Water Resources Engineer-consultant M. Ehsan M&R Specialist-consultant Shamshad Gohar Groundwater Specialist-consultant Communications and Political Imran Ali Economy Specialist consultant Frank V. Steenbergen Groundwater Policy Consultant Ahmad Khan Bhatti Groundwater Policy Consultant Lilac Thomas Program Assistant SASSD Shabir Ahmad Program Assistant SASSD Ghulam Ali Program Assistant SASSD Peer Reviewers: Douglas Olson, Claudia Sadoff, and Daryl Fields Responsibility/ Specialty (b) Staff Time and Cost P Punjab-Irrigation Sector Development Policy Loan Staff Time and Cost (Bank Budget Only) Stage USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY FY FY Total:

54 Supervision FY FY FY Total: P Punjab-Irrigation Sector Development Policy Loan II Staff Time and Cost (Bank Budget Only) Stage USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY FY Total: Supervision FY FY Total:

55 Annex 2 Beneficiary Survey Results 1. Key findings of the Independent Third Party Surveys In order to monitor the impact of reforms relating to fiscal management in planning, procurement and execution of M&R works, transparency of water allocation/entitlements and irrigation managementtransfer and users participation, IPD engaged independent consultants to monitor the ground realities in respect of the above functions, conduct third-party surveys to verify implementation of program interventions and evaluate outputs and outcomes through random surveys as well as case studies. The first Report of the Consultants was issued in February The review of the work plans noted some shortcomings in the work plans prepared initially, which were rectified. Out of a total of 7,867 schemes in the finalized annual M&R work plan, a random representative sample of 946 (818 NCBs and 128 non-ncbs) schemes was selected. With time the field offices started paying attention to the QA Procedures. Eventually, work plans were prepared with introduction of the Third Party Check, documentation was improved and the supervisory activities intensified. The Consultants also checked the Delivery Performance Ratios (DPR) Values is to determine the adequacy of water delivered to the farmers and to ascertain transparency of water allocations and entitlements in FO Managed Channels and control channels managed by IPD, by carrying out random check measurements of discharges. The supply of water at head of the channels by and large was found satisfactory. It was observed that the supply to several outlets has improved but the distribution of supply amongst the outlets observed during the spot-checking was not equitable. Similarly, the DPR values of outlets in head, middle and tail reaches were, also somewhat inconsistent highlighting the need for further improvement. The Consultants carried out case studies of randomly selected Farmers Organizations (FOs). The study used indicators for benchmarking of FOs established by PIDA after their review and evaluation. The Consultants rated performance of 80% of the FOs as adequate/satisfactory/good and 20% as poor. Abiana Collection Performance of FOs The status of Abiana collection in the FO areas prior to and during the DPL Program is summarized in Tables A2.1and A2.2. Crop Season Table A2.1: Abiana Collection by FOs in LCC East Canal Command No. of FOs Assessed Amount after remission (M. Rs.) Collected Amount (M Rs) Av. %age Collection (up to 31 March 2008) Rabi FOs / 88.3% Kharif FOs % Rabi FOs % Kharif FOs % Rabi FOs % Kharif FOs % 47

56 Area LCC (West) Circle CRBC LJC-Sargodha Table A2.2: Abiana Collection by FOs in LCC East Canal Command Collected Crop Nos, Assessed Amount Amount Season of FOs (M. Rs.) (M. Rs.) Kharif 2007 Kharif 2007 Kharif 2007 Av. %age Collection 64 FOs % 30 FOs % 6 FOs % Total % It is observed that the Abiana collection by the FOs was generally high in the beginning but gradually started to decline. Abiana Collection in non FO Areas Abiana collection in non FO areas improved during DPL 2 and improved further during subsequent years. The declining trend was not only reversed but the collection performance improved significantly 70% in compared to 47% in the preceding two years. The status of collection of abiana after completion of DPL Program was as follows: 77% in ; 87% in and 86% in Remote Sensing Study In addition, IPD also conducted a remote sensing study to evaluate the impact of reforms on irrigation system performance and agricultural water productivity under the Punjab Irrigation Sector Reforms Program (PISRP). The study provided macro analysis of the entire system and indicated that water distribution has improved in most of the canals during Kharif 2007 where not only reliability has improved but also the volume delivered to all canals has increased. Variations were controlled and more reliable supplies were provided. Similar improvement is noticed in Rabi supplies but to a lesser extent. Overall, Punjab delivered M m3 more water in than in This is partly due to the fact that that the river supplies were higher by about 5% and also there was better monitoring and transparency through access to data to everybody on IPD website. The Gross Value of Production (GVP) increased in most of the canal commands (average increase: 10%). 3. Summary Findings and Conclusions of Perception Survey In 2008 IPD carried out a Perception Survey to gauge perceptions of a cross section of stakeholders in FOs and non-fo areas. Another study was carried out by the IPD in Muzaffaragrh in , the area of major TW transition. The Perception Survey was mostly related to the institutional reforms for participatory irrigation management (PIM) supported by the DPL Program. The Perception Survey had following objectives: 1. Assess impact of reforms through a set of performance indicators 2. Assess public perceptions about IPD 3. Present a comparative evaluation of FOs and non-fos about IPD 4. Assess the acceptance levels about Participatory Irrigation Management System 48

57 The Outcome Indicators of the Perception Survey included: 1. Redefining IPD s role as is perceived by people 2. Benchmarking IPD performances for organizational development The sample size was 160 in FO areas and 40 in non FO areas. FO samples were filled in LCC (E) and (W) canal commands with the coordination of PIDA Social Mobilization Cell who were deputed in the field for conducting FO elections. Non FO forms were filled out in the Secretariat to capture insiders perceptions about PIM reforms. The profile of surveyed stake holders in Non FO and FO areas is shown in Tables A2.3 and A2.4 respectively. Table A2.3: Non-FO Profile Table A2.4: FO Profile Non- FO No. 40 FOs Land Ownership of Respondents (Acres) No. 160 Assistant Training Coordinator (56.9%) Chief Engineer (14.4%) Civil Engineer 2 26-upward 33 (20.6%) Civil Servant 1 Self 152 (95%) Engineer 2 Sharecropper 4 (2.5%) Field Inspector PIDA 1 Other ownership 4 (2.5%) FO Coordinator 2 Govt. Service 4 Junior Engineer 2 SDO 11 SE 3 XEN 9 XEN Rachna Drainage Division SKP 1 Generally the Reforms interventions are considered a positive sign by the external stakeholders. However, there are mixed views as to the proportion of Departments interference, PIDA s joint management. Water availability has increased and water thefts have been reduced to a considerable extent according to the perceptions of both categories. The perception of the stakeholders in FO areas about the improvements due to various reforms is generally positive as is indicated in Figure 1. The percentages show the improved perception by respondents. The perceived improvements include: improvement in Abiana collection; control of water theft; reduction in corruption; on spot solutions of problems and improved water availability at tails. 49

58 Figure 1: Perceptions about improvements due to reforms FO Perceptions about IPDs support to FOs drew a mixed response. Only 77% of the respondents expressed an opinion and about 59% of these were critical of the support provided by the Department whereas about 41% of respondents were satisfied with the level of support provided by the IPD to the FOs, as indicated in Figure 2, while 27% reported non-cooperation and 16% a monopoly by the IPD and a 16% of respondents perceived tat FOs are not authorized to take on additional management responsibilities under the reforms. Figure 2: Perceptions about support of IPD to FOs SUPPORT OF DEPARTMENT TO FOs (%age) Support to FO, 41% Farmers are unauthorized, 16% Departmental monoply, 16% Non cooperation, 27% Similalry, the perceptions about Participatory Irrigation System (PIM) was quite positive in the FO Areas as shown in Figure 3 by the percentages of respondents with positive perception. 50

59 Figure 3: Perception about PIM The performance gaps in PIM as identified by the respondents in FO areas are given in Table A2.5. Reasons of sub-optimal performance Non interest/ disincentives to president Insufficient representation of common farmers in FO due to weak social networks Reaction against inadequate supply of canal water by the department/ nonpayment of Abiana Illiteracy & capacity constraints of farmers Table A2.5: Performance gaps in PIM Total No. of Recommendations responses: Monetary incentives to be given to FO President 6 FO should be representative of the whole community and elections should be conducted duly at the turn of 5 years 14 Timely payment of Abiana 50% retention of Abiana share in water deficit tails 43 Technical trainings by PIDA training cell Total responses: The performance gaps in PIM as identified by the non FO respondents are given in Table A2.6. Table A2.6: Performance gaps in PIM as identified by the non FO respondents Reasons of sub-optimal Total No. of Recommendations Total No. of performance Responses: 38 Responses: 40 Non interest/ disincentives to president/ field staff 7 Monetary incentives to be given to staff/fo President 13 51

60 Lack of ownership / security about the system Lack of cooperation of IPD/PIDA with FOs Illiteracy & capacity constraints of farmers 10 Power autonomy be given to FOs 13 IPD to maximize interaction with/ social mobilization of Field staff & FOs 12 Trainings/ capacity building support should be given to FOs by IPD/PIDA The management mode for FOs preferred by respondents in FO areas is shown in Table A2.7 indicates preference for management by PIDA and FOs whereas the FOs preferred a reduced role of IPD. Table A2.7: Preferred Management Mode by FO Power Autonomy to FOs No. % Only FO management Joint Management run by PIDA, IPD, AWB PIDA and FOs Nonspecific participation IPD and FOs The perception about effectiveness of communication modes for media campaign in FO areas is predominantly for TV as shown in Figure 4. Figure 4: Effectiveness of the Mode of Communications in FO Areas Conclusions: The Perception Survey Report draws following conclusions: Reforms intervention is considered a positive sign by the external stakeholders. However, there are mixed views as to the proportion of Departments interference, PIDA s joint management. Almost 25 numbers of responses were in favor of total autonomy of FOs. But the majority of respondents are in favor of a joint management of PIDA and FOs. 52

61 Water availability has increased and water thefts have been reduced to a considerable extent according to the perceptions of both categories. The spillover of reforms is gradual but given the consistent support of the department and law executing agencies like the police, a lot of scope for improvement is anticipated in the system. The IPD needs to continue to evaluate this situation in order to inform future reforms and policy decisions. 53

62 Annex 3 Stakeholder Workshop Report and Results A one day workshop on Groundwater Monitoring in Punjab was held on November 2, 2007 by Directorate of Land Reclamation (DLR) & Strategic Planning / Reform Unit (SPRU) Punjab Irrigation and Power Department The objectives of the workshop were to: Highlight the importance of groundwater monitoring and its future requirements Streamline groundwater monitoring for sustainable GW management Highlight the current groundwater status and trend analysis in its true perspective The Chief SPRU informed the participants about: The preparation and finalization of Punjab Groundwater Management Plan Structuring of Steering Committee on Groundwater along with its role The formation of Groundwater Working Group along with its role The establishment of Groundwater Management Organization in Punjab Irrigation and Power Department Key Messages (Workshop Outcomes): The over pumping of groundwater is leading to rapid aquifer depletion. The groundwater level on the average is declining in the province. Need was felt for frequent contact and interaction with the end users to bring about a change in their mind- set for groundwater resource management. Uncontrolled and unregulated groundwater extraction paves the way to groundwater quality deterioration, saline water intrusion and secondary soil salinization. The groundwater trend analysis needs to be placed on website for guidance of the farming communities. 54

63 Annex 4. Summary of Borrower s ICR and/or Comments on Draft ICR Summary of Borrower s ICR of November 2010 follows: The Government of Punjab successfully implemented the Punjab Irrigation Sector Reform Program (PISRP), which was supported by two 12 Development Policy Loans (DPLs) during (FY ). Farreaching institutional reforms were initiated in the irrigation sector under PISRP. The two DPLs in an amount of US$100 million equivalent each were part of a programmatic series of loans during two years (FY ) with a total amount of US$200 million. DPL1 and DPL2 were approved and disbursed. The PISRP was designed to address some of the key problems of the Sector which included: Deteriorated irrigation and drainage infrastructure. Growing water shortages. Government tubewells have generally outlived their useful life and place a major burden on the recurrent budget. Lack of farmer participation in operation, maintenance and management of irrigation services. Lack of financial sustainability. Lack of properly calibrated flow measurement gauges and trained and motivated staff. Uncontrolled growth of private tubewells that led to over exploitation/mining and deterioration of groundwater quality in many areas. The irrigation establishment has grown over time and the good practices followed in the past are not generally in vogue, which has led to inefficiencies. Cognizant of the aforementioned problems the government developed a vision and strategy. The long term vision was "to provide adequate, equitable and reliable irrigation supplies to the cultivable lands of Punjab aiming at enhanced agricultural productivity, and sustainable development with focus on holistic management and broad based institutional reforms". The government launched a medium term reform program for achieving this vision, based on lessons learned from past experience and after extensive consultations with various stakeholders within and outside the government, including policy and strategic dialogue with the World Bank and other development agencies. The strategic vision includes institutional and policy reforms as well as critical investments on rehabilitation and system improvement. The reform program was built on the following four inter-related pillars, which were consistent with the priorities identified in the World Bank Country Water Resources Assistance Strategy, Pillar I: Institutional and Policy Reforms to improve the management and maintenance of the irrigation system to ensure its long term physical and financial sustainability. Pillar II: Water Resource Management Reforms to emphasize the critical importance of water entitlements, measurements, and transparency. The objective is to make intra-province water allocations and distribution more transparent, and to ultimately extend the system of entitlements to groundwater as well in the long term. 12 Initially three annual DPLs of $ 100 million each were proposed but only the first two loans were disbursed in FY

64 Pillar III: Irrigation Service Delivery Reforms to improve the quality, efficiency and accountability of irrigation services, through greater participation of farmers, institutional reforms, and the use of contractual arrangements among water supply agencies and users. Pillar IV: Reforms to encourage new technology to improve water use efficiency and on-farm productivity through a system of incentives and reforms in agriculture marketing and research. A4.1 Achievements under DPL/PISRP The specific achievements of the government under various pillars of DPL/PISRP are summarized below; A4.1.1 Pillar I: Institutional and Policy Reforms: i. M&R Budget was allocated according to revised yardsticks. Rs billion in ; Rs billion in and Rs billion in as compared to Rs billion in ii. 1,617 non performing saline tubewells were closed and FGW Tubewells were closed / transitioned. iii. System of fortnightly (twice monthly average) meetings of the Departmental Accounts Committee (DAC) was institutionalized. 45% of the advance audit observations were reviewed and resolved during the DPL 2. iv. The negative trend in recovery of abiana in non FO areas was reversed. Performance on Abiana collection in non-fo canals improved to 70% as of end June 2007 from 47% in 2005and In FO managed areas the cumulative Abiana collection as of end June 2007 was 72% (82% during FY and 62% during FY ). v. A 10 year Asset Management Plan (AMP) with estimated cost of Rs 144 billion was prepared. The expenditure on rehabilitation & modernization during was 6.08% and for was 7.61% of the deferred maintenance. vi. Performance Evaluation system for M&R was prepared and its implementation started. vii. A realistic and transparent policy for M&R cost sharing between budgetary allocations and user charges for various tiers of the system was approved. A4.1.2 Pillar II: Water Resource Management Reforms: i. IPD posted water accounts for 24 main canals and distributaries regarding entitlements, deliveries & balance share on the website. Data on the website is updated on 10 daily basis. The program continues even after end of DPL Program. ii. Installation of flow metering gauges in the LCC East AWB was completed in Distributaries discharge data was posted on IPD website. Observation and calibration of gauges was undertaken in 20 Canal Systems gauges were calibrated in 2723 channels. Any missing gauges or defects in installed gauges were rectified. iii. Surface Water Quality Monitoring Plan was defined and its implementation started. 56

65 iv. The GW Management Plan was prepared, which included groundwater management policy guidelines, GW strategy and GW management action plan. Three pilot areas have been proposed for GW Management in Punjab. GW information is now available in the irrigation web site. FOs in LCC East started water depth and quality groundwater monitoring. v. Criteria for : i) allocating additional water that becomes available under the Accord, and ii) sharing water shortages among canal commands, was prepared and posted on IPD website. vi. Water accounts for all distributaries canals in LCC East posted on IPD website and updated every 10 days. vii. Preparation of a decision support model stared. A4.1.3 Pillar III: Irrigation Service Delivery Reforms: The status of actions taken is as follows: i. The draft strategy paper on IPD Modernization Plan was prepared by the IPD Reform Unit. ADB appointed an international and local consultant for preparing the draft Modernization Plan. ii. A Strategic Planning and Reform Unit was established in IPD for monitoring implementation of the PISRP/DPL and preparing internal M&E reports of the Reform Program. iii. A communication strategy was prepared and implementation started. iv. 186 new FOs were established in LCC East, LCC West, CRBC, and LBDC. IMTAs were signed with the new FOs. v. To raise awareness of environmental and social risks, guidelines were developed and their implementation was made mandatory for operation, maintenance and rehabilitation of irrigation infrastructure. vi. LCC (East) AWB was made fully operational and two new AWBs (LCC West and LBDC) were notified in vii. Rehabilitation of FO managed channels was undertaken in LCC East AWB. 28 FOs channels having length of 678 km with investment cost of Rs.250 million were rehabilitated. viii. Benchmarking system for FOs was introduced by PIDA. A4.1.4 Pillar IV: Reforms to encourage new technology to improve water use efficiency and onfarm productivity: The status of actions taken during the DPL Program follows: Under the Water conservation programs of watercourse improvement and provision of laser land leveler were achieved: (i) 5011 watercourses improved during FY (ii) 5004 watercourses improved during FY (iii) 500 laser leveler units delivered FY

66 (iv) 1000 laser leveler units delivered FY (v) Project proposal prepared for promoting pressurized irrigation systems. High efficiency irrigation systems (drip/ sprinkler) have been installed on 9,964 acres (4,034 ha) so far in the Punjab The actions relating to amendment of the Punjab Agricultural Produce Ordinance, 1978; Restructuring of research and preparation of models of economic incentives (cost sharing, matching grant, regulations, policies, institutions) were pursued outside the ambit of DPL. A4.2 Impacts of Reforms The DPL Program proved very beneficial and worked as catalyst for introducing far reaching improvements in the water sector in Punjab. The program resulted in improved asset management; better management and distribution of water as capacity and system was created for transparent administration of water entitlements and sustainable management of water resources; greater participation and empowerment of water users in irrigation service delivery; improved capacity in the Irrigation and Power Department (IPD) and farmer organizations (FOs) for dealing with social & environmental issues; better management of groundwater resources including closure of non performing SGW tubewells, and transition of FGW tubewells which resulted in reduced annual electricity payment in by Rs million as compared to Rs million in The hydraulic infrastructure was progressively made safer and sustainable; there was a sizable increase in M&R budget and investments to take care of deferred maintenance of irrigation and drainage infrastructure. Operation and maintenance of distribution system in LCC East; LCC west and CRBC was handed over to FOs, which are also responsible for collection of Abiana. Capacity and system was created for transparent administration of water entitlements and sustainable management of water resources. Water accounts for 24 main canals regarding entitlements, deliveries & balance share were posted on the website 13. Data on the website is updated on 10 daily basis. Distributary discharge data has been posted on the IPD website. Delivery Performance Ratio DPR (ratio of actual to authorized discharge at the head and tail outlets) of distributaries in LCC East were measured by PIDA and PMIU and verified by Third Party Consultants. DPR values in head and tail reaches indicate improved equity and increase in supplies to tail reaches. As a result of various interventions rotation in distributaries reduced and the distribution system received more water. PIDA completed the baseline pre-condition survey of all channels in LCC (East) Circle. Joint measurement of discharges at head of distributaries by IPD and FOs is being carried out. The FOs are regularly monitoring the discharges of outlets. PIDA M&E staff also checks the discharges and informs FOs wherever any corrective measures are needed. These steps have resulted in improved equity of water distribution. FOs resolved more than 2,800 disputes. This included 1,758 disputes related to unauthorized water use/ water theft. Preliminary AGRICULTURE DEPARTMENT estimates indicate that improvement of one watercourse results in saving of about 100 AF annually. Upto June 2008 about 634,613 acres (256,928 ha) acres were leveled by the laser levelers provided under the Program. 13 Posting of water accounts of canals on the web still continues. 58

67 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders No Cofinanciers 59

68 Annex 6. List of Supporting Documents 1. Program Document DPL1, World Bank, April Report of Assets Inventory, IPD, January Irrigation Management Information System (IMIS), IPD, September Working Paper on Functional/ Institutional Analysis of Punjab IPD, June Upgrading of Yardsticks on Market Rate System (MRS). IPD, September Punjab Irrigation System Reform Program (PISRP), IPD, March Program Document DPL2, World Bank, April Groundwater Management Strategy, IPD, July Punjab Groundwater Management Plan GWMATE June The Punjab Groundwater Management Plan, June 2007, AK Bhatti & FV Steenbergen 11. Aide Memoires for the following missions: September 19 - October 1, 2005 April 5-12, 2006 August 16-19, 2006 November 13 20, 206 January 31 February 2, 2007 March 26 April 2, 2007 August 18-28, 2007 December 17 19, Reform Activities: Internal Monitoring and Evaluation Report-II Strategic planning Unit SPRU Dec Third Party Monitoring of DPR Values in FO Managed Channels, Case Studies of FOs and Performance Evaluation/Engineering Audit of M&R Works ( ) 14. Report of Perception Survey by IPD 15. Socio-Environmental Impact Assessment on Transition of SCARP Tubewells in Fresh Groundwater Areas 16. Borrower s Completion Report November Detailed assessment of irrigation sector reforms supported under the DPL program by M. Aslam Rasheed; prepared for the ICR Mission Detailed analysis of communications and political economy of the irrigation sector reforms by Dr. Imran Ali; prepared for the ICR Mission Detailed analysis of the ground water management as part of the irrigation reforms by M. Shamshad Gohar; prepared for the ICR Mission

69 MAP 61