November 19, 2002

20. The current third stage of the CRBIP, which is under implementation, will irrigate the lands of both D.I.Khan and D.G.Khan districts. The Chashma Right Bank Canal (CRBC) was initially planned to provide perennial irrigation to command a cultural area 570,000 acres, which include 350,000 acres in NWFP Province, and 220,000 acres in Punjab Province. Later on, the cultivable command area increased to 606,000 acres following the decision of shifting the alignment of main canal further uphill to the west.

21. The CRBIP design preparation and implementation history is marred with significant disruptions, substantial delays and partly failure. West Pakistan Power and Irrigation Department conducted initial project investigations in 1960s and assessed the possibility and scope for providing perennial irrigation supplies to the area lying above the command of existing inundation canals and beyond the reach of perennial Zams (hill-torrents) emerging from the Sulaiman range into the plain of the Dera Ismail Khan and Dera Ghazi Khan district. The option of bringing a canal on the right bank of the Indus River from Kalabagh head works was considered. The further work on preparation of detailed feasibility report was entrusted to Water and Power Development Authority (WAPDA) in late 1960. Meanwhile, the construction of a barrage on the Indus River at Chashma as part of the Indus Basin Project (IBP) made it possible to taking off a canal on the right bank from the Chashma Barrage.

22. The first feasibility report was prepared by WAPDA in 1970. The feasibility report proposed the gravity canal system to irrigate 500,000 acres of land: 350,000 acres in the Dera Ismail Khan district and 150,000 acres in the Dera Ghazi Khan district.

23. The first feasibility report was revised in 1973. The project revision led to a dramatic increase in the CRBIP's command area. The revised report envisaged the irrigation of 1,368,000 acres in the Dera Ismail Khan and Dera Ghazi Khan districts through gravity and pumping cum gravity system (*3). It was also decided to exclude drainage component from the original project plan in order to control the project cost. A resurrected inter-provincial water dispute following the Indus Basin Water Treaty remained one of the major determinants of decisions with regard to the CRBIP design and system capacity. Three provinces-Punjab, NWFP and Sind, were direct stakeholders in inter-provincial water sharing arrangements.

24. The Bank's involvement in the CRBIP started in 1976 when a fact-finding mission visited the proposed site of the project in D.I.Khan district. The mission asked for further information and handed over a questionnaire to WAPDA. A supplementary questionnaire was also provided to WAPDA during the re-appraisal mission. The third and final appraisal mission came in August 1977, and a Memorandum of Understanding (MOU) was signed to fund the project (Phase-I Gravity Flow System) at the end of the mission visit. The project loan totaling $31.5 million was approved on 15th December 1977. The project (Phase-I Gravity Flow System) was then meant to irrigate 202,350 hectares in both the NWFP and Punjab Province (*4).

25. By late 1979, the project work virtually ceased due to the substantial cost overrun. The revised PC-1 Proforma prepared by WAPDA assessed more than two time increase in the project cost. This situation led the government to impose ban on the award of new contract. Subsequently, the Bank suspended the loan disbursement pending resolution of the cost overrun issue. Management justified the decision of loan suspension and pleaded that the appraisal was conducted without its involvement in project preparation and it relied heavily on WAPDA's original proposal (*5). While WAPDA argued that such substantial cost overrun occurred due to the lack of detailed project planning and field surveys (*6).

26. As a result, the Government and WAPDA underwent a lengthy project reformulation exercise. A high level technical committee that was mandated to review the revised costs and suggest cost reduction measures was constituted by the government in February 1980. The high level technical committee directed WAPDA to prepare cost estimates for various alternatives rowed-kohi (hill-torrent irrigation) schemes in the project area during its last meeting held on 1st May 1980. Meanwhile, it was decided to engage NESPAK-an engineering consultant firm- for review of the design, cost estimates and economics of the CRBIP. NESPAK submitted three plans including revised plan of the project as contained in the revised PC-Proforma of 1979, alternative plan and cost reduction plan. The recommendation was made in the favor of alternative plan. On 11th December 1980, the Federal Ministry of Water and Power directed WAPDA to carry out the study on cross-drainage works and rowed-kohi (hill-torrent irrigation) scheme to ensure minimum cross-drainage works and maximum spreading and utilization of floodwater of hill-torrents as part of the CRBIP. However, WAPDA rejected this idea as well and claimed that rowed-kohi (hill-torrent irrigation) development scheme would not be economically attractive. It was also argued that the decrease in number of cross-drainage works would not necessarily result in reduction of the project cost (*7). Rather, WAPDA maintained that its suggested lift scheme starting from remodeled head regulator to the tail end along with a parallel channel was technically and financially most viable project design. The issue was finally resolved in a high level meeting chaired by the then finance minister. A gravity flow canal design with a capacity of 4879 cusecs was recommended. It was also decided to design and implement the project in three stages spread over 10 years (*8).

27. Meanwhile, the Government requested technical assistance from the Bank in 1981. The technical assistance (*9) reviewed and reassessed the reformulated and staged CRBIP. Following review of the Consultant's report and negotiations between the Government and the Bank, a revised CRBIP was proposed in 1984, with a total investment cost of $577 million consisting of $377 million for the main canal system, including cross drainage structures for the main canal system and $200 million for command area development (CAD), inclusive of surface and sub-surface drainage and watercourses construction (*10). The rehabilitation of Paharpur canal was also included in the CRBIP Stage I. The Bank formally consented to proceed with the Stage I and immediately reactivated the suspended loan. Thus the already separately approved loan of $25 million for on On-farm Water Management Project (OFWMP) (*11) , aimed to improve the water availability at the farm level in the existing irrigated area previously served by the Paharpur canal, became linked with the overall CRBIP. In the same year, the Bank also approved a separate loan of $40 million for the development of Chashma command area (*12). The CRBIP Stage-I was completed in December 1986.

28. The total CRBIP-Stage I command area consists of 140,000 acres, of which only 14,000 ha were newly irrigated area. Even there was also some partial tubewell irrigation in the new canal command area. The remaining command area was already being irrigated by the perennial water supplies from Paharpur system in Dera Ismail Khan District. The Project Performance Audit Report (PPAR) on the Chashma Command Area Development Project points out that the benefits in the CRBIP Stage 1 have been underachieved. It identifies that projections of future-without-project (FWOP) cropping intensities and yields in the Paharpur command area were based on the 1960s estimates in WAPDA's 1970 feasibility report. Subsequent revisions substantially lagged improvements. Projection of the FWOP situation ignored increases in cropping intensity and yields that could have been predicted to follow the commissioning of the Chashma Barrage and the consequent conversion of the Paharpur system from an inundation system to a perennial system prior to the commencement of CRBIP Stage 1. The PPAR concludes that these developments would have raised cropping intensities to about 100 percent by FY 1986 without the project. It further notes that the CRBIP Stage 1, in fact, suffered large seepage losses that caused water logging and reduced cropping intensities in the first few years of canal operations. Department of Agriculture informed the Post- Evaluation Mission (PEM) that the waterlogged area has been increasing since 1995 and now affects some 4,000 ha (*13). A special study in preparation for the PEM for the CRBIP and OFWMP was conducted in late 1990. The report says that locals feel that as the Paharpur canal already irrigated the area, they did not suffer from severe water shortages, and the net result of the project has been more harmful than beneficial (*14). The 1994 Study by the International Water and Irrigation Management Institute (IWIMI) in Stage I area concluded that more than 20,000-25,000 ha in lower reaches of CRBIP Stage III would experience acute water shortages because of prevailing poor irrigation management practices, high cropping intensities and extensive cultivation of water intensive crops such as rice and sugarcane (*15).

29. In December 1987, the Bank approved a loan for $48 million for CRBIP Stage II (*16). The work on the CRBIP Stage- II commenced in August 1988 and was completed in June 1992. Components common to all three projects including command area development and drainage, which covered the Stage I area, have been included in a single package of components for the full development of the Stage II. The canal command area (CCA) of CRBIP Stage ll is about 38,000 ha, made up of 23,900 ha of un-irrigated lands (62 percent), 11,100 ha of tubewell-irrigated land (30 percent) and 3,000 ha already irrigated from the tail end of the Pahrapur system (*17).

30. WAPDA felt it urgent to continue with the momentum gained at the completion of the Stage 11. The dovetailing work was thus completed prior to the commencement of CRBIP Stage III (*18). The already engaged contractors for Stage II through a variation order did this work. However, the government was not satisfied with the decision of WAPDA to undertake dovetailing work and termed the award of contract for dovetailing work on the basis of negotiation highly irregular and against the prescribed rules. An investigation was also ordered to investigate the matter. The result of investigation is not known.

31. Financing for the current and third stage was approved by the ADB in December 1991 for $185 million, which is about 64% of the total cost of stage III. The Government of Germany (KFW) has also loaned about $40 million. The Appraisal Report on the CRBIP Stage III justified the project on the basis that full potential of the staged development of the overall CRBIP could not be realized without the completion of Stage III (*19). The project objectives are to (i) provide a dependable perennial irrigation supply, (ii) ensure efficient distribution of water, (iii) provide necessary drainage and flood relief, (iv) improve access within the area, and (v) strengthen agriculture support services (*20).

32. The CRBIP Stage III once again experienced changes in the project design, cost overrun and substantial delay in the implementation process. Two important inter-linked changes were made in the approved design of the CRBIP Stage III. First, it was decided to replace culverts and siphons with super-passages in cross-drainage works. This decision was taken despite the fact that super-passages were more costly than culverts and siphons. It was however envisaged that super-passages would be economical in the long run (*21). Another associated change in the project design was made by shifting the alignment of the main canal further uphill to the west in order to enable the use of super-passages for the crossing of flood flows of various hill-torrents (*22). These changes in the project design later on resulted into serious adverse social and environmental impact including project-induced displacement.

33. Despite the rush initially shown by the WAPDA with regard to the completion of dovetailing work, the implementation of the current CRBIP Stage III underwent substantial delay. It was envisaged at the time of appraisal that the construction of the main canal would start by early 1992. However, the major contract for its construction (Contract C-65) was not awarded until late 1997. The PC-Proforma (4th Revision) gives us in-depth insights into the causes and implications of project delays. It says that the delay happened because the donors held up their concurrence desiring that 3rd PC-1 1996 should be first approved by the Economic Evaluation Committee (ECNEC) and also the tender be awarded to the 2nd lowest M/s TEKSER whose bid was higher by Rs.180 million from that of the lowest bidder i.e. M/s China Geo Engg. Corp. WAPDA claims that it tried its best to convince the Bank for the award of contract to the 1st lowest bidder so as to save the national exchequer from an extra burden of Rs.180 million, but in vain (*23). Similarly, delay in the award of Contract No.66 once again occurred due to the reluctance of donors in giving their concurrence. The tender for the contract were opened on 5th December 1996 but the concurrence of the donors to sign the contract agreement was not received till 20th February 1999 (*24). The process of award for this contract took 27 months against the scheduled 4 months. One of the reasons of delay was the insistence from the donors to include the provisions of vehicles in the BOQ of the tender documents. WAPDA was of the view that adequate vehicles were available from the completed projects to cater to the need of this contract (*25). Also, two other contracts could not be administered according to scheduled time because of the demand from the donors to ensure the availability of counterpart funds and resolution of Operation and Maintenance (O&M) issue.

34. Stage II&I of CRBIP were completed by WAPDA without reliance upon international contractors and consultants. However, the Stage III is an entirely different story. The Appraisal of CRBIP Stage III attributed the delays experienced in Stage I & II to the failure of local contractors, and recommended that civil works for the construction of main canal, flood carrier channels, and distributaries, minors and surface drains should be tendered in larger packages under international competitive bidding (ICB) procedures to attract large international contractors for the main canal and larger local and/or international contractors for the distribution system (*26). Extensive involvement of international consultants was envisaged in the CRBIP Stage III, in order to undertake further design investigation, planning and preparation of implementation schedule and contract administration including the preparation of pre-qualification and tender documents and bid evaluation. Ironically, despite such extensive engagement of international consultants in project preparation and implementation, the project design suffered major faults along with substantial delays. The consultants also failed to ensure the efficient and timely administration of contract and thus benefited from this situation. Payment to the expatriate consultants involved in the Stage III is being made in foreign currency. Due to the devaluation of local currency up to the extent of 108 percent against US$ during this period, the cost overrun in consultancy services is up to Rs.457 million (*27).

35. By April of 1999, there were already substantial delays and cost overruns and only 15% of the Stage III had been completed. Instead of requesting a new loan for CRBIP, the Government of Pakistan proposed that cost overruns be met by utilizing funds from the ADB-funded National Drainage Sector project. In July 1999, the ADB approved a transfer of $33.5 million from the latter project to the CRBIP. Subsequently, the cost overrun estimates were reduced, resulting in a surplus of $5.1 million that was redirected back to the National Drainage Project. The total (net) loan amount for the CRBIP Stage III is now $207.8 million, of which $163.1 million has been disbursed. The closing date of the loan was originally September 30, 2000, but it has been extended to December 31, 2002.

Loan No. 330-PAK (SF): Chashma Right Bank Irrigation Project, for $31.5 million, approved on 15 December 1977.