Dera Ghazi Khan Rural Development Project · Completion Report Project Number: 27168 Loan Number: 1531 October 2007 Pakistan: Dera Ghazi Khan Rural Development Project

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 Appraisal At Project Completion August 1997 30 June 2007

PRe1.00 = $0.0246 $0.1639 $1.00 = PRs40.6213 PRs61

ABBREVIATIONS

BME – benefit monitoring and evaluation C&WD – Communication and Works Department CD – community development CO – community organization CSP – country strategy and program DG Khan – Dera Ghazi KhanDIP – Department of Irrigation and PowerDOFWM – Directorate of On-Farm Water ManagementDTW – deep turbine tube wellEA – executing agencyEIRR – economic internal rate of return FS – financial services ha – hectare IA – implementing agency km – kilometer LGO – local government ordinance NGO – nongovernment organization NRSP – National Rural Support Program O&M – operation and maintenance PCR – project completion review PERI – Punjab Economic Research Institute PMU – project management unit SCO – savings and credit organization SDR – special drawing rightsWC – watercourse WUA – water users association

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on 30 June. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY1999–2000 ends on 30 June 2000.

(ii) In this report, “$” refers to US dollars.

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

CONTENTS

Page

BASIC DATA ii

MAP vii

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

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

III. EVALUATION OF PERFORMANCE 9 A. Relevance 9 B. Effectiveness in Achieving Outcome 10 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 11 E. Impact 12

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A. Overall Assessment 13 B. Lessons 14 C. Recommendations 15

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. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. 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

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity – Grace Period 8. Terms of Relending (if any) – Interest Rate – Maturity – Grace Period – Second-Step Borrower

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

9. Disbursements a. Dates Initial Disbursement

9 October 1998

Final Disbursement

31 May 2007

Time Interval

104 months

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b. Amount (SDR million)

Effective Date

12 January 1998

Original Closing Date

31 December 2004

Time Interval

83 months

Category or Subloan No.

Original

Allocation

Net Amount

Available

Amount

Disbursed

Undisbursed

Balance 01A 1.593 1.593 0.777 0.816 01B 6.444 6.444 3.795 2.649 01C 9.703 9.703 11.436 1.733 02 2.100 2.100 2.027 0.073

03A 0.145 0.145 0.282 (0.137) 03B 1.086 1.086 0.779 0.307 03C 1.448 1.448 1.561 (0.113) 03D 0.652 0.652 0.424 0.232 04 1.231 1.231 0.305 0.926 05 1.666 1.666 0.000 1.666

Total 26.068 26.068 21.387 4.681

10. Local Costs (Financed) - Amount ($ million) 20.5 - Percentage of Local Costs 53.7 - Percentage of Total Cost 42.1 C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual Foreign Exchange Cost 12.9 10.5 Local Currency Cost 39.3 38.1 Total 52.2 48.6

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual Implementation Costs Borrower-Financed 7.1 6.3 ADB-Financed 34.1 30.4 Beneficiary-Financed 9.1 11.5 Total 50.3 48.2 IDC Costs Borrower-Financed 0.0 0.0 ADB-Financed 1.9 0.4 Other External Financing 0.0 0.0 Total 52.2 48.6

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

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3. Cost Breakdown, by Project Component ($ million)

Component Appraisal Estimate Actual Irrigation Development 5.0 3.7 Community Development 17.2 13.7 Rural Roads 14.3 23.4 Rural Finance 3.1 2.8 Institutional Support 4.8 4.6 Physical Contingencies 1.7 0.0 Price Contingencies 4.2 0.0 Interest during Construction 1.9 0.4 Total 52.2 48.6 4. Project Schedule

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 Men’s SCO 1 February 1999 Formation of First Men’s CO 12 February 1999 Formation of First Men’s CTWG/WUA 23 February 1999 Formation of First Women’s SCO 7 February 1999 Formation of First Women’s 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

Development Objectives

Implementation Progress

12 Jan 1998–31 Dec 2005 S S 1 Jan 2006–28 Feb 2006 S U 1 Mar 2006–31 Mar 2007 S S S = satisfactory, U = unsatisfactory

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Name of Mission

D. Data on Asian Development Bank Missions

Date

No. of Persons

No. of Person-Days

Specialization of Members

TA fact-finding 8–21 Mar 1996 2 34 a, m TA inception 7–11 Oct 1996 1 5 a TA review 15–27 Nov 1996 1 13 a Loan fact-finding 27 Feb–14 Mar 1996 6 96 a, c, d, e, f, m Loan post-fact-finding 25 Apr–1 May 1997 2 14 a, c Loan appraisal 27 May–4 Jun 1997 2 18 a, c Loan inception 5–11 Jan 1999 3 21 g, e, l Special loan administration 19 Apr 2000 2 2 h, i Loan review 1 27–29 Nov 2000 2 6 i, j Loan review 2 21–25 Jan 2002 2 10 b, l Loan review 3 25–29 Nov 2002 2 10 b, l Loan review 4 17–24 Feb 2004 2 16 k, l Loan midterm review 25 Aug–8 Sep 2004 2 30 k, l Loan review 5 7–16 Dec 2004 2 20 k, l Loan review 6 26–31 Dec 2005 1 6 k Loan review 7 12–17 Jun 2006 1 6 k Project completion review 12 Dec 2006–10 Feb 2007 3 67 k, l, m 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 area’s 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.

(ii) 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).

(iii) Rural roads: upgrading of about 175 km of rural roads; (iv) Financial services (FS): (a) mobilizing village savings and credit organizations

(SCOs), (b) financing sub-loans, (c) mobilizing savings, and (d) providing training. (v) 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. EVALUATION OF DESIGN AND IMPLEMENTATION

A. 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, ADB’s 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 ADB’s sector strategy. The design was consistent with the strategic objectives of the Government of Pakistan—economic 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.

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4. At completion, the Project’s design and objectives were still relevant and consistent with ADB’s 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 Government’s Medium-Term Development Framework 2005–2010, 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 area’s 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

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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 women’s or mixed COs. At completion, more than 1,110 COs with an average

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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 women’s 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 women’s 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

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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 Project’s 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 taken—the number of PMU staff and logistical resources were increased—to 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 Project’s 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 Project’s 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 (2005–2006) 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.

2 Planning Commission proforma I.

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E. Project Schedule

19. The implementation of activities according to the Project’s 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 Project’s credibility in 2002. The situation started improving in 2002 and the Project showed major progress in 2003, after changes in the Project’s 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 government’s Planning and Development Department was the Project’s 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 ADB-financed 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 PMU’s 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 Project’s compliance with key

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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 ADB’s 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 inception3—again 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 NGO’s 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 NGO’s 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.

8

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. PERI’s 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 Project’s 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 EA’s PMU fulfilled its management and coordination targets, including the

9

procurement and management of contracts, implementation, and monitoring and evaluation of the Project’s institutional support component. The performance of the IAs, on the other hand, was only partly satisfactory. Some IAs—DOFWM (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 Project’s midterm review to strengthen the PMU’s 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 (2000–2001). 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. ADB’s 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 missions—a practice that was acknowledged and appreciated by the Borrower.

III. EVALUATION OF PERFORMANCE

A. Relevance

30. The Project remained relevant to and consistent with ADB’s CSP and with the Government’s 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 midterm—not enough to meet the Project’s 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 area’s 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 Project’s 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 Government’s 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 $60—almost 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 Project’s 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 Project’s operations are likely to be sustainable. The Punjab government has shown strong ownership of the Project’s interventions and has extended the Project’s 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 ADB’s 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 Punjab Economic Research Institute (PERI). 2006. Economic Analysis of Various Components of the Dera Ghazi

Khan Rural Development Project, Part 1. Pakistan, Lahore. 6 Loan No. 1877/1878-PAK[SF: Agriculture Sector Program Loan II (ASPL–II), amounting to $350 million equivalent. 7 A condition for the release of the second tranche under ASPL-II. 8 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 women’s CSOs, 24% of the credit line was extended to women, and about one fourth of CD schemes were undertaken by women’s 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. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. 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 Project’s 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

9 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 14–30 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 women’s 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 women’s 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 retain—a major consideration in sustained implementation in remote areas. C. Recommendations

58. Future Monitoring. Although the Project’s 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 Project’s 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 Project’s 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 Project’s CD schemes—especially the grain warehouses, and the poultry and cattle sheds—to 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) Minor improvements in existing temporary diversion headworks and structures at Vehova, and strengthening of earthworks in 5 km of Kaha main channel;

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.

(ii) Partial lining of main supply channel (8 km Kaha and 8 km Vehova);

Target scrapped as work was already completed before the Project.

Not done. Work already completed before the Project by Punjab government.

(i) Rehabilitation of the command area of about 6,410 ha of land currently receiving irrigation water; and (ii) development of about 2,910 ha of land not yet receiving irrigation water.

(iii) Formation of about 100 WUAs and improvement of about 100 WCs with one third of the length lined (300 km).

Scope was reduced to 50 WCs in Kaha only, as no works could be undertaken in Vehova because of water rights issues.

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 MTR Targets Actually Achieved (ii) Monitoring of the

recharge of the sweet-water zone, where the tube wells are installed.

No change. 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.

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:

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.

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.

(i) Hill torrent irrigation improvement,

No change. 22 subprojects

(ii) Soil and water conservation,


Activities MTR Targets Actually Achieved (iii) Agricultural

production, No change. 375 subprojects

(iv) Livestock production, and


(v) Village infrastructure improvement


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 MTR Targets Actually Achieved Establishment of road

maintenance mechanisms.

No change. A road maintenance budget of PRs33,000 per km of road was set up by the Punjab government.

3.4 Financial Services Social mobilization for group-based lending for economic empowerment of the rural poor.

Establishment of about 1,000 village SCOs that reach about 25,000 rural members.

No change. More than 1,494 SCOs (34% of these women SCOs), with a total membership of about 25,000, were established.

Provision of credit line of $2.7 million to NRSP; financing of more than 36,000 sub-loans recycled over 5-year implementation period.

No change. A credit line of $2.7 million was provided to NRSP, and 110,000 sub-loans were financed over 7-year implementation period.

Recovery rate of 90% or above.

No change. Recovery rate above 98%.

Management training for about 2,000 SCO leaders (two per SCO) and skills training for about 4,000 other members.

No change. NGO completed management training for more than 2,800 SCO members and skills training for 12,500 other members.

Mobilization of voluntary savings totaling about $300,000 for on-lending by SCOs.

No change. Outstanding savings of CSOs totaled $1.04 million at completion.

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

Appendix 2 19

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20 Appendix 2

Nos

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Appendix 3 21

Sr. No.

Road Name Length (kms)

Actual Length for

Completion (kms)

Contractor Name Completion Date

Actual Completed

Length

1 Kot Qaisrani to Litra 29.06 27.81 M/s Sarwar & Co 30/11/06 27.812 Kutani to Lakhani 8.25 8.25 M/s Manzoor Brothers 30/11/06 8.253 Churkan to Tremman 20.36 20.16 M/s Hidayatullah & Co 15/04/06 20.164 Turutti Rohri to Rajhani 7.00 7.00 M/s Ramzan & Co 12-10-06 7.005 (a) Pull Qamber to Basti Siani 6.50 6.20 M/s Saleem Brothers 30/06/05 6.20

(b) New Culvert. 0.00 0.00 M/s Allah Bukhsh 24/03/06 0.006 Rakhi Monh to Dholi. 7.80 7.80 M/s Abdul Waheed 30/11/06 7.807 Pull Fayaz to Kot Hasso 5.56 5.56 M/s Ramzan & Co 02-12-04 5.568 Graveyard (Choti Zareen) to D.G

Canal 2.62 2.62 M/s Waheed & Co 22/10/04 2.62

9 Cement Factory-Taunsa link road to sanjarwala

2.22 2.22 M/s Saleem Brothers 30/09/04 2.22

10 Jhanda More to Basti Kaloi 2.14 2.14 M/s Ramzan & Co 01-10-04 2.1411 Briot Mumdani to Kohar road 4.00 4.00 M/s Ramzan & Co 30/08/06 4.0012 Jhoke Bodo to Bhati 5.78 5.78 M/s Ramzan & Co 14/07/06 5.7813 Kazmi Chowk to More Jhungi 3.59 3.59 M/s Ramzan & Co 25/09/06 3.5914 Pul Qambar to Govt. Primary School

Aziz Abad via Basti Chandia 5.00 4.76 M/s Ramzan & Co 25/09/06 4.76

15 Bait Sawai road to Bait Faqeer wali 6.00 5.77 M/s Ramzan & Co 25/09/06 5.77

16 Darbar Mian Mattay to Gammun wala 4.90 4.90 M/s Ramzan & Co 25/09/06 4.90

17 Kot Chutta Drahma road to Samina Pir wala

4.00 4.00 M/s Ramzan & Co 25/09/06 4.00

18 Kot Qaisrani pacca road to basti Buzdar

2.54 2.54 M/s Hassan Mahmood 30/08/06 2.54

19 Dhodak road to Basti Langer wala via Sanwal wala

2.56 2.56 M/s Dawn Cons Co 13/03/06 2.56

20 Bindi Daira Shah road to Basti Haji Iqbal Marha

2.96 2.96 M/s Dawn Cons Co 18/03/06 2.96

21 Pacca Peer Adil road to Basti Allah Bakhsh Arain.

3.00 3.00 M/s Dawn Cons Co 26/03/06 3.00

22 Khakhi Samina Road to Basti Allah 2.78 2.23 M/s Dawn Cons Co 26/04/06 2.2323 Shadan Lund to Bait Shadan to Chak

Danda Road 3.20 3.20 M/s Dawn Cons Co 27/03/06 3.20

24 Chatri to Batla to Kot Qasirani Litra road

4.00 4.00 M/s Iftikhar & Co 27/04/06 4.00

25 Basti Tub to Basti Manjhotha 5.25 5.25 M/s Jam Brothers 26/06/06 5.2526 Basti Bhutta road to Basti Lal wali to

Basti Kanjoo wali3.50 3.29 M/s Haji Ghulam Sarwar

and Co 30/11/06 3.29

27 Khakhi Dera Road to Khojay wala via Khakhi wala and Khugi Baigwala

2.38 1.83 M/s Haji Ghulam Sarwar and Co

25/09/06 1.83

28 Manka Basti Sher Muhammad Buzdar to Basti Dur M. Kachela

2.60 2.39 M/s Haji Ghulam Sarwar and Co

25/09/06 2.39

29 Chungi Dambrah to Basti Hashim Hajana

3.44 3.42 M/s Waheed & Co 26/04/06 3.42

30 Samina Chowk to Pull Shoria 2.30 2.30 M/s Waheed & Co 12-03-06 2.30

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

A. District D.G. Khan

22 Appendix 3

Sr. No.


Actual Length for

Completion (kms)


Actual Completed

Length

31 Hyder Chowk (D.G. Choti Road) to basti Gud Pur

2.00 2.00 M/s Waheed & Co 26/03/06 2.00

32 Manka Canal to Chit Sirkani via Basti Lurkhaywala

3.70 2.00 M/s Waheed & Co 25/09/06 2.00

33 Rasheed Abad (Multan Road) to Chah Samandary wala

3.38 3.20 M/s Waheed & Co 18/04/06 3.20

34 Lalay wala Nai wala via Ghousabad to Basti Juma

2.50 1.00 M/s Arshad Jamil 17/09/06 1.00

35 Wakilan wala to Nala Samendri wala via Shahil wala

2.50 2.50 M/s Arshad Jamil 28/03/06 2.50

36 Indus Highway to Noorpur Jamwani 3.00 3.00 M/s Khan Const. Co 15/05/06 3.00

37 Jhoke Utra Jhakhar Imam 2.78 2.00 M/s Khan Const. Co 25/09/06 2.0038 Wasay wala to Mochi wala via Dhole

wala 4.10 3.92 M/s Manzoor Brothers 25/09/06 3.92

39 Mamoori Kot Chutta Road to basti Kappar

2.80 2.80 M/s Manzoor Brothers 25/09/06 2.80

40 Indus highway (Chowk Churatta) to National Highway (Mustafa Chowk)


41 Choti Grid Station to Basti Gulzar Chandia


42 Sher Muhammad Buzdar to Nika Talpur(Head Zero)


43 Jampur Dajal Km no. 14 bohar Hatti Bodla Minor


44 Notak Sheroo to Mana Ahmadani 4.27 4.15 M/s Manzoor Brothers 25/09/06 4.1545 Jampur dajal road Km No. 10 to

petrol pump Noor Muhammad 2.74 2.74 M/s Hafeez and Co 25/09/06 2.74

46 Dubba Darri Yaray wala to Halla with link to Basti Chakar Khan

2.74 2.68 M/s Hafeez and Co 25/09/06 2.68

47 Ghousabad road to Bangla Shedani 3.25 2.95 M/s Hafeez and Co 25/09/06 2.95

48 Kala Bait Nurakhy road to Hamza Gadai link to Basti Iqbal Khan

3.00 2.90 M/s Shafqat Mansoor 26/03/06 2.90

49 Pull Shah Sonhar to Ahmed wala via basti Bhadi Mahar


50 Basti Elahi Bakhsh to Bhatti Metela 2.74 2.74 M/s Jan Muhammad 15/05/06 2.7451 Basti Khakhi to Drahama Kot Chutta

via Basti Chanar 2.76 2.76 M/s Indus Services 26/03/06 2.76

52 Mithay Wali to Bhuch 4.25 4.25 M/s Manzoor Brothers 30/11/06 4.2553 Kala to Basti Ramin 1.82 1.82 M/s Dawn Cons Co 23/06/06 1.8254 Manka Canal to Darkhwast Minor via

Basti Abdul Rashid Chandia 3.60 3.60 M/s Indus Services 30/11/06 3.60

55 Pull Rangay Wali to Jindani road 3.48 3.48 M/s Manzoor Brothers 30/11/06 3.48244.13 235.45 235.45

1 Murghai to Kotla Said Khan 5.88 5.79 M/s Allied Const. Co 31/03/05 5.792 Burceabad to Bait Sauntra 2.56 2.56 M/s Waheed & Co 15/03/05 2.563 Basti Jaffar Shah to Hazrat Wala 3.14 3.14 M/s Waheed & Co 15/03/05 3.144 Head Tallai to Basti G. Rasool 6.80 6.20 M/s Saleem Brothers 30/03/05 6.205 Basti Noor Pur to Basti Sadiq Daha 5.76 5.76 M/s Allied Const. Co 15/03/05 5.76

6 Wang-Burceabad to Chah Daha 4.17 4.17 M/s Allied Const. Co 31/03/05 4.17

subtotal (a)B. District Rajanpur

Appendix 3 23

Sr. No.


Actual Length for

Completion (kms)


Actual Completed

Length

7 Ghazi Chowk to Nallah Saiban. 4.00 4.00 M/s Manzoor Brothers 15/05/05 4.008 Mirran Sakhi to Wang 4.11 4.11 M/s Allied Const. Co 15/01/05 4.119 Muhammadwala to Basti Muhammad

Hussain Wadoo2.70 2.70 M/s Manzoor Brothers 30/09/04 2.70

10 Muhammad Pur Basti Hameed to Basti Maula Bux Wajar

5.00 5.00 M/s Saleem Brothers 30/12/04 5.00

11 Dajal to Harrand (Group-I) 3.00 3.00 M/s Allied Const. Co 30/09/06 3.0012 Hajipur to Rajanpur 12.00 12.00 M/s Allied Const. Co 30/03/04 12.0013 Ghazi Chowk to Kot Tahir Road from

Basti Allah Ditta Lakha to Sheroo road


14 Mughal wala to Basti Paoli 3.90 3.90 M/s H. Abdul Razaq 17/04/06 3.9015 Shero road (Khoka Bhibrian) to Peer

Jhungi 2.50 2.50 M/s Ch. Riaz Ahmad 30/04/06 2.50

16 Pukhta link road Shah Jamal Colony via Patwari Wal Bagh to Karla Ghamo

2.68 2.68 M/s Ch. Riaz Ahmad 10-05-06 2.68

17 Pukhta Gaddan bund to basti Khutra 2.50 2.50 M/s Malik M. Sajjad 30/07/06 2.50

18 Govt. Primary School Basti Prirhar to Sikandar Pitafi Wala

3.00 3.00 M/s Malik M. Sajjad 30/06/06 3.00

19 Basti Mustafa Gola to Gola More via Mulazim Hussain Balachani

2.50 2.50 M/s Allied Const. Co 24/06/06 2.50

20 Aqil pur road to Chowk Qureshi to Shikar Pur via jam Rasul Bakhsh


21 Hajipur to Khalil Makwal via Jam Afzal Burra Luqra Mastoi Agency


22 Basti Dr. Sadiq to chowk Darbar bachal Faqir Sahib

2.50 2.50 M/s Javaid Iqbal & Co 30/06/06 2.50

23 Basti Sind Gabool to Basti Syed Ahsan Shamsi

2.50 2.50 M/s Javaid Iqbal & Co 12-03-06 2.50

24 Dangar Quarter Syed Abdul Rehman to pull Qadra canal

3.00 3.00 M/s Javaid Iqbal & Co 12-03-06 3.00

25 Noorpur Hospital to Basti Bohar Awiray wala

3.50 3.50 M/s Asif Sana 30/09/06 3.50

26 Basti Wazeer Hussain Sarai to Hajipur


27 Basti Allah Bukhsh Machi to jam Kabir Jhabail

5.00 5.00 M/s Muhammad Sajjad 21/05/06 5.00

28 Juma Wah to Basti Allah Bukhsh Machhi.


29 Chowk Liaqat abad to Bachaow Bund via Basti Wahi Malik Basti Pujabi and Dera Sardar Faiz Khan

3.10 3.10 M/s Jan Muhammad 14/03/06 3.10

30 Basti Mayo to Noshera Gharbi Cyphon

4.00 4.00 M/s Javaid Iqbal & Co 17/06/06 4.00

31 Thingana to Basti Hamid Gindani 2.50 2.50 M/s Muhammad Sajjad 30/09/06 2.5032 Chakar Buzdar to Basti Budh 3.00 3.00 M/s Muhammad Sajjad 30/09/06 3.0033 Basti Dina to Basti Hothi 2.50 2.50 M/s H. Abdul Razaq 19/06/06 2.5034 Indus highway Chakki to Basti Haji

Gul Muhammad Bhani 5.00 5.00 M/s Javaid Iqbal & Co 22/06/06 5.00

35 Kotla Rubait chowk to Nallah Qutab via chak Patiat

2.90 2.90 M/s Syed Const. Co 30/09/06 2.90

24 Appendix 3

Sr. No.


Actual Length for

Completion (kms)


Actual Completed

Length

36 Basti Arain to Basti Ghulam Haider Gopang

2.50 2.50 M/s Ch. Riaz Ahmad 30/09/06 2.50

37 Basti Noor Muammad Balohra to Basti Piran Ditta

2.50 2.50 M/s Ch. Riaz Ahmad 17/06/06 2.50

38 Basti Phali to Bambka road to Basti Fauja

2.50 2.50 M/s Zubair Const. Co 30/09/06 2.50

39 Miranpur Phatak to Badli Railway Station


40 Primary School Dhora Hasil to Badli Railway Station

5.10 3.10 M/s Javaid Iqbal 30/09/06 3.10

41 Basti Murad Jhullan via Basti Karim Bakhsh


156.55 153.86 153.86400.68 389.31 389.31Total

subtotal (B)

Appendix 4 25

Men Women Total

985.000 509.000 1,494.000

SCOs Membership 19,537.000 5,342.000 24,879.000

Saving Generated by SCOs (Million Rs.) 52.490 9.980 62.470

Sub-loans

Agri-Inputs 84,387.000 14,104.000 98,491.000

Livestock 654.000 11,278.000 11,932.000

Enterprise 726.000 1,090.000 1,816.000

SIIE 2.000 12.000 14.000 Total 85,769.000 26,484.000 112,253.000

Credit Disbursement (Million Rs.)

Agri-Inputs 1,399.943 74.023 1,473.966

Livestock 8.132 81.523 89.655

Enterprise 9.129 11.067 20.196

SIIE a 0.030 0.063 0.093

Total 1,417.234 166.676 1,583.909 a Small infrastructure as individual enterprise.Source: National Rural Support Programme

ACHIEVEMENT UNDER THE RURAL FINANCIAL SERVICES COMPONENT

February 1999 to November 2006

Formation of Saving and Credit Organizations (SCOs)

Component/Activity Detail ActivitiesGender

26 Appendix 5

Item Local Foreign Total Local Foreign Total

A. Investment Costs1. Civil Works

a. Construction Material 18.18 4.25 22.42 − − −b. Earth Work 1.56 1.56 − − −c. Labor 4.01 4.01 − − −

Subtotal (A1) 23.75 4.25 27.99 33.84 6.92 40.76 2. Contract Management Staff 1.35 1.35 1.10 1.10 3. Credit

a. Credit Line 2.67 - 2.67 − −b. NGO: Credit and Savings 0.24 0.19 0.43 − − −

Subtotal (A3) 2.91 0.19 3.10 0.04 2.78 2.82 4. Domestic Consulting Services

a. Baseline and Impact Studies 0.59 0.59 0.13 0.13 b. Benefit Monitoring and Evaluation Consutants 0.12 0.12 0.00 0.00 c. Contract Agreement Consultants 0.03 0.03 0.04 0.04 d. Engineering Design Consultants 0.15 0.15 0.47 0.47

Subtotal (A4) 0.89 0.89 0.64 0.64 5. NGO Support Services 1.76 0.20 1.96 2.17 2.17 6. Office Equipment 0.01 0.02 0.03 0.02 0.10 0.13 7. Vehicles 0.17 0.17 0.34 0.14 0.29 0.43

Total Investment Costs 30.83 4.82 35.65 37.95 10.09 48.04 B. Incremental Administration Costs

1. Incremental O&M 4.15 0.07 4.22 − − −2. Office Overhead 0.29 0.29 0.10 0.10 3. Watercourse Survey and Design 0.56 0.04 0.60 0.04 0.04

Total Administration Costs 5.00 0.11 5.11 0.14 0.14 Total Baseline Costs 35.80 4.90 40.70 38.09 10.09 48.18 C. Contingencies

1. Physical Contingencies 1.30 0.30 1.60 2. Price Continencies 3.30 0.50 3.80

Total Baseline Costs and Contingencies 40.40 5.70 46.10 38.09 10.09 48.18

Service Charge During Construction - 1.70 1.70 - 0.44 0.44 Total 40.40 7.40 47.80 38.09 10.53 48.63

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

APPRAISED AND COMPLETED COSTS OF THE PROJECTTable A5.1: Detailed Project Costs

($ million)

At Appraisal At Completion

Appendix 5 27

Com

pone

ntTo

tal

Irrig

atio

n De

velo

pmen

t0.

902

0.18

9

1.

091

0.35

8

2.25

0

0.

902

2.79

7

3.

699

Com

mun

ity D

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2.45

5

3.

040

5.49

5

0.

827

7.

361

2.45

5

11

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83

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l Roa

ds3.

565

13.3

38

16.9

03

4.57

9

1.89

6

3.

565

19.8

13

23

.378

Rura

l Fin

ance

2.77

9

-

2.

779

0.04

1

-

2.77

9

0.

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2.82

0

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0

4.

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: ADB

Loa

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BTo

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Tabl

e A5

.2: P

roje

ct C

ost b

y Co

mpo

nent

s($

milli

on)

GOP

Bene

ficia

ries

28 Appendix 5

Item

Fore

ign

Loca

lTo

tal

GO

PB

enef

icia

ryFo

reig

nLo

cal

Tota

l

A.

Inve

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764

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2

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40

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101

1.

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1

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939

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986

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e D

urin

g C

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0.44

2

0.44

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0.44

2

0.44

2

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l Pro

ject

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ts10

.381

20.5

88

30

.969

5.98

6

11

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10

.542

38.0

81

48

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B =

Asi

an D

evel

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ent B

ank,

GO

P =

Gov

ernm

ent o

f Pak

ista

n, N

GO

= n

ongo

vern

men

t org

aniz

atio

n, O

&M

= o

pera

tion

and

mai

nten

ance

.S

ourc

e: A

DB

Loa

n Fi

nanc

ial I

nfor

mat

ion

Sys

tem

, Pro

ject

Man

agem

ent U

nit.

AD

BTo

tal

Tabl

e A

5.3:

Pro

ject

Cos

t by

Act

ivity

$ m

illio

n

Appendix 6 29

Year

1999 1.000 5.576 5.576 0.800 0.656 0.656

2000 3.000 0.323 5.899 3.200 0.176 0.832

2001 3.430 0.146 6.045 3.220 0.316 1.148

2002 4.500 0.351 6.396 3.000 2.200 3.348

2003 6.000 2.538 8.934 5.000 1.577 4.925

2004 6.000 3.854 12.788 5.500 3.774 8.699

2005 11.000 13.016 25.804 7.000 6.332 15.031

2006 8.800 6.586 32.390 19.000 13.257 28.288

2007 0.236 32.626 1.500 2.056 30.344

Source: ADB Loan Financial Information System.

CumulativeProjected Actual Cumulative ActualProjectedContract Awards Disbursements

CONTRACT AWARDS AND DISBURSEMENTS($ million)

30 Appendix 7

III

IIIIV

III

IIIIV

III

IIIIV

III

IIIIV

III

IIIIV

III

IIIIV

III

IIIIV

III

IIIIV

III

IIIIV

A.

Inst

itutio

nal S

uppo

rt

B.

Irri

gatio

n Im

prov

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t

C.

Rur

al R

oads

D.

Com

mun

ity D

evel

opm

ent

E.

Fina

lcia

l Ser

vice

s

BM

E =

ben

efit

mon

itorin

g an

d ev

alua

tion,

CO

s =

com

mun

ity o

rgan

izat

ions

, CW

D =

com

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and

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epar

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t, D

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dep

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and

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DD

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O =

non

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MU

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t, S

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= s

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Pro

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SC

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Stre

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Stre

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Yea

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FY: 0

6-07

Yea

r 5

Yea

r 6

Yea

r 7

Yea

r 8

FY: 0

2-03

FY: 0

3-04

FY: 0

4-05

FY: 0

5-06

PR

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IMP

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itmen

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Pro

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r 9

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8-99

FY: 9

9-00

FY: 0

0-01

FY: 0

1-02

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stru

ctio

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prov

emen

t of P

rodu

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ity a

nd

Sup

ervi

sion

and

Gui

danc

e by

DO

WM

, LG

RD

D, D

OA

, D

OL,

DIP

, and

PM

U

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erco

urse

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ovem

ent,

Lini

ng, a

nd T

ubew

ell

Sup

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and

Gui

danc

e by

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and

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U

Des

ign

by P

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and

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Roa

d C

onst

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ion

Con

tract

s th

roug

h T

ende

ring

2.3. 4. 5. 1. 3. 4. 1.

Lege

nd:

2.

Org

aniz

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n an

d S

treng

then

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of S

CO

s by

NG

O

Sav

ing

Mob

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Cre

dit D

isbu

rsem

ent a

nd M

anag

emen

t Ser

vice

s

Con

stru

ctio

n/Im

prov

emen

t of F

arm

-to-M

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t Roa

ds

Sup

ervi

sion

by

CW

D, P

MU

, and

Con

sulta

nts

At C

ompl

etio

n:

3. 1. 2. 3.

Tran

sfer

red

to O

FWM

Dep

tt.2.

Sto

pped

due

to O

FWM

Mon

itore

d by

Hig

h W

ay &

PM

U

3. 1.

Appendix 8 31

COMPLIANCE WITH LOAN COVENANTS

Reference Covenant Status Article IV, LA Section 4.01

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.

Complied.

Article IV, LA Section 4.02

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 Punjab’s Annual Development Program.

Complied.


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.

Complied.


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-of-payments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan.

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

32 Appendix 8

Reference Covenant Status Article IV, LA Section 4.05

The Borrower shall enable the Bank’s representatives to inspect the Project, the foods financed out of the proceeds of the Loan, and any relevant records and documents.

Complied.


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.

Complied.


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.

Complied.

LA Schedule VI, Paragraph 1

PDD shall be the project Executing Agency and shall provide overall Project guidance and coordination.

Complied.


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.

Complied.


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.

Complied.


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.

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

Appendix 8 33

Reference Covenant Status LA Schedule VI, Paragraph 5

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.

Complied. PSC had 11 meetings.


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.

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.


To qualify for assistance under the Project, each component shall satisfy selection criteria acceptable to the Bank.

Complied.

Surface Irrigation LA Schedule VI, Paragraph 8

DOWM and DIP shall work with WUAs, which will be organized and strengthened by NRSP and registered by DOWM at the District level.

Complied – All WUAs formed, strengthened by NRSP, were registered with Directorate of OFWM and Irrigation Department.


Technical guidance shall be provided through a DOWM field team and the existing staff of DIP.

Complied.


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. 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


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.

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.

Tubewell Irrigation LA Schedule VI, Paragraph 12

The implementation arrangements for this component of the Project shall be similar to those under Part One (a) of the Project.

Complied.


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.

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.


DOA shall provide extension services for this component.

Complied.

Community Development Subprojects LA Schedule VI, Paragraph 15

The Implementing Agencies, DOWM, DIP, DOA, DOL, and LGRDD, shall work with the COs to implement this component of the Project.

Complied.


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 - 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.


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.

Complied.


In consultation with the PCC, the PMU shall approve the selection of all Community Development Sub-Projects to be implemented under the Project.

Complied.

Appendix 8 35


The following guidelines shall apply to the infrastructure works under this component of the Project. (i) The maximum cost for any individual Sub-Project 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 Sub-Projects; (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.

Complied.


Priority in the implementation of Sub-Projects shall be given to communities that mobilize more than 10 percent of the cost of materials.

Complied.


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).

Complied.


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.

Complied.

Rural Roads LA Schedule VI, Paragraph 23

CWD shall implement the upgrading and improvement of rural roads under this Project Component.

Complied.


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.

Complied.


The construction specification for this Project component shall be sufficient to ensure durability and minimize maintenance requirements.

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

36 Appendix 8

Reference Covenant Status Financial Services LA Schedule VI, Paragraph 26

NRSP shall establish two field units in each Project District to implement this component of the Project.

Complied. Seven field units established.


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.

Complied.


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.

Complied.


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.

Complied.


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.

Complied.


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 sub-loans.

Complied. Recovery rate 99 percent.


Women, in particular, shall be targeted for assistance under this component of the Project (about 50 percent of the credit provided).

Complied. However, 25% of the credits were provided to women, based on demand and eligibility criteria.

Re-lending and On-Lending Terms LA Schedule VI, Paragraph 33

Punjab shall on-lend the proceeds of the Loan 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.

Complied. The Punjab on-lent the loan proceeds to the NGO at 10%, which were on-lent to the beneficiaries at 20% out of which 2% was paid as incentive for recovery to group leaders.

Appendix 8 37


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

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

Operation and Maintenance LA Schedule VI, Paragraph 35

CWD shall be responsible for the maintenance of rural 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.

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


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.

Complied. Provisions exist in the memorandum of understandings signed with the communities.


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.

Complied. Provisions exist in the memorandum of understandings signed with the communities.

Monitoring and Evaluation LA Schedule VI, Paragraph 38

The PMU, with the assistance of the implementation 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.

Complied. The IBME systems developed and implemented by the PMU itself, which was accepted by the ADB.

Mid-Term Review LA Schedule VI, Paragraph 39

A comprehensive Midterm Review shall be conducted at the end of the second year of the Project by the Bank and PDD.

Complied.

Environmental Consideration LA Schedule VI, Paragraph 40

Adverse environmental impacts shall be mitigated and appropriate environmental safeguards adopted in relation to noise, dust, air pollution, safety standards, and sanitation measures as specified by Punjab’s Environment Department.

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

38 Appendix 8

Reference Covenant Status PA, Article II, Section 2.08(a)

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.

Complied.

PA, Article II, Section 2.09(a)

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.

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-à-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.

(ii) 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.

(iii) 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.

(iv) 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.

(v) 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.

(iv) 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.

(vii) 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.

(viii) The period of analysis was assumed to be 20 years, the same as that adopted at

appraisal.

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 2–3 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 10–12 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 Base EIRR Base EIRR

Percentage Increase in Costs for

EIRR of 12%

Percentage Decrease in Benefits for EIRR of 12%

Surface Irrigation 22.8 43.0 >100.0 56.0

Tube-Well Irrigation 57.8 39.0 >100.0 55.0

Total Irrigation 55.9 41.0 >100.0 57.0

Rural Roads 36.9 33.7 >100.0 63.0

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

Appendix 9 45

Item UnitFinancial Cost

(PRs)Economic Cost

(PRs)CropsWheat 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 hrs 300.00 250.00 Per irrigation cost 1 494.00 296.40

Urea bag 750.00 1,202.39 DAP bag 1,200.00 1,528.14

Pesticide PRs. 1,000.00 1,100.00

Labor (male) day 150.00 120.00 labor (Female) day 120.00 96.00 DAP: Di-Amonium Phosphatekgs: KilogramsSources: PCR mission estimates

Table A.9.2:Financial and Economic Costs of Inputs and Outputs

46 Appendix 9

Ureab DAPc Potashd

Qty Amount Qty Amount Amount Amount Commodity PricePrice in international market $ t 230 1 318 421 177Freight and insurance (+) $ t 45 1 40 40 40CIF at Karachi port $ t 275 1 358 461 217CIFat Karachi port PRs. t 16,638 1 21,659 27,860 13,122Economic PricesPort charges (+) PRs. t 430 1 430 430 430Losses at port (+) percent 1 166 2 433 557 262Wholesalers margin (+) percent 5 862 3 676 865 414Transport charges from port to Project area (+) PRs. t 750 1 750 750 750Wholesale market value PRs. t 18,846 1 23,948 30,463 14,979Processing cost (-) PRs. t 4,200 1Value of raw material at millgate PRs. t 7,892 1Tonnage of sugarcane required (at 7% recovery rate) kg 1 552 1Value of sugarcane at millgate PRs. t 1,105 1Transport charges to millgate/from wholesale market (-) PRs. 1 100 1 100 100 100Import parity price at farmgate PRs. 1 1,005 1 24,048 30,563 15,079Actual farmgate price PRs. 1 1,500 1 15,000 24,000 18,000

b: Urea, Black Sea, bagged, spot, ibidc: DAP (diamonium phosphate), standard size, bulk, spot, fob, US Gulf, ibidd: Potasium chloride (muirate of potash, standard grade, spot, fob Vancouver, ibidCIF:Cost Insurance on Freight, $: United States Dollars, t: metric tons, kg: kilograms, PRs: Pakistani RupeesSources: PCR mission estimates and as provided above

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

Table A9.3 Import Parity Prices (Sugarcane, Urea, DAP, Potash)

UnitSugarcane a

Fertilizers

Description

Qty Amount Qty Amount Qty Amount Commodity pricePrice in international market $ t 323 t 199 t 1,289Quality adjustment factor percent 82 264 95 189 86 1,104Freight and insurance $ t 0 t 0 tFOB at Karachi port $

0t 264 t 189 t 1,104

FOB at Karachi port PRs. t 15,999 t 11,443 t 66,794Economic pricesPort charges (-) PRs. t 430 t 430 1 430Losses at port (-) percent 2 320 2 9 1 4Wholesalers margin (-) percent 5 800 5 572 5 3,340Transport charges from project area to port (-) PRs. t 750 t 750 t 750Exmill/wholesale market value PRs. t 13,699 t 9,683 t 62,270Value of paddy/seed cotton percent 66 9,042 33 20,549Value of byproduct (+) PRs. t 452 t 8,910Milling cost (-) PRs. t 820 t 950Value at wholesale market/millgate PRs. t 8,674 t 9,683 t 28,509Transport charges farm to wholesale market mill gate (-) PRs. t 100 t 100 t 100Export parity price at farmgate PRs. t 8,574 t 9,583 t 28,409Actual farmgate price PRs. t 7,650 t 10,000 t 25,000

Includes value of broken rice (11%), tips (5%), and husk (24%), The World Bank Commodity Price Data Pink Sheet - March 2007b: Wheat US, HRW, ibidc Cotton A Index New Definition, ibidFOB:Free on board, $: United States Dollars, t: metric tons, kg: kilograms, PRs: Pakistani RupeesSources: PCR mission estimates and as provided above

a: Thai, 5% broken, WR, milled indicative price based on weekly surveys of export transactions (indicative survey price), government

Table A9.4 Export Parity Prices

Description UnitPaddya Wheatb Cottonc

Appendix 9 47

Item Sorghum Millet

Physical QuantitiesMain Crop (kg) 593 692 By Product (kg) 1,008 1,176 InputsTractor Plowing (hrs) 9 9 Seed (kg) 25 12 Urea (bag) 1 1 DAP (kg)Sulfate of Potash (kg)Pesticides Cost (factor)Labor (days) 12 12 Number of irrigations

Financial ValuesRevenue (PRs)Main Product 8,733 10,374 Byproduct 1,008 1,176 Gross Income (PRs) 9,741 11,550 Costs (PRs)Tractor 2,594 2,594 Seed 455 232 Urea 926 926 DAPSulfate of PotashPesticides CostThresher or shelling cost Labor 1,667 1,667 IrrigationOther Costs (10% of above) 564 542 Total Cash Cost (PRs) 6,206 5,960 Gross Margins (PRs) 3,535 5,589

hrs: hours, kg: kilograms, PRs: Pakistani Rupees and DAP: diamonium phosphate Sources: PCR mission estimates

Table A9.5 Enterprise Budgets (Financial Prices) for Kaha

Sultan

48 Appendix 9

Total Sorghum Millet

Percentage in Cropped Area 0.50 0.25 0.25

Area 0.50 0.25 0.25

Main Output

Main crop (kg) 148 173

Byproduct (kg) 252 294

Inputs

Tractor plowing (hrs) 2 2

Seed (kg) 6 3

Urea (bag) 0 0

DAP (kg)

Sulfate of potash (kg)

Pesticides cost (factor)

Labor (days) 3 3

Number of Irrigations

Total Sorghum Millet

Revenue (PRs)

Main Product 2,183 2,594

Byproduct 252 294

Gross Income (PRs) 5,323 2,435 2,887

Costs (PRs)

Tractor 648 648

Seed 114 58

Urea 232 232

DAP

Sulfate of Potash

Pesticides Cost

Thresher/Shelling Cost

Labor 417 417

Irrigation

Other Costs (10% of above) 141 135

Total Cash Cost (PRs) 3,042 1,551 1,490

Gross Margins (PRs) 2,281 884 1,397 hrs: hours, kg: kilograms, PRs: Pakistani Rupees and DAP: diamonium phosphate Sources: PCR mission estimates

DescriptionValue of Outputs and Inputs

Table A9.6

Description Area (ha) Outputs and Inputs

One Ha Model Farm Budgets (Financial Prices) for Kaha Sultan

Appendix 9 49

Wheat Rabi Fodder Cotton Sorghum Millet Kharif

Fodder Onion

Main Output

Main Crop (kg) 3,409 25,174 2,707 1,769 1,284 13,786 24,621

By Product (kg) 3,409 - - 3,006 2,183 - -

Inputs

Tractor Plowing (hrs) 12 10 15 6 6 10 22

Seed (kg) 119 25 18 49 15 42 1,186

Urea (bag) 3 2 1 2 2 2 2

DAP (kg) 2 2 2

Sulfate of Potash (kg)

Pesticides Cost (factor) 1 2 1

Labor (days)

Number of Irrigations 6 9 11 3 1 4 9

Revenue (PRs)

Main Product 34,086 25,174 67,678 26,041 19,266 13,786 61,552

Byproduct 5,113 3,006 2,183

Gross Income (PRs) 39,199 25,174 67,678 29,048 21,449 13,786 61,552

Costs (PRs)

Tractor 3,705 2,964 4,446 1,927 1,927 2,964 6,669

Seed 1,423 1,853 902 909 278 1,008 28,454

Urea 2,594 1,853 926 1,853 1,853 1,853 1,853

DAP 2,075 2,371 2,964

Sulfate of Potash

Pesticides Cost 1,000 2,000 1,000

Thresher/Shelling cost 2,386

Labor 2,727 2,517 6,768 2,604 1,927 1,379 6,155

Irrigation 2,964 4,446 5,434 1,482 494 1,976 4,446

Other Costs (10% of above) 1,887 1,363 2,285 877 648 918 5,154

Total Cash Cost (PRs) 20,760 14,996 25,131 9,652 7,125 10,097 56,695

Gross Margins (PRs) 18,439 10,179 42,547 19,396 14,324 3,689 4,857

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

Sources: PCR mission estimates

Value of Outputs and Inputs

Table A9.7

Outputs and Inputs of Deep Turbine Tube-wells Per Ha

Quantity of Outputs And Inputs Description

50 Appendix 9

Total Wheat Oilseeds Rabi Fodder Cotton Sorghum Millet Kharif

Fodder Onion

Percentage in cropped area 1.78 0.95 0.00 0.10 0.50 0.05 0.10 0.03 0.05

Area 71.00 38.00 0.00 4.00 20.00 2.00 4.00 1.00 2.00

Main Output

Main Crop (kg) 129,527 100,697 54,142 3,537 5,138 13,786 49,242

By Product (kg) 129,527 6,013 8,734

Inputs

Tractor Plowing (hrs) 469 40 296 13 26 10 44

Seed (kg) 4,505 99 361 99 59 42 2,371

Urea (bag) 131 10 25 5 10 2 5

DAP (kg) 66 40 5

Sulfate of Potash (kg) -

Pesticides Cost (factor) 38 40 2

Labor (days)

Number of Irrigations 228 36 220 6 4 4 18

Description

Revenue (PRs)

Main Product 1,295,268 100,697 1,353,560 52,083 77,064 13,786 123,105

Byproduct 194,290 - 6,013 8,734

Gross Income (PRs) 3,224,599 1,489,558 100,697 1,353,560 58,096 85,798 13,786 123,105

Costs (PRs)

Tractor 140,790 11,856 88,920 3,853 7,706 2,964 13,338

Seed 54,063 7,410 18,031 1,819 1,112 1,008 1,067

Urea 98,553 7,410 18,525 3,705 7,410 1,853 3,705

DAP 78,842 47,424 5,928

Sulfate of Potash

Pesticides Cost

Thresher/Shelling Cost

Labor

Irrigation 112,632 17,784 108,680 2,964 1,976 1,976 8,892

Other Costs (10% of above) 48,488 4,446 28,158 1,234 1,820 780 3,293

Total Cash Cost (PRs) 970,415 533,369 48,906 309,738 13,575 20,024 8,580 36,223

Gross Margins (PRs) 2,254,184 956,189 51,791 1,043,822 44,521 65,774 5,205 86,882

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

Sources: PCR mission estimates

Table A9.8

Budgets (Financial Prices) for 40 Ha Block Farm Irrigated By DT Tubewell

Value of Outputs and Inputs

Description Quantity of Outputs and Inputs With Project Per ha

Appendix 9 51

Type of SchemeNo of

Schemes

Number of HH Per Scheme

Number of Beneficiaries Per Scheme

Total Number of

Households Benefited

Total Number

of Persons

Benefited

Annual Income

Per Scheme

(PRs)

Annual Income from All

Schemes (PRs.

million)

Income Per Household

(PRs)

Per Capita

Average Annual Income (PRs)

FIRR at PCR

FIRR at Appraisal

Small scale Irrigation 207 50 350 10,350 72,450 75,600 15.65 1,512 216 57%Soil conservation structures 32 10 70 320 2,240 197,931 6.33 19,793 2,828 44% 46%Wheat flour mills 162 68 476 11,016 77,112 77,112 12.49 1,134 162 61%Cattle sheds 218 19 133 4,142 28,994 29,393 6.41 1,547 221 48%Poultry sheds 142 60 420 8,520 59,640 63,000 8.95 1,050 150 50% 71%Warehouses 146 20 140 2,920 20,440 36,040 5.26 1,802 257 27%Saw mills 25 60 420 1,500 10,500 10,500 0.26 175 25 42%Drinking water schemes 175 63 441 11,025 77,175 95,256 16.67 1,512 216 66%Community halls 225 20 140 4,500 31,500 10,000 2.25 500 71Link roads 19 68 476 1,292 9,044 9,520 0.18 140 20 56%Culverts and bridges 31 125 875 3,875 27,125 26,250 0.81 210 30 72%Others 16 20 140 320 2,240 10,000 0.16 500 71 70%Total 1,398 583 4,081 59,780 418,460 75.4Weighted average 43 299 53,954 1,262 180

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

Table A9.9Table A9.9: Financial Impact of Community-based Scheme

Component/Subcomponent

Total Income

(PRs million)

Number of Benefiting

(HH)

Population of

Benefiting Household

Per Household

Income (PRs)

Per capita Income (PRs.)

Kaha Sultan Surface Irrigation 0.0 486 3,401 0 0Deep Tube-well Development 308.8 1,370 9,590 225,418 32,203Roads 668.6 185,714 1,300,000 3,600 514Community Development Schemes 75.4 59,780 437,453 1,262 172Skill training 330.0 15,000 15,000 22,000 22,000Average All Combined 1,053 185,714 1,300,000 5,669 810HH: Hosehold and PRs: Pakistani RupeesSources: PCR mission estimates

Table A9.10Component/Subcomponent Wise per HH and per Capita Income

52 Appendix 9

Year Ending

Additional Cultivated Area (ha)

Incremental Benefit (PRs.

Million) in 2007 Prices

General Price Index

Deflator

Adjusted Economic Investment

Costs (Million

Rupees - Constant Prices)

$/PKR Parity

1,999 0 16.1 0.00 0.64 0.00 51.60 0.00 0.00 0.002,000 0 16.1 0.00 0.65 0.00 53.40 0.00 0.00 0.002,001 0 16.1 0.00 0.69 0.00 64.00 0.00 0.00 0.002,002 0 16.1 0.00 0.70 0.00 59.50 0.00 0.00 0.002,003 0 16.1 0.00 0.74 0.00 58.50 0.00 0.00 0.002,004 0 16.1 0.00 0.80 23.47 57.60 0.00 0.41 -0.412,005 1,457 18.9 2.74 0.86 4.03 59.90 0.05 0.07 -0.022,006 2,915 21.6 5.48 0.93 1.20 60.00 0.09 0.02 0.072,007 4,858 25.3 9.14 1.00 1.12 60.00 0.15 0.02 0.132,008 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,009 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,010 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,011 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,012 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,013 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,014 4,858 25.3 9.14 1.00 2.12 60.50 0.15 0.03 0.122,015 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,016 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,017 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,018 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,019 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,020 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,021 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,022 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,023 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,024 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,025 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.132,018 4,858 25.3 9.14 1.00 1.12 60.50 0.15 0.02 0.13

22.8%EIRR: Economic Internal Rate of Return, HH: Hosehold and PRs: Pakistani Rupees Sources: PCR mission estimates

EIRR

Gross Margin for Additional Cultivated Area (PRs. million) in

2007 Prices

Table A9.11Economic Internal Rate of Return of Surface Irrigation of Kaha Sultan

Adjusted Cost, Benefits, and Incremental Cash Flow in 2007

Prices ($ million)

Appendix 9 53

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

Ben

efits

Cos

tsC

ash

Flow

1999

00.

00

0.

00

0.00

0.

64

0.00

51.6

0

0.00

0.00

0.

00

2000

80.

00

1.

89

1.

89

14.2

1

0.

65

21.8

5

53.4

0

0.04

0.41

(0

.37)

20

018

0.00

4.71

1.89

6.60

12

.11

0.69

17

.53

64

.00

0.

10

0.

27

(0.1

7)

2002

100.

00

7.

54

4.

71

2.

36

14

.61

15

.53

0.70

22

.05

59

.50

0.

25

0.

37

(0.1

3)

2003

160.

00

11

.31

7.

54

5.

89

3.

77

28

.51

23

.93

0.74

32

.15

58

.50

0.

49

0.

55

(0.0

6)

2004

120.

00

15

.08

11

.31

9.

43

9.

43

2.

83

48

.07

30

.11

0.80

37

.50

57

.60

0.

83

0.

65

0.18

20

0515

0.00

18.8

5

15.0

8

14.1

4

15.0

8

7.07

3.53

73.7

5

34.9

3

0.

86

40.7

4

59.9

0

1.23

0.68

0.

55

2006

260.

00

18

.85

18

.85

18

.85

22

.62

11

.31

8.

84

6.

13

10

5.45

35.5

8

0.

93

38.4

2

60.0

0

1.76

0.64

1.

12

2007

420.

00

18

.85

18

.85

23

.56

30

.16

16

.97

14

.14

15

.32

9.

90

14

7.74

1.90

1.

00

1.90

60.0

0

2.46

0.03

2.

43

2008

00.

00

18

.85

18

.85

23

.56

37

.70

22

.62

21

.21

24

.51

24

.74

19

2.04

1.00

0.

00

60

.00

3.

20

0.

00

3.20

20

090

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

28.2

8

36.7

6

39.5

9

231.

87

1.

00

0.00

60.0

0

3.86

0.00

3.

86

2010

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

49

.01

59

.38

27

0.98

1.00

0.

00

60

.00

4.

52

0.

00

4.52

20

110

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

79.1

7

303.

03

1.

00

0.00

60.0

0

5.05

0.00

5.

05

2012

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

20

130

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

98.9

7

322.

82

1.

00

0.00

60.0

0

5.38

0.00

5.

38

2014

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

20

150

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

98.9

7

322.

82

1.

00

0.00

60.0

0

5.38

0.00

5.

38

2016

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

20

170

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

98.9

7

322.

82

1.

00

0.00

60.0

0

5.38

0.00

5.

38

2018

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

20

190

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

98.9

7

322.

82

1.

00

0.00

60.0

0

5.38

0.00

5.

38

2020

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

20

210

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

98.9

7

322.

82

1.

00

0.00

60.0

0

5.38

0.00

5.

38

2022

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

20

230

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

98.9

7

322.

82

1.

00

0.00

60.0

0

5.38

0.00

5.

38

2024

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

20

250

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

98.9

7

322.

82

1.

00

0.00

60.0

0

5.38

0.00

5.

38

2026

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

20

270

0.00

18.8

5

18.8

5

23.5

6

37.7

0

28.2

8

35.3

5

61.2

7

98.9

7

322.

82

1.

00

0.00

60.0

0

5.38

0.00

5.

38

2018

00.

00

18

.85

18

.85

23

.56

37

.70

28

.28

35

.35

61

.27

98

.97

32

2.82

1.00

0.

00

60

.00

5.

38

0.

00

5.38

57.8

%EI

RR

: Eco

nom

ic In

tern

al R

ate

of R

etur

n, H

H: H

oseh

old

and

PRs:

Pak

ista

ni R

upee

s So

urce

s: P

CR

mis

sion

est

imat

es

Num

ber o

f D

eep

Tube

-w

ell

Ope

ratio

nal

Adju

sted

Cos

t, B

enef

its,

and

Incr

emen

tal C

ash

Flow

in 2

007

Pric

es ($

m

illion

)

EIR

R

Gro

ss M

argi

ns (P

Rs

Milli

on)

Year

En

ding

Tabl

e A9

.12

Eco

nom

ic In

tern

al R

ate

of R

etur

n of

Dee

p Tu

rbin

e Tu

be-w

ells

Tota

l In

crem

enta

l B

enef

it (P

Rs

milli

on)

Con

stan

t pr

ices

(200

7)

Cap

ital

Cos

t (m

illion

R

s) a

t C

urre

nt

Pric

es

Gen

eral

Pr

ice

Inde

x D

efla

tor

Adju

sted

C

apita

l C

ost I

n M

illio

n R

upee

s (C

onst

ant

Pric

es)

US$

/PK

R

Parit

y

54 Appendix 9

Item

sYe

ar19

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

16A.

Tra

ffic C

ount

and

Con

stru

ctio

n Ph

asin

gTo

tal le

ngth

389

390

390

390

390

389

389

389

389

389

389

390

390

390

390

390

389

389

Km co

nstru

cted

00

00

030

6818

810

30

00

00

00

00

Km co

nstru

cted

(cum

ulativ

e)0

00

00

3098

286

389

389

389

389

389

389

389

389

389

389

Balan

ce to

be

cons

tructe

d38

939

039

039

039

035

929

110

30

00

11

11

10

0Gr

owth

rate

5%B.

Ave

rage

Dai

ly Tr

affic

Mot

orcy

cles

190.

219

9.71

209.

722

0.2

231.

224

2.7

254.

926

7.6

281.

029

5.1

309.

832

5.3

341.

635

8.7

376.

639

5.4

415.

243

5.9

Mot

or ca

r/pick

up34

35.7

37.5

39.4

41.3

43.4

45.6

47.8

50.2

52.7

55.4

58.2

61.1

64.1

67.3

70.7

74.2

77.9

Mini

bus/w

aggo

n24

.225

.41

26.7

28.0

29.4

30.9

32.4

34.1

35.8

37.5

39.4

41.4

43.5

45.6

47.9

50.3

52.8

55.5

Buss

es/co

ache

s2.

42.

522.

62.

82.

93.

13.

23.

43.

53.

73.

94.

14.

34.

54.

85.

05.

25.

5Ag

ricult

ural

tracto

rs26

.227

.51

28.9

30.3

31.8

33.4

35.1

36.9

38.7

40.6

42.7

44.8

47.1

49.4

51.9

54.5

57.2

60.1

Trac

tor t

rolle

ys26

.227

.51

28.9

30.3

31.8

33.4

35.1

36.9

38.7

40.6

42.7

44.8

47.1

49.4

51.9

54.5

57.2

60.1

Truc

ks22

.623

.73

24.9

26.2

27.5

28.8

30.3

31.8

33.4

35.1

36.8

38.7

40.6

42.6

44.7

47.0

49.3

51.8

C. R

oad

Use

in M

illion

Km

Mot

orcy

cles

27.0

128

.43

29.8

531

.34

32.9

134

.47

36.1

938

.00

39.9

041

.89

43.9

946

.31

48.6

251

.05

53.6

156

.29

58.9

561

.90

Mot

or ca

r/pick

up4.

835.

085.

345.

605.

886.

166.

476.

797.

137.

497.

868.

288.

699.

139.

5810

.06

10.5

411

.06

Mini

bus/w

aggo

n3.

443.

623.

803.

994.

194.

394.

604.

835.

085.

335.

605.

896.

196.

506.

827.

167.

507.

88Bu

sses

/coac

hes

0.34

0.36

0.38

0.40

0.42

0.43

0.46

0.48

0.50

0.53

0.56

0.58

0.61

0.64

0.68

0.71

0.74

0.78

Agric

ultur

al tra

ctors

3.72

3.92

4.11

4.32

4.53

4.75

4.99

5.23

5.50

5.77

6.06

6.38

6.70

7.03

7.38

7.75

8.12

8.53

Trac

tor t

rolle

ys3.

723.

924.

114.

324.

534.

754.

995.

235.

505.

776.

066.

386.

707.

037.

387.

758.

128.

53Tr

ucks

3.21

3.38

3.55

3.72

3.91

4.10

4.30

4.52

4.74

4.98

5.23

5.50

5.78

6.07

6.37

6.69

7.00

7.35

Tota

l mile

gae

(km

milli

on)

46.2

648

.70

51.1

353

.69

56.3

759

.04

61.9

965

.09

68.3

571

.76

75.3

579

.32

83.2

987

.45

91.8

296

.42

100.

9810

6.03

Corre

ctio

n Fa

ctor

1E.

Incr

enet

al c

ost (

$milli

on)

0.00

0.00

0.00

0.00

0.03

1.08

3.57

10.6

63.

170.

180.

180.

180.

180.

180.

180.

180.

180.

18F.

Incr

emen

tal c

ash

flow

0.00

0.00

0.00

0.00

-0.0

3-0

.74

-2.4

5-7

.24

1.73

4.95

5.21

5.48

5.76

6.06

6.37

6.70

7.04

7.41

EIRR

EIRR

: Eco

nom

ic In

tern

al Ra

te o

f Ret

urn,

HH:

Hos

ehold

and

PRs

: Pak

istan

i Rup

ees

Sour

ces:

PCR

miss

ion e

stim

ates

Tabl

e A9.1

3Ec

onom

ic An

alysi

s of R

ural

Road

s Com

pone

nt

Appendix 9 55

Year

Adjusted Institutional

Strengthening Cost (in 2007

Prices)Total Project

Cost Toal BenefitsTotal Project Cash Flow

1999 0.31 0.31 0.00 -0.312000 0.45 0.86 0.04 -0.832001 0.19 0.47 0.10 -0.362002 0.38 0.75 0.25 -0.512003 0.50 1.08 0.49 -0.592004 0.52 2.66 1.17 -1.492005 0.80 5.11 2.40 -2.712006 0.78 12.10 5.27 -6.832007 0.39 3.61 7.51 3.902008 0.00 0.20 8.49 8.292009 0.00 0.20 9.41 9.212010 0.00 0.20 10.33 10.132011 0.00 0.20 11.15 10.952012 0.00 0.20 11.78 11.572013 0.00 0.20 12.09 11.882014 0.00 0.22 12.42 12.202015 0.00 0.20 12.76 12.562016 0.00 0.20 13.12 12.922017 0.00 0.20 13.50 13.302018 0.00 0.20 13.90 13.70

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

Table A9.14Combined Economic Internal Rate of Return of the Irrigation, Rural Roads, and

Institutional Strengthening Components ($ million)

Dera Ghazi Khan Rural Development Project · Completion Report Project Number: 27168 Loan Number: 1531 October 2007 Pakistan: Dera Ghazi Khan Rural Development Project

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