Completion Report

Project Number: 27168 Loan Number: 1531 October 2007

Pakistan: Dera Ghazi Khan Rural Development Project

CURRENCY EQUIVALENTS Currency Unit Pakistani rupee/s (PRe/PRs) At Project Completion 30 June 2007 $0.1639 PRs61

At Appraisal PRe1.00 $1.00 = = August 1997 $0.0246 PRs40.6213

ABBREVIATIONS BME C&WD CD CO CSP DG Khan DIP DOFWM DTW EA EIRR FS ha IA km LGO NGO NRSP O&M PCR PERI PMU SCO SDR WC WUA (i) benefit monitoring and evaluation Communication and Works Department community development community organization country strategy and program Dera Ghazi Khan Department of Irrigation and Power Directorate of On-Farm Water Management deep turbine tube well executing agency economic internal rate of return financial services hectare implementing agency kilometer local government ordinance nongovernment organization National Rural Support Program operation and maintenance project completion review Punjab Economic Research Institute project management unit savings and credit organization special drawing rights watercourse water users association NOTES

The fiscal year (FY) of the Government and its agencies ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY19992000 ends on 30 June 2000. In this report, $ refers to US dollars.

(ii)

Vice President Director General Director Team leader Team member

Liqun Jin, Operations 1 J. Miranda, Central and West Asia Department (CWRD) P. L. Fedon, Country Director, Pakistan Resident Mission (PRM), CWRD M. S. Shafi, Project Implementation Officer, PRM, CWRD N. ul Islam, Associate Project Analyst, PRM, CWRD

CONTENTS Page BASIC DATA MAP I. II. PROJECT DESCRIPTION EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation B. Project Outputs C. Project Costs D. Disbursements E. Project Schedule F. Implementation Arrangements G. Conditions and Covenants H. Consultant Recruitment and Procurement I Performance of Consultants, Contractors, and Suppliers J. Performance of the Borrower and the Executing Agency K. Performance of the Asian Development Bank EVALUATION OF PERFORMANCE A. Relevance B. Effectiveness in Achieving Outcome C. Efficiency in Achieving Outcome and Outputs D. Preliminary Assessment of Sustainability E. Impact OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment B. Lessons C. Recommendations ii vii 1 1 1 3 5 5 6 6 6 7 8 8 9 9 9 10 11 11 12 13 13 14 15

III.

IV.

APPENDIXES 1. Planned and Achieved Outputs of the Project 2. Categories of Community Development Subproject 3. Completion Dates of Rural Roads under the Dera Ghazi Khan Rural Development Project 4. Achievement under the Financial Services Component 5. Appraised and Completed Costs of the Project 6. Contract Awards and Disbursements 7. Implementation Schedule 8. Status of Compliance with Loan Covenants 9. Economic and Financial Analyses 10. Project Framework

BASIC DATA
A. Loan Identification 1. 2. 3. 4. 5. 6. 7. B. Country Loan Number Project Title Borrower Executing Agency Amount of Loan Project Completion Report Number Pakistan 1531 Dera Ghazi Khan Rural Development Islamic Republic of Pakistan Punjab Planning and Development Department SDR26.068 million PCR:PAK 998

Loan Data 1. Appraisal Date Started Date Completed 2. Loan Negotiations Date Started Date Completed Date of Board Approval Date of Loan Agreement Date of Loan Effectiveness In Loan Agreement Actual Number of Extensions Closing Date In Loan Agreement Actual Number of Extensions Terms of Loan Interest Rate Maturity Grace Period Terms of Relending (if any) Interest Rate Maturity Grace Period Second-Step Borrower Disbursements a. Dates Initial Disbursement 9 October 1998

27 May 1997 4 June 1997 28 July 1997 30 July 1997 4 September 1997 16 October 1997 14 January 1998 12 January 1998 None 31 December 2004 31 May 2007 2 1.0% 35 years 10 years 1.0% 35 years 10 years National Rural Support Program, $2.7 million at 10.0%, repayable 1 year after project completion

3. 4. 5.

6.

7.

8.

9.

Final Disbursement 31 May 2007

Time Interval 104 months

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Effective Date 12 January 1998 b. Category or Subloan No. 01A 01B 01C 02 03A 03B 03C 03D 04 05 Total 10. Amount (SDR million) Original Allocation 1.593 6.444 9.703 2.100 0.145 1.086 1.448 0.652 1.231 1.666 26.068 Local Costs (Financed) - Amount ($ million) - Percentage of Local Costs - Percentage of Total Cost Net Amount Available 1.593 6.444 9.703 2.100 0.145 1.086 1.448 0.652 1.231 1.666 26.068 Amount Disbursed 0.777 3.795 11.436 2.027 0.282 0.779 1.561 0.424 0.305 0.000 21.387 Undisbursed Balance 0.816 2.649 1.733 0.073 (0.137) 0.307 (0.113) 0.232 0.926 1.666 4.681 Original Closing Date 31 December 2004 Time Interval 83 months

20.5 53.7 42.1

C.

Project Data 1. Project Cost ($ million) Appraisal Estimate 12.9 39.3 52.2 Actual 10.5 38.1 48.6

Cost Foreign Exchange Cost Local Currency Cost Total 2. Financing Plan ($ million)

Cost Implementation Costs Borrower-Financed ADB-Financed Beneficiary-Financed Total IDC Costs Borrower-Financed ADB-Financed Other External Financing Total

Appraisal Estimate 7.1 34.1 9.1 50.3 0.0 1.9 0.0 52.2

Actual 6.3 30.4 11.5 48.2 0.0 0.4 0.0 48.6

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

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3. Cost Breakdown, by Project Component ($ million) Appraisal Estimate 5.0 17.2 14.3 3.1 4.8 1.7 4.2 1.9 52.2 Project Schedule Actual 3.7 13.7 23.4 2.8 4.6 0.0 0.0 0.4 48.6

Component Irrigation Development Community Development Rural Roads Rural Finance Institutional Support Physical Contingencies Price Contingencies Interest during Construction Total 4.

Item Appraisal Estimate Actual Date of Contract with Consultantsa Contract with NGO 8 February 1999 Contract with Design Consultant 1 January 2000 Contract with Construction Supervision Consultant 2 October 2003 Contract with Baseline Survey Consultants 21 February 2000 Contract with Impact Evaluation Consultants 21 May 2005 Civil Works Contract Date of Award (first contract) 5 April 2003 Completion of Work (last contract) 30 November 2006 Equipment and Supplies Procurement Dates First Procurement 10 October 1998 Last Procurement 28 March 2006 Other Milestones Formation of First Mens SCO 1 February 1999 Formation of First Mens CO 12 February 1999 Formation of First Mens CTWG/WUA 23 February 1999 Formation of First Womens SCO 7 February 1999 Formation of First Womens CO 7 February 1999 CO = community organization, CTWG = community tubewell group, NGO = non-governmental organization, SCO = savings and credit organization, WUA = water users organization 5. Project Performance Report Ratings Ratings Implementation Period 12 Jan 199831 Dec 2005 1 Jan 200628 Feb 2006 1 Mar 200631 Mar 2007 S = satisfactory, U = unsatisfactory Development Objectives S S S Implementation Progress S U S

D.

Data on Asian Development Bank Missions Date 821 Mar 1996 711 Oct 1996 1527 Nov 1996 27 Feb14 Mar 1996 25 Apr1 May 1997 27 May4 Jun 1997 511 Jan 1999 19 Apr 2000 2729 Nov 2000 2125 Jan 2002 2529 Nov 2002 1724 Feb 2004 25 Aug8 Sep 2004 716 Dec 2004 2631 Dec 2005 1217 Jun 2006 12 Dec 200610 Feb 2007 No. of Persons 2 1 1 6 2 2 3 2 2 2 2 2 2 2 1 1 3 No. of Person-Days 34 5 13 96 14 18 21 2 6 10 10 16 30 20 6 6 67 Specialization of Members a, m a a a, c, d, e, f, m a, c a, c g, e, l h, i i, j b, l b, l k, l k, l k, l k k k, l, m

Name of Mission TA fact-finding TA inception TA review Loan fact-finding Loan post-fact-finding Loan appraisal Loan inception Special loan administration Loan review 1 Loan review 2 Loan review 3 Loan review 4 Loan midterm review Loan review 5 Loan review 6 Loan review 7 Project completion review

a = senior project engineer, b = senior project implementation officer, c = program officer, d = project specialist, e = project economist, f = social development specialist, g = rural development specialist, h = resident representative, i = senior program officer, j = senior control officer, k = project implementation officer, l = project analyst, m = staff consultant., TA = technical assistance

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I.

PROJECT DESCRIPTION

1. The Dera Ghazi (DG) Khan Rural Development Project (the Project) in Pakistan is in the DG Khan and Rajanpur districts of the central province of Punjab, along its southern fringe. At appraisal, rural poverty in the province was highest in the districts of DG Khan (with 24% of the rural poor in the province) and Bahawalpur (36%). The Project was designed particularly for the poorest rural populations in (i) the rain-fed plains, (ii) rain-fed hills, and (iii) canal-irrigated areas of these two districts. A survey done during appraisal revealed a rural poverty incidence of about 85% in the rain-fed plains and hills, and about 70% in the canal-irrigated areas. 2. The Project was intended to increase rural incomes and employment, and improve the quality of life of the population. Given the areas potentials, these objectives were to be achieved by (i) improving irrigation and road infrastructure, (ii) developing communities, (iii) providing financial services, and (iv) providing institutional support through organizational and skills training for beneficiaries in village communities. The Project had the following components and scope of work: (i) Irrigation improvement:,(a) rehabilitating temporary diversions and lining works in perennial hill torrent networks, (b) developing 100 water users associations (WUAs) and improving 100 watercourses (WCs) in hill torrents, and (c) installing 100 tube wells and improving the related WCs in freshwater zones. Community development (CD): (a) mobilizing and strengthening 600 community organizations (COs); and (b) identifying, prioritizing, and implementing CD subprojects (to be done by the communities themselves). Rural roads: upgrading of about 175 km of rural roads; Financial services (FS): (a) mobilizing village savings and credit organizations (SCOs), (b) financing sub-loans, (c) mobilizing savings, and (d) providing training. Implementation support: consultancy services and incremental administration support for the purpose of (a) mobilizing and strengthening beneficiary WUAs, COs, and SCOs in the villages; and (b) designing and supervising the infrastructure construction and strengthening the project management unit (PMU).

(ii) (iii) (iv) (v)

II. A.

EVALUATION OF DESIGN AND IMPLEMENTATION

Relevance of Design and Formulation

3. The objective of increasing rural incomes and employment, and improving the quality of life especially for women, was consistent with the new operation strategy prepared by the Asian Development Bank (ADB) for Pakistan in 1995, which was centered on human development and, above all, on poverty reduction and on the improvement of the status of women. In agriculture and rural development, ADBs strategy at appraisal was focused on rural development projects in more backward areas with high poverty, where better use of natural and human resources would lead to economic growth. The choice of the project area was dictated by poverty incidence and the geographic focus of ADBs sector strategy. The design was consistent with the strategic objectives of the Government of Pakistaneconomic and social development, greater private sector participation, improved agricultural production, more efficient use of increasingly scarce irrigation water, rural development, reduced poverty, wider coverage of basic infrastructure (including rural roads) for more accessible services, and environmental and social sustainability.

4. At completion, the Projects design and objectives were still relevant and consistent with ADBs country strategy1, emphasizing sustainable pro-poor growth through rural development and infrastructure development. The CSP also stressed inclusive social development, particularly improvements in social service delivery systems. Accordingly, the Project was designed to encourage communities to participate in subproject implementation and operation. 5. The Government is now pursuing a well-designed, multi-pronged poverty reduction strategy to generate employment and build infrastructure in rural and low-income urban areas by increasing the access of the poor to basic services, microcredit, and social safety nets. The Project design was in line not only with this strategy but also with the Governments Medium-Term Development Framework 20052010, which is focused on the rural sector and specifically on enhancing the asset ownership of the poor, strengthening the nonfarm sector, promoting the participation of the rural population in development, improving rural financial markets, and developing the human resources of rural development institutions. 6. The components and activities of the Project, beneficiary selection, and stakeholder participation and consultation, as designed at appraisal, were all sound. A particular strength of the design was the emphasis on building the capacity of COs and increasing the participation of beneficiaries in project planning, design, and implementation. Decentralizing the management of operation and maintenance (O&M) and encouraging cost sharing by communities dramatically changed the development model for the area. The Project assisted in (i) surface and subsurface irrigation, (ii) WC lining, (iii) soil and water conservation, (iv) hill torrent management, and (v) livestock and agriculture productivity improvement. These activities helped develop and harness the areas agriculture, livestock, and water potential. The rural roads component gave farmers better access to markets and services. The FS component brought them economic empowerment through much-needed cash at affordable interest rates at their doorstep, with which they could buy good-quality inputs, sell their produce at the right time, and increase their profit margins. The implementation support component developed and strengthened COs and WUAs, and intensified networking, thus creating social capital and contributing to improved services by the line agencies in the communities. Capacity building and skills training of COs led to more jobs. The provision of drinking water, sanitation, and village infrastructure improved the quality of life of the village communities. Generally, all the project activities were in line with the needs of the area and served their purpose effectively. 7. The implementation arrangements at appraisal relied heavily on the ability of the Implementing Agencies (IAs) to implement the Project, without dedicated support or decentralized authority. During implementation it was realized that the IAs capacity had been overrated and their need for implementation support had been taken too lightly. The devolution of most IAs to the district level, under the Local Government Ordinance (LGO) of 2001, magnified the IAs lack of capacity. Similarly, the costs and size of certain subproject components had been miscalculated, and invalid assumptions had been made about the average size of the COs. To address these issues and to meet the beneficiaries targets as anticipated at appraisal, ADB made minor changes in the cost category allocations, implementation arrangements, and scope of the Project during implementation. Registering the COs mobilized for the Project as community citizen boards under LGO 2001 gave them access to more resources and ensured that the social capital of the Project was mainstreamed. 8. At completion, the design of almost all Project components remained relevant and consistent with current approaches to rural development. However, the success of the
1

ADB, 2002 Country Strategy and Program (CSP) 2002-2006, Manila

implementation was due primarily to the dedicated and relentless support of the Executing Agency (EA) and its PMU, assisted by a nongovernment organization (NGO), rather than the performance of the IAs (line departments).

B.

Project Outputs

9. The planned and achieved outputs of the Project are summarized in a table in Appendix 1 and discussed below. 10. Irrigation Improvement. This component comprised: (i) surface irrigation, and (ii) irrigation. The achievement of outputs under the surface irrigation subcomponent was only partly satisfactory. On the rain-fed plains, the Project was to support small-scale irrigation improvements, to increase the efficiency of water use at the Vehova and Kaha hill torrents, by (i) rehabilitating the irrigated command area of about 6,410 hectares (ha), and (ii) developing about 2,910 ha of unirrigated land. The appraised activities were: (i) minor improvements in temporary diversion headworks and structures at Vehova, and the strengthening of earthworks in the Kaha main channel; (ii) the partial lining of the main supply channel; and (iii) the formation of about 100 WUAs, and the improvement of about 100 WCs through the lining of one third (300 km) of their collective length. The improvement of the cross-drainage, diversions, and earthworks of the Kaha hill torrent brought an additional 4,854 ha of unirrigated land under the Kaha command. But only 10 WCs (30 km in total length) were lined, improving water flows to about 400 ha of land. Emerging water rights issues in Vehova, low demand for WCs, and lining works already carried out by the Punjab government on canals in Kaha before the Project led to a reduction in the scope of activities. The IA could not provide reasonable alternatives to Vehova, despite repeated consultations and requests by ADB. Project efforts at WC development were stopped in December 2004 at the request of the Punjab government to facilitate implementation through a national program, which followed a slightly different approach. Funds were allocated by the Punjab government for this program, and work on all the remaining 50 WCs in Kaha has been completed. 11. The achievement of outputs under the irrigation subcomponent was satisfactory. The support for irrigation in two major freshwater zones on the rain-fed plains was designed to involve (i) forming about 100 WUAs, (ii) installing 100 tube wells (DTWs), (iii) improving about 100 WCs, and (iv) monitoring the recharge. The achievements exceeded the original targets in several respects: 136 WUAs were formed, and they completed work on 136 DTWs and 40 WCs. Work on the remaining WCs has been completed with government funding, as explained in para. 10. Piezometers were installed in the tube wells to allow the monitoring of the groundwater level during implementation. No reduction in the water table was noted, and the Department of Irrigation and Power (DIP), the IA for this component, continues to monitor the water table. The irrigation component cost $3.7 million, compared with $5 million estimated at appraisal. 12. Community Development. Progress in achieving the outputs of the CD component was highly satisfactory. The Project was designed to respond to priority CD works identified and prioritized during the implementation by the communities themselves, with the help of a facilitating nongovernment organization (NGO). The activities in this component were grouped under five headings: (i) hill torrent management, (ii) soil and water conservation, (iii) agricultural production, (iv) livestock production, and (v) village and community infrastructure improvement. The activities, as designed, included mobilizing and developing the capacity of 600 COs averaging 25 members each (for a total of 15,000 members); 40% of these organizations were to be womens or mixed COs. At completion, more than 1,110 COs with an average

membership of 14 members each (for a total of 15,560 members) had been mobilized, and 25% were all-women COs. In total, 1,398 CD subprojects were completed at an average cost of $6,167, as against $20,000 envisaged at appraisal. As appraised, the CD subprojects and plans were prioritized and implemented by the communities concerned and facilitated by the NGO. Appendix 2 lists the activities in this component. About one third were categorized as productive investments and another third as social sector investments (provision of drinking water, sanitation, community halls, etc.). The cost of this component was $13.7 million, as against $17.2 million estimated at appraisal. 13. Rural Road Upgrading. Progress in achieving the outputs of the rural road component was highly satisfactory. The Project was designed to upgrade about 175 km of rural roads. At completion, 389 km of road had been upgraded (Appendix 3). The increase in scope was approved by ADB at the request of the Punjab government halfway through the Project, given the low road-to-population and road-to-area ratios in the target area, and the need to cover the appraised target population of 1.3 million. The construction specifications for the roads were upgraded under the Project to meet the higher specifications required for durability and minimum maintenance, as envisaged at appraisal. This subcomponent cost $23.4 million, compared with $14.3 million estimated at appraisal. The increase in cost was due mainly to the increase in the scope of the component. The cost per kilometer of road was significantly lower (by 28%) than the appraisal estimate. 14. Financial Services. Progress in achieving the FS component outputs was highly satisfactory. The Project envisaged support for the National Rural Support Program (NRSP) an NGO that was concerned mainly with the social mobilization of the poor, including women and the provision of FS through 1,000 village SCOs (half of which were womens SCOs) with a total membership of 25,000. The NRSP would be extended a credit line of $2.67 million, and more than 36,000 recycled sub-loans would be financed over a 5-year implementation period. The sub-loans were expected to average $150 each and to have a recovery rate of over 90%. Total outstanding savings would amount to $300,000 by the end of the Project. This component also included management training for about 2,000 SCO leaders (two per SCO) and skills training for about 4,000 other members. At completion, the NRSP had (i) mobilized more than 1,494 SCOs (34% of which were womens SCOs) with a total membership of about 25,000, and (ii) provided 110,000 sub-loans using a credit line of $2.65 million over a 7-year implementation period. The loans averaged $235 each and had a recovery rate of 99%; total outstanding savings amounted to $1.04 million. The NGO provided management training to more than 2,800 SCO members and skills training to another 12,500 members (Appendix 4). This subcomponent cost $2.8 million, compared with $3.1 million estimated at appraisal. 15. Institutional Support. The Project was designed to provide institutional support to the beneficiary WUAs, COs, and SCOs in the villages to enable them to prepare investment programs through participatory approaches, implement the Project, establish a monitoring and evaluation system, and update and maintain databases relevant to the system. The PMU envisaged hiring NGOs for about 800 person-months to set up and strengthen the COs, WUAs, and SCOs. Consultants to be hired in three packages for a total of about 60 person-months would also assist the PMU and the relevant IA in designing roads and supervising construction, establishing a benefit monitoring and evaluation (BME) system for the PMU, and preparing simple legal contracts between the IAs and beneficiary organizations. A total of 1,410 person-months of NGO services went into the formation and strengthening of 1,110 COs, 200 WUAs, and 1494 SCOs; 78 person-months of consulting services, into the design of roads and construction supervision; and 59 person-months, into the establishment of baseline data and the conduct of BME studies. A simple legal contract between the IAs and beneficiaries was

developed by the PMU without the help of consultants. The cost of this component was $4.6 million, as estimated at appraisal. Person-months had to be added because the scope of the services had been underestimated during appraisal and the CD and rural roads components had increased in scope. However, the overall cost of the subcomponent did not increase. 16. The above changes in the cost and the scope of individual components helped achieve the Projects objectives and cover the 1.3 million beneficiaries envisaged at appraisal. These changes had only a minor impact on the implementation schedule since effective measures were takenthe number of PMU staff and logistical resources were increasedto avoid delays in implementation.

C.

Project Costs

17. The actual project cost was $48.4 million, compared with $52.2 million estimated at appraisal. (The appraised and actual project costs are in Appendix 5.) The CD and irrigation components cost less than planned. The saving of $3.5 million in the cost of the CD component was a result of overestimation of the size and cost of the CD subprojects at appraisal, and insufficient community capacity to afford larger subprojects. The saving of $1.4 million in the cost of the irrigation improvement component was due mainly to a reduction in the scope of the surface irrigation subcomponent compelled by water rights issues, a partial overlap with other programs, and lack of demand for WCs. The rural roads component, however, cost more than anticipated at appraisal. The increase of $8.6 million in the cost of this component was due mainly to an increase in scope (from 175 km to 389 km of road upgraded) to benefit the Projects target population of 1.3 million. However, the cost per kilometer of road was significantly lower (by 28%) than estimated during appraisal. The institutional support and FS components, on the other hand, were completed without any significant variation in costs. Thus, in most cases (except for the irrigation component), there was an increase in scope and yet the Project was completed for less than the appraised cost. The changes in cost had a positive overall impact on the Projects economic and financial rates of return.

D.

Disbursements

18. No disbursement schedule was developed during appraisal. Disbursement was initially slow but picked up in 2002 and peaked in the last 2 years (20052006) of the Project. The initial slow disbursement was due to a delayed start, without a full-time project director, and two separate investigations into allegations of mismanagement and financial malpractice. The overall impact of this delay was more than 3 years. Subsequently, minor delays were caused by the revision of the Project documents, (PC-I) 2 , flaws in project design assumptions, and contractors unresponsiveness to the rural roads contracts in 2003. Delays were also caused by LGO 2001, in view of the lack of implementation capacity in the districts and, in some cases, the lack of interest on the part of the IAs in providing the envisaged design and implementation support for subprojects. Minor changes made by ADB in the scope of the Project and its implementation arrangements in September 2002, allowing the rural roads component to be divided into smaller procurement packages, improved implementation and disbursement. The actual disbursements and contract awards under the Project are listed in Appendix 6.

Planning Commission proforma I.

E.

Project Schedule

19. The implementation of activities according to the Projects planned schedule was only partly satisfactory. (The appraised and actual implementation schedules are in Appendix 7.) Although the targets identified in the appraised schedule were realistic and practical, they were based on the (incorrect) assumption that the IAs could meet these targets on schedule (para. 8). The capacity of the IAs was further weakened after the introduction of the devolution plan in 2001, which transferred more responsibilities to IAs, in some cases without giving them the additional staff and resources required. Moreover, the project schedule, which had already been delayed by 19 months by management issues (para. 18), was delayed further by having to reestablish the Projects credibility in 2002. The situation started improving in 2002 and the Project showed major progress in 2003, after changes in the Projects implementation arrangements. The Project was completed in November 2006, within the revised implementation schedule, with an unavoidable delay of 23 months carried forward from 2000 2001.

F.

Implementation Arrangements

20. The Punjab governments Planning and Development Department was the Projects EA, providing overall supervision and coordination through a PMU established in DG Khan. The project design included several IAs, in accordance with the capacity required for the various subcomponents. The IAs were (i) the Directorate of On-Farm Water Management (DOFWM), for the irrigation improvement component and the management of smaller hill torrents under the CD component; (ii) the DIP, for channel improvements under the irrigation improvement component and the management of larger hill torrents under the CD component; (iii) the Department of Agriculture, for the soil and water conservation and agricultural production activities under the CD component; (iv) the Department of Livestock, for the livestock production activities under the CD component; (v) the Local Government and Rural Development Department, for village and community infrastructure improvement activities under the CD component; (vi) the Communication and Works Department,(C&WD) for the rural roads component; (vii) NRSP, for the FS component; and (viii) the PMU, for the institutional support component. The implementation arrangements at appraisal were based on prior experience in several ADBfinanced area and rural development projects where having a relatively large number of IAs had proved workable and efficient as long as the components were designed in a straightforward manner and could be implemented independently. However, in the Project, where the capacity of district IAs varied from district to district, this approach did not deliver well. In remote districts with scarce human resources, IAs were hard put to retain high-quality staff without special incentives or administrative control over the staff by the district government. The Project design did not foresee the need for dedicated implementation staff for the IAs, except the DOFWM, and the consulting services were of insufficient volume to meet capacity gaps in the IAs. This issue was resolved during implementation by increasing the PMUs technical staff with the help of an incremental staff budget, to provide support to the IAs in design and technical supervision wherever gaps existed. However, such support also limited the IAs involvement, and hence defeated the objective of building project ownership and capacity in the IAs.

G.

Conditions and Covenants

21. The conditions of loan effectiveness were met and the loan was declared effective within 88 days of its signing. All the covenants were relevant and the Projects compliance with key

social, financial, environmental, economic, and other implementation loan covenants was deemed satisfactory (Appendix 8). Of the 49 loan covenants, 46 were met, 1 was partly met, 1 is still to be met, and 1 is not yet due (recommended follow-up actions are in para. 59). The loan covenant still to be met relates to the O&M of the roads completed under the Project; the IA has allocated enough funds in its annual O&M budget for this purpose. The covenant that was only partly met relates to the establishment and operations of the project coordination committee (PCC) at the divisional level, to review plans, address coordination issues, and resolve obstacles to implementation. The PCC was formed and met twice. After LGO 2001 was passed, the divisional tier of government was abolished and coordination and planning devolved to the districts. With the delay in the implementation of reforms under LGO 2001 and in the transfer of adequate numbers of staff to the districts, the project steering committee (PSC), with all the line departments, stakeholders, and district management represented, took over the role of the PCC. The PSC met regularly and performed this role efficiently. The PMU, for its part, reported on the progress and achievements of the Project to stakeholders every 15 days, to facilitate coordination. The PMU also submitted quarterly progress reports, audited financial statements, and the project completion report well within the time covenanted in the Loan Agreement, and the quality of these reports was generally acceptable to ADB.

H.

Consultant Recruitment and Procurement

22. Consultants were selected and goods and works were procured according to the Loan Agreement (schedules 4 and 5) and ADBs guidelines for the hiring of consultants and for procurement. In the first 2 years the EA had problems applying the ADB procedures and guidelines; however, after the first few contracts and with regular guidance from ADB, the hiring of consultants and the procurement of goods and works were undertaken efficiently for the rest of the project period. The consultants and the NGO were hired in four packages. The first package for 6 person-months of design services was awarded to an individual consultant since few firms had expressed interest, given the small size of the assignment and the remote location of the project area. The contract for 59 person-months to establish a BME system was awarded to the Punjab Economic Research Institute (PERI), through single-source selection (SSS) procedures approved by ADB at inception3again because of the lack of interest from private sector firms in providing this service in a remote area. For the third contract, a consulting firm was hired through quality- and cost-based selection to provide 72 person-months of construction supervision services for the rural roads component. The NGOs services for community mobilization and strengthening and the FS component were engaged through SSS procedures approved at appraisal. A contract for legal services was also awarded but later canceled as the standard contracts used for communities in similar projects were deemed sufficient reference models for the Project and there was no longer a need to outsource legal services. Variations were made in the NGO and construction supervision services contracts to accommodate the increase in scope and the delay in implementation. However, these changes did not have any cost implications: all the consulting services contracts were completed at a cost of $0.66 million, compared with $0.89 million envisaged at appraisal, and the NGOs contract was completed at a cost of $2.12 million, as against $1.96 million envisaged at appraisal. 23. The civil works contracts for rural roads were packaged into seven large road contracts at appraisal; another 35 km of road would be identified and tendered during implementation.
3

ADB. 1999. Back-to-Office Report of the Inception Mission on the Dera Ghazi Khan Rural Development Project in Pakistan. Manila.

However, with the delayed start of the Project, most of the roads identified at appraisal (except for two packages) were taken up by the Punjab government for implementation. Under the changed scope approved by ADB, the PMU used the selection criteria approved at appraisal to identify a total length of 360 km of remaining and additional new roads. The roads were initially packaged into large contracts (around $1 million each). But in the surge of construction activities of national and provincial road authorities in the project area, few large contractors were available and fewer still responded to the advertisements for bids. The two larger contracts that were initially awarded were delayed by negligence and lack of interest from major contractors. In consultation with ADB, the Borrower divided the roads into smaller packages. A total of 96 small contracts were awarded, and most were completed within the contract period.

I.

Performance of Consultants, Contractors, and Suppliers

24. The performance of the design and construction supervision consultants was satisfactory. The consultants made staff available on-site and maintained their staff presence even under difficult conditions in remote areas. They could do so because they mobilized and trained local staff. The overall cost estimate for the services was $0.15 million, but $0.48 million was required to complete the work. The increase in cost was due mainly to the underestimation of costs at appraisal and an increase in project targets for the upgrading of rural roads. 25. PERIs BME performance was satisfactory. There were initial delays in collecting baseline data and producing interim reports on the impact assessment. However, after PERI made some changes in staff assignments, these issues were resolved and PERI was able to increase the size of the baseline sample according to the revised scope. PERI delivered an impact and completion report according to the revised schedule agreed on with ADB. This work was estimated at $0.71 million; it was completed for $0.13 million. 26. About 100 contracts were awarded. The overall performance of contractors was generally satisfactory. Small contractors tended to perform better than large contractors. Looking for a quick turnover and facing internal fund constraints, the small contractors were quick to mobilize and completed works on time. Almost all of the large contracts (above $0.5 million) were much delayed and produced a lower quality of construction than the small contracts. The awarding of the larger contracts itself delayed project implementation, and then after the contracts were awarded the large contractors were a major cause of delay in implementing works. Small local contractors also performed better because they understood the local culture and traditions better and built rapport with local communities. All additional land needed for widening roads and improving their alignment was provided voluntarily by stakeholder communities. Road contractors quoted highly competitive rates and rebuilt or improved 389 km of roads at an average cost of $59,000 per km against an appraisal estimate of $82,000 per km, for a substantial saving in the cost of construction. No major supply contracts were awarded.

J.

Performance of the Borrower and the Executing Agency

27. The performance of the Projects EA, the Planning and Development Department, was highly satisfactory. After an initial delay due to a tussle between PMU staff and the district administration, the EA was able to manage and supervise the Project very effectively. All policy decisions, compliance reviews, subproject processing, and approvals were made diligently and efficiently. The EAs PMU fulfilled its management and coordination targets, including the

procurement and management of contracts, implementation, and monitoring and evaluation of the Projects institutional support component. The performance of the IAs, on the other hand, was only partly satisfactory. Some IAsDOFWM (for irrigation), DIP (for WC development), the Department of Livestock (for livestock production), and the Local Government and Rural Development Department (for community development)lacked capacity and interest in the Project. The PMU had to mobilize its resources on most fronts for works that should been implemented by these IAs. (Implementation arrangements were changed during the Projects midterm review to strengthen the PMUs ability to take on the role of nonperforming IAs.) However, the NGO (NRSP) performed very well, effectively assisting the PMU and IAs in organizing and strengthening COs and facilitating the participation of COs and WUAs in the implementation of the Project. The NRSP proved flexible and provided stopgap support to many IAs with inadequate capacity. With its own resources, the NRSP was also able to continue the FS component during the period when Project activities were suspended (20002001). Likewise, the performance of the C&WD, the IA for the rural roads component, was satisfactory. The C&WD managed to complete 389 km of road in the project area against the original target of 175 km within the extension period of 23 months, with very little external support.

K.

Performance of the Asian Development Bank

28. ADBs performance in administering the Project was satisfactory. No delays in the implementation can be attributed to ADB. Missions were conducted regularly, and most revisions, changes, and extensions were forestalled and approval was given well ahead of time. PMU management was suspended by the Government after major disputes between PMU staff and allegations of corruption at the start of the implementation. All project activities stopped. The delegation of the Project to the Pakistan Resident Mission in 2000 increased close and regular consultations between the Borrower and ADB. PMU staff acceptable to ADB were appointed in October 2001 and activities resumed. The Midterm Review Mission in 2004 identified gaps in the implementation arrangements related to the limited implementation capacity of the IAs and the need for a change in scope to cover the thinly spread population to be served by the Project. These issues were resolved during the mission through a change in scope and in implementation arrangements. The only other minor delays related to disbursement during the two extensions of the project (loan) closing dates, when funds could not be transferred to the imprest account. ADB acted promptly on both occasions to allow limited replenishments since both the COs managing contracts and many small private contractors (more than 80 with contracts of less than $0.1 million each) could not sustain any delays in payment by ADB. No disagreement with the Borrower on the terms of reference, bidding, or awards affected project implementation. 29. The Pakistan Resident Mission interacted regularly with the IA. Project staff were trained in project management and administration, including procurement, disbursement, and consultant hiring procedures. The EA and IAs received advice and guidance daily and during ADB missionsa practice that was acknowledged and appreciated by the Borrower.

III. A. Relevance

EVALUATION OF PERFORMANCE

30. The Project remained relevant to and consistent with ADBs CSP and with the Governments long-term plans and strategies for rural development and the agriculture sector,

10

both at appraisal and at completion. Its overall impact shows that most of its appraised design aspects were relevant to and helped increase farm productivity, created employment, increased water use efficiency, and increased the incomes of small farmers (Appendix 9). 31. While the design of the Project was relevant, however, the notional targets for community schemes and road construction had been underestimated. The CO targets assumed an average CO membership of 25 per CD scheme. A membership of only 14 was observed at midtermnot enough to meet the Projects target of benefiting 15,000 households. Similarly, the targets assumed at appraisal for improving rural roads were too low to serve the 1.3 million intended beneficiaries, given the project areas scattered settlements. At midterm, ADB increased the number of CD schemes and the targets for CO formation and rural roads to respond to the thin population spread, while still keeping within the overall cost of the Project and without compromising quality standards. These changes during implementation improved the Projects relevance and its capacity to reach the targeted population.

B.

Effectiveness in Achieving Outcome

32. The Project was effective in achieving its outcomes. At completion, the total value of production (net of production cost) from the additional hectares brought under cultivation in Kaha was estimated at $183,200, for an increase of $37.7 per ha in the yearly gross margin (Appendix 9, Table A9.6). The low gross margin was due mainly to seasonal variations in flow in the Kaha hill torrent and the related low cropping intensity in the area. The total annual value of production (net of production cost) from the 137 DTWs of about $5.1 million meant a yearly gross margin of $932 per ha in the irrigated plains, compared with the $300 per ha envisaged at appraisal. This significant increase in the estimated gross margin was due to the following: (i) the higher-than-expected cropping intensities achieved by farmers; (ii) the cultivation of high-value crops such as onions; (iii) the availability of loans through the lines of credit supported by the Project; and (iv) the Governments deregulation policy, which gave farmers higher compatible values for their outputs, and thus an incentive to grow high-value crops. 33. During the Project Completion Review (PCR) Mission, road users indicated that passenger fares had gone down by almost 50%, as envisaged at appraisal. The average passenger fare is equal to that charged to transport a 40 kilogram (kg) load. The PCR Mission estimated that, on the average, each household now saves $20 in passenger fares and $40 in cartage yearly (Appendix 9, para. 15), for a total of $60almost three times the appraised estimate. The increase in savings is attributed to various factors: (i) the transfer of a larger share of the vehicle operating cost to consumers, (ii) competition in the transport sector made possible by liberal bank leasing facilities, (iii) a surge in economic activity from greater-than-expected development, and (iv) widespread demand for CD infrastructure. 34. The average increase in household income for all CD schemes was $21 per household, with the highest increase reported from soil conservation structures, which contributed an annual increase of $327 per household, against $25 estimated at appraisal for soil conservation measures alone. 35. In addition, the Projects investment in nonfarm community schemes and social services such as drinking water, street paving, sanitation, and community facilities has helped improve living standards. The provision of doorstep credit facilities has made it economically possible for farmers to grow high-value crops, buy better-quality inputs, and sell outputs on their own terms.

11

C.

Efficiency in Achieving Outcome and Outputs

36. The Project proved efficient in achieving its planned outcomes and outputs. It was completed at 93% of the estimated cost and was able to achieve more than the appraised targets for all components (except the surface irrigation subcomponent). The delay of more than 23 months in implementation did not reduce the overall economic internal rate of return (EIRR), which was estimated at 33.5%, compared with 23.6% estimated at appraisal (Appendix 9). The methodology adopted during appraisal was also used in evaluating the project interventions at completion. At appraisal, EIRRs were estimated for the irrigation improvement and rural roads components but not for the community development, FS, and institutional support components. The EIRR for the surface irrigation subcomponent was evaluated at 23.0% against an appraisal estimate of 43.2%, despite the reduction in scope and the decision not to rehabilitate the head reach, where the additional area allocated for high-value crops (the main contributor to the high EIRR at appraisal) was located. The EIRR for the installation of DTWs was estimated at 39.0% at the design stage, and 57.8% at the end of the Project, when higher yields were assumed. The EIRR for the rural roads component was evaluated at 36.9%3 percentage points higher than estimated at appraisal. The estimated combined EIRR for the above components, together with the cost of institutional strengthening, was estimated at 23.6% at appraisal, and a significantly higher 33.5% at completion. This suggests that the expenditure on institutional strengthening was cost-effective. 37. At the appraisal stage, no financial analysis, indicative or otherwise, was done for the interventions that were to be identified and managed by communities, such as income-generating physical infrastructure (cattle and poultry sheds, warehouses, small irrigation schemes, small wheat-flour mills and sawmills, and soil conservation structures). These were to be funded after their viability was assessed, during implementation.4 Similarly, the Project also supported the development of community-managed social infrastructure such as community halls, dispensaries, nonformal school buildings, small drinking water supply structures and ponds, link roads and street soling, and culverts and bridges. Most of these interventions have proved beneficial. However, some interventions for which there was inconspicuous demand might take a longer time than anticipated to yield the desired returns. Cattle sheds, for instance, will require support services, including a network for milk collection and financial support for building herds, before they are fully used. Similarly, warehouses are currently underused because of the lack of marketable surpluses of grain, and of holding capacity for cash crops. Moreover, community organizations need to be strengthened further to manage collective inputs and market outputs.

D.

Preliminary Assessment of Sustainability

38. The Projects operations are likely to be sustainable. The Punjab government has shown strong ownership of the Projects interventions and has extended the Projects activities after completion, using its own funding and retaining all project staff and NGOs involved. 39. About 1,398 CD schemes were implemented by communities in the project area. These schemes were based on the priority needs of COs, which also contributed toward the cost of
4

National Rural Support Program (NRSP). 2005. Monitoring, Evaluation, and Research for the Dera Ghazi Khan Rural Development Project. Islamabad, NRSP

12

construction, showing their ownership. According to the completion report from PERI5 and the observations of the PCR Mission, more than 95% of these schemes, including those that were completed more than 5 years ago, are fully operational. The COs were registered under LGO 2001 to ensure continuous utilization at capacity. 40. There are minor risks to the sustainability of the road infrastructure supported by the Project. The Punjab government has developed a formula under which all roads built under the Project receive an annual allocation of PRs33,000 per km for O&M (rather than the PRs20,000 provided in para. 35, schedule 6, of the Loan Agreement) to sustain the operation and economic benefits of these roads. The PCR Mission observed that, although the roads had been built to higher specifications and would require less maintenance, the districts had limited capacity to use O&M funds efficiently. To ensure the sustained O&M of the roads, regular follow-up by the district roads departments and reporting to ADB every 6 months was recommended. 41. The FS component is highly likely to be sustainable since the Punjab government has agreed to extend the services of the NGO for the next 5 years, after project completion. The rural finance market has also developed in the area and all mainstream microfinance institutions have opened branches to capitalize on economic opportunities. 42. The agriculture and irrigation infrastructure components are likely to be sustainable as well. The NGO has secured funding and will continue to assist farmers in networking and market connectivity in the medium term. Extension services in the project area, which started in 2006, will continue under ADBs Second Agriculture Sector Program Loan (ASPL-II)6 through a provincial trust fund for the NGO and an outreach program for agriculture extension and research funded by ASPL-II.7 In addition, policy reforms under ASPL-II are promoting greater private sector participation by introducing market-based mechanisms, and are also expected to encourage farmers to increase production and use farm and irrigation infrastructure effectively. The DIP has, moreover, instituted a system of allocations for O&M of irrigation systems in Punjab, including the Kaha perennial hill torrent system, thus ensuring funding support for the sustained maintenance of the system.

E.

Impact

43. As envisaged, the Project significantly reduced poverty in the project area. The impact evaluation studies carried out by PERI8 show that the project interventions have successfully reduced poverty incidence by 16%, against the 10% target at appraisal. The PCR Mission estimated a $95 increase in the annual income of the average household with support from the Project, compared with $100 estimated at appraisal (Appendix 9, Table A9.10). 44. According to the PCR Mission, the improvements in enterprises and in farm and nonfarm activities have increased the demand for both permanent and seasonal labor. Agriculture and related activities alone employ about 2,112 more each year, compared with 1,000 anticipated at appraisal. The additional employment created during construction is estimated at 4,700 person-years (Appendix 9, para. 20). Annual employment due to the project activities is
5 6 7 8

Punjab Economic Research Institute (PERI). 2006. Economic Analysis of Various Components of the Dera Ghazi Khan Rural Development Project, Part 1. Pakistan, Lahore. Loan No. 1877/1878-PAK[SF: Agriculture Sector Program Loan II (ASPLII), amounting to $350 million equivalent. A condition for the release of the second tranche under ASPL-II. PERI. 2006. Economic Analysis of Various Components under the Dera Ghazi Khan Rural Development Project, Part 2. Pakistan, Lahore.

13

expected to surpass the 2,000-person mark in coming years. The PCR Mission also noted that the multiplier effect of interventions would generate other rural nonfarm activities, further reducing poverty. In addition, by PERI estimates, 9 more than 15,000 formerly unemployed persons who received skills training under the Project now contribute about PRs330 million yearly to the economy. 45. Annual savings of about $5 million will be realized from improved road access. These savings from reduced vehicle operating costs will induce a significant fall in passenger fares and cartage charges. Improved road access will also encourage a shift toward the production of high-value crops, boosting farm incomes and generating employment for the landless population that depends on dryland farming in the project area. 46. The Project has had many unquantifiable benefits, such as the production of additional crop by-products and forage for animals, skills development through training, community cohesion through community mobilization, overall improvements in the quality of life, and the empowerment of women and their gradual mainstreaming into the decision-making process. About 34% of the CSOs mobilized by the Project were womens CSOs, 24% of the credit line was extended to women, and about one fourth of CD schemes were undertaken by womens COs. Since the project area is in a remote and well-entrenched tribal environment, these activities have had a major impact on mainstreaming women into economic activities. Credit provision has largely eased financial constraints on investments in production and livelihood opportunities. 47. The Project was rated a category B project, with no significant environmental impact envisaged at appraisal. Road construction was undertaken mainly under small, short-term contracts with few environmental issues because of the short construction periods and the strict housekeeping measures enforced by the supervision consultants. Any land required for minor improvements in alignment was provided voluntarily by the communities. The only concern was the possible overexploitation of the DTWs in the freshwater zone. The DIP installed piezometers in the freshwater zones where tube wells were installed, to monitor the groundwater discharge. The DIP has also developed a groundwater regulation regime to be enforced by July 2007 to ensure the optimal use and continuous regulation of the available groundwater.

IV. A.

OVERALL ASSESSMENT AND RECOMMENDATIONS

Overall Assessment

48. Overall, the Project was a success. Its interventions were carried out efficiently and effectively and yielded an overall positive impact compatible with the Projects appraised design and monitoring framework (Appendix 10). The institutional arrangements for the O&M of the infrastructure developed under the Project are likely to be sustainable. 49. The Project was implemented as conceived at appraisal. The only design elements that were revised during implementation were (i) the number of COs to be formed, and (ii) the length of rural roads to be upgraded to cater to a thinly spread rural population and to achieve the target of serving 1.3 million people, as defined at appraisal. The scope was reduced for the

PERI. 2006. Updating the Baseline Survey of the Dera Ghazi Khan Rural Development Project. Pakistan, Lahore.

14

surface irrigation subcomponent because of water rights issues in the hill torrent areas and the completion of works under other programs, given the delayed start of the Project.

B.

Lessons

50. A multi-sector area development project cannot be implemented effectively at the local level without (i) dedicated coordination and implementation units in each district, (ii) dedicated staff and resources for all key IAs implementing the project, (iii) district rather than provincial governments having administrative control of IA staff, (iv) IAs being held accountable for progress, and (v) a technical assistance component that answers the requirements of the individual districts. 51. The market-based composite rates mechanism established by the Punjab government provided a risk-sharing mechanism in a very volatile market for construction materials, which allowed contracts to be awarded and completed for less than the estimated costs. Effective procurement mechanisms of risk sharing in unstable price conditions attract private sector participation and allow contracts to be awarded at compatible rates. 52. A key reason for the success of the Project is the sustained operations of WUAs, COs, and SCOs formed and strengthened by the Project. These organizations were able to sustain themselves mainly because of their small size (average of 1430 households) and homogeneity of membership, the demand-driven approach of the Project allowing communities to set priorities, and rigorous monitoring ensuring that all members of the community were willing and would continue to contribute funds for the selected priorities. 53. Rural support organizations (NGOs) interested in developing their own constituencies are much more effective intermediate partners in rural development projects because of their interest in continuity beyond the projects. The NGO under the Project maintained regular interaction and follow-up with COs, WUAs, and SCOs and followed a pragmatic approach to institutional strengthening. It relied on simple and maintainable rules and roles based on the technical, management, and absorptive capacity of the client COs, WUAs, and SCOs that contributed immensely to the sustained and transparent operations of these organizations. 54. In demand-driven community-based projects, it is useful to follow a supply-driven approach at the start, to be able to learn and to demonstrate the dynamics of different types of community subprojects. Communities can thus make informed choices about their priorities (to see is to believe) and at the same time the IAs can learn and improve. 55. Interventions related to women in conservative male-dominated societies where laws and customs impede womens access to opportunities will succeed only if they are implemented after a certain level of credibility has been established with such communities and if the delivery approach respects the local norms and culture. Customs, beliefs, and attitudes that confine women to limited roles change incrementally, and aggressive approaches to change block the process of changing these roles and status of women altogether. Men and women play different roles, have different needs, and face different constraints in responding to specific opportunities. Identifying the right entry points at the design stage based on these roles, needs, and constraints is the key to successful operations and the start of the change process. In the remote and resource-poor area project area, the credit and social infrastructure proved to be effective entry points for womens empowerment.

15

56. The PMUs that will manage rural development projects in remote locations must be empowered with flexible technical and incremental staff support to enable them to respond to the changing needs and capacity gaps of the institutions implementing the projects at the local level. To make IAs accountable for the progress of their respective components, funds should be allocated directly to the annual development budgets of the IAs and project targets reflected in their annual development plans. 57. Giving preference to the use and strengthening of local capacity to implement projects is a challenging option at the start of a project. However, local staff are easier to retaina major consideration in sustained implementation in remote areas.

C.

Recommendations

58. Future Monitoring. Although the Projects roads were built to higher specifications than originally planned and should require less maintenance, the PCR Mission recommended regular follow-up. The Punjab government has agreed to the regular monitoring of the O&M activities in the districts, to ensure the sustained O&M of the Projects road infrastructure. Monitoring will be undertaken by the district C&WD and reported to ADB every 6 months. 59. Further Action or Follow-Up. Most of the Projects activities in the agriculture, livestock, and other productive subsectors under the CD and subsurface irrigation components were completed in 2006. For these investments to reach their full productive potential, the extension services to the COs must continue. Under a recent initiative of the Punjab government, livestock and agriculture extension services are being widely provided in DG Khan. These activities are also being supported under ASPL-II. The agriculture and livestock departments have committed to provide extension services and other concessions to project COs in particular, as these CO networks offer an ideal platform for such activities. A list and profile of project COs has been provided to these departments at the district level. 60. The C&WD has committed to develop a policy of incentives and penalties to ensure the effective use of O&M funds. The PCR Mission observed that road shoulders in certain areas where the soil texture was weak needed to be encased in stable soil to check erosion. The C&WD has agreed to undertake this work under the district O&M budget if erosion is observed. 61. Additional Assistance. The project area still has very high poverty, and there is great potential for water harvesting and water management infrastructure, since water is the lifeline of most economic activities. The Punjab government has already begun such projects with its own funds and support from ADB (TA 4802-PAK; and Chashma Right Bank Irrigation Project, Stage III, Loan 1146-PAK[SF]). However, there is still a large unmet demand for community and social infrastructure that the Project with its limited scope and time frame could not accommodate. A follow-on project in the social sector may be warranted. 62. Timing of Project Performance Evaluation Report. The project performance evaluation report can be prepared anytime after 2008 to allow the Projects CD schemes especially the grain warehouses, and the poultry and cattle shedsto become fully established. Most of these were completed in late 2006 and still need time and effort to realize their full potential.

Appendix 1

16

PLANNED AND ACHIEVED OUTPUTS OF THE PROJECT

Component

Activities

MTR Targets

Actually Achieved

1 Irrigation Improvement Surface Irrigation (i) Rehabilitation of (i) Minor the command area improvements in of about 6,410 ha of existing temporary land currently diversion headworks receiving irrigation and structures at water; and (ii) Vehova, and strengthening of development of earthworks in 5 km of about 2,910 ha of Kaha main channel; land not yet receiving irrigation (ii) Partial lining of main water. supply channel (8 km Kaha and 8 km Vehova); (iii) Formation of about 100 WUAs and improvement of about 100 WCs with one third of the length lined (300 km).

Minor improvements in existing temporary diversion headworks and structures at Kaha main channel.

Minor improvements in five existing temporary diversion headworks and structures at Kaha hill torrent were completed.

Target scrapped as work was already completed before the Project. Scope was reduced to 50 WCs in Kaha only, as no works could be undertaken in Vehova because of water rights issues.

Not done. Work already completed before the Project by Punjab government. 50 WUAs were formed and 10 WCs with total length of 30 km were partially lined (10 km). There was lack of demand because of a parallel program of the government, not requiring any up-front community contribution, under which all remaining 40 WCs were completed.

Subsurface Irrigation (i) Formation of about 100 WUAs, installation of 100 DTWs, improvement of about 100 km of WCs, and lining of about 33 km of WC length; No change. In total, 136 WUAs completed work on 136 DTWs, and 33 km of 40 WCs with a total length of 50 km were lined. The number of WCs was reduced because 10 were completed under a parallel program of the government, which did not require any up-front community contribution.

Appendix 1

17

Component

Activities (ii) Monitoring of the recharge of the sweetwater zone, where the tube wells are installed.

MTR Targets No change.

3.2 Community Development

Mobilization and capacity development of 600 COs (with an average of 25 members each, for a total of 15,000 members), about 40% of which were women COs or mixed COs, and implementation of subprojects identified by the COs in the following areas: (i) Hill torrent irrigation improvement, (ii) Soil and water conservation, Activities (iii) Agricultural production, (iv) Livestock production, and (v) Village infrastructure improvement

Mobilization and capacity development of 1,100 COs (with an average of 14 members each, for a total of 15,000 members), about 40% of which were women COs or mixed COs, and implementation of subprojects identified by the COs. No change. No change. MTR Targets No change. No change. No change.

Actually Achieved The groundwater was monitored during implementation through piezometers installed in tube wells. No reduction in the water table was noted and the DIP, the IA for this component, continues to monitor the water table. In total 1,110 COs (with an average of 25 members each, for a total of 15,560 members) were mobilized and capacity building was undertaken; of this total, 25% were women COs and 9% were mixed COs. These COs implemented 1,498 subprojects they themselves identified. 22 subprojects 212 subprojects Actually Achieved 375 subprojects 360 subprojects 428 subprojects

3.3 Rural Roads Rehabilitate and upgrading of selected rural roads to specifications sufficient to ensure durability and minimize maintenance. Improvement of about 175 km of rural roads. Improvement of up to 425 km of rural roads. About 389 km of rural roads were upgraded to higher specifications as agreed at appraisal to ensure durability and minimize maintenance.

18

Appendix 1

Component

Activities Establishment of road maintenance mechanisms.

MTR Targets No change.

Actually Achieved A road maintenance budget of PRs33,000 per km of road was set up by the Punjab government. More than 1,494 SCOs (34% of these women SCOs), with a total membership of about 25,000, were established. A credit line of $2.7 million was provided to NRSP, and 110,000 sub-loans were financed over 7-year implementation period.

3.4 Financial Services Social mobilization Establishment of about for group-based 1,000 village SCOs lending for economic empowerment of the that reach about 25,000 rural members. rural poor.

No change.

No change. Provision of credit line of $2.7 million to NRSP; financing of more than 36,000 subloans recycled over 5year implementation period. Recovery rate of 90% No change. Recovery rate above or above. 98%. No change. NGO completed Management training management training for about 2,000 SCO for more than 2,800 leaders (two per SCO) SCO members and and skills training for skills training for about 4,000 other 12,500 other members. members. No change. Outstanding savings of Mobilization of CSOs totaled $1.04 voluntary savings million at completion. totaling about $300,000 for on-lending by SCOs. CO = community organization, CSO = community services organizations, DTW = deep-turbine tube well, km = kilometer, NGO = nongovernment organization, SCO = savings and credit organization, WC = water course, WUA = water users association Source: Project Management Unit

CATEGORIES OF COMMUNITY DEVELOPMENT SUBPROJECTS Type Nos. 15 5 2 22 200 3 10 213 116 146 31 (i) Culvert (ii) Culvert / Bridge (iii) V.R Bridge 26 1 4 (i) Water Supply for Irrigation (ii) Deep Well for Irrigation 197 3 1 Protection Bund 2 Protection / Soil Conservation Bund 3 Water Regulatory Structure subtotal (A) 1 Water Supply for Irrigation 2 Mini Dam 3 Diversion / Soil Conservation Bund subtotal (B) 1 Atta Chaki 2 Food Godown 3 Culvert / Bridge Subtype Nos.

Head

A. Hill Torrent Management

B. Soil and Water Conservation

C. Agricultural Production Unit

Appendix 2

4 Atta Chaki ,Sawjin ,Paenja 5 Atta Chaki ,Sawjin ,Paenja ,Expeller 6 Ara Machine 7 Ara Machine, Paenja 8 Ara Machine, Oil Expeller, Sawjin 9 Water Course Improvement 10 Atta Chaki, Sawjin, Rice Husk Unit 11 Atta Chaki, Paenja, Rice Husk Unit, Oil Expeller 12 Atta Chaki, Expeller, Rice Husk Unit 13 Atta Chaki, Water Supply for Irrigation 14 Ara Machine, Oil Expeller, Paenja, Sawjin 15 Ara Machine, Oil Expeller, Paenja 16 Ara Machine, Sawjin 17 Ara Machine, Rice Husk Unit, Oil Expeller, Paenja 18 Aqueduct 19 Sawjin, Expeller, Rice Husking Unit 20 Rice Husking Unit 21 Atta Chaki, Oil Expeller, Paenja 22 Atta Chaki, Oil Expeller 23 Oil Expeller 24 Bore for Multipurpose 25 Oil Expeller, Paenja 26 Atta Chaki, Paenja 27 Ara Machine, Oil Expeller 28 Atta Chaki, Ara Machine, Oil Expeller, Paenja 29 Atta Chaki, Rice Husk Unit, Paenja 30 Expeller, Rice Hushking Unit, Paenja 31 Expeller, Rice Hushking Unit subtotal (C)

7 5 6 3 3 3 3 6 3 1 2 7 1 2 1 1 1 4 7 1 1 4 1 1 2 2 3 1 375

19

20

CATEGORIES OF COMMUNITY DEVELOPMENT SUBPROJECTS Type Nos. 218 142 360 175 103 (i) (ii) (iii) (iv) DWSS DWSS (Hand Pump) DWSS (Water Reservoir) Water Tanki 38 78 57 2 1 Cattle Shed 2 Poultry Shed subtotal (D) 1 Water Supply for Drinking Purpose 2 Community Hall Subtype Nos.

Head

Appendix 2

D. Live Stock Production

3 Community Building

E.

Community Infrastructure Development

4 Soling 5 Lath / Kharad Machine 6 Street Drains 7 Jeepable Track 8 Electricity Generator subtotal (E) Total

(i) (ii) (iii) 123 (iv) (v) (vi) (i) 17 (ii) (iii) 1 1 2 6 428 1,398

Community Building for Dispensary Community Building for School Community Building Vocational Center School Boundry Wall Science Labortary Link Road Soling Street Soling Street Soling / Drainage System

13 59 47 1 2 1 13 4 0

DWWS = drinking water supply scheme Source: Project Management Unit

Appendix 3

21

COMPLETION DATES OF RURAL ROADS UNDER THE D.G. KHAN RURAL DEVELOPMENT PROJECT

Sr. No.

Road Name

Length Actual Length (kms) for Completion (kms) 29.06 8.25 20.36 7.00 6.50 0.00 7.80 5.56 2.62 2.22 2.14 4.00 5.78 3.59 5.00 27.81 8.25 20.16 7.00 6.20 0.00 7.80 5.56 2.62 2.22 2.14 4.00 5.78 3.59 4.76

Contractor Name

Completion Actual Date Completed Length

A. District D.G. Khan 1 Kot Qaisrani to Litra 2 Kutani to Lakhani 3 Churkan to Tremman 4 Turutti Rohri to Rajhani 5 (a) Pull Qamber to Basti Siani (b) New Culvert. 6 Rakhi Monh to Dholi. 7 Pull Fayaz to Kot Hasso 8 Graveyard (Choti Zareen) to D.G Canal 9 Cement Factory-Taunsa link road to sanjarwala 10 Jhanda More to Basti Kaloi 11 Briot Mumdani to Kohar road 12 Jhoke Bodo to Bhati 13 Kazmi Chowk to More Jhungi 14 Pul Qambar to Govt. Primary School Aziz Abad via Basti Chandia 15 16 17 18 19 20 21 22 23 24 25 26 27 Bait Sawai road to Bait Faqeer wali Darbar Mian Mattay to Gammun wala Kot Chutta Drahma road to Samina Pir wala Kot Qaisrani pacca road to basti Buzdar Dhodak road to Basti Langer wala via Sanwal wala Bindi Daira Shah road to Basti Haji Iqbal Marha Pacca Peer Adil road to Basti Allah Bakhsh Arain. Khakhi Samina Road to Basti Allah Shadan Lund to Bait Shadan to Chak Danda Road Chatri to Batla to Kot Qasirani Litra road Basti Tub to Basti Manjhotha Basti Bhutta road to Basti Lal wali to Basti Kanjoo wali Khakhi Dera Road to Khojay wala via Khakhi wala and Khugi Baigwala Manka Basti Sher Muhammad Buzdar to Basti Dur M. Kachela Chungi Dambrah to Basti Hashim Hajana Samina Chowk to Pull Shoria

M/s Sarwar & Co M/s Manzoor Brothers M/s Hidayatullah & Co M/s Ramzan & Co M/s Saleem Brothers M/s Allah Bukhsh M/s Abdul Waheed M/s Ramzan & Co M/s Waheed & Co M/s Saleem Brothers M/s Ramzan & Co M/s Ramzan & Co M/s Ramzan & Co M/s Ramzan & Co M/s Ramzan & Co

30/11/06 30/11/06 15/04/06 12-10-06 30/06/05 24/03/06 30/11/06 02-12-04 22/10/04 30/09/04 01-10-04 30/08/06 14/07/06 25/09/06 25/09/06

27.81 8.25 20.16 7.00 6.20 0.00 7.80 5.56 2.62 2.22 2.14 4.00 5.78 3.59 4.76

6.00 4.90 4.00 2.54 2.56 2.96 3.00 2.78 3.20 4.00 5.25 3.50 2.38

5.77 4.90 4.00 2.54 2.56 2.96 3.00 2.23 3.20 4.00 5.25 3.29 1.83

M/s Ramzan & Co M/s Ramzan & Co M/s Ramzan & Co M/s Hassan Mahmood M/s Dawn Cons Co M/s Dawn Cons Co M/s Dawn Cons Co M/s Dawn Cons Co M/s Dawn Cons Co M/s Iftikhar & Co M/s Jam Brothers M/s Haji Ghulam Sarwar and Co M/s Haji Ghulam Sarwar and Co M/s Haji Ghulam Sarwar and Co M/s Waheed & Co M/s Waheed & Co

25/09/06 25/09/06 25/09/06 30/08/06 13/03/06 18/03/06 26/03/06 26/04/06 27/03/06 27/04/06 26/06/06 30/11/06 25/09/06

5.77 4.90 4.00 2.54 2.56 2.96 3.00 2.23 3.20 4.00 5.25 3.29 1.83

28 29 30

2.60 3.44 2.30

2.39 3.42 2.30

25/09/06 26/04/06 12-03-06

2.39 3.42 2.30

22

Appendix 3

Sr. No.

Road Name

31 32 33 34 35 36 37 38 39 40

Hyder Chowk (D.G. Choti Road) to basti Gud Pur Manka Canal to Chit Sirkani via Basti Lurkhaywala Rasheed Abad (Multan Road) to Chah Samandary wala Lalay wala Nai wala via Ghousabad to Basti Juma Wakilan wala to Nala Samendri wala via Shahil wala Indus Highway to Noorpur Jamwani Jhoke Utra Jhakhar Imam Wasay wala to Mochi wala via Dhole wala Mamoori Kot Chutta Road to basti Kappar Indus highway (Chowk Churatta) to National Highway (Mustafa Chowk) Choti Grid Station to Basti Gulzar Chandia Sher Muhammad Buzdar to Nika Talpur(Head Zero) Jampur Dajal Km no. 14 bohar Hatti Bodla Minor Notak Sheroo to Mana Ahmadani Jampur dajal road Km No. 10 to petrol pump Noor Muhammad Dubba Darri Yaray wala to Halla with link to Basti Chakar Khan Ghousabad road to Bangla Shedani

Length Actual Length Contractor Name (kms) for Completion (kms) 2.00 2.00 M/s Waheed & Co 3.70 3.38 2.50 2.50 3.00 2.78 4.10 2.80 3.65 2.00 3.20 1.00 2.50 3.00 2.00 3.92 2.80 3.65 M/s Waheed & Co M/s Waheed & Co M/s Arshad Jamil M/s Arshad Jamil M/s Khan Const. Co M/s Khan Const. Co M/s Manzoor Brothers M/s Manzoor Brothers M/s Manzoor Brothers

Completion Actual Date Completed Length 26/03/06 25/09/06 18/04/06 17/09/06 28/03/06 15/05/06 25/09/06 25/09/06 25/09/06 25/09/06 2.00 2.00 3.20 1.00 2.50 3.00 2.00 3.92 2.80 3.65

41 42 43 44 45 46 47 48

3.78 4.50 3.00 4.27 2.74 2.74 3.25 3.00 2.50 2.74 2.76 4.25 1.82 3.60 3.48 244.13 5.88 2.56 3.14 6.80 5.76 4.17

3.78 4.50 3.00 4.15 2.74 2.68 2.95 2.90 2.50 2.74 2.76 4.25 1.82 3.60 3.48 235.45 5.79 2.56 3.14 6.20 5.76 4.17

M/s Manzoor Brothers M/s Manzoor Brothers M/s Manzoor Brothers M/s Manzoor Brothers M/s Hafeez and Co M/s Hafeez and Co M/s Hafeez and Co M/s Shafqat Mansoor M/s Shafqat Mansoor M/s Jan Muhammad M/s Indus Services M/s Manzoor Brothers M/s Dawn Cons Co M/s Indus Services M/s Manzoor Brothers

25/09/06 25/09/06 25/09/06 25/09/06 25/09/06 25/09/06 25/09/06 26/03/06 25/09/06 15/05/06 26/03/06 30/11/06 23/06/06 30/11/06 30/11/06

3.78 4.50 3.00 4.15 2.74 2.68 2.95 2.90 2.50 2.74 2.76 4.25 1.82 3.60 3.48 235.45 5.79 2.56 3.14 6.20 5.76 4.17

Kala Bait Nurakhy road to Hamza Gadai link to Basti Iqbal Khan 49 Pull Shah Sonhar to Ahmed wala via basti Bhadi Mahar 50 Basti Elahi Bakhsh to Bhatti Metela 51 Basti Khakhi to Drahama Kot Chutta via Basti Chanar 52 Mithay Wali to Bhuch 53 Kala to Basti Ramin 54 Manka Canal to Darkhwast Minor via Basti Abdul Rashid Chandia 55 Pull Rangay Wali to Jindani road subtotal (a) B. District Rajanpur 1 Murghai to Kotla Said Khan 2 Burceabad to Bait Sauntra 3 Basti Jaffar Shah to Hazrat Wala 4 Head Tallai to Basti G. Rasool 5 Basti Noor Pur to Basti Sadiq Daha 6 Wang-Burceabad to Chah Daha

M/s Allied Const. Co M/s Waheed & Co M/s Waheed & Co M/s Saleem Brothers M/s Allied Const. Co M/s Allied Const. Co

31/03/05 15/03/05 15/03/05 30/03/05 15/03/05 31/03/05

Appendix 3

23

Sr. No.

7 8 9 10 11 12 13

14 15 16

17 18 19 20 21 22 23 24 25 26 27 28 29

Length Actual Length Contractor Name (kms) for Completion (kms) Ghazi Chowk to Nallah Saiban. 4.00 4.00 M/s Manzoor Brothers Mirran Sakhi to Wang 4.11 4.11 M/s Allied Const. Co Muhammadwala to Basti Muhammad 2.70 2.70 M/s Manzoor Brothers Hussain Wadoo Muhammad Pur Basti Hameed to 5.00 5.00 M/s Saleem Brothers Basti Maula Bux Wajar Dajal to Harrand (Group-I) 3.00 3.00 M/s Allied Const. Co Hajipur to Rajanpur 12.00 12.00 M/s Allied Const. Co Ghazi Chowk to Kot Tahir Road from 4.10 4.10 M/s Manzoor Brothers Basti Allah Ditta Lakha to Sheroo road Mughal wala to Basti Paoli 3.90 3.90 M/s H. Abdul Razaq Shero road (Khoka Bhibrian) to Peer 2.50 2.50 M/s Ch. Riaz Ahmad Jhungi Pukhta link road Shah Jamal Colony 2.68 2.68 M/s Ch. Riaz Ahmad via Patwari Wal Bagh to Karla Ghamo Pukhta Gaddan bund to basti Khutra 2.50 2.50 M/s Malik M. Sajjad Govt. Primary School Basti Prirhar to Sikandar Pitafi Wala Basti Mustafa Gola to Gola More via Mulazim Hussain Balachani Aqil pur road to Chowk Qureshi to Shikar Pur via jam Rasul Bakhsh Hajipur to Khalil Makwal via Jam Afzal Burra Luqra Mastoi Agency Basti Dr. Sadiq to chowk Darbar bachal Faqir Sahib Basti Sind Gabool to Basti Syed Ahsan Shamsi Dangar Quarter Syed Abdul Rehman to pull Qadra canal Noorpur Hospital to Basti Bohar Awiray wala Basti Wazeer Hussain Sarai to Hajipur Basti Allah Bukhsh Machi to jam Kabir Jhabail Juma Wah to Basti Allah Bukhsh Machhi. Chowk Liaqat abad to Bachaow Bund via Basti Wahi Malik Basti Pujabi and Dera Sardar Faiz Khan Basti Mayo to Noshera Gharbi Cyphon Thingana to Basti Hamid Gindani Chakar Buzdar to Basti Budh Basti Dina to Basti Hothi Indus highway Chakki to Basti Haji Gul Muhammad Bhani Kotla Rubait chowk to Nallah Qutab via chak Patiat 3.00 2.50 2.50 6.50 2.50 2.50 3.00 3.50 2.75 5.00 4.40 3.10 3.00 2.50 2.50 6.50 2.50 2.50 3.00 3.50 2.75 5.00 4.40 3.10 M/s Malik M. Sajjad M/s Allied Const. Co M/s Allied Const. Co M/s Allied Const. Co M/s Javaid Iqbal & Co M/s Javaid Iqbal & Co M/s Javaid Iqbal & Co M/s Asif Sana M/s Shafqat Mansoor M/s Muhammad Sajjad M/s Muhammad Sajjad M/s Jan Muhammad

Road Name

Completion Actual Date Completed Length 15/05/05 15/01/05 30/09/04 30/12/04 30/09/06 30/03/04 30/09/06 4.00 4.11 2.70 5.00 3.00 12.00 4.10

17/04/06 30/04/06 10-05-06

3.90 2.50 2.68

30/07/06 30/06/06 24/06/06 20/06/06 30/09/06 30/06/06 12-03-06 12-03-06 30/09/06 30/04/06 21/05/06 21/04/06 14/03/06

2.50 3.00 2.50 2.50 6.50 2.50 2.50 3.00 3.50 2.75 5.00 4.40 3.10

30 31 32 33 34 35

4.00 2.50 3.00 2.50 5.00 2.90

4.00 2.50 3.00 2.50 5.00 2.90

M/s Javaid Iqbal & Co M/s Muhammad Sajjad M/s Muhammad Sajjad M/s H. Abdul Razaq M/s Javaid Iqbal & Co M/s Syed Const. Co

17/06/06 30/09/06 30/09/06 19/06/06 22/06/06 30/09/06

4.00 2.50 3.00 2.50 5.00 2.90

24

Appendix 3

Sr. No.

Road Name

36 37 38 39 40 41

Basti Arain to Basti Ghulam Haider Gopang Basti Noor Muammad Balohra to Basti Piran Ditta Basti Phali to Bambka road to Basti Fauja Miranpur Phatak to Badli Railway Station Primary School Dhora Hasil to Badli Railway Station Basti Murad Jhullan via Basti Karim Bakhsh subtotal (B) Total

Length Actual Length Contractor Name (kms) for Completion (kms) 2.50 2.50 M/s Ch. Riaz Ahmad 2.50 2.50 4.00 5.10 4.00 156.55 400.68 2.50 2.50 4.00 3.10 4.00 153.86 389.31 M/s Ch. Riaz Ahmad M/s Zubair Const. Co M/s Allied Const. Co M/s Javaid Iqbal M/s Muhammad Sajjad

Completion Actual Date Completed Length 30/09/06 17/06/06 30/09/06 30/09/06 30/09/06 30/09/06 2.50 2.50 2.50 4.00 3.10 4.00 153.86 389.31

Appendix 4

25

ACHIEVEMENT UNDER THE RURAL FINANCIAL SERVICES COMPONENT February 1999 to November 2006 Component/Activity Detail Activities Men 985.000 19,537.000 52.490 Gender Women 509.000 5,342.000 9.980 Total 1,494.000 24,879.000 62.470

Formation of Saving and Credit Organizations (SCOs) SCOs Membership Saving Generated by SCOs (Million Rs.) Sub-loans Agri-Inputs Livestock Enterprise SIIE Total Credit Disbursement (Million Rs.) Agri-Inputs Livestock Enterprise SIIE a Total
a

84,387.000 654.000 726.000 2.000 85,769.000

14,104.000 11,278.000 1,090.000 12.000 26,484.000

98,491.000 11,932.000 1,816.000 14.000 112,253.000

1,399.943 8.132 9.129 0.030 1,417.234

74.023 81.523 11.067 0.063 166.676

1,473.966 89.655 20.196 0.093 1,583.909

Small infrastructure as individual enterprise. Source: National Rural Support Programme

26

Appendix 5

APPRAISED AND COMPLETED COSTS OF THE PROJECT Table A5.1: Detailed Project Costs ($ million) At Appraisal Foreign At Completion Foreign

Item A. Investment Costs 1. Civil Works a. Construction Material b. Earth Work c. Labor Subtotal (A1) 2. Contract Management Staff 3. Credit a. Credit Line b. NGO: Credit and Savings Subtotal (A3) 4. Domestic Consulting Services a. Baseline and Impact Studies b. Benefit Monitoring and Evaluation Consutants c. Contract Agreement Consultants d. Engineering Design Consultants Subtotal (A4) 5. NGO Support Services 6. Office Equipment 7. Vehicles Total Investment Costs B. Incremental Administration Costs 1. Incremental O&M 2. Office Overhead 3. Watercourse Survey and Design Total Administration Costs Total Baseline Costs C. Contingencies 1. Physical Contingencies 2. Price Continencies Total Baseline Costs and Contingencies Service Charge During Construction Total

Local

Total

Local

Total

18.18 1.56 4.01 23.75 1.35 2.67 0.24 2.91 0.59 0.12 0.03 0.15 0.89 1.76 0.01 0.17 30.83 4.15 0.29 0.56 5.00 35.80 1.30 3.30 40.40 40.40

4.25

4.25

22.42 1.56 4.01 27.99 1.35 2.67 0.43 3.10 0.59 0.12 0.03 0.15 0.89 1.96 0.03 0.34 35.65 4.22 0.29 0.60 5.11 40.70 1.60 3.80 46.10 1.70 47.80

33.84 1.10 0.04 0.13 0.00 0.04 0.47 0.64 2.17 0.02 0.14 37.95 0.10 0.04 0.14 38.09

6.92

40.76 1.10 2.82 0.13 0.00 0.04 0.47 0.64 2.17 0.13 0.43 48.04 0.10 0.04 0.14 48.18

0.19 0.19

2.78

0.20 0.02 0.17 4.82 0.07 0.04 0.11 4.90 0.30 0.50 5.70 1.70 7.40

0.10 0.29 10.09

10.09

38.09 38.09

10.09 0.44 10.53

48.18 0.44 48.63

NGO = nongovernment organization, O&M = operation and maintenance. Source: ADB's Loan Financial Information System, Project Management Unit.

Table A5.2: Project Cost by Components ($ million)

GOP Total 1.091 5.495 16.903 2.779 4.132 0.442 30.842 6.275 11.507 0.470 0.041 4.579 1.896 3.565 2.779 0.392 0.442 10.535 0.827 7.361 2.455 0.358 2.250 0.902 Foreign

Beneficiaries

Component Foreign 0.902 2.455 3.565 2.779 0.392 0.442 10.535 20.307 3.740 13.338 3.040 0.189

ADB Local 2.797 11.228 19.813 0.041 4.210 38.089

Total Local

Total 3.699 13.683 23.378 2.820 4.602 0.442 48.623

Irrigation Development

Community Development

Rural Roads

Rural Finance

Institutional Support

Interest During Construction

Total

ADB = Asian Development Bank, GOP = Government of Pakistan. Source: ADB Loan Financial Information System, Project Management Unit.

Appendix 5

27

28

Table A5.3: Project Cost by Activity $ million

Foreign ADB Local Total GOP Beneficiary Foreign Total Local Total

Appendix 5

Item

A. Investment Costs 1. Civil Works 6.761 1.101 2.779 2.779 0.041 2.779 1.101 16.567 23.328 5.764 11.507 6.922

33.838 1.101 0.041

40.760 1.101 2.820

2.

Contract Management

3.

Credit

4. 0.129 0.004 0.040 0.441 0.614 0.002 0.024 0.026 2.166 0.399 9.939 20.448 0.399 30.387 2.166 0.155 5.986 0.129 0.004 0.040 0.441 0.614

Domestic Consultant Services Baseline, EIRR, and Impact Studies Legal Contract Agreement Engineering Design Consultant Engineering Supervision Consultant Subtotal

0.129 0.004 0.042 0.465 0.640 2.166

0.129 0.004 0.042 0.465 0.640 2.166

5.

NGO Support Services

6.

Office Equipment and Vehicles Total Investment Costs

11.507

0.399 10.100

0.155 37.941

0.554 48.041

B. Incremental Administration Costs Incremental O&M Office Overhead Watercourse Survey and Design Total Administration Costs 9.939 0.097 0.043 20.588

0.097 0.043 30.527

5.986

11.507

10.100

0.097 0.043 38.081

0.097 0.043 48.181

Total Costs Service Charge During Construction 0.442 10.381

0.442 20.588 30.969 5.986 11.507

0.442 10.542 38.081

0.442 48.623

Total Project Costs

ADB = Asian Development Bank, GOP = Government of Pakistan, NGO = nongovernment organization, O&M = operation and maintenance. Source: ADB Loan Financial Information System, Project Management Unit.

Appendix 6

29

CONTRACT AWARDS AND DISBURSEMENTS ($ million)

Year

Contract Awards Projected Actual Cumulative 1.000 3.000 3.430 4.500 6.000 6.000 11.000 8.800 5.576 0.323 0.146 0.351 2.538 3.854 13.016 6.586 0.236 5.576 5.899 6.045 6.396 8.934 12.788 25.804 32.390 32.626

Disbursements Projected Actual 0.800 3.200 3.220 3.000 5.000 5.500 7.000 19.000 1.500 0.656 0.176 0.316 2.200 1.577 3.774 6.332 13.257 2.056

Cumulative 0.656 0.832 1.148 3.348 4.925 8.699 15.031 28.288 30.344

1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: ADB Loan Financial Information System.

30

PROJECT IMPLEMENTATION SCHEDULE

Year 1 Year 2 Year 3 Year 9 Year 4 Year 5 Year 6 Year 7 Year 8 FY: 98-99 FY: 99-00 FY: 00-01 FY: 01-02 FY: 02-03 FY: 03-04 FY: 04-05 FY: 05-06 FY: 06-07
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV

Major Activities by Component

A. Institutional Support 1. Recruitment of Consultants/Employment of NGOs

Appendix 7

2. Procurement of Equipment and Vehicles

3. Baseline Survey

4. Establishment and Operation of BME System

5.

Orgqnization and Strengthening of Cos, WUAs, and SCOs

B. Irrigation Improvement Strengthening of WUAs by Participation and Guidance 1.

Transferred to OFWM Deptt. Stopped due to OFWM

2. Watercourse Improvement, Lining, and Tubewell

3. Supervision and Guidance by DOWM and PMU

C. Rural Roads 1. Design by PMU and Consultants

Monitored by High Way & PMU

2. Road Construction Contracts through Tendering

3. Construction/Improvement of Farm-to-Market Roads

4. Supervision by CWD, PMU, and Consultants

D. Community Development 1. Strengthening of Cos by Participation and Guidance

2. Construction/Improvement of Productivity and

3. Supervision and Guidance by DOWM, LGRDD, DOA, DOL, DIP, and PMU

E. Finalcial Services 1. Organization and Strengthening of SCOs by NGO

2. Saving Mobilization

3. Credit Disbursement and Management Services

BME = benefit monitoring and evaluation, COs = community organizations, CWD = communication and works department, DIP = department of irrigation and power, DOA = department of ariculture, DOL = department of livestock, DOWM = directorate of on-farm water management, LGRDD = local government and rural development department, NGO = nonovernment organization, PMU = project management unit, SCO = savings and credit organization, WUA = water user association Legend:
At Appraisal: At Completion:

Source: Project Management Unit.

Appendix 8

31

COMPLIANCE WITH LOAN COVENANTS Reference Article IV, LA Section 4.01 Covenant The Borrower shall cause Punjab to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental, rural road construction, agricultural and irrigation development, building and small-scale infrastructure construction, and institutional support practices. In the carrying out of the Punjab and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to this Loan Agreement. The Borrower shall make available to Punjab, or cause Punjab to make available, promptly as needed, and on terms and conditions acceptable to the Bank, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project. The Borrower shall keep the Bank advised of the progress in budgetary allocations and releases of the funds of the Project. Prior to the start of each fiscal year during Project implementation, the Borrower shall furnish to the Bank a draft financing plan for the Project in respect of Punjabs Annual Development Program. The Borrower shall ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures. The Borrower shall furnish, of cause to be furnished, to the Bank all such reports and information as the Bank shall responsibly request concerning (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the administration, operations and financial conditions of Project Executing Agency, the implementation Agencies, and any other agencies of the Borrower responsible for the carrying out the Project and operation of the Project facilities, or any part thereof; (v) financial and economic conditions in the territory of the Borrower and the international balance-ofpayments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan. Complied. Status

Article IV, LA Section 4.02

Complied.

Article IV, LA Section 4.03

Complied.

Article IV, LA Section 4.04

Complied. All the progress reports, audit reports, and other project related reports were provided promptly.

32

Appendix 8

Reference Article IV, LA Section 4.05

Covenant The Borrower shall enable the Banks representatives to inspect the Project, the foods financed out of the proceeds of the Loan, and any relevant records and documents. The Borrower shall take all actions which shall be necessary on its part to enable Punjab to perform its obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. It is the mutual interaction of the Borrower and the Bank that no other external debt owed a creditor other than the Bank shall have any priority over the Loan by way of a lien on the assets of the Borrower. PDD shall be the project Executing Agency and shall provide overall Project guidance and coordination. The PMU shall be responsible for management and coordination of the Project, including all procurement and the approval of subprojects. The PMU shall implement parts (ii), (iii) and (iv) of part five of the project. The PMU headed by a project Director, shall have an Implementation, Planning, and Monitoring section and a Management and Contracts section, each headed by a Deputy Project Director, and adequate support staff and equipment. The Project Director and two Deputy Directors shall have qualifications employees for the duration of the Project. The Implementing Agencies Include: (i) DOWM, for part one (a) (iii) , part one (b), and a portion of part two (a) of the Project; (ii) DIP for the channel improvements under Part one (a) (i) and (ii) of the Project, and a Portion of part Two (a) of the Project; (iii) DOA, for part Two (b) and (c) of the Project: (iv)DOL, for part Two (d) of the Project ; (v) LGRDO, for part Two (e) of the Project; (vi) CWD, for part Three of the Project; (vii) NRSP, for part Four and part (i) of part Five of the Project; and (viii) The PMU, for parts (ii) , (iii) and (iv) of part Five of the Project.

Status Complied.

Article IV, LA Section 4.06

Complied.

Article IV, LA Section 4.07

Complied.

LA Schedule VI, Paragraph 1 LA Schedule VI, Paragraph 2

Complied. Complied.

LA Schedule VI, Paragraph 3

Complied.

LA Schedule VI, Paragraph 4

Complied. Minor exception with regard to LGRDD for which a minor change of implementation arrangement was approved.

Appendix 8

33

Reference LA Schedule VI, Paragraph 5

Covenant Within three months of the effective Date, Punjab shall establish the project steering Committee, which shall be the overall, senior oversight body for project implementation. The project steering Committee shall comprise secretaries of the concerned departments, the Heads of the relevant line departments and NGOs, and may include members of other organizations as appropriate. The project steering Committee shall be headed by the chairperson of the planning and Development Board, The Project steering Committee shall meet at least twice a year, and shall approve yearly and half- yearly implementation of the project. Within three months of the Effective Date, Punjab shall establish the PCC in D.G.Khan Division to deal with operational and implementation matters and progress. The PCC shall be chaired by the Commissioner, D.G.Khan Division, and shall consist of Divisional government officers from the Implementing Agencies. Representatives of other private and public entities with a role in the Project shall also be represented on the PCC. The Secretary of PCC shall be the Project Director. The PCC shall meet at least quarterly, and shall review plans, address coordination issues, and identity and resolve obstacles in Project Implementation. To qualify for assistance under the Project, each component shall satisfy selection criteria acceptable to the Bank.

Status Complied. PSC had 11 meetings.

LA Schedule VI, Paragraph 6

Partly Complied. Only one meeting held during the initial phase of the Project. However, as a result of devolution, the administrative divisions were abolished, and the DCC could no longer function.

LA Schedule VI, Paragraph 7

Complied.

Surface Irrigation LA Schedule VI, DOWM and DIP shall work with WUAs, which will be Paragraph 8 organized and strengthened by NRSP and registered by DOWM at the District level. LA Schedule VI, Paragraph 9 LA Schedule VI, Paragraph 10 Technical guidance shall be provided through a DOWM field team and the existing staff of DIP. The PMU shall approve the selection of channels and watercourses to be improved under the Project based on the recommendations of DIP and DOWM. Contract agreements will be executed between the WUAs and the Implementing Agencies, whereby the WUAs agree to procure all construction materials, complete the improvement works, properly use the Project funds provided, and implement all O&M activities. DOA shall provide extension services for this component.

Complied All WUAs formed, strengthened by NRSP, were registered with Directorate of OFWM and Irrigation Department. Complied. Complied. Channels were recommended by DIP, while DOWM seconded a team of six staff to the PMU for watercourse component. The contracts were executed with the WUAs.

34

Appendix 8

Reference LA Schedule VI, Paragraph 11

Covenant For the Watercourse Improvements, the WUAs shall contribute 20 percent of all materials paid advance, soil for earthworks, and all O&M. For the main channel improvements, the WUAs shall supply soil for earthworks and all O&M. In addition, farmers shall supply all skilled and unskilled labour for the watercourse and main channel improvement works.

Status Complied on all other accounts except labor cost for main channels improvement, for which ADB provided special weaver due to lack of affordability of COs, to share cost of the main channel. Complied.

Tubewell Irrigation LA Schedule VI, The implementation arrangements for this component Paragraph 12 of the Project shall be similar to those under Part One (a) of the Project. LA Schedule VI, Paragraph 13 The WUAs shall be organized and strengthened by NRSP and registered by DOWM at the District level. The WUAs shall procure the tube-wells, materials and carry out the required works, including contracting for the drilling works required. The WUAs shall contribute 20 percent of the cost of materials and installation in advance for tube-wells and watercourse improvement required labour (both skill and unskilled), soil for earthworks, and subsequent O&M. One DOWM field team shall be provided to assist the WUAs. DOWM shall monitor the groundwater recharge and quality in coordination with WAPDA. DOA shall provide extension services for this component.

Complied- WUAs have been organized and strengthened by water management team of PMU/NRSP. WUAs share 20 percent cost, provide labor and soil, procure materials and carry out required works including contracting all types of work.

LA Schedule VI, Paragraph 14

Complied.

Community Development Subprojects LA Schedule VI, The Implementing Agencies, DOWM, DIP, DOA, DOL, Paragraph 15 and LGRDD, shall work with the COs to implement this component of the Project. LA Schedule VI, Paragraph 16 The COs shall be organized and strengthened by NRSP, an experienced, domestic NGO, and the COs shall be registered by the Social Welfare Department at the divisional level, based on a feasibility report prepared by the Sub-District-Level Social Welfare Officer. The O&M arrangements shall be conducted entirely by the COs.

Complied.

Complied COs strengthened by NRSP. These COs have been clustered and registered as CCBs under LGO 2001. Individual registration of Project CO is not required. About 46 million has been saved by CO for O&M. Complied.

LA Schedule VI, Paragraph 17

The COs shall contribute 10 percent of the cost of materials in advance, required labour (both skilled and unskilled), soil for earthworks, and subsequent O&M for the activities to be carried out under this component of the Project. In consultation with the PCC, the PMU shall approve the selection of all Community Development SubProjects to be implemented under the Project.

LA Schedule VI, Paragraph 18

Complied.

Appendix 8

35

Reference LA Schedule VI, Paragraph 19

Covenant The following guidelines shall apply to the infrastructure works under this component of the Project. (i) The maximum cost for any individual SubProject under this Project component, other than hill torrent Sub-Projects, shall be the equivalent of $20,000 at 1997 prices, unless proposals for more costly Sub-Projects have been reviewed by the PMU and submitted to the Bank for approval prior to implementation; (ii) A representative of the Bank will participate in the review by the PSC of all Hill Torrent Sub-Projects prior to the approval of such SubProjects; (iii) Any Sub-Project shall have a minimum cost of $1,000 equivalent and benefit no fewer than 10 households; and (iv) The estimated implementation period shall be six to nine months, with a maximum period of 12 months. Priority in the implementation of Sub-Projects shall be given to communities that mobilize more than 10 percent of the cost of materials. Using selection criteria acceptable to the Bank, the NGO referred to in paragraph 10 above shall identify villages and communities for assistance under the Project, assist Communities in determining the required interventions using participatory techniques, and organize beneficiaries into multiple-function COs, each headed by a trained community mobilizer (both men and women volunteers from within the village community). Women, in particular, shall be targeted for assistance under this component through the formation and strengthening of groups of women participants (about 40 percent of the total number of COs) into women only and mixed COs. At least one third of the NGO village organizers shall be women. CWD shall implement the upgrading and improvement of rural roads under this Project Component. The PMU shall approve the selection of all rural roads to be upgraded or improved under the Project. The PMU shall recruit the domestic consultants, referred to in Schedule 5 to this Loan Agreement, in consultation with CWD to monitor design standards and to provide construction supervision of rural roads improved under the Project. The construction specification for this Project component shall be sufficient to ensure durability and minimize maintenance requirements.

Status Complied.

LA Schedule VI, Paragraph 20 LA Schedule VI, Paragraph 21

Complied.

Complied.

LA Schedule VI, Paragraph 22

Complied.

Rural Roads LA Schedule VI, Paragraph 23 LA Schedule VI, Paragraph 24

Complied. Complied.

LA Schedule VI, Paragraph 25

Complied. Designs reviewed and approved by Consultants, CWD, and PMU.

36

Appendix 8

Reference Covenant Financial Services LA Schedule VI, NRSP shall establish two field units in each Project Paragraph 26 District to implement this component of the Project. LA Schedule VI, Paragraph 27 The Staff of each field unit shall carry out Social Mobilization and group formation, provide basic training to group members, mobilize savings, and disburse and recover credit form SCOs. The Staff shall also monitor the activities of SCOs closely to ensure that (a) their operations are in conformity with the procedures agreed upon between SCOs and NRSP, (b) credit is utilized productively, and (c) records of transactions are properly kept. NRSP shall establish a revolving fund and allocate recovered sub-loan principal amounts into the fund. The resources of the fund shall be utilized to finance on-lending for similar purposes to members of SCOs in the Project area. The SCOs shall carry out the initial appraisal of applications for credit, and the Social Organizers of NRSP shall further appraise the Sub-loan proposals. The members of each SCO shall elect a group leader who shall organize meetings and facilities lending and savings transactions. Sub-loans shall be granted by the SCOs to members in accordance with the following guidelines: (i) No collateral shall be required for sub-loans, except that each sub-loan shall be guaranteed by four members of the SCOs. (ii) Sub-loans shall only be granted to individuals; (iii) Each SCO member shall have completed a minimum period of savings to become eligible for credit and should continue saving to maintain their eligibility for further sub-loans. NRSP shall pay, as appropriate, a two percent margin of the recovered amount to the group leaders of the SCOs as an incentive to recover outstanding subloans. Women, in particular, shall be targeted for assistance under this component of the Project (about 50 percent of the credit provided).

Status Complied. Seven field units established. Complied.

LA Schedule VI, Paragraph 28

Complied.

LA Schedule VI, Paragraph 29

Complied.

LA Schedule VI, Paragraph 30

Complied.

LA Schedule VI, Paragraph 31

Complied. Recovery rate 99 percent.

LA Schedule VI, Paragraph 32

Complied. However, 25% of the credits were provided to women, based on demand and eligibility criteria. Complied. The Punjab onlent the loan proceeds to the NGO at 10%, which were onlent to the beneficiaries at 20% out of which 2% was paid as incentive for recovery to group leaders.

Re-lending and On-Lending Terms LA Schedule VI, Punjab shall on-lend the proceeds of the Loan Paragraph 33 allocated for Part Four of the Project in local currency pursuant to a subsidiary loan agreement acceptable to the Bank. Except as otherwise agreed to by the Bank, the on-lending rate shall not he less than 18 percent per annum.

Appendix 8

37

Reference LA Schedule VI, Paragraph 34

Covenant The Borrower shall require Punjab to cause NRSP to repay the subsidiary loan one year from the end of the Project.

Status Not yet due. However, the provisions exist in the SLA.

Operation and Maintenance LA Schedule VI, CWD shall be responsible for the maintenance of rural Paragraph 35 roads improved under Part Three of the Project. CWD shall carry out the O&M of the rural roads on its own or it shall use private sector local contractors. CWD shall allocate sufficient funds for O&M annually. In any event, CWD shall allocate a minimum of 20,000 Rupees per Kilometer for O&M. LA Schedule VI, Paragraph 36 The WUAs shall be responsible for the O&M of the Watercourses and other Irrigation Infrastructure improved under Part One of the Project, while DOWM and DIP shall be responsible for providing Technical Supervision to the WUAs. The maintenance of the infrastructure improved or constructed under Part Two of the Project shall be the responsibility of COs that contributed to their construction.

Ongoing. The District Government has committed to seek required funding from the provincial government.

Complied. Provisions exist in the memorandum of understandings signed with the communities. Complied. Provisions exist in the memorandum of understandings signed with the communities. Complied. The IBME systems developed and implemented by the PMU itself, which was accepted by the ADB.

LA Schedule VI, Paragraph 37

Monitoring and Evaluation LA Schedule VI, The PMU, with the assistance of the implementation Paragraph 38 and BME consultants, shall establish a BME system to monitor implementation progress of the Project which shall employ a set of indicators acceptable to the Bank, and assess the impact of the Project on the beneficiaries. The BME shall include the estimates of vehicle cost savings and incremental value-added Internal Rate of Return (EIRR) estimates for irrigation improvements, Community Developments and Rural Roads. Mid-Term Review LA Schedule VI, A comprehensive Midterm Review shall be conducted Paragraph 39 at the end of the second year of the Project by the Bank and PDD. Environmental Consideration LA Schedule VI, Adverse environmental impacts shall be mitigated and Paragraph 40 appropriate environmental safeguards adopted in relation to noise, dust, air pollution, safety standards, and sanitation measures as specified by Punjabs Environment Department.

Complied.

Complied - As specified by the Punjabs Environment Department and the RRP, and included in the contract documents, implementation was monitored by PMU during construction

38

Appendix 8

Reference PA, Article II, Section 2.08(a)

Covenant Punjab shall furnish to the Bank all such reports and information as the Bank shall reasonably request concerning (i) the Loan and the expenditure of the proceeds thereof; (ii) the goods and services and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations and financial condition of the Punjab; and (v) any other matters relating to the purposes of the Loan. Punjab shall ensure that PDD and the implementation agencies (i) maintain separate accounts for the Project and for its overall operations; (ii) have such accounts and related financial statements (balance sheet, statement of income and expenses, and related 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; and (iii) furnish to the Bank, promptly after their preparation but in any event not later than twelve months after the close of the fiscal year to which they relate, 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 Agreement as well as on the use of the procedures for imprest account and statement of expenditures), all in the English language. Punjab shall furnish to the Bank such further information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request.

Status Complied.

PA, Article II, Section 2.09(a)

Complied.

Appendix 9

39

FINANCIAL AND ECONOMIC ANALYSES D. Introduction

1. The Dera Ghazi Khan (DG Khan) Rural Development Project in the southwestern Punjab (the Project) began in 1997 and was completed in 2007 Within the project boundary are the districts of DG Khan and Rajanpur. The main objectives of the Project were: (i) to reduce poverty by increasing farm productivity and rural incomes; and (ii) to improve the quality of life by increasing access to productive, physical, and social rural infrastructure and rural financial services, and by developing human resources and enhancing skills. 2. The following post-project economic evaluation was made to reestimate the anticipated economic returns with the use of the actual incremental investment costs and net benefit stream incurred and realized during implementation and foreseen after the Project, and to compare these with the returns estimated at the appraisal stage. The impact of the Project on poverty incidence is also analyzed against the assumptions at the appraisal stage. 3. This economic analysis generally follows the same approach and methodology that was adopted at the appraisal stage in August 1997. The present analysis, however, benefits from the data provided in the various reports compiled by the Punjab Economic Research Institute (PERI),10 and discussions with the project staff, staff of the National Rural Support Program (a nongovernment organization contracted to mobilize communities and to provide financial services), field staff of the line agencies, and field observations and interaction during the Project Completion Review (PCR) Mission with a large array of direct and indirect beneficiaries at randomly selected community organizations. E. Methodology and Approach

4. The Project had five main components, namely: (i) irrigation improvement with tube-well irrigation and surface irrigation development subcomponents; (ii) community development through hill torrent management, soil and water conservation, agriculture production, livestock production, and village community infrastructure improvement; (iii) rural road upgrading; (iv) financial services; and (v) institutional support. 5. The Project was appraised on the basis of its estimated economic viability vis--vis the economic internal rates of return (EIRRs) for the irrigation improvement and rural road components. The cost of the community development and institutional support components was excluded. But the cost of the institutional support component was considered in estimating the overall EIRR for the Project. The selection criterion for the community development interventions was the financial viability of the community-identified interventions. 6. Following the above approach, this analysis reestimated the EIRRs for the irrigation development and rural road components, as well as for the overall Project (by adding the cost of the institutional support component). The reestimated EIRRs under different scenarios for the Project are provided at Table A9.1.

10

Economic Analysis of Various Components of Dera Ghazi Khan Rural Development Project (parts 1 and 2), March 2006; Updating of Baseline Survey of Dera Ghazi Khan Rural Development Project, February 2006; and Impact Evaluation of Dera Ghazi Khan Rural Development Project, November 2006.

40

Appendix 9

F.

Assumptions

7. The main assumptions used in this end-of-project financial and economic analysis were as follows: (i) Current prices (2007) in Pakistan rupees (PRs) were used for all items in the cost and benefit stream by converting prices with the use of the gross domestic product deflator for the respective years. The net cash flow was converted into current US dollars with the use of the conversion rates for the relevant years. Import parity and export parity prices were estimated for the traded goods, after adjusting for taxes, duties, and any price distortions. The financial and economic prices for various inputs and outputs are presented in Table A9.2 while the derivations for import and export parity prices are summarized in Tables A9.3 and A9.4, respectively. In estimating import and export parity price, a foreign exchange conversion rate of PRs60.5 = $1 was assumed, reflecting the true opportunity cost of foreign exchange. A standard conversion factor of 0.9 was used for non-traded goods. This was estimated by the standard computation and is in line with current use in appraised projects. Labor cost was adjusted by a factor of 0.8 to reflect the opportunity cost of labor. Considering the current demand for labor, especially in the construction industry, and out-migration from the rural areas, the opportunity cost of labor was assumed at 0.8 rather than 0.75, as traditionally assumed. Financial crop budgets were prepared for individual crop enterprises and a model farm budget was constructed for a 1 hectare (ha) farm. The gross margins, based on economic prices of inputs and outputs, were applied to the area that would be cultivated with the help of investments in irrigation. As tube-well irrigation is a recent development in the area, which was largely rain-fed or a cultivable wasteland, and given the inexperience of the farmers in the area in irrigated agriculture, the full development stage was assumed to be attained in 6 years. The period of analysis was assumed to be 20 years, the same as that adopted at appraisal.

(ii)

(iii)

(iv)

(v)

(iv)

(vii)

(viii)

G.

Financial Analysis 1. Surface Irrigation

8. At appraisal it was envisaged that the investment in surface irrigation structures would: (i) rehabilitate about 6,410 ha of land currently receiving irrigation water, and (ii) provide

Appendix 9

41

irrigation to an additional 2,910 ha in the command areas of Kaha Sultan and Vehowa. However, after a change in scope during implementation that excluded the rehabilitation of main diversion structures, and litigation problems at Vehowa, the surface irrigation improvement was limited to the Kaha Sultan command area. At completion, an increase of 4,854 ha in cropped area was noted in Kaha Sultan alone, against a total increase in cropped area of 2,910 ha envisaged at appraisal for the Kaha Sultan and Vehowa command areas combined. 9. One hundred watercourses (WCs), 50 each in the Vehova and Kaha Sultan command areas, were also to be rehabilitated. But only 10 WCs were improved in the Kaha Sultan area largely because of low demand, and no WC was improved in Vehova because of water rights issues. The remaining WCs in Kala Sultan are expected to be improved under the ongoing national WC rehabilitation program, funded by the Government of Pakistan. 10. At completion, the total value of production (net of production cost) from the additional area brought under cultivation was about $183,200. With the improvement in surface irrigation structures, the production of sorghum in the area has increased by about 720 metric tons (MT) yearly, and millet by about 840 MT yearly. The Project did not finance any improvement in surface irrigation in areas already receiving water, as these activities were already under way with government funding when the Project started. Hence, the 5% increase in production in the area already receiving irrigation water was not realized under the Project. 11. Gross margins per hectare of cultivated crops grown in the Kaha Sultan area where surface irrigation supply was rehabilitated are presented in Table A9.5. The annual increase in gross margin is estimated at $37.70, as can be seen from Table A9.6. Although a target for this subcomponent is not specified in the project framework, it has been subsumed into the overall target of a $300 per hectare increase for the irrigation development component. The increase of $37.70 in the gross margin is reasonable, given the low cropping intensity due to the seasonal variation in the water source, and the lack of demand for watercourse improvement. It was also expected at appraisal that higher-production packages would be introduced over time in the area by the agriculture extension and research services. A shift toward higher-value crops has only just started and a substantial shift is expected in the next 23 years, as marketing systems developed for high-value crops are well established in the area and the demonstration effect of the activities being undertaken in deep turbine tube-wells (DTWs) is catching on in this area (para. 14). However, given the seasonal variation in water availability, the investment in the shift to high-value crops is expected to be limited and seasonal (one crop only). 2. Tube-Well Irrigation

12. At appraisal it was assumed that by the end of the Project about 100 DTWs, with a command area of about 40 hectares each, would be developed. Each DTW was to be jointly owned and managed by a water users association (WUA), consisting of about 1012 farmers. Each developed tube-well was also to be complemented by an improved WC distribution system. By the end of the Project, about 137 DTWs had been developed and about 5,480 ha of new area had been brought under cultivation. However, only 40 WCs were laid according to the specified standards; there are plans to improve the rest under the ongoing national program (para. 9). 13. From the crop budgets shown in Table A9.7, and the estimated model farm budgets (Table A9.8), a total annual value of production (net of production cost) of $5.1 million from the 137 DTWs was estimated. Each DTW on average contributes about $37,190 worth of

42

Appendix 9

production, given the average production of 130 MT of wheat valued at $25,000, 54 MT of seed cotton valued at $23,333, 50 MT of onions valued at $2,050, and 115 MT of fodder valued at $1,917. 14. These estimates indicate a yearly gross margin per hectare of about $932 on the irrigated plains (tube-wells), compared with $300 per hectare envisaged at appraisal. The significant increase in the gross margin estimate is due to (i) higher-than-expected cropping intensities achieved; (ii) cultivation of high-value crops such as onions; (iii) availability of loans through the line of credit supported by the Project; and (iv) the deregulation policy of the government, which has allowed farmers to get higher value for their outputs and given them an incentive to grow high-value crops. 3. Rural Road Upgrading

15. By the end of the Project about 389 km of rural roads had been improved. During the PCR Mission road users reported that passenger fares had decreased by almost 50%, as envisaged at appraisal. The average passenger fare is the same as cartage for a 40 kilogram load. The road users also indicated that on average each household saves about $20 in passenger fare and $40 in cartage yearly. The $60 saved is almost thrice the estimate at the appraisal stage for various reasons, including the transfer of a larger share of the vehicle operating cost to consumers because of competition in the transport sector resulting from the liberal leasing facility of the banks, a surge in economic activity due to greater-than-expected tube-well development, and widespread demand for community development infrastructure. 4. Community Development

16. At appraisal it was envisaged that the communities would identify community-based jointly managed initiatives that accorded with their prioritized felt needs, organize their factors of production, undertake income-generating activities, and improve their quality of life. A total of 1,398 such subprojects were completed out of more than 17,000 identified to be financially viable. These completed subprojects were: (i) 207 small irrigation schemes such as dug wells and shallow tube-wells; (ii) 32 soil conservation structures; (iii) 162 small wheat-flour and multipurpose mills; (iv) 218 cattle sheds; (v) 142 poultry sheds; (vi) 146 farm-produce warehouses; (vii) 25 sawmills and multipurpose mills; (viii) 175 drinking water schemes; (ix) 225 community centers, dispensaries, and school buildings; (x) 19 link roads and street soling projects; (xi) 31 culverts and bridges; and 16 other small schemes. (For details see Table A9.9). 17. The findings of the impact assessment report of PERI support the conclusion that (i) all the interventions have reasonably high Financial Internal Rate of Returns (FIRRs) - ranging from 27% to 66%; and (ii) the community-based schemes will generate annual income of $1.2 million, benefiting about 60,000 households with about 418,000 people. (The actual number of beneficiary households and population may be less, however, as about 10% are benefiting from more than one intervention and some double counting may be involved.) Moreover, the beneficiaries include both members and nonmembers of the community organizations. 18. The community development schemes have increased yearly household income by an average of $21 per household, with the highest increase reported from soil conservation structures, at $327 per household, against $25 estimated for soil conservation measures only, at appraisal.

Appendix 9

43

H.

Poverty Reduction Impact

19. The overall goal of the Project was to reduce poverty incidence in the rain-fed area of the DG Khan district, which is extremely poor compared with other districts of the province. The impact evaluation studies carried out by PERI show that project interventions have successfully reduced the poverty incidence to about 54%, against 60% anticipated at appraisal. The PCR Mission estimates that the project support will increase the overall per capita annual income by $13.50, or by about $95 per average household. For details see Table A9.10. 20. Discussions with communities suggest that the enhanced enterprises and the farm and nonfarm activities have increased the demand for both permanent and casual or seasonal labor. During construction, the Project generated employment of about 4,740 person-years, compared with 1,000 person-years anticipated at appraisal, producing income of PRs366 million ($6 million). 21. After the Project, the annual demand for additional labor is expected to be about 2,112 person-years. Of this total, 900 person-years would be seasonal labor for farm production; 390 person-years, unskilled labor for road maintenance; and about 290 person-years for the management of the community-based infrastructure, especially small wheat-flour mills, sawmills, community irrigation schemes, etc. The additional employment would have a total annual value of about $3 million. 22. The PCR Mission also noted that most of the interventions, by virtue of their multiplier effect, would generate additional rural nonfarm activities and further reduce poverty. In addition, according to the impact evaluation study of PERI, more than 15,000 formerly unemployed persons have received skills training and are contributing about $5.5 million yearly. I. Economic Analysis

23. For the reevaluation of the Project interventions, the methodology adopted at appraisal was largely followed. At appraisal, the EIRR was estimated for the irrigation improvement and rural roads components, but not for the community development, financial services, and institutional support components. The EIRRs estimated at appraisal and at completion were as follows. 1. Surface Irrigation

24. The present end-of-project analysis suggests an estimated EIRR of 22.8% for the surface irrigation component, against the appraisal estimate of 43.0%. The difference is mainly due to the change in scope and the exclusion of the rehabilitation of irrigation structures in the head reach, and the lack of interest of the community in WC development (Table A9.11). 2. Deep Tube-Well Irrigation

25. The EIRR for the deep turbine tube-wells was estimated at 39.0% at the design stage. The end-of-project estimate is 57.8%, largely because higher cropping intensity and yields were achieved than were assumed at the design stage. The investment is still viable, at 12%, even if the costs were to go up by 100% or the benefits to decrease by half (Table A9.12). The combined EIRRs for the two irrigation subcomponents were estimated at 41% at the appraisal stage, and at 56% at completion.

44

Appendix 9

3.

Roads

26. The reestimated EIRR for the roads component is 36.9%, about 3 percentage points higher than the appraisal estimate (Table A9.13). 4. Total Project Viability

27. The estimated EIRR for the Project, considering the costs and benefits of the irrigation and roads components and the cost of the institutional strengthening component, is 33.5%, against 24.0% estimated at appraisal (Table A9.14).
Table A9.1: Summary Base EIRRs and Switching Values (%) PCR Appraisal

Component Surface Irrigation Tube-Well Irrigation Total Irrigation Rural Roads

a

Base EIRR 22.8 57.8 55.9 36.9

Base EIRR 43.0 39.0 41.0 33.7

Percentage Increase in Costs for EIRR of 12% >100.0 >100.0 >100.0 >100.0

Percentage Decrease in Benefits for EIRR of 12% 56.0 55.0 57.0 63.0

33.5 23.6 70.0 41.0 Total Project Cost EIRR = economic internal rate of return. a Includes irrigation, roads, and institutional strengthening components.
Source: project completion review mission.

Appendix 9

45

Table A.9.2: Financial and Economic Costs of Inputs and Outputs Financial Cost Economic Cost Item Unit (PRs) (PRs) Crops Wheat kgs 10.00 9.58 Wheat byproduct kgs 1.50 1.35 Wheat seed kgs 12.00 11.50 Oil seeds kgs 16.88 15.19 Oil seeds seed kgs 20.25 18.23 Rabi fodder kgs 1.00 0.90 Rabi fodder seed kgs 75.00 67.50 Cotton kgs 25.00 28.41 Cotton seed kgs 50.00 56.82 Paddy kgs 7.65 8.57 Paddy seed kgs 9.18 10.29 Paddy byproduct kgs 0.70 0.63 Sugarcane kgs 1.50 1.00 Sugarcane seed kgs 1.80 1.62 Sugarcane fodder kgs 1.00 0.90 Sorghum kgs 14.73 13.25 Sorghum buproduct kgs 1.00 0.90 Sorgum seed kgs 18.41 16.57 Millets kgs 15.00 13.50 Millet byproduct kgs 1.00 0.90 Millet seed kgs 18.75 16.88 Kharif fodders kgs 1.00 0.90 Kharif fodder seed kgs 24.00 21.60 Vegetables kgs 1.00 0.90 Vegetable seed kgs 500.00 450.00 Melons kgs 1.00 0.90 Melon seed kgs 80.00 72.00 Onion kgs 2.50 2.25 Onion seed kgs 24.00 21.60 Guar kgs 1.00 0.90 Guar seed kgs 1.00 0.90 Tractor plowing Per irrigation cost Urea DAP Pesticide hrs 1 bag bag PRs. 300.00 494.00 750.00 1,200.00 1,000.00 150.00 120.00 250.00 296.40 1,202.39 1,528.14 1,100.00 120.00 96.00

Labor (male) day labor (Female) day DAP: Di-Amonium Phosphate kgs: Kilograms Sources: PCR mission estimates

46

Appendix 9

Table A9.3 Import Parity Prices (Sugarcane, Urea, DAP, Potash) Potashd Description Amount Unit Commodity Price Price in international market $ t 230 1 318 421 177 Freight and insurance (+) $ t 45 1 40 40 40 CIF at Karachi port $ t 275 1 358 461 217 CIFat Karachi port PRs. t 16,638 1 21,659 27,860 13,122 Economic Prices Port charges (+) PRs. t 430 1 430 430 430 Losses at port (+) percent 1 166 2 433 557 262 Wholesalers margin (+) percent 5 862 3 676 865 414 Transport charges from port to Project area (+) PRs. t 750 1 750 750 750 Wholesale market value PRs. t 18,846 1 23,948 30,463 14,979 Processing cost (-) PRs. t 4,200 1 Value of raw material at millgate PRs. t 7,892 1 Tonnage of sugarcane required (at 7% recovery rate) kg 1 552 1 Value of sugarcane at millgate PRs. t 1,105 1 Transport charges to millgate/from wholesale market (-) PRs. 1 100 1 100 100 100 Import parity price at farmgate PRs. 1 1,005 1 24,048 30,563 15,079 Actual farmgate price PRs. 1 1,500 1 15,000 24,000 18,000 a: 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 b: Urea, Black Sea, bagged, spot, ibid c: DAP (diamonium phosphate), standard size, bulk, spot, fob, US Gulf, ibid d: Potasium chloride (muirate of potash, standard grade, spot, fob Vancouver, ibid CIF:Cost Insurance on Freight, $: United States Dollars, t: metric tons, kg: kilograms, PRs: Pakistani Rupees Sources: PCR mission estimates and as provided above
Table A9.4 Export Parity Prices Paddya Wheatb Cottonc Description Unit Qty Amount Qty Amount Qty Amount Commodity price Price in international market $ t 323 t 199 t 1,289 Quality adjustment factor percent 82 264 95 189 86 1,104 t 0 t 0 t 0 Freight and insurance $ FOB at Karachi port $ t 264 t 189 t 1,104 FOB at Karachi port PRs. t 15,999 t 11,443 t 66,794 Economic prices Port charges (-) PRs. t 430 t 430 1 430 Losses at port (-) percent 2 320 2 9 1 4 Wholesalers margin (-) percent 5 800 5 572 5 3,340 Transport charges from project area to port (-) PRs. t 750 t 750 t 750 Exmill/wholesale market value PRs. t 13,699 t 9,683 t 62,270 Value of paddy/seed cotton percent 66 9,042 33 20,549 Value of byproduct (+) PRs. t 452 t 8,910 Milling cost (-) PRs. t 820 t 950 Value at wholesale market/millgate PRs. t 8,674 t 9,683 t 28,509 Transport charges farm to wholesale market mill gate (-) PRs. t 100 t 100 t 100 Export parity price at farmgate PRs. t 8,574 t 9,583 t 28,409 Actual farmgate price PRs. t 7,650 t 10,000 t 25,000 a: Thai, 5% broken, WR, milled indicative price based on weekly surveys of export transactions (indicative survey price), government Includes value of broken rice (11%), tips (5%), and husk (24%), The World Bank Commodity Price Data Pink Sheet - March 2007 b: Wheat US, HRW, ibid c Cotton A Index New Definition, ibid FOB:Free on board, $: United States Dollars, t: metric tons, kg: kilograms, PRs: Pakistani Rupees Sources: PCR mission estimates and as provided above

Ureab Sugarcane a Qty Amount Qty Amount

Fertilizers DAPc Amount

Appendix 9

47

Table A9.5 Enterprise Budgets (Financial Prices) for Kaha Sultan Item Physical Quantities Main Crop (kg) By Product (kg) Inputs Tractor Plowing (hrs) Seed (kg) Urea (bag) DAP (kg) Sulfate of Potash (kg) Pesticides Cost (factor) Labor (days) Number of irrigations Financial Values Revenue (PRs) Main Product Byproduct Gross Income (PRs) Costs (PRs) Tractor Seed Urea DAP Sulfate of Potash Pesticides Cost Thresher or shelling cost Labor Irrigation Other Costs (10% of above) Total Cash Cost (PRs) Gross Margins (PRs)
hrs: hours, kg: kilograms, PRs: Pakistani Rupees and DAP: diamonium phosphate Sources: PCR mission estimates Sorghum Millet

593 1,008 9 25 1

692 1,176 9 12 1

12

12

8,733 1,008 9,741 2,594 455 926

10,374 1,176 11,550 2,594 232 926

1,667 564 6,206 3,535

1,667 542 5,960 5,589

48

Appendix 9

Table A9.6 One Ha Model Farm Budgets (Financial Prices) for Kaha Sultan Area (ha) Outputs and Inputs Description Total Percentage in Cropped Area Area Main Output Main crop (kg) Byproduct (kg) Inputs Tractor plowing (hrs) Seed (kg) Urea (bag) DAP (kg) Sulfate of potash (kg) Pesticides cost (factor) Labor (days) Number of Irrigations Description Revenue (PRs) Main Product Byproduct Gross Income (PRs) Costs (PRs) Tractor Seed Urea DAP Sulfate of Potash Pesticides Cost Thresher/Shelling Cost Labor Irrigation Other Costs (10% of above) Total Cash Cost (PRs) Gross Margins (PRs)
hrs: hours, kg: kilograms, PRs: Pakistani Rupees and DAP: diamonium phosphate Sources: PCR mission estimates Sorghum Millet

0.50 0.50

0.25 0.25 148 252 2 6 0

0.25 0.25 173 294 2 3 0

Value of Outputs and Inputs Total

Sorghum Millet

2,183 252 5,323 2,435 648 114 232

2,594 294 2,887 648 58 232

417 141 3,042 2,281 1,551 884

417 135 1,490 1,397

Appendix 9

49

Table A9.7 Outputs and Inputs of Deep Turbine Tube-wells Per Ha Quantity of Outputs And Inputs Description
Wheat Rabi Fodder Cotton Sorghum Millet Kharif Fodder Onion

Main Output Main Crop (kg) By Product (kg) Inputs Tractor Plowing (hrs) Seed (kg) Urea (bag) DAP (kg) Sulfate of Potash (kg) Pesticides Cost (factor) Labor (days) Number of Irrigations 6 9 11 3 1 4 9 1 2 1 12 119 3 2 10 25 2 15 18 1 2 6 49 2 6 15 2 10 42 2 22 1,186 2 2 3,409 3,409 25,174 2,707 1,769 3,006 1,284 2,183 13,786 24,621 -

Value of Outputs and Inputs Revenue (PRs) Main Product Byproduct Gross Income (PRs) Costs (PRs) Tractor Seed Urea DAP Sulfate of Potash Pesticides Cost Thresher/Shelling cost Labor Irrigation Other Costs (10% of above) Total Cash Cost (PRs) Gross Margins (PRs) 1,000 2,386 2,727 2,964 1,887 20,760 18,439 2,517 4,446 1,363 14,996 10,179 6,768 5,434 2,285 25,131 42,547 2,604 1,482 877 9,652 19,396 1,927 494 648 7,125 14,324 1,379 1,976 918 10,097 3,689 6,155 4,446 5,154 56,695 4,857 2,000 1,000 3,705 1,423 2,594 2,075 2,964 1,853 1,853 4,446 902 926 2,371 1,927 909 1,853 1,927 278 1,853 2,964 1,008 1,853 6,669 28,454 1,853 2,964 34,086 5,113 39,199 25,174 67,678 25,174 67,678 26,041 3,006 29,048 19,266 2,183 21,449 13,786 61,552 13,786 61,552

DAP: diamonium phosphate, $: United States Dollars, t: metric tons, kg: kilograms, PRs: Pakistani Rupees Sources: PCR mission estimates

50

Appendix 9

Table A9.8 Budgets (Financial Prices) for 40 Ha Block Farm Irrigated By DT Tubewell Quantity of Outputs and Inputs With Project Per ha Description
Total Wheat Oilseeds Rabi Fodder Cotton Sorghum Millet Kharif Fodder Onion

Percentage in cropped area Area Main Output Main Crop (kg) By Product (kg) Inputs Tractor Plowing (hrs) Seed (kg) Urea (bag) DAP (kg) Sulfate of Potash (kg) Pesticides Cost (factor) Labor (days) Number of Irrigations Description Revenue (PRs) Main Product Byproduct Gross Income (PRs) Costs (PRs) Tractor Seed Urea DAP Sulfate of Potash Pesticides Cost Thresher/Shelling Cost Labor Irrigation Other Costs (10% of above) Total Cash Cost (PRs) Gross Margins (PRs)

1.78 71.00

0.95 38.00 129,527 129,527 469 4,505 131 66 38 228

0.00 0.00

0.10 4.00 100,697

0.50 20.00 54,142

0.05 2.00 3,537 6,013

0.10 4.00 5,138 8,734 26 59 10

0.03 1.00 13,786

0.05 2.00 49,242

40 99 10

296 361 25 40 40

13 99 5

10 42 2

44 2,371 5 5 2

36

220

18

Value of Outputs and Inputs 1,295,268 194,290 3,224,599 1,489,558 140,790 54,063 98,553 78,842 100,697 100,697 11,856 7,410 7,410 1,353,560 88,920 18,031 18,525 47,424 1,353,560 52,083 6,013 58,096 3,853 1,819 3,705 77,064 8,734 85,798 7,706 1,112 7,410 13,786 2,964 1,008 1,853 123,105 13,338 1,067 3,705 5,928 13,786 123,105

112,632 48,488 970,415 2,254,184 533,369 956,189

17,784 4,446 48,906 51,791

108,680 28,158 309,738 1,043,822

2,964 1,234 13,575 44,521

1,976 1,820 20,024 65,774

1,976 780 8,580 5,205

8,892 3,293 36,223 86,882

DAP: diamonium phosphate, $: United States Dollars, t: metric tons, kg: kilograms, PRs: Pakistani Rupees Sources: PCR mission estimates

Appendix 9

51

Table A9.9 Table A9.9: Financial Impact of Community-based Scheme Per Annual Total Annual Capita Income Total Number Income Average from All Number Number of Number of of Per Schemes Income Per Annual of HH Per Beneficiaries Households Persons Scheme Household Income (PRs. million) (PRs) (PRs) Scheme Per Scheme Benefited Benefited (PRs) 50 350 10,350 72,450 75,600 15.65 1,512 216 10 70 320 2,240 197,931 6.33 19,793 2,828 68 476 11,016 77,112 77,112 12.49 1,134 162 19 133 4,142 28,994 29,393 6.41 1,547 221 60 420 8,520 59,640 63,000 8.95 1,050 150 20 140 2,920 20,440 36,040 5.26 1,802 257 60 420 1,500 10,500 10,500 0.26 175 25 63 441 11,025 77,175 95,256 16.67 1,512 216 20 140 4,500 31,500 10,000 2.25 500 71 68 476 1,292 9,044 9,520 0.18 140 20 125 875 3,875 27,125 26,250 0.81 210 30 20 140 320 2,240 10,000 0.16 500 71 583 4,081 59,780 418,460 75.4 43 299 53,954 1,262 180

Type of Scheme Small scale Irrigation Soil conservation structures Wheat flour mills Cattle sheds Poultry sheds Warehouses Saw mills Drinking water schemes Community halls Link roads Culverts and bridges Others Total Weighted average

No of Schemes 207 32 162 218 142 146 25 175 225 19 31 16 1,398

FIRR at FIRR at PCR Appraisal 57% 44% 46% 61% 48% 50% 71% 27% 42% 66% 56% 72% 70%

PCR: Project Completion Review, FIRR: Financial Internal Rate of Return, and PRs: Pakistani Rupees Sources: PCR mission estimates

Table A9.10 Component/Subcomponent Wise per HH and per Capita Income Per Population Total Household Per capita of Income Number of Income Income Benefiting Benefiting (PRs million) Component/Subcomponent (PRs.) (PRs) Household (HH) Kaha Sultan Surface Irrigation 0.0 486 3,401 0 0 Deep Tube-well Development 308.8 1,370 9,590 225,418 32,203 Roads 668.6 185,714 1,300,000 3,600 514 Community Development Schemes 75.4 59,780 437,453 1,262 172 Skill training 330.0 15,000 15,000 22,000 22,000 Average All Combined 1,053 185,714 1,300,000 5,669 810 HH: Hosehold and PRs: Pakistani Rupees Sources: PCR mission estimates

52

Appendix 9

Table A9.11 Economic Internal Rate of Return of Surface Irrigation of Kaha Sultan Adjusted Gross Economic Margin for Investment Additional Costs Cultivated Incremental General (Million Additional Area (PRs. Benefit (PRs. Price Rupees Year Cultivated million) in Index Million) in Constant Ending Area (ha) 2007 Prices 2007 Prices Deflator Prices)

$/PKR Parity

Adjusted Cost, Benefits, and Incremental Cash Flow in 2007 Prices ($ million) 0.00 0.00 0.00 0.00 0.00 0.00 0.05 0.09 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.00 0.00 0.00 0.00 0.00 0.41 0.07 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.00 0.00 0.00 0.00 0.00 -0.41 -0.02 0.07 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.12 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 22.8%

1,999 0 16.1 0.00 0.64 0.00 51.60 2,000 0 16.1 0.00 0.65 0.00 53.40 2,001 0 16.1 0.00 0.69 0.00 64.00 2,002 0 16.1 0.00 0.70 0.00 59.50 2,003 0 16.1 0.00 0.74 0.00 58.50 2,004 0 16.1 0.00 0.80 23.47 57.60 2,005 1,457 18.9 2.74 0.86 4.03 59.90 2,006 2,915 21.6 5.48 0.93 1.20 60.00 2,007 4,858 25.3 9.14 1.00 1.12 60.00 2,008 4,858 25.3 9.14 1.00 1.12 60.50 2,009 4,858 25.3 9.14 1.00 1.12 60.50 2,010 4,858 25.3 9.14 1.00 1.12 60.50 2,011 4,858 25.3 9.14 1.00 1.12 60.50 2,012 4,858 25.3 9.14 1.00 1.12 60.50 2,013 4,858 25.3 9.14 1.00 1.12 60.50 2,014 4,858 25.3 9.14 1.00 2.12 60.50 2,015 4,858 25.3 9.14 1.00 1.12 60.50 2,016 4,858 25.3 9.14 1.00 1.12 60.50 2,017 4,858 25.3 9.14 1.00 1.12 60.50 2,018 4,858 25.3 9.14 1.00 1.12 60.50 2,019 4,858 25.3 9.14 1.00 1.12 60.50 2,020 4,858 25.3 9.14 1.00 1.12 60.50 2,021 4,858 25.3 9.14 1.00 1.12 60.50 2,022 4,858 25.3 9.14 1.00 1.12 60.50 2,023 4,858 25.3 9.14 1.00 1.12 60.50 2,024 4,858 25.3 9.14 1.00 1.12 60.50 2,025 4,858 25.3 9.14 1.00 1.12 60.50 2,018 4,858 25.3 9.14 1.00 1.12 60.50 EIRR EIRR: Economic Internal Rate of Return, HH: Hosehold and PRs: Pakistani Rupees Sources: PCR mission estimates

Table A9.12 Economic Internal Rate of Return of Deep Turbine Tube-wells

Capital Total Cost Incremental Number of Benefit (PRs (million Deep TubeRs) at million) Constant Current well Year Gross Margins (PRs Million) Ending Operational 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 prices (2007) Prices General Price Index Deflator 0.00 14.21 12.11 15.53 23.93 30.11 34.93 35.58 1.90

Adjusted Capital Cost In Adjusted Cost, Benefits, Million and Incremental Cash Rupees Flow in 2007 Prices ($ (Constant US$/PKR million) Parity Benefits Costs Cash Flow Prices)

1999 0 0.00 2000 8 0.00 1.89 2001 8 0.00 4.71 1.89 2002 10 0.00 7.54 4.71 2.36 2003 16 0.00 11.31 7.54 5.89 3.77 2004 12 0.00 15.08 11.31 9.43 9.43 2.83 2005 15 0.00 18.85 15.08 14.14 15.08 7.07 3.53 2006 26 0.00 18.85 18.85 18.85 22.62 11.31 8.84 2007 42 0.00 18.85 18.85 23.56 30.16 16.97 14.14 2008 0 0.00 18.85 18.85 23.56 37.70 22.62 21.21 2009 0 0.00 18.85 18.85 23.56 37.70 28.28 28.28 2010 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2011 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2012 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2013 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2014 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2015 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2016 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2017 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2018 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2019 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2020 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2021 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2022 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2023 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2024 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2025 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2026 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2027 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 2018 0 0.00 18.85 18.85 23.56 37.70 28.28 35.35 EIRR EIRR: Economic Internal Rate of Return, HH: Hosehold and PRs: Pakistani Rupees Sources: PCR mission estimates 6.13 15.32 24.51 36.76 49.01 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 61.27 9.90 24.74 39.59 59.38 79.17 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 98.97 0.00 1.89 6.60 14.61 28.51 48.07 73.75 105.45 147.74 192.04 231.87 270.98 303.03 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 322.82 0.64 0.65 0.69 0.70 0.74 0.80 0.86 0.93 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 0.00 21.85 17.53 22.05 32.15 37.50 40.74 38.42 1.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

51.60 53.40 64.00 59.50 58.50 57.60 59.90 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00

0.00 0.04 0.10 0.25 0.49 0.83 1.23 1.76 2.46 3.20 3.86 4.52 5.05 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38

0.00 0.41 0.27 0.37 0.55 0.65 0.68 0.64 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 (0.37) (0.17) (0.13) (0.06) 0.18 0.55 1.12 2.43 3.20 3.86 4.52 5.05 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 5.38 57.8%

Appendix 9

53

54

2004 389 30 30 359 389 68 98 291 389 188 286 103 389 103 389 0 389 0 389 0 389 0 389 0 390 0 389 1 390 0 389 1 390 0 389 1 390 0 389 1 390 0 389 1 389 0 389 0

Table A9.13 Economic Analysis of Rural Roads Component 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2016

Appendix 9

389 0 389 0

242.7 43.4 30.9 3.1 33.4 33.4 28.8 34.47 6.16 4.39 0.43 4.75 4.75 4.10 59.04 1.08 -0.74 3.57 -2.45 10.66 -7.24 3.17 1.73 0.18 4.95 0.18 5.21 36.19 6.47 4.60 0.46 4.99 4.99 4.30 61.99 38.00 6.79 4.83 0.48 5.23 5.23 4.52 65.09 39.90 7.13 5.08 0.50 5.50 5.50 4.74 68.35 41.89 7.49 5.33 0.53 5.77 5.77 4.98 71.76 43.99 7.86 5.60 0.56 6.06 6.06 5.23 75.35 46.31 8.28 5.89 0.58 6.38 6.38 5.50 79.32 0.18 5.48 48.62 8.69 6.19 0.61 6.70 6.70 5.78 83.29 0.18 5.76 51.05 9.13 6.50 0.64 7.03 7.03 6.07 87.45 0.18 6.06

254.9 45.6 32.4 3.2 35.1 35.1 30.3

267.6 47.8 34.1 3.4 36.9 36.9 31.8

281.0 50.2 35.8 3.5 38.7 38.7 33.4

295.1 52.7 37.5 3.7 40.6 40.6 35.1

309.8 55.4 39.4 3.9 42.7 42.7 36.8

325.3 58.2 41.4 4.1 44.8 44.8 38.7

341.6 61.1 43.5 4.3 47.1 47.1 40.6

358.7 64.1 45.6 4.5 49.4 49.4 42.6

376.6 67.3 47.9 4.8 51.9 51.9 44.7 53.61 9.58 6.82 0.68 7.38 7.38 6.37 91.82 0.18 6.37

395.4 70.7 50.3 5.0 54.5 54.5 47.0

415.2 74.2 52.8 5.2 57.2 57.2 49.3

435.9 77.9 55.5 5.5 60.1 60.1 51.8 56.29 58.95 61.90 10.06 10.54 11.06 7.16 7.50 7.88 0.71 0.74 0.78 7.75 8.12 8.53 7.75 8.12 8.53 6.69 7.00 7.35 96.42 100.98 106.03 0.18 6.70 0.18 7.04 0.18 7.41

Items Year 1999 2000 2001 2002 2003 A. Traffic Count and Construction Phasing Total length 389 390 390 390 390 Km constructed 0 0 0 0 0 Km constructed (cumulative) 0 0 0 0 0 Balance to be constructed 389 390 390 390 390 Growth rate 5% B. Average Daily Traffic Motorcycles 190.2 199.71 209.7 220.2 231.2 Motor car/pickup 34 35.7 37.5 39.4 41.3 Minibus/waggon 24.2 25.41 26.7 28.0 29.4 Busses/coaches 2.4 2.52 2.6 2.8 2.9 Agricultural tractors 26.2 27.51 28.9 30.3 31.8 Tractor trolleys 26.2 27.51 28.9 30.3 31.8 Trucks 22.6 23.73 24.9 26.2 27.5 C. Road Use in Million Km Motorcycles 27.01 28.43 29.85 31.34 32.91 Motor car/pickup 4.83 5.08 5.34 5.60 5.88 Minibus/waggon 3.44 3.62 3.80 3.99 4.19 Busses/coaches 0.34 0.36 0.38 0.40 0.42 Agricultural tractors 3.72 3.92 4.11 4.32 4.53 Tractor trolleys 3.72 3.92 4.11 4.32 4.53 Trucks 3.21 3.38 3.55 3.72 3.91 Total milegae (km million) 46.26 48.70 51.13 53.69 56.37 Correction Factor 1 E. Increnetal cost ($million) 0.00 0.00 0.00 0.00 0.03 F. Incremental cash flow 0.00 0.00 0.00 0.00 -0.03 EIRR EIRR: Economic Internal Rate of Return, HH: Hosehold and PRs: Pakistani Rupees Sources: PCR mission estimates

Appendix 9

55

Table A9.14 Combined Economic Internal Rate of Return of the Irrigation, Rural Roads, and Institutional Strengthening Components ($ million) Adjusted Institutional Strengthening Total Project Cost (in 2007 Total Project Prices) Year Cost Toal Benefits Cash Flow 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0.31 0.45 0.19 0.38 0.50 0.52 0.80 0.78 0.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.31 0.86 0.47 0.75 1.08 2.66 5.11 12.10 3.61 0.20 0.20 0.20 0.20 0.20 0.20 0.22 0.20 0.20 0.20 0.20 0.00 0.04 0.10 0.25 0.49 1.17 2.40 5.27 7.51 8.49 9.41 10.33 11.15 11.78 12.09 12.42 12.76 13.12 13.50 13.90 -0.31 -0.83 -0.36 -0.51 -0.59 -1.49 -2.71 -6.83 3.90 8.29 9.21 10.13 10.95 11.57 11.88 12.20 12.56 12.92 13.30 13.70

EIRR 33.5% EIRR: Economic Internal Rate of Return, HH: Hosehold and PRs: Pakistani Rupees Sources: PCR mission estimates