ADB prepares 'Administration Memorandum'

Asian Development Bank has prepared Administration Memorandum (PAM) to assist the Pakistan in the implementation of the Multitranche Financing Facility Punjab Irrigated Agriculture Investment Programme, for which ADB's Board of Directors approved a loan from ADB's Ordinary Capital resources in the amount of ¥25,637,827,000 and SDR component of $6,743,000.
According to ADB sources, this PAM is based on; (i) the loan agreement signed by the Government and ADB on 22 June 2007; (ii) the Report and Recommendation of the President to the Board of Directors on a Proposed Multitranche Financing Facility Punjab Irrigated Agriculture Investment Programme dated 22 November 2006; and (iii) ADB's relevant guidelines.
In case the provisions in this PAM differ from those of the above-mentioned documents, the provision in the loan agreement, relevant guidelines and the Report and Recommendation of the President will prevail over the PAM in their respective order, sources added.
Pakistan Government had requested loans for up to an equivalent of $900,000,000 to finance the PIAIP: up to $890,000,000 equivalent from ADB's ordinary capital resources (OCR) and a loan of $10,000,000 equivalent in Special Drawing Rights from ADB's Special Funds resources (Asian Development Fund) to help finance the PIAIP.
The financing will be provided under an MFF according to ADB policy. Under the MFF, separate multiple loans will be extended to finance projects subject to submission of related Periodic Financing Requests (PFRs) by the Government. The Government and the Government of Punjab have entered into the financial framework agreement (FFA) with ADB, and will comply with FFA requirements.
The FFA satisfies the requirements set forth in Pilot Financing Instruments and Modalities. The Government intends to finance the PIAIP with the submission of at least four PFRs for individual loans. The last loan is expected to be executed no later than 31 December 2015.
Pursuant to the FFA, the Government submitted to ADB the first PFR for $227.8 million equivalent, which comprises $217.8 million equivalent in OCR funds and $10 million equivalent in Special Drawing Rights from ADB's Special Funds resources.
ADB is currently pursuing grant co-financing with the Government of the Netherlands to support the institutional development components. This co-financing is not confirmed, however once the co-financing is secured, it will be used to offset the Government of Punjab's contribution to the Project.
The investment amount of the PIAIP was determined based on sector needs, funds devoted to the sector, identified projects, the absorptive capacity of PIPD and the Government of Punjab, and anticipated inflation over the programme period.
Commenting over the programme area and location of the project, ADB sources said that the lower Bari Doab canal is located between Lahore and Multan. The Balloki Barrage on the Ravi River diverts water into the LBDC head regulator and the Balloki-Sulemanki Link Canal. The majority of the Ravi River flows are diverted upstream in India, and only about 5 percent of the water diverted at Balloki annually originates from the Ravi itself.
The bulk of the water supply diverted to LBDC at Balloki comes from other link canals, which convey water to the barrage from Mangla Reservoir and the Jhelum and Chenab rivers. The LBDC main canal stretches over 200 km and supplies water to about 1,500 km of distributary and minor canals, which feed about 3,500 outlets to irrigate over 700,000 hectare.
Approximately 275,000 farm families derive their livelihoods directly from crops grown in the LBDC command area including wheat, rice, maize, cotton, sugarcane, fodder, flowers, vegetables, and citrus and other orchard crops. LBDC is an important and progressive agricultural area in Punjab and offers significant potential for increased productivity.
ADB sources mentioned that the Programme will support physical and non-physical investments in the water resource and irrigated agriculture sectors in Punjab, Pakistan. It takes a holistic and integrated approach to improving sector performance supported through institutional reform with a focus on sustainability, decentralised management, transparency, and accountability.
The programme will also finance (i) comprehensive rehabilitation and upgrading (R&U) of all water resource and irrigation infrastructure; (ii) improved groundwater, conjunctive-use, and surface water management strategies and practices; (iii) on-farm water management (OFWM), improved irrigation technologies, and agricultural support services; and (iv) sector reforms, improved management methods, institutional strengthening and restructuring for water resource management, and irrigated agriculture.
It is expected to support investments in the (i) Lower Bari Doab Canal and Balloki Barrage, (ii) Pakpattan Canal and Sulemanki Barrage, (iii) Thal Canal distribution system, (iv) Sidhnai Canal distribution system, and (v) Trimmu and Punjnad barrages. This will impact between 25 percent and 30 percent of the irrigated area in Punjab and given the magnitude and duration of the PIAIP, will have a transformative impact on the irrigated agriculture, mainstreaming best practices and institutional reform, sources added.
According to ADB sources, a vital project activity is the integration of the institutional development of farmer organisations and their direct involvement in the R&U process for their particular canal. Six important outputs from this process include (i) the opportunity for farmer organisations to develop their management capacity and social capital, (ii) a sense of ownership over their canal and (iii) hands-on experience to teach O&M skills for use as they take control to manage the system.
The Project will ensure the following farmer organisation participation: (i) farmer organisations will identify and propose civil works on the basis of a system walk-through with project management unit (PMU) consultant staff; (ii) PMU consultants will carry out surveys and design in consultation with the farmer organisations; and (iii) farmer organisations will be part of a PMU staff and PIPD committee that will facilitate dialogue, feedback, and if necessary, actions to address the concerns of the farmer organisation with the R&U.
The walk-through will also be used to identify small-scale civil works that are within the farmer organisation's capacity to execute under community contracting with appropriate supervision as a means of generating additional revenue, leverage R&U resources, and contribute to farmer organisation development.
These works will be included in the larger civil works contracts for the distributary and minor canals. The LBDCIP will support a pilot trial for full farmer organisation management of civil works in a small and technically appropriate minor or distributary canal undergoing R&U later in the Project.
The farmer organisation participation will be supported by the PMU. This experience could be replicated later under the PIAIP in subsequent canals. Procedures for farmer organisation participation will be refined in the two initial subprojects, 15-L and Jhandraka.