Project Completion Report - Ghazi Barotha Hydropower Project (Loan 1424-PAK) in Pakistan
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Project Completion Report PCR: PAK 26409 Ghazi Barotha Hydropower Project (Loan 1424-PAK) in Pakistan August 2005
CURRENCY EQUIVALENTS
Currency Unit – Pakistan Rupee/s (PRe/PRs)
At Appraisal At Project Completion
(October 1995) (January 2005)
PRe1.00 = $0.0314 $0.0169
$1.00 = PRs31.79 PRs59.00
ABBREVIATIONS
ADB – Asian Development Bank
BUP – built-up property
EA – executing agency
EIRR – economic internal rate of return
EOT – extension of time
FIRR – financial internal rate of return
GBTI – Ghazi Barotha Taraqiati Idara
ICB – international competitive bidding
IDB – Islamic Development Bank
JBIC – Japan Bank for International Cooperation
LVC – land valuation committee
M&E – mechanical and electrical
PCR – project completion review
RAP – resettlement action plan
T&D – transmission and distribution
TA – technical assistance
TOC – taking over certificate
WACC – weighted average cost of capital
WAPDA – Water and Power Development Authority
WEIGHTS AND MEASURES
A (ampere) – unit of electric current
GWh (gigawatt-hour) – 1,000,000 kWh
KA (kilo ampere) – 1,000 A
km (kilometer) – 1,000 meters
kV (kilovolt) – 1,000 V
kW (kilowatt) – 1,000 W
kWh (kilowatt-hour) – 1,000 Wh
MW (megawatt) – 1,000,000 W
W (watt) – unit of active power
Wh (watt-hour) – unit of energy
V (volt) – unit of electrical voltage
NOTES
(i) The fiscal year (FY) of the Government and WAPDA ends on 30 June. FY before
a calendar year denotes the year in which the fiscal year ends, e.g., FY2005
ends on 30 June 2005.
(ii) In this report, "$" refers to US dollars.CONTENTS
Page
BASIC DATA i
MAPS vi
I. PROJECT DESCRIPTION 1
II. EVALUATION OF DESIGN AND IMPLEMENTATION 1
A. Relevance of Design and Formulation 1
B. Project Outputs 2
C. Project Costs 3
D. Disbursements 4
E. Project Schedule 4
F. Implementation Arrangements 6
G. Conditions and Covenants 6
H. Related Technical Assistance 7
I. Consultant Recruitment and Procurement 7
J. Performance of Consultants, Contractors, and Suppliers 9
K. Performance of the Borrower and the Executing Agency 9
L. Performance of the Asian Development Bank 10
III. EVALUATION OF PERFORMANCE 10
A. Relevance 10
B. Efficacy in Achievement of Purpose 11
C. Efficiency in Achievement of Outputs and Purpose 11
D. Preliminary Assessment of Sustainability 11
E. Environmental, Sociocultural, and Other Impacts 11
IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14
A. Overall Assessment 14
B. Lessons Learned 14
C. Recommendations 15
APPENDIXES
1. Chronology of Main Events 16
2. Principal Project Data 18
3. Appraisal and Actual Project Costs 24
4. Currency Equivalents 25
5. Summary of Contracts Funded 26
6. Projected and Actual Disbursements 28
7. Implementation Schedule 29
8. Project Coordination Chart 30
9. Status of Compliance with Loan Covenants 31
10. Financial Statements 35
11. Water and Power Development Authority Electricity Tariffs 38
12. Planned and Actual Procurement Schedule 39
13. Financial and Economic Reevaluation 41
14. Data on Land, Resettlement, Income Loss, and Compensation 46
15. Quantitative Assessment of Overall Project Performance 48BASIC DATA
A. Loan Identification
1. Country Pakistan
2. Loan Number 1424-PAK
3. Project Title Ghazi Barotha Hydropower Project
4. Borrower Pakistan
5. Executing Agency Water and Power Development Authority
6. Amount of Loan $300 million
7. Project Completion Report PCR: PAK 893
Number
B. Loan Data
1. Appraisal
– Date Started 3 July 1995
– Date Completed 20 July 1995
2. Loan Negotiations
– Date Started 10 November 1995
– Date Completed 13 November 1995
3. Date of Board Approval 16 January 1996
4. Date of Loan Agreement 11 March 1996
5. Date of Loan Effectiveness
– In Loan Agreement 9 June 1996
– Actual 20 June 1996
– Number of Extensions 1
6. Closing Date
– In Loan Agreement 30 June 2002
– Actual 20 January 2004
– Number of Extensions 1
7. Terms of Loan
– Interest Rate Currency-specific lending ($)
– Service Charge 1% per annum
– Maturity (number of years) 25
– Grace Period (number of years) 6
8. Terms of Relending
– Interest Rate 14% per annum
– Maturity (number of years) 25
– Grace Period (number of years) 6
– Second-Step Borrower Water and Power Development Authorityii
9. Disbursements
a. Dates
Initial Disbursement Final Disbursement Time Interval
28 June 1996 20 January 2004 7 years, 7 months
Effective Date Original Closing Date Time Interval
20 June 1996 30 June 2002 6 years
b. Amount ($ million)
Categorya Original Last Revised Amount Amount Undisbursedb
Allocation Allocation Increased/ Disbursed Balance
(Cancelled)
01 140.00 183.50 43.50 166.45 17.05
02 28.60 20.70 (7.90) 14.00 6.70
03 8.00 12.90 4.90 8.59 4.31
04 31.00 29.00 (2.00) 15.47 13.53
05 50.00 50.00 0.00 50.00 0.00
06 42.40 3.90 (38.50) 0.00 3.90
Total 300.00 300.00 0.00 254.51 45.49
a
01 = civil works for the barrage, 02 = gates equipment, 03 = cranes, 04 = transmission lines, 05 =
interest and commitment charges during construction, 06 = unallocated, and 07 = local expenditure—civil
works for the barrage.
b
An undisbursed loan amount of $45,493,361.98 was cancelled at loan closing (20 January 2004).
10. Local Costs (Financed)
- Amount ($ million) 18.6
- Percent of Local Cost 2.6
- Percent of Total Cost 1.0
C. Project Data
1. Project Cost ($ million)
Cost Appraisal Estimate Actual
Foreign Exchange Cost 1,394.00 1,207.55
Local Currency Cost 806.00a 719.00b
Total 2,200.00 1,926.55
a
$20.0 million of which is Asian Development Bank funds.
b
$18.6 million of which is Asian Development Bank funds.iii
2. Financing Plan ($ million)
Cost Appraisal Estimate Actual
Foreign Local Total Foreign Local Total
Exchange Currency Cost Exchange Currency Cost
ADB Financed 280.0 20.0 300.0 235.9 18.6 254.5
Cofinancing 884.3 62.7 947.0 764.8 38.6 803.4
WAPDA 229.7 723.3 953.0 206.9 661.8 868.7
Total 1,394.0 806.0 2,200.0 1,207.6 719.0 1,926.6
ADB = Asian Development Bank, IDC = interest during construction, WAPDA = Water and Power Development
Authority.
3. Cost Breakdown by Project Component ($ million)
Component Appraisal Estimate Actual
Foreign Local Total Foreign Local Total
Exchange Currency Cost Exchange Currency Cost
A. Base Cost
1. Land and Preparatory Works 0.9 117.9 118.8 0.0 174.4 174.4
2. Civil Works 591.5 254.2 845.7 767.4 157.0 924.4
3. Electromechanical Equipment 307.1 62.7 369.8 147.7 6.7 154.4
4. Transmission Lines 51.8 13.0 64.8 30.1 6.6 36.7
5. Engineering and Administration 27.9 58.8 86.7 16.5 113.7 130.2
6. Import Duties 0.0 31.1 31.1 0.0 34.6 34.6
Subtotal (A) 979.2 537.7 1,516.9 961.7 493.0 1,454.7
B. Contingencies
1. Physical 116.1 53.5 169.6 150.0 20.0 170.0
2. Price 96.7 39.8 136.5 0.0 0.0 0.0
Subtotal (B) 212.8 93.30 306.1 150.0 20.0 170.0
C. Interest During Construction 202.0 175.0 377.0 95.9 206.0 301.9
Total Project Cost 1,394.0 806.0 2,200.0 1,207.6 719.0 1,926.6iv
4. Project Schedule
Item Appraisal Estimate Actual
Land Acquisition Dec 1994–Nov 1995 May 1996–Aug 2001
Relocation and Resettlement May 1995–Oct 1999 Oct 1994–present
Preparatory Works (Construction) Jun 1995–Dec 1996 Aug 1994–Sep 1998
Main Civil Works (Construction):
C1 Barrage Dec 1995–Mar 2000 Dec 1995–Dec 2003
C2 Power Channel Dec 1995–Mar 2000 Dec 1995–Dec 2003
C3 Power Complex Mar 1996–Jun 2001 Feb 1997–Dec 2004
Mechanical and Electrical Works:
ME-01 Turbines and Auxiliaries Jun 1996–Jun 2001 Nov 1997–Apr 2004
ME-02 Generators and Auxiliaries Jun 1996–Jun 2001 Dec 1997–Apr 2004
ME-03 Transformers and Misc. Equipment Jul 1997–Sep 2000 Oct 1999–Jul 2004
ME-04 Cranes Dec 1995–Dec 1999
Dec 1996–Jun 2004
ME-05 High-Voltage Switchgear, Sep 1996–Dec 1999 Apr 1999–Apr 2004
Control, and Protection
ME-06 Medium- and Low-Voltage Switchgear Mar 1997–Sep 1999
ME-07 Elevators Feb 1998–Mar 2000
ME-08 Diesel Generating Standby Sets Mar 1997–Sep 1999 Aug 1998–Oct 2004
ME-09 Gate Equipment Dec 1995–Jan 2000 Nov 1997–Apr 2004
ME-10 Isolated Phase Bus Aug 1997–Sep 2000 Jan 1997–Jul 2004
ME-11 Switchyard Steel Structures May 1997–Nov 1999
ME-12 Cables and Accessories Oct 1996–Jan 2000
ME-13 Miscellaneous Auxiliaries Sep 1996–May 2000
ME-14 Supervisory Control and Data Jun 1996–Mar 2001 Aug 1998–Oct 2004
Acquisition and Telecommunications
ME-15 Transmission Lines Aug 1997–Mar 2000 Oct 1999–Nov 2004
ME-16 Penstocks Jul 1996–Dec 2000 Jan 1999–Jun 2003
.
Misc. = miscellaneous.
Note: In the actual schedule, ME-06–ME-08 and ME-10–ME-13 in the original appraisal were merged in ME-03
(Transformers and Misc. Equipment) for financing by Kreditanstalt für Wiederaufbau, and ME-14 and ME-15 were
redesignated as ME-08 and ME-10, respectively.
5. Project Performance Report Ratings
Ratings
Development Implementation
Implementation Period Objectives Progress
From 1 January 1996 to 31 December 1996 Satisfactory Satisfactory
From 1 January 1997 to 31 December 1997 Satisfactory Satisfactory
From 1 January 1998 to 31 December 1998 Satisfactory Partially Satisfactory
From 1 January 1999 to 31 December 1999 Satisfactory Partially Satisfactory
From 1 January 2000 to 31 December 2000 Satisfactory Partially Satisfactory
From 1 January 2001 to 31 December 2001 Partially Satisfactory Satisfactory
From 1 January 2002 to 31 December 2002 Partially Satisfactory Satisfactory
From 1 January 2003 to 31 December 2003 Partially Satisfactory Satisfactory
From 1 January 2004 to 20 January 2004 Partially Satisfactory Satisfactoryv
D. Data on Asian Development Bank Missions
No. of No. of Specialization
Name of Mission Date Persons Person-Days of Membersa
Fact-Finding Mission 08–23 Mar 1995 6 80 a, b, c, d, f
Appraisal Mission 03–20 July 1995 5 80 a, b, c, e
Inception 16–21 Nov 1996 2 12 a, c
Review Mission 1 3–10 Aug 1997 2 16 c
Review Mission 2 26 Nov–10 Dec 1997 1 5 c
Review Mission 3 15–20 Dec 1998 2 10 c, g
Review Mission 4 11–24 April 1999 2 14 c, d
Review Mission 5 21 Sept–1 Oct 1999 5 10 d, j, k
Review Mission 6 29 May–1 June 2000 1 4 j
Review Mission 7 15–21 Feb 2001 3 12 h, i, j
Review Mission 8 26 Aug–2 Sept 2002 3 21 c, g, i
Review Mission 9 26–28 May 2003 1 3 c
Review Mission 10 26 Sept–2 Oct 2003 2 14 c, i
Project Completion Reviewb 17–28 Jan 2005 3 33 c, d, i
a
a - financial analyst, b - programs officer, c - engineer, d - economist, e - counsel, f - environment specialist, g -
project implementation officer, h - resettlement specialist, i - project analyst, j - project specialist.
b
The project completion report was prepared by Pil-Bae Song, senior energy specialist/mission leader; and
Anicia Q. Rullan, associate operations analyst, and an infrastructure economist (staff consultant).o 73o00'E
64 00'E
35o00'N 35o00'N
P AK I S T AN
Peshawar
GHAZI BAROTHA HYDROPOWER PROJECT Barotha
Tarbela Dam N.W.F.P. ISLAMABAD
(as completed)
Lahore
Topi PUNJAB
Quetta D.I. Khan
a
ngir
aha Galla
To J P AK I S T AN
BARRAGE
BALOSCHISTAN
Ghazi
Khalo SINDH
Isa 26o 00'N 26o00'N
Jallo Hyderabad
R Bhai
Karachi
I V E
R ARABIAN
S
D U
SEA
I N
Kab
o
64 00'E 73o00'E
ul
Banda Feroze
Riv
To
Pe
er
sh
aw
Ghurghushti
ar
POWER CHANNEL
Hazro Punjwana
N
Musa
0 2 4 6 8 10
GT
Kudlathi
Gondal Roa
Haji Shah d Kilometers
Hattian
Kamra Complex
ER
Lawrencepur To Rawalpindi National Capital
RS Rumian
INDUS RIV
Provincial Capital
Dakhner District Capital
North
Headpond
Village
d
R oa
ss Power Channel
ce
Ac
Barotha South Attock City Railway
er
Headpond
o Riv Road
r
Ha
River
Gariala
Provincial Boundary
To
International Boundary
Fa
05-0943 RM
teh
Map 1
Boundaries are not necessarily authoritative.
ja
ng
POWER COMPLEXMap 2
P AK I S T AN
GHAZI BAROTHA HYDROPOWER PROJECT
BARRAGE LAYOUT
(as completed)
Right Flank Road Link
Fuse Plug
N Barrage Pond
Spur
Right Guide
Bank
Left Guide Bank
Dividing Island
Control Building
Standard Byas
Skimming Platform
Power Channel
Head Regulator
Undersluice
Cunette
Separating Dyke
GHAZI
Road
05-0943b RMP AK I S T AN
GHAZI BAROTHA HYDROPOWER PROJECT
POWER CHANNEL AND ANCILLARY WORKS
(as completed)
BARRAGE
I N D U S R I V E R
N
To Peshawar
Power Channel
Bridge
To
Pe
sh Railway
aw
ar
Road
POWER
CHANNEL
G.T. Road
To Islamabad
05-0943e RM
To Ba
Map 3
POWER
sal
COMPLEXP AK I S T AN
GHAZI BAROTHA HYDROPOWER PROJECT
POWER COMPLEX LAYOUT
(as completed)
Power
Channel
North Headpond
Intake
Forebay
Tail Regulator
Powerhouse
Switchyard
I N
South Headpond
D
U
Spillway
S
R
Barotha
I V
Bridge Road
E
R
Tailrace Channel
N
05-0943c RM
Map 4I. PROJECT DESCRIPTION
1. The Ghazi Barotha Hydropower Project was set up in the public sector by the Water and
Power Development Authority of Pakistan (WAPDA), a government-owned utility. The Project
was to divert water from the Indus River at Ghazi (Map 1), which is 7 kilometers (km)
downstream from Tarbela dam, to a 52 km power channel. The channel was to then transport
the water to Barotha, where a capacity of 1,450 megawatt (MW), consisting of five units of 290
MW each, was to be installed to generate 6,600 gigawatt-hours (GWh) of power annually. The
Project was a run-of-the-river project, with far less environmental and social impact than is often
associated with large dams and reservoirs. The Project comprised three main components: (i) a
barrage at Ghazi (Map 2), which is 7 km downstream from Tarbela dam; (ii) a 52 km channel
from Ghazi to Barotha (Map 3); and (iii) a power complex at Barotha, with a 1,450 MW
generating capacity (Map 4). Approximately 340 km of transmission lines were also to be
installed by the Project.
2. The main objectives of the Project were to meet the demand for electric power in
Pakistan by generating hydropower in an environmentally sustainable and socially acceptable
manner, with minimal environmental and resettlement impacts. The power generated by the
Project was also to help moderate the impact of higher costs of thermal generation in the private
sector.
3. As energy was in short supply in Pakistan, a cost-effective approach to improving
efficiency in transportation, conversion, and consumption of energy needed to be addressed.
Technical assistance (TA) was therefore associated with the loan to formulate the Power
Efficiency Project, to improve demand-side management and reduce power losses.1
4. Pakistan was the Borrower, with WAPDA acting as the Executing Agency (EA).2 An
Asian Development Bank (ADB) loan of $300 million, from ordinary capital resources, was
approved on 16 January 1996. Cofinancing of $947 million was also provided, comprising $350
million from the World Bank, $350 million from the Japan Bank for International Cooperation
(JBIC),3 $147 million from Kreditanstalt für Wiederaufbau, $60 million from the European
Investment Bank, and $40 million from the Islamic Development Bank (IDB).
II. EVALUATION OF DESIGN AND IMPLEMENTATION
A. Relevance of Design and Formulation
5. Pakistan was suffering from a severe shortage of generating facilities in year-round
power generating capability. As a result, power supply restrictions (load shedding)4 had been
resorted to since 1982. To overcome this, additional generating capacity of 7,000 MW was
required by 2001. Although significant private sector thermal generating capacity, up to 5,792
MW, was hoped to be installed during 1995–2000, new hydropower capacity was also required.
The Project was identified to support the Government’s least-cost development program of
expansion of electricity generation, enhancement of reliability of power supply, and
1
Asian Development Bank. 1996. Technical Assistance to the Islamic Republic of Pakistan for the Power Efficiency
Project. Manila. (TA No. 2525-PAK, for $850,000, approved on 16 January 1996).
2
The loan was re-lent by the Government to WAPDA at a rate of 14% interest, with a 25-year maturity and a 6-year
grace period.
3
Formerly the Overseas Economic Cooperation Fund.
4
This had extended to as much as 39% of peak power demand during critical periods of the year.2 improvement of power system control, thereby alleviating the acute power shortage situation in the country through the provision of urgently needed power generating plant additions. 6. ADB’s association with the Project started with the November 1994 development partner meeting in Paris, at which stage WAPDA had already commenced advance procurement action. In June 1994, prequalified bidders for the civil works packages were identified, and bid documents were issued in August 1994. Subsequently, the Government and the World Bank requested ADB to participate in the ongoing procurement. ADB recognized that the Project had been well prepared and agreed to support the Government’s efforts for early implementation of the Project. B. Project Outputs 7. Appendix 1 provides a chronology of major events during project implementation. Due to the size and complexity of the Project and the various sources of financing, the Project was divided into various packages comprising civil works for the barrage, power channel, and power complex (C-01, C-02, and C-03, respectively). Detailed project data on the barrage, power channel, and power complex are shown in Appendix 2. A series of mechanical and electrical (M&E) works, in association with the civil works, were also undertaken. 8. The Barrage. The barrage across the Indus River, located near Ghazi, downstream from Tarbela, consists of several major components: gated head regulator, skimming platform, undersluices, open flume standard bays, dividing island, right and left guide banks, fuse plug embankment, separation dyke, cunette, road bridge over the barrage, control building, workshops, offices, and M&E installations. A taking over certificate (TOC) for works essential for impounding was issued on 16 June 2003, and the TOC for works not essential for impounding was issued in November 2003 (effective from 22 August 2003). Impounding of the barrage pond commenced in February 2003, and the maximum level was reached on 20 May 2003. 9. The Power Channel. The power channel is 52 km long and lined with reinforced concrete. The capacity is 1,600 cubic meters per second. Seventy-nine structures of different categories are on the channel, including bridges, superpassages, culverts, inlets, and escapes. The TOC for works essential for impounding was issued on 9 August 2003 (effective from 30 July 2003). Impounding of the power channel commenced on 9 April 2003. 10. The Power Complex. The power complex is located near the confluence of the Indus and Haro rivers, at Barotha. It consists of several components: powerhouse, with five 290 MW capacity generating units, having a total generating capacity of 1,450 MW; tail regulator; forebay; intake structure; penstocks (five); headponds (two); sill structures (two) and low-level outlets (two); spillway; tailrace channel; switchyard; and other associated installations. Most of the work, including the powerhouse and installation and testing of turbines, generators, and M&E equipment, has been completed. Several minor items at the power complex, however, have yet to be completed. Impounding of the forebay and south head pond was started in April 2003, simultaneously with the impounding of the channel. The tailrace channel was flooded on 18 April 2003, and its downstream cofferdam was removed. 11. The Mechanical and Electrical Work. The M&E works covered the manufacture, supply, and installation of turbines, generators, and transformers, as well as associated powerhouse and switchyard equipment and gate equipment and cables and accessories. Transmission facilities, to connect the powerhouse to WAPDA's 500 kV grid (involving two 500 kV transmission lines of 100 km between Barotha and Rewat [lot 1], financed by IDB, and about
3
150 km of lines that loop in and out of the existing 500 kV lines between Tarbela and Gatti [lot
2], financed by ADB) were also included.
12. The 500 kV Barotha-Rewat transmission lines (lot 1), the supply of towers, conductor,
insulators and hardware, and accessories had been substantially completed and were expected
to be in full operation by 31 March 2005. The 500 kV Tarbela-Gatti transmission lines (lot 2)
were completed in February 2003 and commissioned and fully operational on 6 June 2003.
13. The Project’s components did not change, except for the transmission facilities required
for the reliable evacuation of power. Load flow studies carried out by WAPDA identified the
need for additional lines and/or substations. These were for (i) a 500 kV transmission link
between Rewat and Lahore, along with extensions of the (existing) Rewat and Lahore
substations; (ii) a new 500 kV substation at Gakhar; and (iii) a 220 kV transmission line linking
the powerhouse at Barotha to Nowshehra.5
14. As envisaged at appraisal, all the components have now been installed and
commissioned, and all five generating units are in commercial operation. The first mechanical
run of Unit No. 1 was on 13 May 2003, and trial generation started on 16 June 2003. Official
inauguration of Unit No. 1 and Unit No. 2 took place on 19 August 2003. These two units
commenced commercial operation on 28 August 2003 and 18 September 2003, respectively.
For Unit No. 3, the testing started in September 2003 and was completed in October 2003. The
unit was put into commercial operation on 20 November 2003. Unit No. 4 had its first run on 3
December 2003. Reliability runs continued for this unit from mid-December 2003 to January
2004, and the unit started commercial operation on 18 January 2004. The commissioning tests
and reliability runs for Unit No. 5, the final unit, were started in April 2004, and the unit was
formally commissioned and began commercial operation on 14 May 2004.
15. The Project Completion Review (PCR) Mission made visits to the Project site and
examined each of the major civil works components and the ancillary works that had been
undertaken. At all of the locations visited, all equipment installation had been done in a
satisfactory manner and all facilities were being well maintained. However, at the power
complex, several small items such as some of the internal access roads and general cleaning of
the power complex had still not been completed, and work was ongoing.6 The PCR Mission was
nevertheless pleased to note that all components of the Project, as conceived at appraisal, had
been successfully implemented, meeting the intended objectives.
C. Project Costs
16. At Appraisal, the project cost was estimated to be $2.20 billion, of which $1.39 billion
(63%) was estimated to be the foreign exchange cost, and the total local currency cost was
$0.81 billion (37%). ADB’s loan at appraisal was $300 million, comprising $280 million (93%) in
foreign exchange cost and $20 million (7%) in local currency cost, to be financed from the
ordinary capital resources. Total cofinancing sources amounted to $947 million, of which $884
million was estimated to be the foreign exchange cost and $63 million was estimated to be the
local currency cost. The remaining foreign exchange cost of $230 million and local currency cost
of $723 million were to be met by WAPDA.
5
These transmission line extensions are being financed and constructed by WAPDA, under a separate project (i.e.,
Transmission Arrangements for Dispersal of Ghazi Barotha Power).
6
All of the outstanding work required is being financed by WAPDA.4
17. The Project’s actual completion cost, estimated by the PCR Mission, was $1.93 billion,
with a foreign exchange cost of $1.21 billion (63%) and a local currency cost of $0.72 billion
(37%). ADB financed $254.5 million, of which $235.9 million (93%) was foreign exchange cost
and $18.6 million (7%) was local currency cost. Cofinancing accounted for $803.4 million, of
which $764.8 million (95%) was foreign exchange cost and $38.6 million (5%) was local
currency cost. The Project’s actual completion cost was $273.4 million less than that envisaged
at appraisal, which represented an overall 12% reduction in the cost estimated at appraisal.
Actual local costs were approximately 11% lower and foreign costs were approximately 13%
lower than at appraisal. The Project benefited from lower-than-expected bid prices, in particular
for the power complex and M&E equipment packages.
18. Although local costs decreased in dollar terms, land prices increased significantly. At
appraisal the total cost of land acquisition was estimated at $37 million. Actual costs amounted
to approximately $115 million, a 300% increase from appraisal estimates. In terms of foreign
costs, two of the civil works contracts (C-01 and C-02) cost more than envisaged at appraisal,
because contractors filed numerous variation orders and claims, due to implementation delays.7
The actual cost of contract C-03, however, was approximately 27% below that estimated at
appraisal. The M&E contract’s actual costs were also below appraisal estimates, by
approximately 58%, due to lower bid prices.
19. The detailed costs for each project component compared to appraisal estimates are
shown in Appendix 3. A summary of these costs is also shown in the basic data. For cost
comparison, the local currency costs incurred by WAPDA were converted into dollars at the rate
prevailing during each transaction. The average rates of exchange used are given in Appendix
4. A summary of contracts financed by ADB is given in Appendix 5.
D. Disbursements
20. A comparison of projected and actual disbursements under the loan is provided in
Appendix 6. Loan proceeds were disbursed in accordance with ADB’s Loan Disbursement
Handbook. Disbursement of the loan proceeds was slower than expected, because of delays in
project implementation.
21. Due to counterpart funding problems, the Government requested that ADB’s
disbursement be temporarily increased from 77.4% to 90.0% of the total cost for contract C-01.
ADB approved this on 9 June 1997 for all expenditures incurred from that date to 30 June 1998.
This change in disbursements was subject to the condition that cumulative loan withdrawals
against local currency costs would not exceed the limit of $20 million. The availability of
counterpart funds was caused by delays in tariff increases and budgetary constraints of the
federal Government. On 15 June 1998, the Government requested that ADB maintain the
increased disbursement proportion of 90.0% until 30 June 1999. The request was approved by
ADB. In July 1999 the disbursement proportion reverted back to 77.4%, as specified in the Loan
Agreement.
E. Project Schedule
22. The actual and appraisal implementation schedules of major project activities are
compared in Appendix 7. At appraisal, the Project was envisaged to be implemented within 6
7
An estimate of the outstanding claims still to be made is included in the cost estimate in the basic data (and in
Appendix 3), under physical contingencies of $170 million.5 years, with construction commencing in early 1996 and project commissioning taking place in mid-2001. ADB’s Board approved the loan on 16 January 1996. The date of the Loan Agreement and the Project Agreement was 11 March 1996. The loan became effective on 20 June 1996 and was extended once from the original closing date of 30 June 2002 to 31 December 2003, due to implementation delays. 23. Project implementation was delayed by 3 years, due to (i) late handover of land for the power channel and the power complex, which caused resettlement delays;8 (ii) various contract delays for the main components, mainly due to WAPDA’s financial shortfall in counterpart funding; (iii) some difficulties arising from labor unions and various contractors not having been paid for several months; and (iv) necessary repatriation of foreign consultants from the site, owing to the events of 11 September 2001 in the United States. 24. The start of works on the barrage and power tunnel contracts was delayed to September 1996, due to delays taking place in the release of the contractor’s equipment from customs and in the acquisition of land, the latter being due to disputed land valuation prices and the lack of counterpart funds. 25. The permeability of the riverbed material was found to be much higher than expected, and this led to delays in the construction of the undersluices and standard bays. As a result, the barrage and auxiliary works had only reached a physical progress of 53%, against the planned 77%, by September 1999. The original duration of the contract was 51 months, with a completion date of 10 March 2000. A request for an extension of time (EOT) was made by the contractor on several occasions. The contractor cited several reasons for the delay, including (i) liquidity problems; (ii) delays by WAPDA in handing over employer furnished equipment; (iii) ground conditions that were unforeseen resulting in dewatering problems; and (iv) delays in the availability of design drawings for gates and other M&E equipment. 26. Due to the events of 11 September 2001, the civil works contractor undertaking contracts C-01 and C-02 stopped work on the site on 25 September 2001. A supplementary agreement9 with the contractor was made on 14 April 2002, extending the completion date to 31 July 2003, which enabled resumption of the work on both contracts. As a result of the demobilization of the contractor, the construction work was delayed by about 12 months.10 Due to this, the Borrower, through the Ministry of Finance, requested on 28 May 2002 that ADB extend the loan closing date by 17 months, from 30 June 2002 to 31 December 2003. ADB approved the extension on 12 August 2002. 27. The original duration of contract C-02 was 51 months, with completion expected by 10 March 2000. The contractor submitted an EOT request of 21 months, due to the late turnover of land by WAPDA, with a cut-off date of 30 November 1997 for the turnover of land to the contractor. Several further EOT requests were made, and the completion date was extended to 24 May 2001. As with contract C-01, the events of 11 September 2001 halted work. Supplementary Agreement No.1-2002 extended the completion date of the contract to 31 July 2003. 8 At appraisal, land acquisition was expected to be completed by the end of 1995; however, this was not accomplished until almost 4 years later. 9 Supplemetary Agreement No. 1-2002 provided an advance to the contractors of $18 million and PRs120 million and an on account payment of $22 million and PRs180 million. 10 While the calendar duration of this stoppage was about 8 months, the stoppage in fact led to a 1 year delay, since the next few months after the contractors returned to site were the high flow season of the Indus River, which made working at full speed impossible until October 2002, when the high water flows had passed.
6 28. Contract C-03 had an original duration of 64 months, with an expected completion date of 16 June 2002. The first EOT request was made on 8 February 1999, due to the late turnover of land. Other requests for EOT culminated in Supplementary Agreement No.2-2002 on 9 February 2001, extending the completion date to 15 July 2003. F. Implementation Arrangements 29. Apart from the delays in project implementation, the implementing arrangements were as envisaged at appraisal, with WAPDA as the EA. As required under the Loan Agreement, WAPDA, with the Water Wing bearing the responsibility for implementing the Project, established a Ghazi Barotha project office for the Project’s day-to-day implementation. WAPDA also reestablished the panel of experts, to review all technical and safety aspects of the Project.11 Overall project coordination was carried out by a WADA team based in the WAPDA colony at Hattian, located near the center of the project area, and no formal mechanism existed for coordination among financers. The environmental aspects of project implementation were monitored by WAPDA’s Environmental Cell. An independent environmental and resettlement review panel also monitored the Project’s environmental aspects. A project coordination chart is shown in Appendix 8. G. Conditions and Covenants 30. Compliance with the covenants under the loan is presented in Appendix 9, and WAPDA’s financial statements are provided in Appendix 10. The deterioration in WAPDA's finances, particularly from FY1997 onward, impacted adversely on the Project. Up to FY1996, WAPDA's financial performance was largely satisfactory, and WAPDA complied with the financial covenants under previous ADB projects. Specifically, WAPDA financed 40% of its average investment program from its own resources. However, by mid-FY1997, WAPDA faced a large increase in operating costs,12 while its revenues, particularly power tariffs, did not increase in line with power purchases. To cover the increased costs, power tariffs needed to rise steeply (by more than 30%) in FY1998. Although the impact of the independent power producers program on WAPDA's finances was assessed at appraisal, the (political) risks entailed in implementing the required tariff increases were not fully recognized. The present tariff levels are shown in Appendix 11.13 31. Covenant compliance was not satisfactory, particularly relating to transmission and distribution (T&D) losses,14 accounts receivable,15 ratio of self-financing,16 and debt service coverage ratio.17 WAPDA has been the beneficiary of several ADB loans in the past and is aware of the importance of loan covenant compliance. WAPDA needs to monitor covenant compliance regularly and more rigorously. ADB suggested that (i) a coordinator be assigned for centralized monitoring of all covenants under ADB loans; (ii) reports be provided quarterly to 11 The panel of experts was originally appointed at the feasibility and design stage. 12 Due to power purchases from independent power producers, which were contracted by the Government under the 1994 Private Power Policy. 13 Tariffs have been regulated by the National Electric Power Regulatory Authority since FY1997. 14 The maximum covenanted system losses were to be 18% from 2001 onward (Loan Agreement, Schedule 6, para. 10). 15 The average of WAPDA’s overall accounts receivable was not to exceed at any time the equivalent of 3 months of energy sales (Loan Agreement, Schedule 6, para. 7). 16 The self-financing ratio was to not be less than 40% of the annual average of WAPDA’s capital expenditures incurred (Loan Agreement, Schedule 6, para. 4). 17 WAPDA’s net revenue was to be at least 1.5 times the debt service requirements on all debt (Loan Agreement, Schedule 6, para. 5).
7
ADB on key covenants, such as T&D losses and accounts receivable; and (iii) a time bound
action plan be created to improve T&D losses and accounts receivable payment rates, as well
as explain the low self-financing ratio and debt service coverage ratio.
32. Audited and unaudited accounts were continually submitted late, on average 4–5
months behind the required date. Quarterly progress reports on project execution were
submitted on time. ADB requested on several occasions that WAPDA submit its project
completion report by July 2004. WAPDA did not, however, submit this report until the PCR
Mission was in Pakistan in January 2005.
H. Related Technical Assistance
33. ADB included a TA grant in the Project. ADB commenced with the engagement of
consulting services and made a final selection in October 1997, in anticipation of the signing of
the TA agreement. ADB informed the Ministry of Water and Power and the Economic Affairs
Department of this on 15 October 1997 and requested advice regarding the TA. As the TA
agreement was not signed, the TA lapsed automatically.18 ADB informed the Economic Affairs
Department on 27 August 1998 that it intended to cancel the TA and requested a reply. No reply
was received, and the TA was cancelled on 24 June 1999.
I. Consultant Recruitment and Procurement
1. Consultant Recruitment
34. The consultants who formulated and designed the Project were retained by WAPDA,
using their own funds, to assist in project implementation and supervise the construction of the
main civil works; supervise the manufacture, supply, installation, and commissioning of M&E
equipment; and coordinate and manage various contracts. The consultants were a joint venture
of two local and three international consulting engineer firms. The contract between the
consultants and WAPDA was signed on 14 August 1996, for a period of 84 person-months. Due
to delays in project implementation, the contract was extended through three amendments:
Amendment 1, on 10 July 2001, to extend the contract to 111 person-months; Amendment 2, on
15 April 2003, to extend the contract to 123 person-months; and Amendment 3, on 31
December 2005, to extend the contract an additional 16–17 person-months.
2. Procurement
35. Procurement financed by ADB was undertaken in accordance with ADB’s Guidelines for
Procurement. Procurement of other packages was in accordance with the procurement
guidelines of each particular funding agency. To facilitate the Project’s timely implementation,
ADB approved on 9 March 1995 (i) advance procurement action for the C-01 contract and
barrage-associated equipment and (ii) retroactive financing of up to 10% of ADB’s loan amount
for procurement expenditures under ADB’s loan. ADB approved retroactive financing for the
costs incurred after 20 July 1995.19 The planned and actual procurement schedule is shown in
Appendix 12.
18
The validity of the TA expired after a 12-month period. The TA was apparently cancelled because a similar study
was to be carried out under a separate funding arrangement.
19
The last date of appraisal.8
36. As envisaged at appraisal, procurement was subdivided into two categories: (i)
packages to be financed solely by WAPDA and to be procured on the basis of local competitive
bidding and (ii) packages to be financed from foreign loans and to be procured on the basis of
international competitive bidding (ICB). Local competitive bidding packages comprised
preparatory works, while ICB packages covered the main civil works and M&E equipment. The
Project’s civil works components, for the purpose of procurement and execution, were divided
into three ICB packages: (i) contract C-01 (barrage and ancillary works), (ii) contract C-02
(power channel and ancillary works), and (iii) contract C-03 (power complex and ancillary
works). Contract C-01 was financed by ADB, contract C-02 by the World Bank, and Contract C-
03 by JBIC and the World Bank.
37. The prequalification and tender documents for the civil works contracts were prepared
by consultants after the completion of the feasibility study in 1992. In response to
prequalification, 81 companies from 20 countries submitted applications. Of these, 33 firms
sought prequalification for contract C-01 (barrage and ancillary works). Based on the evaluation
report of 30 June 1994, prequalification of 12 firms was approved by WAPDA and/or the World
Bank for contract C-01. Of these, five firms were also approved for prequalification for tendering
for the combination of contracts C-01 and C-02 (power channel). Tender documents were
issued to the prequalified firms in August 1994, and the tender opening date was set for 14
December 1994. This opening date was postponed at a development partners meeting on 21
November 1994 in Paris, to facilitate review of the procurement and other relevant documents
by development partners in light of their respective guidelines. Contracts C-01 and C-02 were
awarded to the same contractor on 10 December 1995. As Contract C-03 (power complex) was
partly financed by JBIC, JBIC guidelines required the procurement documents to be cleared by
JBIC before they were issued. This was, however, not undertaken, and JBIC could not provide
funding, until the contract was rebid. The rebid, followed by JBIC’s approval, meant that the
award of this contract was almost 12 months after the award of the other two civil works
contracts, and there was a serious risk that the powerhouse would not have been completed
until well after the other project facilities had been completed. However, due to delays that were
experienced in contracts C-01 and C-02, this did not occur. The contract for C-03 was awarded
on 18 December 1996.
38. A total of 16 M&E contract packages (ME-01–ME-16) were created. Package ME-04
(cranes), ME-09 (gate equipment), and ME-15 (transmission lines) were financed by ADB.20 The
other M&E packages were financed by European Investment Bank, IDB, JBIC, Kreditanstalt für
Wiederaufbau, and the World Bank. The procurement process for the M&E equipment followed
the award of contract C-03 (power complex).
39. For the evacuation of power from Barotha hydropower station, taking into account the
availability of WAPDA funds, a scenario was selected that, although not the best option,
reflected the design approved by the financers, which consisted of (i) an in-out arrangement of
the existing 500 kV Tarbela-Gatti lines 1 and 2 at Barotha, financed by ADB; (ii) two 500 kV
single circuit transmission lines from Barotha-Rewat, financed by IDB; (iii) a 500 kV Rewat
substation for two Barotha-Rewat 500 kV lines, financed by IDB; and (iv) several Rewat-Lahore
transmission lines and the extension of existing Rewat and Lahore substations, financed by the
Kuwait Fund.21 WAPDA subsequently realized that commissioning all units in the Barotha
hydropower station under the selected configuration would not sustain a reliable power supply.
20
Package ME-15 (transmission lines) was financed in association with IDB.
21
The Rewat-Lahore transmission lines and the extension of the substations were not in the original project scope,
and WAPDA was using alternative sources of finance (i.e., the Kuwait Fund) to undertake this work.9
WAPDA therefore decided to build 220 kV twin bundle lines from Barotha to Peshawar, through
Shahibagh, together with an extension of Barotha switchyard, and sought financing from
development partners for these components.22 WAPDA also requested ADB to reallocate loan
proceeds to meet the foreign exchange cost for the expansion of the 500/200 kV switchyard at
Barotha, to enable evacuation of power to these transmission lines. ADB reallocated $10 million
on 11 February 2002 to undertake this. Although the work financed by JBIC had contracts
awarded in June and July 2002, ADB procurement was substantially delayed due to the slow
progress in preparing and finalizing the bidding documents. The bidding documents were
approved by ADB only in September 2003. However, as the loan account was closed in January
2004, and the work had not started, ADB did not finance the component. WAPDA, through its
own financing arrangements, is now undertaking this work.
J. Performance of Consultants, Contractors, and Suppliers
1. Consultants
40. The EA reported that the performance of the consultants was satisfactory and that the
consultants performed their tasks professionally and in accordance with the terms of reference.
2. Contractors
41. In executing the different civil works contracts, the performance of the various
contractors was satisfactory. However, several disputes occurred regarding contractors’ claims,
and these are still being resolved according to the contract procedure. After the 11 September
2001 incident in the United States, the contractors working on the barrage (C-01) and power
channel (C-02) stopped work. As a result of WAPDA’s efforts, culminating in the signing of
Supplementary Agreement No.1-2002 between WAPDA and the contractors on 14 April 2002
and the extension of the completion date to 31 July 2003 for these civil works, the contractors
restarted work in April 2002.
K. Performance of the Borrower and the Executing Agency
1. The Borrower
42. The performance of the Borrower overall was rated satisfactory. During project
preparation, the Borrower made every effort to expedite the project preparation process, as this
was a high priority project for the Government. The feasibility and design study had a major
emphasis on minimizing the Project’s adverse environmental and social impacts, even when
this involved higher costs. The Borrower’s processing and approval of the feasibility study was
relatively fast, and the Project was ready for development partner appraisal within 36 months.
The Borrower’s performance during the preparation phase was rated highly satisfactory.
However, during the Project’s implementation phase, the Borrower’s performance was not so
good. The Borrower could have taken steps to insulate the EA from the increases in generation
costs when the EA’s financial position deteriorated following the induction of independent power
producers under the 1994 policy. However, the Borrower did not allow the EA to increase its
tariffs and it did not provide other resources to the EA to enable it to cover costs. During the
Project’s implementation phase, the Borrower’s performance was rated as unsatisfactory.
Taking into account the Borrower’s performance during the Project’s preparation and the
22
A loan was obtained from JBIC for construction of the 220 kV transmission lines and a conventional substation.10
Borrower’s performance during project implementation, an overall rating of partly satisfactory
has been given.
2. Water and Power Development Authority
43. The performance of the EA is rated partly satisfactory. Although the EA achieved project
objectives, delays in project implementation, caused by (i) the availability of counterpart funds
and (ii) delays in land acquisition and compensation, affected the Project’s efficiency and
effectiveness. The EA was also not able to consistently meet its financial covenants of (i)
keeping overall accounts receivable from exceeding the equivalent of 3 months of energy sales,
(ii) maintaining a 40% self-financing ratio, and (iii) maintaining a debt service coverage ratio of
at least 1.5 times the estimated debt service requirements. This affects the sustainability of the
Project and has resulted in the EA’s performance being rated partly satisfactory.
L. Performance of the Asian Development Bank
44. The Borrower and the EA appreciated the assistance and cooperation extended to them
by ADB and considered the performance of ADB to be fully satisfactory. Project formulation was
relatively quick, taking 6 months from fact-finding to Board approval in January 1996. ADB
undertook 1 inception mission and 10 review missions,23 monitored progress closely, and
provided valuable assistance in resolving conflicts with some contractors. These missions
included visits to the Project’s site and the EA’s headquarters in Lahore, where coordination
meetings were held to discuss and solve problems. The number of review missions, however,
could have been greater, due to the fact that the implementation period spanned approximately
9 years. Also, ADB had only one review mission involving a resettlement specialist considering
the problems related to resettlement throughout the Project. ADB had a total of seven project
officers during the loan handling project implementation. ADB also reorganized its organization
during project implementation, which did not contribute to a smooth handover of the Project
from one officer to another. The role performed by ADB’s missions in providing advice regarding
technical issues and preparation and evaluation of bid documents, as well as matters of loan
administration, was recognized by the EA. The EA indicated to the PCR Mission that some
disbursement applications sent to ADB were delayed. As a result, the EA had to pay additional
interest on delayed payments to contractors. Overall, ADB’s performance was rated partly
satisfactory.
III. EVALUATION OF PERFORMANCE
A. Relevance
45. The Project’s rationale—to ease the acute power supply shortage situation in the country
and reduce load shedding through the provision of an urgently needed power generating plant—
was sound. The Project was in line with ADB’s operational strategy at the time of appraisal. It
supported the Government’s least-cost development program to expand electricity generation,24
enhance the reliability of the power supply, and alleviate the acute power shortage. The Project
is rated highly relevant.
23
The World Bank, however, undertook a total of 16 supervision missions.
24
The Project provided a total incremental generation capacity of 1,450 MW, which accounts for 22% of total WAPDA
generation capacity as of FY2003.11 B. Efficacy in Achievement of Purpose 46. Except for delays, project implementation followed the arrangements envisaged at appraisal. The Project is considered successful in achieving its objective of meeting the demand for electric power in Pakistan at the least cost and in an environmentally sustainable and socially acceptable manner. Although the Project faced significant delays in implementation, which resulted in a postponement of project benefits, and WAPDA’s weak financial sustainability, the additional electric power provided by the Project is substantial. The Project was rated as efficacious. C. Efficiency in Achievement of Outputs and Purpose 47. The Project was considered efficient in achieving its outputs and purpose, despite delays in implementation. In estimating the financial internal rate of return (FIRR) and economic internal rate of return (EIRR) for this project completion report, the Project was evaluated using a similar methodology to that used at appraisal. The FIRR was estimated at 14.2%, which is above the weighted average cost of capital of 6.5%. The FIRR at appraisal was estimated at 13.0%. The recalculated EIRR was 31.4%, compared to 17.9% at appraisal. The EIRR is greater than the opportunity cost of capital of 12.0% and thus enables the Project to be rated efficient. Appendix 13 provides details on the methodology that was used, assumptions, and workings underlying the FIRR and EIRR estimates and discusses the differences in the results from those at appraisal. D. Preliminary Assessment of Sustainability 48. WAPDA’s financial position remains problematic. For the Project to be maintained properly, WAPDA must improve its financial position, which will ensure that resources are available for proper and adequate maintenance. The Project is well constructed and should last as long as its economic life, if regular maintenance is carried out. WAPDA’s debt service coverage ratio25 and system losses26 continue to be problems. These need to be urgently overcome. Certain improvements, however, have been made (e.g., accounts receivable have reached the target of 3 months of energy sales for 3 consecutive fiscal years). However, WAPDA, still needs to make further improvements. At this stage, the Project has been given a rating of less likely for sustainability. E. Environmental, Sociocultural, and Other Impacts 49. The Project was specially designed to minimize environmental and social impacts. Throughout the Project’s studies, emphasis was placed on the early identification of environmental and resettlement impacts. The adopted alignment of the power channel caused minimal resettlement, as it avoided all villages by shifting the power channel to higher ground away from the river. The Project also resettled project affected persons in the project area near their homes on new spoil bank land provided by the Project along the power channel. Frequent interaction with local people during the project planning stage kept the project team attuned to 25 The debt service coverage ratio has only been greater than the covenanted 1.5 in 1 year during project implementation (i.e., 1999). 26 Total system losses rose from 24.13% in 1997 to 27.87% in 2003. Out of total system losses, transmission losses have been declining, but distribution losses have been rising.
12 public concerns. The PCR Mission visited the project area and observed no adverse environmental impacts of significance.27 50. Environmental mitigation measures included (i) releasing a minimum of 28 cubic meters per second of water from the barrage at all times, so as to not have any impact on downstream ecosystems and riverine conditions; (ii) implementing downstream of the barrage a program of regular water quality monitoring, as well as monitoring of local flora and fauna; (iii) providing an underdrainage system under the channel, to minimize seepage losses and adverse impacts on local groundwater levels; and (iv) implementing safety measures for the power channel, including chain-link fences near populated areas; cattle grids, to prevent livestock from wandering onto the service roads and/or accidentally falling into the channel; hand rails, floating booms, and grab rails along points of public access; and public education programs, to inform residents of potential safety risks, etc. In addition, the Project included the construction of 46 bridges and crossings over the channel. 51. The Government and WAPDA were committed to improve or restore the current standard of living and earning capacity of all affected people. This was reflected in entitlement packages that clearly identified the type of land (or asset) loss and defined entitled people, rights, and entitlements to compensate for various categories of loss, etc. Compensation for land and other assets was at current market prices, including compensation for improvements made by the owners. The relocation of houses was coordinated with the allocation of agricultural lands, to minimize out-of-area resettlement. Efforts were made to compensate affected people through redeveloped land in the same area, as far as possible. This involved placing about 30 million cubic meters of spoil from the channel excavation in spoil banks28 along the channel, which were graded, covered with top-soil, provided with tube well irrigation, and offered for resale to affected people at prices consistent with the rates at which the land was originally acquired. 52. An integrated regional development program, Ghazi-Barotha Taraqiati Idara (GBTI), promoted participatory development of the affected communities for land compensation, rehabilitation, and resettlement works. GBTI was paid PRs99.38 million from the agreed integrated regional development program funds of PRs176 million to prepare a development program for the affected communities. GBTI began 150 productive physical infrastructure schemes with the participation of community organizations benefiting more than 40,000 households. 53. The Project fell under two sets of official environmental and resettlement regulations, (i) those established by the Government of Pakistan and the Government of Punjab and (ii) those of the international development partners. ADB has its own environmental and resettlement requirements, which are similar in approach to those of the World Bank. However, the development partners agreed that the environmental and resettlement procedures of the World Bank were to be used for all project components, to allow for a uniform approach. The World Bank financed the Resettlement Action Plan (RAP),29 and ADB funds were not used for this 27 The main effect of the barrage was a partial redirection of the flow of the Indus River, and the groundwater inflow- outflow relationships were slightly altered. The reduction of flow, however, has not affected local livestock, as substantial pools remain. The main effect of the power complex on water resources was the disruption of a small irrigation system near Barotha. Minimal effect was noticed on the flora and fauna of the riverine area. Although transmission lines passed through three forest reserves, the impact was minor due to the degradation already caused by the rural population. 28 A total of 159 spoil banks have been constructed along the both sides of the power channel. 29 September 1994.
13 purpose. The RAP set out (i) resettlement policy for the Project; (ii) resettlement-related baseline data collected for the Project; (iii) entitlements established for the Project (i.e., compensation); (iv) milestone dates related to when resettlement actions were to have taken place; (v) emphasis on monitoring, to ensure the plan’s provisions were effectively implemented; and (vi) assessment of the costs of resettlement-related activities. 54. The Project’s physical implementation started with the land acquisition process. For all three civil works components about 4,309 hectares of privately owned land were acquired.30 The total compensation for this land amounted to about PRs4.6 billion. The land acquired, along with other data on resettlement for each of the Project’s components, is shown in Appendix 14. About 261 built-up properties were affected in the construction of the civil works components. For all the affected households, three resettlement villages (one near Ghazi town, one near Feroze Banda village, and one near Barotha village) were constructed by WAPDA. The locations of these resettlement villages are also in proximity to the sites of the affected houses. In these villages, all the basic amenities (i.e., water supply, sewerage system, roads, electric supply, schools [primary] for girls and boys, and dispensary and mosque) have been provided by WAPDA. The main objective for providing all these facilities was that the standard of living of the affected families should be better than the preproject scenario. While project implementation disrupted the local community, the construction works also employed about 13,500 local people and many local companies. Over the course of the construction, this influx of capital into the local economy has had a significant effect on improving business opportunities and economic growth, particularly in the project area. 55. In accordance with the RAP, the land cost was to be assessed by a land valuation committee (LVC) comprising one representative each from WAPDA and a nongovernment organization and two representatives from the village concerned, with the local assistant commissioner as chair. To give importance to the recommendations and/or assessments of the LVC, the Punjab 1983 Land Acquisition Rules were relaxed to give power to the land acquisition collector, for assessing the cost of land with due consideration to the recommendations of the LVC. Due to pressure from local politicians and those affected, the LVCs were recommending high prices for land, almost 3–4 times the fair prices previously estimated.31 The National Accountability Bureau investigated to determine if corruption was taking place. This was not the case, but the National Accountability Bureau based its land prices on historical prices, to determine a fair market value of the land. This was against the legal agreements in the RAP. The ADB-financed components of the Project did not involve any resettlement.32 The World Bank-financed power channel, however, involved 35,974 affected people and led to a number of representations by affected people as well as certain nongovernment organizations. On 17 December 2002, the World Bank alerted the Government and made it clear that the RAP had to be implemented by the Government. The World Bank considered suspending loan disbursements. Following discussions with the Government and WAPDA, a time bound action plan for resolving the issues involved was agreed upon, and the threat to invoke remedies under various loan agreements was withdrawn. 30 An additional 952 hectares of government land was also acquired. 31 At feasibility, the original land cost was estimated at PRs1.8 billion, which increased to over PRs5 billion, due to price hikes and manipulation by land owners. 32 The environmental and social aspects of the Project had been looked after by the World Bank, with ADB playing a minor role in their supervision. In informal discussions with the World Bank, the World Bank intimated that ADB should be providing more support. ADB’s mission in May 2000 agreed with this. However, only one ADB mission, in February 2001, included a resettlement specialist. No missions had environmental specialists, apart from the Fact-Finding Mission.
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