Second Flood Protection Sector Project · 2014. 9. 29. · The flood forecasting and early warning...

Completion Report

Project Number: 28165-01 Loan Number: 1578 July 2007

PAK: Second Flood Protection Sector Project

CURRENCY EQUIVALENTS

Currency Unit – Pakistan rupees (PRe/PRs)

At Appraisal At Project Completion (30 September 1997) (31 December 2006)

PRe1.00 = $0.025 $0.016 $1.00 = PRs40.47 PRs60.88

ABBREVIATIONS

ADB ― Asian Development Bank EA ― executing agency EIRR ― economic internal rate of return FEWS ― flood early warning system FFC ― Federal Flood Commission FFD ― Flood Forecasting Division FPA Flood Protection Association IA ― implementing agency ICB ― international competitive bidding IRI ― Irrigation Research Institute ISRIP ― International Sediment Research Institute of Pakistan MOWP ― Ministry of Water and Power NFFB ― National Flood Forecasting Bureau NCB ― national competitive bidding NGO ― non-government organization NWFP ― North-West Frontier Province PC-I ― Planning Commission Proforma I PCR project completion report OECF ― Overseas Economic Cooperation Fund (of Japan) PID Provincial Irrigation Department PIDA ― Provincial Irrigation and Drainage Authority PMD ― Pakistan Meteorological Department RMT ― river management team WAPDA-W ― Water and Power Development Authority (Water Wing)

NOTES

(i) The fiscal year (FY) of the Government of Pakistan and the provincial governments ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2007 ends on 30 June 2007.

(ii) In this report, "$" refers to US dollars. (iii) “Government” refers to the Government of Pakistan.

Vice President L. Jin, Operations 01 Director General J. Miranda, Central and West Asia Region Department Director P. Fedon, Pakistan Resident Mission Team leader R. Farrukh, Project Implementation Officer, Pakistan Resident Mission Team member L. Ali, Assistant Project Analyst, Pakistan Resident Mission

CONTENTS

Page

BASIC DATA ii

MAP vi

I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1 B. Project Outputs 3 C. Project Costs 5 D. Disbursements 5 E. Project Schedule 6 F. Implementation Arrangements 7 G. Conditions and Covenants 7 H. Consultant Recruitment and Procurement 7 I. Performance of Consultants, Contractors and Suppliers 8 J. Performance of the Borrower and the Executing Agency 8 K. Performance of the Asian Development Bank 9

III. EVALUATION OF PERFORMANCE 9 A. Relevance 9 B. Effectiveness in Achieving Outcomes 10 C. Efficiency in Achieving Outcomes and Outputs 10 D. Preliminary Assessment of Sustainability 10 E. Impact 11

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 11 A. Overall Assessment 11 B. Lessons Learned 11 C. Recommendations 12

APPENDIXES 1. Flood Protection Subprojects 14 2. Project Framework 16 3. Loan Covenants 20 4. Economic Analysis 29 5. Assessment of Overall Project Performance 40 6. Procurement Packages 41 7. Chronology of Major Events 42

BASIC DATA A. Loan Identification 1. Country 2. Loan number 3. Project title 4. Borrower 5. Executing agency 6. Amount of loan 7. Project Completion Report number

Pakistan 1578-PAK(SF) Second Flood Protection Sector Project Islamic Republic of Pakistan Federal Flood Commission SDR73,249,000 28165-01

B. Loan Data 1. Appraisal – Date started – Date completed 2. Loan negotiations – Date started – Date completed 3. Date of Board approval 4. Date of loan agreement 5. Date of loan effectiveness – In loan agreement – Actual – Number of extensions 6. Closing date – In loan agreement – Actual – Number of extensions 7. Terms of loan – Interest rate – Maturity (number of years) – Grace period (number of years) 8. Terms of relending (if any) – Interest rate – Maturity (number of years) – Grace period (number of years) – Second-step borrower

22 June 1997 11 July 1997 08 October 1997 10 October 1997 13 November 1997 10 February 1999 11 May 1999 01 October 1999 2 30 June 2005 31 December 2006 2 1% 35 10 N/A

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9. Disbursements a. Dates Initial Disbursement

30 June 2000

Final Disbursement

23 April 2007

Time Interval

82 months

Effective Date

01 October 1999

Original Closing Date

30 June 2005

Time Interval

69 months

b. Amount (SDR) Category or Subloan

Original

Allocation

Last Revised

Allocation

Amount

Canceled

Net Amount

Available

Amount

Disbursed

Undisbursed

Balance Civil works 38,653,400 31,685,142 6,968,258 31,685,142 25,170,391 6,514,751Equipment, vehicles and supplies 2,808,100 5,153,271 (2,345,171) 5,153,271 2,942,351 2,210920Consulting services 17,744,800 3,633,610 14,111,190 3,633,610 4,496,896 (863,286)Overseas studies 435,000 0 435,000 0 0 0 Local training 580,700 56,775 523,925 56,775 0 56,775Local studies 47,300 0 47,300 0 0 0 Service charge 2,344,000 1,494,218 849,782 1,494,218 354,333 1,139,885Unallocated (FC) 4,098,300 0 4,098,300 0 0 0 Unallocated (LC) 6,537,400 1,608,984 4,928,416 1,608,984 0 1,608,984 Total 73,249,000 43,632,000 29,617,000 43,632,000 32,963,971 10,668,029

10. Local Costs (financed) - Amount ($) 29,648,606 - Percent of Local Costs 69 - Percent of Total Cost 48 C. Project Data

1. Project Cost ($ ‘000) Cost Appraisal Estimate Actual

Foreign Exchange Cost 52,500 18,508 Local Currency Cost 147,500 42,647 Total 200,000 61,155

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2. Financing Plan ($ ‘000) Cost Appraisal Estimate Actual Implementation Costs Borrower financed 44,000 12,998 ADB financed 96,800 47,640 Other external financing 50,000 0 Beneficiaries 6,000 0 Total 196,800 60,638 IDC Costs Borrower financed - ADB financed 3,200 517 Other external financing - Total 200,000 61,155

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

3. Cost Breakdown by Project Component ($ ‘000)

Component Appraisal Estimate Actual Policy improvement and capacity building 37,300 3,718 Improvement of flood forecasting, warning and preparedness

17,400 7,503

Implementation of subprojects 142,100 49,417 Service charge on ADB loan 3,200 517 Total 200,000 61,155 4. Project Schedule

Item Appraisal Estimate Actual Date of contract with consultants-Package B June 1998 April 2000 Date of contract with consultants-Package C June 1998 April 2000 Date of contract with NGO June 1998 June 2001 Completion of engineering designs June 1999 June 2004 Civil works contract Date of award April 1999 January 2004 Completion of work December 2004 May 2006 Equipment and supplies Dates First procurement October 1998 April 2004 Last procurement February 2002 April 2006 Completion of equipment installation NA April 2007 Start of operations Completion of tests and commissioning NA April 2007 Beginning of start-up NA November 2006 NA= not available

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5. Project Performance Report Ratings

Ratings Implementation Period

Development Objectives

Implementation Progress

From 30/12/1998 to 30/07/2000 S S From 30/08/2000 to 30/12/2000 S PS From 30/01/2001 to 26/02/2001 S U From 27/02/2001 to 30/05/2001 S PS From 29/06/2001 to 30/08/2001 S S From 29/09/2001 to 29/06/2005 S PS From 30/07/2005 to 31/03/2007 S S S = satisfactory, PS = partly satisfactory, U = unsatisfactory. D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Membersa

Fact-finding 28/04/1997 6 108 a, b, c, d, e, f Appraisal 22/06/1997 6 120 a, b, c, g, e, f Follow-up 18/08/1997 1 8 b Special Project Administration 1 07/06/1998 2 34 h, i Special Project Administration 2 29/11/1999 2 6 j, k Project Review 1 16/12/2003 3 48 l, m, o Project Review 2 05/07/2004 2 34 l, o Project Review 3 25/01/2005 3 93 l, n, o Project Review 4 20/2/2006 1 31 l Project Completion Review 5/3/2007 1 30 l a a – Senior project economist, b - financial analyst, c – programs officer, d – senior environment specialist, e – social development specialist, f – senior project implementation officer, g – counsel, h – irrigation engineer, i – project assistant, j – project engineer, k – senior project specialist, l – project implementation officer, m – senior

project assistant, n – associate project analyst, o – flood engineer.

I. PROJECT DESCRIPTION

1. Flooding is a major problem in Pakistan and is most extensive and damaging in the Indus Plain. Damage also occurs in areas along small rivers with relatively steep catchments causing flash floods. Major flood events result from excessive flows within the Indus River basin, including the Indus itself and main tributaries, namely the Jhelum, Chenab, Ravi, Sutlej and Kabul rivers. It is one of the largest river systems in the world and provides irrigation water to about 12 million hectares, representing 80 percent of Pakistan’s irrigated land. Melting snow from the mountains combined with monsoon rains (generally from July to September) cause heavy flooding and riverbank erosion. Floods have resulted in loss of life and substantial damage to property, infrastructure and agriculture. Serious flooding also leads to dislocation of entire communities, disrupting the life and productive activities of thousands of households. In many cases, the poorest segment of society suffers the greatest damage as a single flood can wipe out their limited possessions, including houses, livestock and small farms, which are their only source of livelihood. 2. Flood hazards and riverbank erosion that adversely affect human settlements, infrastructure and farming areas have to be minimized so that Pakistan’s predominantly rural communities in flood-prone areas can sustain increases in agricultural production, employment and incomes. The predominance of low-income families among rural communities provided strong justification for the Project. The major objective of the Project was to reduce damage due to flooding to the communities along Pakistan’s major and secondary rivers. A secondary objective was to reduce the level of poverty in these areas. 3. The Project consisted of three components: (i) policy improvement and capacity building for planning, design and implementation of flood protection works; (ii) improvement of flood forecasting, warning and preparedness; and (iii) implementation of subprojects for flood protection works.1 The policy improvement and capacity building component comprised various studies, trainings, consulting services and support to communities in flood preparedness and relief. The forecasting component included completion of a flood forecasting model and an early warning system initiated under the first flood protection sector project,2 extension of radar coverage, expansion of the telemetry network and the HF radio communication network modernized under the first project, meteorological studies, and reassessment of the Mangla Dam reservoir operation. Implementation of subprojects included one core subproject in each of four provinces (Balochistan, North-West Frontier, Punjab and Sindh). Other subprojects were to be identified along stretches of the major and secondary rivers including hill torrents.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

4. The Project was designed to build upon the achievements of the first project by augmenting the facilities made available earlier and by further enhancing the institutional capabilities of the Federal Flood Commission (FFC); the National Flood Forecasting Bureau (NFFB), renamed the Flood Forecasting Division (FFD) of the Pakistan Meteorological Department (PMD); the Irrigation Research Institutes (IRIs); the Water and Power Development Authority-Water Wing (WAPDA-W); the Provincial Irrigation Departments and Irrigation and

1 ADB. 1997. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Islamic Republic of Pakistan for Second Flood Protection Sector Project. Manila. 2 Loan No. 837-PAK(SF): Flood Protection Sector Project, for $115.0 million, approved 25 August 1987.

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Drainage Authorities (PIDs/PIDAs); and flood-prone communities. The Project was relevant to ADB’s country strategy and program. It was formulated as a sector loan because the Government had a suitable investment plan, the agencies involved in implementing the plan were assessed to have the requisite capability, and sector policies were considered suitable for improvement. The Project was designed to support a time slice of the National Flood Protection Plan covering the period from 1998 to 2004. The Project provided continuity to the first project. The flood forecasting and early warning system developed under the first project needed substantial improvement, the flood protection works along major and secondary rivers were to be expanded, and the capacity of flood sector agencies required further enhancement for improved design and management skills. The Project formulation process was adequate. The Project preparatory technical assistance3 was approved before completion of the first project, which ensured continuity, reasonable assessment of deficiencies in the first project and needed improvements. The feasibility studies were conducted for one core subproject in each province to help implementation of civil works along major rivers on a priority basis, including the Jhelum and Sutlej rivers which were not included in the first project. The stakeholder consultation was adequately done and flood-prone communities and non-government organizations (NGOs) working with riverine communities were consulted. 5. The scope of flood protection subprojects and flood forecasting components was adequately designed, but their cost was overestimated. The input of consultants under Packages A and B was on the high side. Package A included overall project management and institutional strengthening, and mobilizing resources for operation and maintenance. Package B included capacity building for integrated river management; preparation, development and administration of subprojects; and coordinating social analysis and beneficiary participation. The scope of these packages included some activities and studies, which were considered less relevant to achieving the development objectives of the Project during reformulation. Some of the studies duplicated similar activities under Package C and those carried out under the first project. The quality of the project preparatory technical assistance could have been improved by precisely defining the scope of each component, limiting the role of consultants to the activities where their input was required, and making reasonable cost estimates. 6. In May 2001, ADB suspended the loan due to lack of progress in implementation. The Project was reinstated on 01 August 2001 following the Government’s agreement to address ADB’s concerns, which included (i) early recruitment of Package A consultants and an NGO, (ii) making data and information available to the consultants, (iii) arranging urgently the surveys and investigations required for Package B studies, and (iv) settling outstanding invoices of the consultants. With a new government in October 1999, affected parties sent complaints about lack of transparency in the recruitment of Package B consultants to the Chief Executive of Pakistan. Subsequently, investigations started and the FFC did not begin any Project activity. After a long investigation, which bore no result, the Chief Executive convened a special committee in June 2001 to reformulate the Project. The reformulated Project was approved by the federal cabinet in October 2002. As a result, consultancy Package A was removed, the scope of Package B was substantially reduced, the cost of Package C was reduced, and the amount allocated for civil works was reduced. ADB was not consulted during the reformulation process, but ADB’s first loan review mission in December 2003 carried out an in-depth review and subsequently a change in scope was approved in July 2004. It was concluded that the Project’s objectives envisaged at appraisal would be fully achieved if the Project could be implemented according to its reformulated design. 3 TA No. 2562-PAK: Second Flood Protection Sector Project, for $800,000, approved 30 April 1996.

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B. Project Outputs

1. Policy Improvement and Capacity Building

7. The scope of this component was reduced in the reformulated Project design and changes were made regarding responsibility for implementation of some of the activities. Three studies (morphological, environmental and flood plain zoning) were dropped, as was the Package A consultancy. The scope of the Package B consultancy and NGO input was reduced. The studies were not considered essential to achieve the Project objectives, and development of an effective flood forecasting system did not depend on the studies. The role of Package A consultants was assigned to a monitoring cell established in the FFC. The IRIs did the physical modeling for the design of flood protection structures. Mathematical modeling is not required when physical modeling is done because the physical model emulates the true river conditions, and the objective of designing the technically best possible structures was achieved through physical modeling. 8. Four policy initiatives were envisaged under this component, including (i) development of an integrated river management approach to assist in the formulation of medium and long-term strategies for flood protection by forming a multi-agency river management team (RMT) and a steering group of senior officials in Pakistan’s water resource sector; (ii) classification of rivers by provincial and federal jurisdictions to rationalize investments in Pakistan’s major and other rivers and to define responsibilities of the FFC in relation to the PIDAs; (iii) formulation of a zoning policy to define within the floodplain the areas that are suitable for human settlements, agriculture production and other uses; and (iv) recovery of operation and maintenance costs of flood protection facilities and other agriculture infrastructure. Three of these initiatives were taken up. Formulation of a zoning policy was not required because lands in flood plains are used by human settlements and agriculture as well as other public and private infrastructure. It was deemed impractical to divide flood plains into zones and enact a law to implement the policy. Therefore, the flood plain zoning study was deleted from the reformulated Project. The RMT and a steering group were formed and rivers were classified. Agricultural income tax was enacted in the four provinces. A study on levying flood cess was done and recommendations were forwarded to the provincial governments. Procedures for the allocation of operation and maintenance funds are in place and funds are approved in annual budgets. 9. Fifty-seven flood protection associations (FPAs) of the beneficiary communities living along major and secondary rivers were formed, including 43 male and 14 female associations. Memorandums of understanding were signed with the FPAs to get them involved in implementation and providing land required for civil works free of cost. Training based on three modules was conducted with 314 male and 147 female members of the associations to create awareness and preparedness for minimizing damage due to floods. Module 1 dealt with the disaster management cycle, the concept of vulnerability, capacity analysis and mapping. Module 2 dealt with kinds of damage, methods for conducting needs assessment and immediate and long-term needs, the importance of community participation, and gender roles in community participation. Module 3 dealt with local government ordinances and the roles and responsibilities of local government departments during floods. The NGO recruited for beneficiary participation also carried out five research studies. The studies assessed (i) the impact of riverine flooding on housing and shelter and livelihood sources in Multan and Muzaffarabad districts; (ii) the impact of riverine flooding on food and nutrition, and health and health care in Multan and Muzaffarabad districts; (iii) the impact of riverine flooding on housing and shelter and livelihood sources in Sargodha district; (iv) the impact of riverine flooding on

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food and nutrition, and health and health care in Sargodha district; and (v) the politics of relief as experienced by people of Badin after the rain and flood disaster in 2003. 10. Consulting services, equipment and materials were provided. Training needs were assessed for key Project staff, but training could not be conducted as planned. Staff had no time to attend training courses once project implementation began in 2004, after more than four years of loan effectiveness. However, during development of the flood forecasting model, FFD staff received on-the-job training on using the model. Similarly, staff of PIDs carried out feasibility studies of the subprojects with the assistance of consultants, which enhanced their capacity and skills. WAPDA-W staff were fully involved with the consulting experts for the procurement, installation and operation of the telemetry network and the HF radio communication system. This on-the-job training carried more practical value than classroom training. For the recovery of operation and maintenance costs of flood protection facilities and other agricultural infrastructure, agricultural income tax laws were enacted in the four provinces.

2. Improvement of Flood Forecasting, Warning and Preparedness 11. Improvements in Pakistan’s flood forecasting and warning system initiated under the first project were to be continued and expanded under this component. The flood forecasting model has been completed and a flood early warning system (FEWS) has been developed and installed at the FFD. Weather radar at Lahore has been upgraded, the radar at Sialkot replaced and a new radar installed at Mangla. The meteor burst telemetry system has been expanded to cover 22 new sites on major and secondary rivers in the four provinces. The HF radio communication system has been expanded by procurement of 22 new sets, of which 10 are provided to PIDs, two to the FFC and 10 to the WAPDA-W. A study intended to reassess the operating procedures of the Mangla Dam was not done under the Project because the Government had undertaken to raise the Mangla Dam project and Mangla’s reservoir operation was also revised. Meteorological studies were not carried out because the quantitative measurement and forecast of rainfall in the upper catchments of the Indus River and its tributaries was expected to improve using data generated from the radars and by collecting synoptic weather data from satellite by the receivers procured under the Project. After commissioning of the radars, the precision of rainfall forecasts has increased and forecasts issued by the PMD through the media are more accurate and reliable than in the past. Scale-model testing was also done for three barrages at Qadirabad and Panjnad on the Chenab River and at Kotri on the Indus. The objective of the testing was to establish discharge computation formulae and discharge coefficients for the barrages with varying configuration and hydraulic conditions, to enable the FEWS to forecast the precise time and magnitude of flows at these locations. In addition, a digital terrain model was developed to produce flood plain and flood risk maps of all major rivers in the Indus system. A flood plain map shows rivers, flood plains, canals, flood embankments, settlements, contours and other topographic features. A flood risk map shows the extent of periodic floods, inundated areas and settlements. The maps are an excellent tool for sector planning and have greatly enhanced the capacity of government agencies for identification and risk assessment of flood-prone areas. All activities envisaged at appraisal under this component have been completed. 3. Implementation of Subprojects 12. This component included implementation of four core subprojects and 40 other subprojects in the four provinces. The four core subprojects, one in each of the four provinces, were analyzed in detail at appraisal for immediate implementation These included Mangla-Trimmu reach in Punjab, Chashma-Taunsa reach in North-West Frontier Province (NWFP),

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Guddu-Sukkur reach in Sindh, and the Toba-Achakzai-Qila Abdullah area in Balochistan. All core subprojects have been implemented except in Balochistan. In Punjab, three schemes were implemented in the Mangla-Trimmu reach of the Jhelum River. In NWFP, five schemes were implemented on the Indus River in Chashma-Taunsa reach. In Sindh, nine schemes have been completed on the Indus in Guddu-Sukkur reach. The core subproject in Balochistan included flood protective works along small rivers in Qila Abdullah district, but the works could not be implemented because of the security situation in the area and also because of disputes among local tribes. Apart from the core subprojects, 40 other subprojects were to be implemented on major and secondary rivers. Against that target, 58 subprojects were implemented under the Project, including 24 in Punjab, seven in Sindh, 15 in NWFP and 12 in Balochistan (see Appendix 1). Although delays occurred in the approval process, execution was done at a reasonably good pace after approval was received and most of the works were completed between two flood seasons.4 The quality of civil works was found to be exceptionally good because of strict controls and checks. The consultants and monitoring teams of the Government regularly checked the specifications of materials used in construction, ensured adherence to design configuration of the structures, and conducted laboratory tests of the stone material. Sub-standard and below-specification works were removed and replaced at a few locations. All protective works completed under the Project successfully withstood high floods without damage during the 2006 flood season. C. Project Costs

13. The total cost of the Project at appraisal was estimated at $200.0 million, including taxes and duties. ADB’s loan was $100.0 million. The Overseas Economic Cooperation Fund (OECF) of Japan 5 was to finance $50.0 million, the Government’s share was $44.0 million and beneficiaries were to contribute an estimated $6.0 million. ADB’s loan included $40.5 million foreign exchange and $59.5 million local currency financing. After reformulation, the Project cost was revised to $81.98 million, including ADB financing of $63.91 million, Government financing of $15.67 million and the beneficiaries’ contribution of $2.4 million. ADB financing included $21.85 million foreign exchange and $42.06 million local currency. 14. The actual Project cost was $61.155 million, of which $48.157 million was utilized from the ADB loan, including interest during construction of $0.517 million. The Government financed $12.998 million and the contribution of beneficiaries came in the form of land.6 None of the subprojects caused involuntary resettlement and they did not have a negative impact on indigenous people. Consequently there were no cost implications. The actual Project cost was far lower than appraisal estimates mainly because the appraisal estimates were too high and Pakistan’s rupee depreciated substantially against the dollar7 during implementation. D. Disbursements

15. The disbursement procedures did not delay disbursements and implementation. The reason for the delay in disbursements was that implementation occurred six years after loan approval and four years after loan effectiveness. The physical implementation of Project activities began only in 2004. By that time, the recruitment of consultants and an NGO was 4 Flood works were constructed between October and June to avoid the flood season from July to September. 5 OECF did not finance the Project because the Government of Japan imposed economic sanctions on Pakistan

after it conducted nuclear tests in May 1998. 6 The value of land provided by the beneficiaries could not be worked out and was not included in the cost of the

subprojects. 7 The Project was estimated at appraisal in September 1997 at PRs40.47:USD1.

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completed and only $1.836 million had been disbursed from the loan. After starting implementation in 2004, annual disbursement projections were prepared and achieved in 2005 and 2006. Direct payments were made to the consultants and the NGO as well as to contractors in Sindh province. Direct payments were also made to contractors in the other provinces for bills exceeding the limit of $50,000. Imprest account and statement of expenditure dispensation was used for payments to the PIDs for civil works, except in Sindh province.8 Use of imprest accounts facilitated execution of civil works in three provinces. Most of the bills were for less than $50,000 and were paid from the imprest accounts, which was less time-consuming and ensured timely release of payments to contractors. In the case of Sindh, some delays occurred because each payment was to be released by ADB, which took considerable time in some cases. The payments for civil works were released after consultants verified the works were in accord with the design specifications. Payments were withheld for works that did not comply with design specifications until compliance was achieved. The final payments were released after certification of the works by the monitoring teams, following the consultants’ verification. E. Project Schedule

16. According to the Project schedule prepared at appraisal, implementation was to start in 1998, completion was due on 31 December 2004 and loan closing was scheduled for 30 June 2005. The loan was signed 14 months after loan approval due to non-availability of Asian Development Fund (ADF) funds. While an overall period of seven years was sufficient for Project implementation, the proposed schedule of activities was unrealistic in view of the usual procedural delays and given the delays experienced in the first project. The loan was approved on 13 November 1997 and, according to the schedule, recruitment of consultants was to begin on 1 January 1998 and be completed in six months. The scheduled loan effectiveness date was three months after loan signing (11 May 1999), but was extended twice because conditions for effectiveness were not completely met.9 Almost all activities were scheduled to start before the end of year one, which seemed ambitious, particularly in view of the first project’s experience. There were substantial delays during the first four years of implementation as mentioned in the evaluation report of the first project.10 The physical implementation of the Project began after six years and was completed in three years from 2004 to 2006. The loan was extended twice for a total period of 18 months until 31 December 2006. The first extension was granted in July 2005 because project implementation had taken off and many subprojects were under execution. The second extension was granted in July 2006 because procurement and installation of radars, the telemetry network and the HF radio system was in process and needed six months to be completed. 17. During the first six years, only recruitment of consultants and an NGO was done and few studies were initiated. ADB suspended the loan from May to August 2001 because of poor implementation progress. In June 2001, the Government decided to reformulate the Project due to its slow performance and reports of misappropriation in awarding Package B contracts. The federal cabinet approved the reformulation in October 2002. Implementation could not start immediately, however, because the executing agency (EA) did not take any initiative to start it. In the second half of 2003, ADB began pushing the EA and the Ministry of Water and Power (MOWP) to begin implementation. ADB held a series of meetings with the MOWP, the FFC and 8 Sindh PID could not open the imprest account because it received the approval to open the account about five

months before the original loan closing date. It was not possible to release the imprest advance in accordance with ADB procedures. Therefore, direct payments were made to the contractors.

9 The loan was declared effective on 01 October 1999. 10 ADB. 1997. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Islamic Republic of Pakistan for Second Flood Protection Sector Project. Manila, Appendix 4

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other implementing agencies, and fielded the first loan review mission in December 2003. The mission set the tone for implementation by doing a rigorous review, holding intense discussions with all the agencies and agreeing on a time-bound action plan and schedule for implementation. The mission also developed an effective coordination mechanism among implementing and coordinating agencies, as well as support organizations, including the MOWP, three federal agencies, four provincial agencies, two consortia of consultants and the NGO. ADB approved the reformulated Project’s change in scope in July 2004. The contracts of consultants and the NGO were revised in light of the changed scope. F. Implementation Arrangements

18. The FFC was the EA responsible for overall coordination and management of the Project. The PID of each province was the implementing agency (IA) for executing civil works along rivers. The WAPDA-W was the IA for procurement and installation of the telemetry network and HF radio communication system. The FFD was the IA for procurement and installation of radars. It was also responsible for supervising the early warning system to be developed by Package C consultants, getting it installed in Lahore, using it to forecast floods, and issuing warnings. The implementation arrangements were designed by keeping in view the mandate of federal and provincial agencies, but procedural delays remained a constant feature of the Project. Each individual subproject required FFC and MOWP approval, which was one of the key reasons for implementation delays. The FFC does not execute, operate or maintain any flood sector subproject, yet it has centralized control over implementation of subprojects financed by the federal Government. Based on the experience of delays in the first project, provincial governments and IAs should have been given authority to approve subprojects. G. Conditions and Covenants

19. Conditions of loan effectiveness included approval of the Planning Commission Proforma I (PC-I) by the Executive Committee of the National Economic Council of the borrower, evaluation of the proposals for the short-listed consulting firms, and selection of an NGO for flood preparedness campaigns and community mobilization. Routine procedural delays in completing agreed actions delayed the loan effectiveness by five months. 20. A total of 32 loan covenants was included in the loan agreement. After reformulation, four covenants were considered irrelevant and were waived, and one covenant was modified. The total number of covenants was thus 28, including one sector covenant, four environmental, six social, seven financial, three economic and seven other covenants. The borrower complied with 26 loan covenants and partly complied with two (see Appendix 3). The compliance with most of the loan covenants was delayed due to delays in Project implementation. The audited project accounts were received before the due dates and were rated highly satisfactory. H. Consultant Recruitment and Procurement

21. The selection of consultants was carried out in accordance with Schedule 4 of the Loan Agreement and ADB’s Guidelines on the Use of Consultants (as amended from time to time). A consortium of four firms was recruited in Package B for capacity building for integrated river management and preparation, development and supervision of civil works subprojects. A total of 1,884 person-months, including 168 international and 1,716 of domestic consulting services, was envisaged under the package. The consortium utilized 45 person-months of international and 816 person-months of domestic consultants. Another consortium of two firms was recruited in Package C to strengthen flood forecasting, management and the warning system. Under that

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package, 285 person-months were envisaged, including 79 of international and 206 of domestic consultants. The Package C consortium utilized 38 person-months of international and 433 of domestic consultants. Although ADB procedures were followed in recruiting consultants, the evaluation of the Package B consultants was not considered transparent by the competing firms, which lodged a complaint with the Government, leading to delays in implementation and reformulation of the Project. The scope of the Package B consultants was very broad, with studies that were considered not essential and some overlapping with activities identified in the scope of Package C. The required input for preparation and supervision of civil works subprojects was overestimated. A consortium of NGOs was recruited, but their scope of work was substantially reduced in the reformulated Project design. As a result, one NGO in the consortium received a revised contract with a reduced scope of work. After approval of the reformulated Project, the contracts of the Package B and C consultants were also revised. 22. Procurement of works and goods was carried out in accordance with Schedule 3 of the Loan Agreement and ADB’s guidelines. Four international competitive bidding (ICB) contracts and one international shopping (IS) contract for supply and installation of equipment, and 89 national competitive bidding (NCB) contracts for civil works were awarded. The ICB contracts included two for Sialkot and Mangla radars, one for 22 telemetry stations and one for 22 HF radio communication sets. The IS contract was for upgrading the Lahore radar. The mode of procurement was not changed. I. Performance of Consultants, Contractors and Suppliers

23. The performance of the Package B consultants was partly satisfactory. The performance of the lead firm was not satisfactory, as it did not show professional commitment and focused more on claiming person-months rather than providing required outputs. The team leader from the lead firm did not provide input as required. During the last year of Project implementation, when Project activities were in full swing, he left for another assignment. The firm did not have qualified people to do the studies, which not only delayed the submission of reports but also had an impact on their quality. The deputy team leader of one of the associate firms coordinated on the team leader’s behalf until completion. The subprojects’ preparation and supervision was the responsibility of the associate firm, which performed this specific task in a professional manner. The performance of the Package C consultants was satisfactory. They completed the assigned works according to the terms of reference and delivered outputs of good quality in a professional manner. The NGO’s performance was also satisfactory. The performance of civil works contractors and suppliers of the telemetry network and HF radio system was satisfactory. The performance of the supplier of the Mangla radar was unsatisfactory because supply and installation were delayed by more than nine months. J. Performance of the Borrower and the Executing Agency

24. The borrower reformulated the Project, which was the right step in making the Project’s scope and cost allocations more realistic, and to tackle the transparency issue for the Package B consultants. However, spelling out the responsibility for misappropriation and related punitive action would have been appropriate and could have contributed to avoid such problems in the future. The borrower provided counterpart funds in a timely manner. The performance of the borrower was satisfactory. 25. The FFC had overall responsibility for Project management and coordination. During the first six and a half years, from loan signing to mid-2005, the EA’s performance was unsatisfactory. Delayed decisions on approval of subprojects, revision of contracts of

9

consultants and the NGO, and holding back eligible payments to the consultants slowed implementation after reformulation. The Project Director was replaced in July 2005 as a response to ADB’s condition for an extension of the loan closing date. From July 2005 until the end of the Project there was some improvement in performance. The performance of the EA was partly satisfactory. 26. The performance of the WAPDA-W in procurement, installation and operation of the meteor burst telemetry network and HF radios was highly satisfactory. The ownership and commitment demonstrated by WAPDA-W staff during implementation was exemplary. The performance of the PMD in procurement and installation of radars, and coordination with the consultants for development of flood forecasting and the early warning system, was unsatisfactory. The Mangla radar was delayed by more than nine months and the PMD, as the implementing agency, made no serious effort to expedite delivery and failed to enhance the pace of work. The coordination of the PMD with the consultants was unprofessional. 27. The PIDs were responsible for execution of civil works in their respective provinces. They managed to get the works completed in a short span of time once the contract awarding process was completed. Contract awards were delayed because of the centralized approval process that required the PC-I of each subproject to be approved by the FFC and the MOWP. The composite schedule of rates used for cost estimates also delayed awarding the contracts because the rates did not match market prices, which reduced contractors’ participation. The execution of works was carried out at a relatively faster speed and all works were completed before the 2006 flood season. The quality of civil works was outstanding. Almost all the structures withstood high floods during 2006 without damage. The performance of the PIDs was satisfactory. K. Performance of the Asian Development Bank

28. The Project could not have been completed had ADB not played a very proactive role in improving coordination among executing and implementing agencies and the consultants, day-to-day follow-up of the activities, and intense monitoring of implementation. ADB fielded regular review missions once implementation began and remained proactive during the final three years. Surplus loan proceeds were cancelled at the time of approving the change in scope of the Project, following reformulation by the Government. ADB regularly visited the subproject sites and did regular checks on the quality of works. Submissions from the EA were responded to promptly, and disbursements and approvals were efficient. ADB also guided consultants on the methodology and approach for carrying out various studies, reviewed the draft reports and gave comments on technical aspects. ADB’s performance was satisfactory.

III. EVALUATION OF PERFORMANCE

A. Relevance

29. The Project was relevant to the Government’s strategy for development of the sector and consistent with the National Flood Protection Plan at the time of appraisal, and it remained relevant until completion. The Project was also relevant to ADB’s strategy of supporting projects with the potential for economic growth and poverty reduction. However, overestimation of the costs and the exaggerated scope of consulting services rendered the Project over-designed and only partly relevant.

10

B. Effectiveness in Achieving Outcomes

30. The Project was effective in achieving outcomes. The number of flood protection works completed is more than envisaged (para. 10). The flood early warning system has been developed and radars, a telemetry system and an HF radio communication system have been installed as envisaged. The number of people benefiting from the Project is estimated to be more than 30 million. Due to implementation delays, completion of the subprojects was delayed by about two years. Civil works were to be completed by 31 December 2004 according to the schedule, meaning that beneficiaries were to be protected from floods in 2005. However, actual completion was achieved only before the 2006 flood season. Although beneficiaries were exposed during the 2005 flood season, no damage occurred during that period. The stability of flood embankments and river training works was visible after the 2006 flood season. They performed well and demonstrated the soundness of the design and the quality of works. They withstood floods without any damage and trained the river flows as designed. The early warning system operated during the 2006 flood season and produced reasonably accurate forecasts of river flows at major control structures. Although the actual cost was less than the appraisal estimates and the scope of the consulting services and some other non-physical activities was reduced, the subprojects delivered more outputs than planned at appraisal. C. Efficiency in Achieving Outcomes and Outputs

31. The Project was efficient as desired economic benefits have been achieved (see Appendix 4). The economic internal rate of return (EIRR) of core subprojects in Punjab, Sindh and NWFP is estimated at 21.6, 15.6 and 31 percent respectively. The EIRR of core subprojects worked out at appraisal was 13, 14 and 28 percent for Punjab, Sindh and NWFP respectively. The overall EIRR of the core subprojects was not estimated at appraisal, but is estimated at 21.7 percent at completion (for three provinces). The estimated EIRRs are economically viable and robust for all provinces. The EIRR for Balochistan is not estimated because the core subproject was not implemented there. The Project was less efficient in terms of implementation performance. The Project was completed in about nine years with a delay of 18 months. The physical implementation began after a delay of six years and was completed in three years. ADB provided proactive support to the implementing and executing agencies, which made completion of the works possible, with a delay of only 18 months despite the loss of the first six years. The efficiency of the executing and implementing agencies was mixed, being very low during the first six years and remarkable during the final three years, with a few exceptions. D. Preliminary Assessment of Sustainability

32. The Project’s sustainability is likely because of (i) the sound design of flood embankments and river training works based on physical model studies, and the quality of construction; (ii) the presence of appropriate policies and procedures to ensure continued funding for the operation and maintenance of subprojects and the flood early warning system; (iii) the availability of appropriate technology and equipment to operate the early warning system; and (iv) the availability of technically equipped human resources to operate and maintain the subprojects and the early warning system. The PIDs have established yardsticks for estimating the operation and maintenance funds for flood protection structures, which are provided annually. In addition, each year before the flood season, the federal and provincial governments prepare flood action plans by identifying the critical locations and structures along rivers. Monitoring of the flood protection facilities is done round the clock as flood waves propagate in the rivers. Additional funds are allocated for emergent works if required. The PMD has recruited additional staff to operate the facilities provided under the Project for flood forecasting and early

11

warnings. The additional funds required from July 2007 for operating and maintaining the system have been allocated in the annual budget. E. Impact

33. The overall impact of the Project is positive. The flood protection works are protecting a vast area of irrigated land, which was under constant threat from floods and inundated on many occasions in the past. These works have averted damage to crops and livestock, which are the main sources of livelihood for riverine communities, thus reducing vulnerability and loss of livelihood. Immovable assets such as private houses and public infrastructure such as roads, bridges, schools, hospitals, communication and power transmission facilities, canals and irrigation structures (including barrages and outfalls) are also protected. In many cases, reclamation of irrigated land eroded by floods has begun. The flood early warning system will substantially reduce loss of human life, livestock and movable assets due to the issue of early warnings. The institutional capacity of the implementing agencies such as the WAPDA-W, the PMD and the PIDs has been substantially enhanced. The radars have improved the reliability of rain forecasts, which will enhance the precision in flood forecasting as well as the operational capacity of the irrigation system during flood seasons, by providing reliable reservoir inflow forecasts for storage reservoirs. None of the subprojects caused involuntary resettlement or had a negative impact on indigenous people. The environmental impact of the Project is positive. The negative impacts associated with inundation due to floods and riverbank erosion have been reversed with construction of flood embankments and river training works. Environmental assessments were done for the subprojects at the feasibility stage, and arrangements for implementation of mitigation measures and monitoring were effective.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

34. The Project was successful. The outputs achieved were more than envisaged in terms of the number of subprojects completed as part of the reformulated Project design. The Project was relevant, effective, efficient and likely to be sustained. The rating follows the Operations Evaluation Department’s suggested weights and is provided in Appendix 5. B. Lessons Learned

35. The number of participating and implementing provinces, agencies and organizations with different conditions and political economies complicated implementation and made it difficult and time-consuming to reach agreements on key issues. The institutions that ultimately own the infrastructure and are responsible for its operation and maintenance must be the ones that manage the planning, design and implementation. 36. The authority for the approval process of the subprojects should remain with the institution owning the infrastructure. A centralized approval process was one of the main reasons for delays. Preparation and approval of PC-I of each and every subproject takes considerable time. The cost of civil works in Sindh, Balochistan and NWFP is estimated on the basis of a composite schedule of rates that does not match market prices and results in delays in awarding contracts.

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37. Implementation of such complex project, which involves a large number of federal and provincial agencies, requires extra effort in coordination and follow-up of activities from the borrower, EAs, IAs and ADB. C. Recommendations

1. Project Related

38. The FFD of the PMD is the agency responsible for operating FEWS and issuing early warnings. Two FFD staff were trained in the operation of FEWS and the FFD has begun forecasting floods. More staff have been recruited to operate the new radars. The addition of one hydrologist in the FFD would be helpful in updating the hydro meteorological and other data in the FEWS. The FFD should remain proactive in getting data from the WAPDA-W, which is operating the meteor burst telemetry network, and from the HF radio communication system provided to the PIDs and the WAPDA. 39. The MOWP should recruit one or two experts from the consulting firm that developed FEWS during the next flood season to supervise the operation of FEWS, rectify any problems during operation and fine-tune the model if required. Since FEWS is based on a hydro dynamic river flow model and such models may have room for refinement on the basis of actual flows observed during flood seasons, the precision of forecasting could be further enhanced.

2. General

40. The execution of flood protection works is the responsibility of the provincial agencies, while decision making and control of funds are with the federal Government. The approving authority for each single subproject is also with the federal Government. To improve the efficiency and performance of the sector, provincial governments should be given complete authority over decision making and the approval process. The federal Government, through the FFC, should focus only on monitoring and evaluation, with no involvement or control over implementation. The monitoring unit established in the FFC should be equipped with qualified staff for this purpose. 41. The provincial governments in Sindh, NWFP and Balochistan provinces should discontinue using the composite schedule of rates for cost estimation of civil works and use market rates instead. 42. Estimates of Project costs, consultancy inputs, the scope of work and the implementation schedule should be carefully worked out at appraisal by keeping in view the operating environment of the country, past experience, the capacity of the EAs and IAs, and the relevance to the Project’s objectives. Studies should be avoided where they have no significant relation with the outcome of the Project or their usefulness cannot be clearly identified. Past experience about utilizing the results of sector studies by the borrower and EAs and IAs should also be considered. 43. Although ADB’s procedures for recruiting consultants are followed by the EAs and submitted to ADB for review and approval, ADB should carefully review technical and financial evaluations and be provided with the means to verify the transparency of the process. 44. The Government of Pakistan and ADB need to be very strict on whether to accept the replacement of experts who are included in consultants’ proposals. It has become a common

13

practice that consultants include the résumés of strong experts in their proposals in order to win the projects, but then replace them with weaker ones at the time of mobilization and during implementation. The most common reason given is non-availability of the expert because of the length of time taken in recruitment. However, the consulting firms engaged on ADB-financed projects are fully aware of the time taken from submission of proposals to mobilization. In technical evaluation, the qualification and experience of the proposed experts carries maximum marks, therefore their replacement should be accepted only in very exceptional cases. The practice of replacing experts is one of the main reasons for the deteriorating quality of consultants’ output, which is being questioned in many projects in Pakistan.

14 Appendix 1

FLOOD PROTECTION SUBPROJECTS

S No Subproject A. Punjab Province 1a Protection of Upper Jhelum Cana-Jhelum River Construction of Sloping Spur and Bund for Protection of Village Joya and Hamoka-Jhelum River Construction of Apron and Stone Pitching of Shahpur Flood Bund-Jhelum River 2 Construction of Guide Head Spur opposite Village Qasmani-Sindh River 3 Flood Carrying Channel of Sori Lund Hill Torrent in D.G.Khan 4 Raising LMB, RMB and Guide Bund of Balloki H / Works-Ravi River 5 Construction of Bund for Protection of Saroba Village-Soan River 6 Construction of Bund for Protection of Dhok Adhrana-Soan River 7 Raising and Strengthening of RMB and LMB Upstream Punjnad Headworks-Chenab River 8 Construction of J-Head Spur at Kahloon Village-Indus River 9 Extension of Guide Spur at Alluwali-Indus River 10 Raising Piplan Guidewall-Indus River 11 Construction of Guide Spur Nos.1 and 2 upstream and downstream Stud No.2 at Kallurkot-Indus River 12 Construction of J-Head Spur at Village Ravi-Indus River 13 Construction of J-Head Spur at Village Dagar Malana-Indus River 14 Construction of Protecting Bund for Lalu Guddar Disty. and Kanda Minor-Sutlej River 15 Construction of Mole Head Spur at RD 15000 of Chenab Flood Bund-Chenab River 16 Construction of Guide Wall Spur at Mallianwala-Chenab River 17 Raising L.MB of Suleimanki Headworks and allied spurs-Sutlej River 18 Extension of Guide Bank head spur No.3-B at RD 252000 of Shujabad Branch-Chenab River 19 Construction of J-Head and Sloping Spurs for Protection of B.S. Link canal outfall-Sutlej River 20 Construction of J-Head Spur 1B at RD 29000 of Shahwala Groyne-Indus River 21 Construction of J. Head Spur at RD.12500 Chachran Link Bund.-Chenab River 22 Construction of Flood Bund to protect Fateh Muhammad Disty. and Adjoining areas-Sutlej River 23 Construction of stone pitched dike to protect Pandoke outfall drain and agric. lands-Sutlej River 24 Construction of J-Head Spur to protect Q.B.Link canal outfall structure-Ravi River 25 Remodeling of Minchan Bund RD 122-243-Sutlej River B. Sindh Province 1a Construction of stone pitching along Ranwati Bund-Indus River Construction of stone pitching along Dilwaro Bund-Indus River Construction of stone pitching and apron along Qadirpur Loop Bund-Indus River Construction of stone pitching and apron along Baji Bund-Indus River Re-sectioning K.K. Bund-Indus River Re-sectioning of Ghouspur Loop Bund-Indus River Earthwork and stone pitching along Khairwah Bund-Indus River Construction of stone pitching along S.F. Bund-Section-II A-Indus River Construction of stone pitching along Sukkur Begari Bund-Indus River 2 Construction of stone pitching along Trench Bund of L.M. Bund of Guddu Barrage-Indus River 3 Construction of stone pitching and apron along U/S left spur of Gudu Barrage-Indus River 4 Construction of stone studs along U/S right guide bank of Gudu Barrage-Indus River 5 Construction of stone pitching along right marginal bund of Guddu Barrage-Indus River 6 Centralizing main current of River Indus upstream Gudu Barrage 7 Remodeling of F.P. Bund

Appendix 1 15

8 Remodeling of Gaj Diversion Bund C. Balochistan Province 1 Construction of protection bunds for land/gardens in Amrit Dola, Killi Dabri-Qilla Abdullah 2 Construction of bund for protection of Patfeeder canal and command area-Nasirabad 3 Construction of protection bunds for lands along banks of Porali River-Lasbela 4 Construction of Zarap delay action dam-Panjgur 5 Construction of bunds for protection of land along banks of Kech River 6 Construction of Garhi Manda delay action dam-Quetta 7 Construction of Kapip Tangi delay action dam-Zhob 8 Construction of protection bunds in Rakhpore area-Zhob 9 Construction of protection bunds in Omza area-Zhob 10 Construction of bunds for protection of land in Sanjavi area-Ziarat 11 Construction of bunds for protection of lands in Rud Malazai area-Pishin 12 Construction of Khaiz delay action dam in Toba Kakri area-Pishin D. North-West Frontier Province 1a Construction of spur No. 28-A on right bank of River Indus-Dera Ismail Khan Construction of spur No. 32 on right bank of River Indus-Dera Ismail Khan Construction of spur No. 33 on right bank of River Indus-Dera Ismail Khan Construction of spur No. 18-C on right bank of River Indus-Dera Ismail Khan Construction of spur No. 21-B on right bank of River Indus-Dera Ismail Khan 2 Construction of 4 spurs on Kurram River-Bannu 3 Construction of flood protection bund for Panyala town-Dera Ismail Khan 4 Construction of spurs and bund on Kurram River in Thall-Hangu 5 Construction of flood protection bunds on Adezai River at Mamoon Khatki 6 Construction of bunds and river training works on Adezai River-Agra, Jala Bela, L Daudzai 7 Construction of bunds and river training works on Kabul River-Koroona, Banda Sheikh Ismail 8 Construction of bunds and river training works on Shah Alam River-Takht abad, Bela Niko Khan 9 Construction of bunds and river training works on Adezai River-Mukam Shah, Vino Garhi 10 Construction of flood protection bunds on Swat River downstream Munda headworks 11 Construction of flood protection bund on Narangi River-Swabi 12 Construction of flood protection bunds on Kunhar River-Mansehra 13 Construction of flood protection bunds on Siran River-Mansehra 14 Construction of bunds and river training works on Swat River upstream Munda headworks 15 Construction of bunds and river training works on Panjkora River-Dir 16 Construction of spur on right bank of Swat River-Momdheri

a = core subproject

16 Appendix 2

PROJECT FRAMEWORK

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms

Assumptions and Risks

Goal To promote economic growth and reduce poverty by reducing flood damage to human settlements, agricultural land, infrastructure and human life in flood-prone areas of Pakistan

Flood losses from serious floods and riverbank erosion reduced

National, provincial and district statistical reports Federal Flood Commission (FFC) monitoring reports Benefit monitoring and evaluation reports

Implementation of the National Flood Protection Plan is adequately funded by the federal and local governments Operation and maintenance requirement of flood protection structures are adequately met Design criteria of flood protection structure are not exceeded

Purpose To protect essential social infrastructure in flood-prone communities from flood damage and thereby increase their capability for increasing income and employment

Riverbank erosion and flood damage to settlements, infrastructure and agricultural lands reduced Effective and timely flood forecasting and warning systems established Agricultural production stabilized

Benefit monitoring and evaluation reports National, provincial and district statistics Project completion report

Needed funds including those provided under the Project are released on a timely basis Flood protection works are constructed according to design standards and are completed on time Field supervision of Project works is adequately provided Flood forecasting and warning systems are operating reliably

Outputs Policy improvement and capacity building

River management team notified

Quarterly progress reports

Consultants are recruited on time

Appendix 2 17

Design Summary




Improvement in flood forecasting, warning and preparedness

Implementation of subprojects

Integrated river management policies and practices put in place In-country training for Project staff started Mathematical and physical modeling carried out for subprojects Hydro-dynamic model of Indus basin completed by 30 June 2005 Hydro-meteorological equipment procured and installed Radio receivers procured and distributed to flood prone areas Non-government organization (NGO) engaged to mobilize communities Detailed survey and design of core subprojects completed PIDAs prepared feasibility reports of the non-core subprojects, where required Detailed survey and design of non-core subprojects completed NGO engaged to

Project review mission reports Project completion report

Policy initiatives are supported at various levels of the Government Qualified local staff are assigned to the Project No delay in procurement of needed equipment Needed funds are released on time Contracts processed without delay PIDAs’ capacity is improved for preparation of feasibility reports Consultants have provided the additional input Land acquisition

18 Appendix 2

Design Summary




mobilize communities Contracts for civil works awarded Civil works completed

carried out without delay Revised contracts of consultants are signed without delay

Activities Preparatory Works a. Project director and Project coordinators appointed b. Project steering

committee organized c. NGO and consultants

appointed d. Project monitoring cell

established Policy improvement and capacity building Improvement in flood forecasting, warning and preparedness Implementation of subprojects

a. Detailed design for core subprojects complete b. Screening and feasibility studies carried out for other subprojects c. Detailed design for other subprojects carried out d. Construction of core and other subprojects carried out e. Project progress monitored continuously by FFC and consultants f. Project completion report

(Performance targets of the activities are provided in output)


Needed funds are released on time Project staff are appointed without delay Consultants are engaged without delay Competent Project staff are recruited Project management office assigns capable staff to the Project

Appendix 2 19

Design Summary




prepared Inputs Policy improvement and capacity building Improvement in flood forecasting, warning and preparedness Implementation of subprojects

$3.5 million $10.8 million $65.7 million


Needed funds are released on time Project staff are appointed without delay Consultants are engaged without delay Competent Project staff are recruited Project management office assigns capable staff to the Project

20 Appendix 3

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan

Agreement

Status of Compliance Within one year after the effective date, the FFC shall, in consultation with the provinces, carry out a classification of the country's river system into main rivers and other rivers so as to enable the FFC to focus its coordination and monitoring functions on flood protection works along main rivers and commence delegation of flood protection works along other rivers to provincial authorities concerned. The FFC shall keep the Bank informed of the status of the classification, and shall complete the classification within two years after the effective date. During the course of Project implementation, the borrower shall develop a zoning policy for major rivers and introduce appropriate legislative measures to implement the zoning policy covering the flood-prone areas in the country. The borrower shall implement the zoning policy within five years after the effective date. Each PIDA shall prepare an initial environmental examination and summary initial environmental examination for each subproject, other than the four core subprojects, for review by the Bank to ensure that the subprojects are implemented in accordance with the Bank's (i) Environmental Guidelines for Agricultural and Natural Resources Development Projects, (ii) Environmental Guidelines for Selected Infrastructure Projects and (iii) Environmental Assessment Requirements and Environmental Review Procedures of the Asian Development Bank. Each PIDA shall ensure that the summary initial environmental examination of each subproject

Schedule 5, para 13 Schedule 5, para 14 Schedule 5, para 7(a) Schedule 5, para 7(b)

Complied late, Satisfactory Not applicable Zoning policy was excluded from scope in reformulation. It was not practically possible to implement such a policy because the flood plains are being used for agriculture and various other activities. There are many human settlements and public and private infrastructure in the flood plains. Any policy would have social and political implications. The covenant was waived. Complied, Satisfactory Complied, Highly satisfactory

Appendix 3 21

Covenant

Reference in Loan

Agreement

Status of Compliance (other than the four core subprojects) is approved by the provincial Environmental Protection Agency and endorsed by the FFC before it is sent to the Bank for review and approval. Where a subproject is located in an ecologically important area, such as a bird migration route (the Indus Flyway) or wildlife sanctuary, each PIDA shall obtain the approval of the concerned Department of Wildlife and any other agency concerned on the design of the subproject in the area. The approval shall be obtained so as to ensure that the subproject is designed to take into account ecological considerations, including ensuring that the Project will not adversely affect migrating birds during their wintering season, as well as any ecologically important endemic and protected species. Where a subproject involves river training works that may cause adverse environmental impacts, including those arising from riverbank erosion due to deflection of flows, each PIDA shall carry out physical and mathematical hydraulic model tests to evaluate alternative structure designs and select the most environmentally suitable alternative. Each PIDA shall discuss the outcome of the tests with persons who are likely to be affected by the river training works. Each PIDA shall ensure that beneficiary participation and preparation of socioeconomic profiles of flood-prone communities form part of the feasibility study for each subproject. Each PIDA shall also ensure that each feasibility study is reviewed and approved by the FFC. The FFC shall submit to the Bank for review and approval of the initial feasibility studies until the Bank has determined, based on the level of quality of the feasibility studies, that subsequent feasibility studies need not be submitted to the Bank for approval prior to the implementation of

Schedule 5, para 7(c.i) Schedule 5, para 7(c.ii) Schedule 5, para 6(d)

Representatives of the provincial Environmental Protection Agencies were members of Project working group that reviewed and approved the feasibility studies and initial environmental examinations of each subproject. Complied, Highly satisfactory Complied, Highly satisfactory Complied, Highly satisfactory One subproject was dropped in Punjab because of concerns raised by beneficiaries.

22 Appendix 3

Covenant

Reference in Loan

Agreement

Status of Compliance subprojects. In these cases, copies of approved feasibility studies shall be retained in the FFC's files for use by the Bank during review missions. Where a subproject involves land acquisition, the borrower and the PIDA concerned shall ensure that all land, rights in land and riparian rights required for the Project are acquired or made available in a timely manner, free from any liens or other impediments. The borrower and each concerned PIDA shall ensure that the Bank's policy on involuntary settlement is applied, including (i) compensation for all land and fixed assets at the replacement rate, (ii) restoring the economic and social base of persons affected by land acquisition resulting in loss of livelihood or housing, and (iii) ensuring that farmers without ownership rights are consulted and fairly compensated such that their living standards are not adversely affected by the Project. Each PIDA shall adopt procedures for land acquisition and resettlement related to the Bank-financed portions of the Project in accordance with the Bank's policy for involuntary resettlement. Each PIDA shall also ensure that the funds required for compensation and rehabilitation are released to the concerned agencies prior to the start of any physical work on each subproject The borrower shall implement procedures for beneficiary participation in flood protection during the first year of Project implementation in accordance with arrangements acceptable to the Bank. The borrower shall ensure that these procedures include cost sharing in the construction and operation and maintenance of flood protection works with substantial benefits accruing to distinctly identifiable beneficiaries. Where a subproject involves flood protection works with substantial benefits accruing to these beneficiaries, each PIDA shall ensure that there is an agreement between the agency concerned and the beneficiaries before commencing any physical work.

Schedule 5, para 8(a) Schedule 5, para 8(a) Schedule 5, para 8(b)

Complied, Highly satisfactory None of the subprojects involved involuntary resettlement. Complied, Satisfactory Most of the subprojects did not require private land. Beneficiaries provided land free of cost wherever required. Partly complied, Partly satisfactory Beneficiaries’ participation in some subprojects was not ensured.

Appendix 3 23

Covenant

Reference in Loan

Agreement

Status of Compliance The FFC shall engage NGOs specializing in flood preparedness campaigns and on community mobilization, in accordance with criteria agreed upon by the borrower and the Bank, and in accordance with arrangements acceptable to the Bank. The NGOs shall be community facilitators at the national, provincial and district levels in improving the planning and execution of flood protection works and in ensuring the involvement of flood-prone communities in subproject implementation and maintenance. The NGOs shall assist the FFC (i) in reviewing policies applicable at national, provincial and local levels based on their close contacts with the communities, (ii) in supporting the formation of local preparedness associations through mobilizing and training men and women from flood-affected areas, (iii) by working with the PIDAs on the planning and execution of flood protection works in close consultation with local communities, (iv) in mobilizing communities for purposes of flood preparedness by providing construction materials or labor or both, and assisting in the collection of cash contributions, as applicable, and (v) in identifying mitigation measures related to any adverse impact of flood protection works. The borrower shall cause the FFC and each PIDA to provide adequate funds through budgetary allocations to meet the operation and maintenance costs of flood protection works and equipment during and after Project implementation. Within one year after the effective date, the borrower shall cause the FFC and each province to provide the Bank an estimate of the funds required for operation and maintenance of flood protection works and equipment. The borrower shall cause the FFC and each province to provide the Bank by the end of August of each year details of the funds allocated for such operation and maintenance and the funds actually utilized for such operation and maintenance during the preceding fiscal year.

Schedule 5, para 9(a) Schedule 5, para 9(b) Schedule 5, para 18(a) Schedule 5, para 18(b)

Complied, Satisfactory Complied, Satisfactory Complied, Satisfactory Complied, Satisfactory The subprojects were completed in 2006 and funds for operation and maintenance were allocated by the PIDs since July 2006. Estimating funds after one year of effectiveness was not possible as these are required

24 Appendix 3

Covenant

Reference in Loan

Agreement

Status of Compliance The borrower shall cause each province to formulate, with the assistance of the Project consultants, a time-bound action plan, acceptable to the Bank, on measures for resource mobilization for operation and maintenance of flood protection works. The action plan shall include introduction of any of the following: (i) flood cess in the case of urban areas, (ii) user charges, and (iii) other appropriate mechanisms. The borrower shall provide the Bank with the action plan by 31 December 1999. The borrower shall ensure timely release of adequate counterpart funds required for the Project to the FFC and each PIDA by the first month of each quarter of the borrower's fiscal year during the Project implementation period. The borrower shall cause the FFC and each PIDA to forward to the borrower by the end of May of each year an estimate of its respective counterpart fund requirements for the next fiscal year for inclusion in the borrower's Public Sector Development Program. The borrower shall ensure that these counterpart funds included in the Public Sector Development Program are protected from budgetary reductions in the event of shortfalls in federal revenue generation. The borrower shall keep the Bank, through its Pakistan Resident Mission, informed of the releases of the counterpart funds for the Project. The borrower shall maintain, or cause to be maintained, records and accounts adequate to identify the goods and services and other items of expenditure financed out of the proceeds of the loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, the Project-related operations and financial condition of the agencies of the borrower responsible for

Schedule 5, para 19 Schedule 5, para 16(a) Schedule 5, para 16(b) Schedule 4, Section 4.06 (a)

after completion of the infrastructure. Complied, Satisfactory Recommendations of the flood cess study have been submitted to the Government and an action plan prepared. The PIDs have developed yardsticks for providing annual funds for flood protection infrastructure. Complied, Highly satisfactory Complied, Highly satisfactory Complied, Highly satisfactory

Appendix 3 25

Covenant

Reference in Loan

Agreement

Status of Compliance carrying out the Project and operation of the Project facilities, or any part thereof. The borrower shall (i) cause the FFC and each PIDA to maintain separate accounts for the Project, (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to the Bank, (iii) furnish to the Bank as soon as available, but in any event not later than 12 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the loan proceeds and compliance with the covenants of this loan agreement as well as on the use of the procedures for the imprest fund accounts and statement of expenditures issued for the Project), all in the English language, and (iv) furnish to the Bank such other information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request. By 30 June 1998, the borrower shall cause Balochistan and Sindh to enact legislation on agricultural income tax to enable collection of an agricultural income tax based on the size of holdings. The borrower shall cause each province to notify the Bank of any proposal to change its legislation on agricultural income tax and to keep the Bank informed of the outcome of the proposal.

Within six months after the effective date, the FFC shall submit to the Bank for review and approval detailed procedures for monitoring and evaluating the benefits from the Project. As part of the annual reviews of the Project, the FFC shall furnish the Bank with monitoring reports on the Project including quantitative indicators of achievements. Within three months after completion of the Project, the FFC shall carry out additional

Schedule 4, Section 4.06 (b) Schedule 5, para 17(a) Schedule 5, para 23 Schedule 5, para 24

Complied, Highly satisfactory Complied, Satisfactory Complied late, Satisfactory Complied late, Satisfactory

26 Appendix 3

Covenant

Reference in Loan

Agreement

Status of Compliance socioeconomic surveys covering representative areas under completed subprojects to determine the quantitative benefits realized under the Project. The FFC shall evaluate the benefits of the Project in accordance with a schedule and terms of reference to be agreed upon by the FFC and the Bank. Within one month after the effective date, the borrower shall cause each province to appoint a senior official of its PIDA as Project Coordinator. Within one year after the effective date, or at a later date as the Bank may otherwise agree, the borrower shall have obtained the OECF loan or shall have made other arrangements, satisfactory to the Bank, to commit the provision of funds intended to be provided by the OECF loan. The borrower shall allocate an adequate federal revenue budget for carrying out studies to sustain the activities of the WAPDA’s Hydrology and Water Management Directorate on the collection and analysis of data on river discharges and the International Sediment Research Institute of Pakistan (ISRIP) on river morphology so that these activities support the operations of the NFFB on flood forecasting and the RMT’s operations on river management. Within nine months after the effective date, the FFC, in consultation with the PIDAs, the NFFB and WAPDA, shall submit to the Bank for

Schedule 5, para 2(b) Schedule 5, para 21 Schedule 5, Para 11 Schedule 5, Para 12

A socioeconomic survey was carried out for establishing a baseline. The benefits of the civil works have been estimated and provided in the benefit monitoring and evaluation report. The project completion report mission has collected data pertaining to all civil works and worked out benefits of the subprojects after completion. There was no need to conduct additional surveys by the FFC. Complied, Satisfactory Not applicable The Government of Japan imposed economic sanctions on Pakistan after nuclear tests in May 1998. Therefore the OECF did not provide funds. Funds were also not required due to the availability of sufficient funds from the ADB loan and government counterpart funds to complete the Project. Complied, Satisfactory Partly complied, Partly satisfactory

Appendix 3 27

Covenant

Reference in Loan

Agreement

Status of Compliance approval a program for overseas and local training to be provided under the Project. The program shall include a description of the training, detailed criteria and procedures of selection of trainees, and an implementation schedule. The borrower shall cause the FFC, each PIDA, the NFFB and WAPDA to adopt a strict system of selection and bonding in connection with the overseas training provided under the Project to ensure that trainees continue their services for a reasonable period upon completion of their training. The FFC shall ensure that the RMT established under the Project provides assistance to the federal and provincial agencies concerned to develop and implement river management programs. The FFC shall ensure that the RMT includes specialists from federal and provincial agencies concerned with integrated river management, including the IRIs (in Punjab and Sindh), each PIDA, ISRIP, WAPDA's Water Resources Planning Organization, WAPDA's Hydrology and Water Management Directorate, WAPDA's Environment Cell and the Water Resources Section of the Center of Excellence in Water Resources Engineering. Within three months after the effective date, the FFC shall establish a steering group to provide overall guidance to the RMT. The steering group shall be headed by the FCC chairman and shall include a representative of each agency in the RMT. The steering group shall meet as often as necessary but at least once every six months. The FFC shall ensure that the RMT integrates the results of the studies to be carried out under the Project (morphology, remote sensing, environment and land zoning) as part of the FFC's river management programs.

Schedule 5, Para 10 (a) Schedule 5, Para 10 (b) Schedule 5, Para 10(c)

A training plan was prepared but training could not be carried out because it was not possible for staff to spare time from implementation. However, on-the-job training was conducted. Complied, Satisfactory Complied, Satisfactory Not applicable These studies were excluded from the scope in the reformulated Project, keeping in view their relevance with the Project and also the studies done during the first project and by the Government, which were sufficient for achieving the desired objectives. The

28 Appendix 3

Covenant

Reference in Loan

Agreement

Status of Compliance Each PIDA shall prepare a list of potential subprojects for review and approval by its Project working group, based on the criteria agreed upon between the borrower and the Bank. The group shall forward the list of proposed subprojects to the Project steering committee for approval prior to conduct of detailed feasibility studies. Upon securing such approval, each PIDA shall carry out a feasibility study of the subproject showing its technical, social, financial, economic and environmental viability. Within four months after the effective date, the borrower shall introduce measures to allow the IRIs (in Punjab and Sindh) and ISRIP to become fully autonomous institutions with the possibility of generating their own income. The borrower shall keep the Bank informed of the status of the measures taken. Without limiting the generality of the foregoing, each PIDA shall furnish to the FFC for submission to the Bank semiannual reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be furnished in such form and in such detail and within such a period as the Bank shall reasonably request, and shall indicate, among other things, the subprojects approved during the period under review, progress made and problems encountered during the period under review, steps taken or proposed to be taken to remedy these problems, and a proposed program of activities and expected progress during the following period.

Schedule 5, para 6 (c) Schedule 5, para 15 Project Agreement, Section 2.08(b)

covenant was waived. Complied, Highly satisfactory Not applicable The IRIs and ISRIP are organizations under the PIDs and WAPDA. They cannot be fully autonomous for administrative reasons, but they generate their income by providing services to government agencies as well as private institutions. Complied, Satisfactory This covenant was modified. In place of semiannual reports, quarterly progress reports were solicited to be submitted within 15 days of the end of each quarter.

Appendix 4 29

ECONOMIC ANALYSIS

I. INTRODUCTION

1. The following analysis is an ex-post economic reevaluation at the close of the Project to estimate the anticipated economic returns based on actual costs and anticipated and visible benefits, and compare those with the returns estimated at the appraisal stage. 2. The reevaluation generally follows the methodology adopted at the appraisal in October 1997. The present analysis, however, relies on the data provided by the PIDs, and the data presented in the Benefit Monitoring and Evaluation: Baseline Survey Report (BME). The aforementioned data was verified in the field during the project completion report (PCR) mission to ensure its validity. II. METHODOLOGY AND APPROACH

3. The Project consists of three core and 58 other subprojects, located in four provinces. The Project was appraised on the basis of estimated economic viability in relation to the EIRR of four core subprojects, one each in the four provinces. The subprojects that were to be identified during the implementation period by the provinces and selected on the basis of economic viability were grouped as non-core subprojects. The present analysis re-estimates the economic viability for core subprojects aggregated at the provincial level, and for overall at the national level, except for Balochistan province where a core subproject was not implemented.

4. The present analysis generally follows the same approach as at appraisal. It may be noted that while estimating the EIRRs of the core subprojects at appraisal, district data on agricultural production benefits was used rather than site-specific information. For the present reassessment, the data collected by consultants for the final BME report, provided by the PIDs and validated by the PCR mission, is used. It was largely found to be realistic during the field verification.

III. ASSUMPTIONS

5. Following are the main assumptions adopted for analysis.

• The analysis has been carried out in Pak Rupees adjusted to constant prices (2007). All expenditure made before the year of analysis are converted to 2007 prices.

• Import parity and export parity prices have been estimated and used for the traded goods,

adjusting for taxes, duties and any price distortions. The financial and economic prices for various inputs and outputs are presented in Table 2, while the derivations for import and export parity prices are summarized in Tables 3 and 4.

• For estimating import and export parity price, the foreign exchange conversion rate has

been assumed as 60.5 reflecting the true opportunity cost of one US dollar.

• A standard conversion factor of 0.9 has been used for non-traded items. This was estimated by the standard computation and is line with the currently appraised projects.

30 Appendix 4

• The labor cost has been adjusted by 0.8 to reflect the opportunity cost of labor. Considering the current demand for labor, especially in the construction industry, and out migration from rural areas, the opportunity cost of labor has been assumed at 0.8 rather than 0.75, traditionally assumed.

• Financial crop budgets were prepared for individual crop enterprises and the total farm

income estimated for a one hectare farm. The gross margins, based on economic prices of inputs and outputs, were applied to the area expected to be secured and protected from flood damage and land erosion. Similarly, the value of increased production realized from the reclaimed area was accounted for in the benefit stream. It is assumed that without the Project’s intervention, the total area under threat would have been eroded by rivers in 10 years. Hence, the benefit from the intervention has been phased out over this period.

• For the area reclaimed to reach full development stage, a period of 10 years has been

assumed to be at par with the area protected.

• For low-lying reclaimed areas in NWFP that are still within the flooding area, it is assumed that reeds can be grown that have some economic value. The expected benefits have been taken into account, assuming a full development stage of 10 years, when the output would value PRs 1,000 a hectare.

• Replacement value has been adopted as a principle for estimating the value of assets

under threat.

• The period of analysis has been assumed to be 50 years.

• The cost stream includes the cost of civil works and annual provision of 2 percent for regular operation and maintenance. Where needed, special provision for additional operation and maintenance costs has been taken into account.

• For flood protection projects in Sindh, a composite probability factor of 0.01 was applied

to represent the stream of benefits from secured livestock, livelihood means, physical infrastructure and other private properties.

• Benefits that are taken into account while re-estimating economic viability are the same

as the ones assumed at the appraisal. However, for this analysis, actual values observed were analyzed. The benefits include the following.

(i) Benefits from avoided erosion: Erosion was leading to a gradual loss of the

productive area under cultivation. The gross margins are estimated for the crops grown in the area under potential threat and saved from erosion and accounted for as benefits.

(ii) Production from reclaimed land: With the intervention, a considerable area

is expected to be reclaimed. An expected stream of production from this area, expected to reach a stage at par with the area already under cultivation in 10 years’ time, is also accounted for as benefits. Similarly, some of the recovered low-lying area that will be reclaimed but which is not fit for agriculture would yield reeds of some economic value. This has also been valued and included in the benefit stream.

Appendix 4 31

(iii) Costs saved from replacing private and public property and infrastructure: Erosion has been destroying houses, farm buildings, social infrastructure (schools, hospitals and the drinking water supply system), rural tracks, roads (brick-soled, shingle and black top), the electricity distribution network, shops and agro-processing units, etc. The replacement cost of such units is assumed as a benefit and was phased out to represent the pace of erosion.

(iv) Losses averted from direct flooding and stagnant water: In subprojects

where riverbank erosion is not the main threat and the main reason for damage is inundation from river overflows and a failure of flood protection and breaches, the benefits have been estimated as losses avoided and so taken as benefits. The losses would have included full and or partial destruction of crops and orchards, damage to property, disruption of normal life and access to social services and clean water, a temporary loss of business, and damage to physical infrastructure. The benefits have been adjusted for the probability of floods of various intensity, duration and depth.

IV. ANALYSIS

6. The cost stream for the present analysis includes the cost of civil works and provision of 2 percent as operation and maintenance cost. The yearly expenditure was adjusted to constant prices prevailing in the year of analysis (2007). The benefits include i) the value of various structures protected by the floods such as the irrigation distribution network and allied structures, flood protection structures, physical infrastructure (roads and power lines), and social infrastructure (schools, health facilities, the drinking water supply system); ii) the value of houses and private buildings; iii) the value of movable and immovable private assets; iv) the value of private sector processing units and means of non-farm rural livelihoods; v) the value of livestock protected; vi) the value of crops saved from flooding and inundation; and the vii) value of production to be realized from reclaimed agricultural land. 7. The conclusion focuses on a comparative assessment of EIRRs at appraisal and at the end of the Project. Switching values have also been estimated to evaluate the upper bound of cost increases and the lower bound of decreases such that the EIRR is constrained at 12 per cent.

V. CONCLUSION

8. Table 1 presents the summary findings of the economic analysis and compares them with the analysis at the appraisal stage. The estimated EIRRs are economically viable and robust for all provinces. The subproject selected for Balochistan was dropped and its EIRR is not included in the analysis. 9. The non-core subprojects were selected on the basis of economic viability. The expected benefits and impacts were evaluated in the field. It was observed that the estimated EIRRs at the time of feasibility were conservative and the benefits far exceed expectations. As the subprojects vary in nature (protection from flood damage erosion and securing urban

32 Appendix 4

properties, infrastructure, industrial establishments and communication networks), it was felt that aggregating them would not be appropriate. 10. At the appraisal, the EIRRs for the subprojects ranged between 13 percent and 28 percent. The EIRRS estimated at the end of the Project ranged between 15.6 percent and 31 percent. For all of the subprojects, re-estimated EIRRs are higher than the planned ones. 11. While estimating the economic viability of the Project at appraisal stage, the specifications of benefits were vague and varied from subproject to subproject. This restrained the aggregation of the subprojects.

VI. NON-QUANTIFIABLE BENEFITS

12. During field visits, the mission noted that the flood protection structures have given a sense of security to the population residing and farming in the protected hinterland. The beneficiaries reported that the protection has encouraged them to invest in better housing, agricultural machinery (such as shallow wells and tube wells) and implements. They also expressed that there will be a shift in the cropping pattern over time, with an emphasis on high-value crops such as off-season vegetables.

Table 1 Base Case EIRR

Parameter/Stage NWFP Punjab Sindh Balochistana Overall

Core Subproject

At Appraisal 28.0% 13.0% 14.0% 20.0% —

At PCR 31.0% 21.6% 15.6% — 21.7%

Switching Values at PCR (Constrained at 12% EIRR)

% increase in costs 60.00% 54.00% 27.4% — 47.00%

% decrease in benefits 40.00% 35.10% 22.0% — 32.0%— = not estimated.

a = EIRR for Balochistan was not calculated at completion because the core project was not implemented.

Appendix 4 33

Table 2 Farmgate Financial and Economic Price of Inputs and Outputs

(April 2007) Input/Output Unit Financial Economic

A. Output Cotton Rs/kg 25.0 28.4 Paddy Rs/kg 7.7 8.6 Maize Rs/kg 8.0 7.2 Millets Rs/kg 9.0 8.1 Sorgum Rs/kg 9.0 8.1 Sesamum Rs/kg 8.0 7.2 Kharif pulses Rs/kg 27.5 24.8 Kharif vegetables Rs/kg 4.3 3.8 Kharif fodder Rs/kg 3.0 2.7 Gowar seed Rs/kg 23.0 20.7 Wheat Rs/kg 10 9.6 Barley Rs/kg 8 7.2 Rape and mustard Rs/kg 30.5 27.5 Gram Rs/kg 20.0 18.0 Rabi pulses Rs/kg 27.5 24.8 Rabi vegetables Rs/kg 5.0 4.5 Onion, chillies, potatoes Rs/kg 10.0 9.0 Rabi fodder Rs/kg 2.5 2.3 Sugarcane Rs/kg 1.5 1.0 Gardens Rs/ha 100,000.0 90,000.0 Wheat straw Rs/kg 1.0 0.9 Cotton sticks Rs/kg 0.2 0.2 Paddy straw Rs/kg 2.0 1.8 B. Inputs Cotton seed Rs/kg 32.5 36.9 Paddy Rs/kg 11.8 10.6 Maize Rs/kg 10.8 9.7 Millets Rs/kg 10.8 9.7 Sorgum Rs/kg 9.6 8.6 Sesamum Rs/kg 33.0 29.7 Kharif pulses Rs/kg 33.0 29.7 Kharif vegetables Rs/kg 300.0 270.0 Kharif fodder Rs/kg 500.0 450.0 Gowar seed Rs/kg 27.6 24.8 Wheat Rs/kg 12.0 11.5 Barley Rs/kg 16.0 14.4 Rape and mustard Rs/kg 36.6 32.9 Gram Rs/kg 24.0 21.6 Rabi pulses Rs/kg 33.0 29.7 Rabi vegetables Rs/kg 5.0 4.5

34 Appendix 4

Table 2 continued Farmgate Financial and Economic Price of Inputs and Outputs

(April 2007) Input/Output Unit Financial Economic

Onions Rs/kg 300.0 270.0 Rabi fodder Rs/kg 50.0 45.0 Sugarcane Rs/kg 2.0 1.3 Tractor plowing Rs/Plow/ha 1,000.0 700.0 Urea Rs/kg 15.0 24.0 DAP Rs/kg 24.0 30.6 MoP Rs/kg 18.0 15.1 Pesticides Rs/spray 500.0 600.0 Harvesting/picking cost %/gvp 5.0 0.9 Threshing cost %/gvp 7.0 0.9 Tube well irrigation cost Rs/ha 1,000.0 700.0 Canal irrigation cost Rs/ha 60.0 90.0 Other costs %/gvp 2.0 1.8 Hired labor daily wages (male) Rs//da 150.0 120.0 Hired labor daily wages (female) Rs//da 120.0 96.0

Appendix 4 35

Table 3 Import Parity Prices (Sugarcane, Urea, DAP, Potash)

Description Fertilizers Sugarcane1 Urea2 DAP3 Potash4

Unit Price Price Price Price Commodity price Price in international market $/mt 230 318 421 177Freight and insurance (+) $/mt 45 40 40 40CIF at Karachi port $/mt 275 358 461 217CIFat Karachi port PRs/mt 16,638 21,659 27,860 13,122Economic prices Port charges (+) PRs/mt 430 430 430 430Losses at port (+) 1percent 166 433 557 262Wholesalers margin (+) 5percent 862 676 865 414Transport charges from port to Project area (+) PRs/mt 750 750 750 750Wholesale market value PRs/mt 18,846 23,948 30,463 14,979Processing cost (-) PRs/mt 4,200 Value of raw material at mill gate PRs/mt 7,892 Tonnage of cane required (at 7% recovery rate) 552 Value of cane at mill gate PRs/mt 1,105 Transport charges to mill gate/from wholesale market (-) PRs/mt

100 100 100 100

Import parity price at farm gate PRs/mt 1,005 24,048 30,563 15,079Actual farm gate price PRs/mt 1,500 15,000 24,000 18,0001 = Sugar (World), International Sugar Agreement daily price, raw, fob, and stowed at greater Caribbean ports.The World Bank Commodity Price Data Pink Sheet, March 2007. 2 = Urea, Black Sea, bagged, spot, ibid. 3 = DAP (diamonium phosphate), standard size, bul, spot, fob, US Gilf, ibid. 4 =Potassium chloride (muirate of potash, standard grade, spot, fob Vancouver, ibid. mt = metric ton.

36 Appendix 4

Table 4 Export Parity Prices

Paddy1 Wheat2 Cotton3

Description Unit Price Price Price Commodity Price Price in international market $/mt 323 199 1,289Quality adjustment factor 82percent 264 189 1,104Freight and insurance $/mt 0 0 0FOB at Karachi port $/mt 264 189 1,104FOB at Karachi port PRs/mt 15,999 11,443 66,794Economic Prices Port charges (-) PRs/mt 430 430 430Losses at port (-) 2 percent 320 9 4Wholesalers’ margin (-) 5 percent 800 572 3,340Transport charges from Project area to port (-) PRs/mt 750 750 750Ex-mill/wholesale market value PRs/mt 13,699 9,683 62,270Value of paddy/seed cotton 66percent 9,042 20,549Value of byproduct2 (+) 5percent 452 8,910Milling cost (-) PRs/mt 820 950Value at wholesale market/mill gate PRs/mt 8,674 9,683 28,509Transport charges farm to wholesale market mill gate (-) PRs/mt 100 100 100Export parity price at farm gate PRs/mt 8,574 9,583 28,409Actual farm gate price4 PRs/mt 7,650 10,000 25,0001: Thai, 5% broken, WR, milled indicative price based on weekly surveys of export transactions (indicative survey price), government standard, fob Bangkok: The World Bank Commodity Price Data Pink Sheet, March 2007. 2: Wheat US, HRW. 3: Cotton A Index New Definition. mt = metric ton.

Appendix 4 37

Table 5 Net Cash Flows, EIRR and Switching Values for Core Projects

Year Ending NWFP Punjab Sindh Overall

1998 1999 2000 2001 2002 2003 2004

2005 (135.68)

(36.81)

(165.59)

(338.08)

2006 (125.47)

(34.04)

(153.12)

(312.63)

2007 56.40

16.38

53.91

126.69

2008 128.40

17.36

53.91

199.67

2009 130.16

18.34

53.91

202.41

2010 131.93

19.32

53.91

205.16

2011 133.70

20.30

53.91

207.91

2012 135.47

21.28

53.91

210.66

2013 89.59

21.48

53.91

164.99

2014 30.31

21.69

53.91

105.91

2015 9.52

21.89

53.91

85.32

2016 10.47

22.09

53.91

86.47

2017 11.41

5.24

53.91

70.56

2018 11.41

5.24

53.91

70.56

2019 11.41

5.24

53.91

70.56

2020 11.41

5.24

53.91

70.56

2021 11.41

5.24

53.91

70.56

2022 11.41

5.24

53.91

70.56

2023 11.41

5.24

53.91

70.56

2024 11.41

5.24

53.91

70.56

2025 11.41

5.24

53.91

70.56

38 Appendix 4

Table 5 continued Net Cash Flows, EIRR and Switching Values for Core Projects


2026 11.41

5.24

53.91

70.56

2027 11.41

5.24

53.91

70.56

2028 11.41

5.24

53.91

70.56

2029 11.41

5.24

53.91

70.56

2030 11.41

5.24

53.91

70.56

2031 11.41

5.24

53.91

70.56

2032 11.41

5.24

53.91

70.56

2033 11.41

5.24

53.91

70.56

2034 11.41

5.24

53.91

70.56

2035 11.41

5.24

53.91

70.56

2036 11.41

5.24

53.91

70.56

2037 11.41

5.24

53.91

70.56

2038 11.41

5.24

53.91

70.56

2039 11.41

5.24

53.91

70.56

2040 11.41

5.24

53.91

70.56

2041 11.41

5.24

53.91

70.56

2042 11.41

5.24

53.91

70.56

2043 11.41

5.24

53.91

70.56

2044 11.41

5.24

53.91

70.56

2045 11.41

5.24

53.91

70.56

2046 11.41

5.24

53.91

70.56

2047 11.41

5.24

53.91

70.56

2048 11.41

5.24

53.91

70.56

2049 11.41

5.24

53.91

70.56

2050 11.41

5.24

53.91

70.56

Appendix 4 39

Table 5 continued Net Cash Flows, EIRR, and Switching Values for Core Projects


2051 11.41

5.24

53.91

70.56

2052 11.41

5.24

53.91

70.56

2053 11.41

5.24

53.91

70.56

2054 11.41

5.24

53.91

70.56

EIRR 31.0% 21.59% 15.63% 21.68% % Increase in cost restricted to 12% EIRR 60.0% 54.00% 38.64% 52.1 % decrease in benefits restricted to 12%

EIRR 40.0% 35.10% 27.87% 37.2

40 Appendix 5

ASSESSMENT OF OVERALL PROJECT PERFORMANCE

Criterion Assessment Rating (0-3) Weight (%) Weighted

Average Relevance Partly relevant 1 20 0.2 Effectiveness Effective 2 30 0.6 Efficiency Efficient 2 30 0.6 Sustainability Likely 2 20 0.4 Overall Rating Successful 100 1.8 Highly Successful (HS): Overall Weighted Average is greater than 2.7. Successful (S): Overall weighted average is between 1.6 and less than 2.7. Partly Successful (PS): Overall weighted average is between 0.8 and less than 1.6. Unsuccessful (U): Overall weighted average is less than 0.8.

Appendix 6 41

PROCUREMENT PACKAGES

Package Unit Procurement Method

Value ($ ‘000)

A. Equipment Mangla radar 1 ICB 2,045 Sialkot radar 1 ICB 724 Lahore radar 1 IS 284 Telemetry station 22 ICB 1,203 HF radio 22 ICB 113 B. Civil Works Punjab 34 NCB 19,879 Sindh 23 NCB 18,423 Balochistan 12 NCB 3,310 NWFP 20 NCB 7,531

ICB = international competitive bidding, Is = international shopping, NCB = national competitive bidding.

42 Appendix 7

CHRONOLOGY OF MAJOR EVENTS

Event Date Fact finding April 1997 Appraisal June 1997 Loan negotiations October 1997 Board approval November 1997 Loan agreement February 1999 Loan effectiveness October 1999 Special project administration mission November 1999 Award of first consultancy contract April 2000 Loan suspended May 2001 Award of NGO contract June 2001 Project put on hold/reformulation started June 2001 Loan reinstated August 2001 Reformulation approved October 2002 First loan review mission December 2003 Award of first civil works contract January 2004 Change in scope and cancellation of surplus loan proceeds July 2004 Second loan review mission July 2004 Third loan review mission January 2005 Award of Lahore radar contract April 2005 Award of Sialkot radar contract April 2005 First extension of loan closing date July 2005 Fourth loan review mission February 2006 Award of Mangla radar contract February 2006 Award of HF radios contract February 2006 Award of telemetry contract April 2006 Completion of civil works May 2006 Second extension of loan closing date June 2006 Upgrading of Lahore radar completed June 2006 Installation and commissioning of Sialkot radar July 2006 Installation and commissioning of telemetry network December 2006 Installation and commissioning of HF radio system December 2006 Loan closed December 2006 Installation and commissioning of Mangla radar April 2007

Second Flood Protection Sector Project · 2014. 9. 29. · The flood forecasting and early warning...

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