Project Number: 42091-043 October 2013

MFF 0033-AFG: Water Resources Development Investment Program Tranche 2

Periodic Financing Request Report

CURRENCY EQUIVALENTS (as of 20 September 2013)

Currency Unit – afghani/s (AF)

AF1.00 = $0. 017562

$1.00 = AF56.94

ABBREVIATIONS ADB – Asian Development Bank ADF – Asian Development Fund ANDS – Afghanistan National Development Strategy CPS – Country Partnership Strategy DMF – design and monitoring framework EARF – environmental assessment and review framework EIRR – economic internal rate of return EMP – environmental management plan FFA – framework financing agreement IEE – initial environmental examination IWRM – integrated water resources management LARF – land acquisition and resettlement framework LARP – land acquisition and resettlement plan LKIS – Lower Kokcha Irrigation System MAIL – Ministry of Agriculture, Irrigation, and Livestock MEW – Ministry of Energy and Water MFF – multitranche financing facility MOF – Ministry of Finance M&E – monitoring and evaluation NGO – nongovernment organization NVDA – Nangahar Valley Development Authority O&M – operation and maintenance PCO – program coordination office PFR – periodic financing request PMO – project management office PSC – project steering committee WRDIP – Water Resources Development Investment Program WUA – water user association

WEIGHTS AND MEASURES AF – afghani ha – hectare km – kilometer m3 – cubic meter m3/sec – cubic meters per second t – metric ton t/ha – tons/ha

GLOSSARY

mirab – traditional water sharing system shura – community decision-making body

NOTES

(i) The fiscal year (FY) of the Government of Islamic Republic of Afghanistan and its agencies ends on 20 December. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2013 ends on 20 December 2013.

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

Vice-President X. Zhao, Operations 1 Director General K. Gerhaeusser, Central and West Asia Department (CWRD) Director M. Ojiro, Environment, Natural Resources and Agriculture Division, CWRD Team leader R. Jones, Natural Resources and Agriculture Economist, CWRD Team members M. Ayubi, Senior Project Officer, CWRD R. Abdukayumov, Procurement Specialist, Operations Services and

Financial Management Department R. Butler, Social Development Specialist, CWRD S. Campbell, Senior Gender Specialist, CWRD C. Cabrales-Chiong, Operations Assistant, CWRD N. Djenchuraev, Environment Specialist, CWRD C. Losenno, Senior Climate Change Specialist, CWRD C. Png, Counsel, Office of the General Counsel B. Tambunan, Lead Portfolio Management Specialist, CWRD Peer reviewers T. Panella, Principal Water Resources Specialist, South East Asia

Department (SERD), Water CoP K. Ryu, Project Administration Unit Head, SERD, Agriculture, Rural

Development, and Food Security CoP

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

TRANCHE AT A GLANCE

I. BACKGROUND 1

II. ASSESSMENT OF MFF IMPLEMENTATION 2

III. PERIODIC FINANCING REQUEST 3 A. Impact and Outcome 3 B. Outputs 4 C. Investment and Financing Plans 4 D. Implementation Arrangements 5 E. Project Readiness 6 F. Advance Contracting and Retroactive Financing 6

IV. DUE DILIGENCE 6 A. Technical 6 B. Economic and Financial 7 C. Governance 7 D. Poverty, Social and Gender Dimensions 8 E. Safeguards 9 F. Risks and Mitigating Measures 9 G. Risk Categorization 10

V. ASSURANCES 10

VI. RECOMMENDATION 10

APPENDIXES

1. PFR from the Government

2. Tranche 2 Design and Monitoring Framework

3. Project Administration Manual

4. Summary of Poverty Reduction and Social Strategy

5. Economic and Financial Analysis

6. Contribution to the ADB Results Framework

SUPPLEMENTARY APPENDIXES

A. Environment Assessment and Review Framework

B. Land Acquisition and Resettlement Framework

C. Initial Environmental Examination

D. Land Acquisition and Resettlement Plan

E. Risks Assessment and Risks Management Plan

TRANCHE AT A GLANCE

1. Project Name: MFF – Water Resources Development Investment Program 2. Project Number: 42091-043

- Tranche 2 (Lower Kokcha Irrigation Project) 3. Country: Afghanistan 4. Department/Division: Central and West Asia Department/Environment, Natural

Resources and Agriculture Division 5. Sector Classification:

Sectors Primary Subsectors Agriculture and natural

resources √

Irrigation, drainage and flood protection

6. Thematic Classification: Themes Primary Subthemes

Economic growth √ Promoting economic efficiency and enabling business environment

6a. Climate Change Impact 6b. Gender Mainstreaming

Adaptation low; Mitigation none Gender equity theme (GEN)

Effective gender mainstreaming (EGM)

Some gender benefits (SGB)

No gender elements (NGE) √

7. Targeting Classification: 8. Location Impact:

General Intervention

Targeted Intervention

National Low

Regional Medium

Rural High

Urban

Geographic dimensions

of inclusive growth

Millennium development

goals

Income poverty at household

level

√

9. Project Risk Categorization: Low Risk

10. Safeguards Categorization:

Environment B

Involuntary resettlement B

Indigenous peoples C

11. ADB Financing:

Sovereign/Nonsovereign Modality Source Amount ($ Million) MMiMillion)Million) Sovereign MFF – Tranche

(Loan Asian Development Fund rroresourcesresourrerRResources

100.0

Total (Grant) 100.0

12. Cofinancing: None

13. Counterpart Financing: $3.39 million

14. Aid Effectiveness: Parallel implementation unit No Program-based approach Yes

I. BACKGROUND

1. On 23 September 2009, the Board approved the provision of grants under the multitranche financing facility (MFF) for the Water Resources Development Investment Program (WRDIP) for an amount not exceeding the equivalent of $303.3 million. 1 The investment program is financed by grants from the Asian Development Fund (ADF). The investments are financed in three tranches, with a first tranche of $89.9 million. 2. The expected impact of the MFF is an increase in agricultural productivity, and the outcome is improved water resources management. The investment program will finance (i) the rehabilitation and upgrading of existing irrigation and water resources infrastructure, and development of new irrigation and water resources infrastructure; (ii) flood management infrastructure; (iii) institutional strengthening; and (iv) capacity building for key staff throughout the sector. 3. Afghanistan is largely an agrarian society with the agriculture sector accounting for 27% of gross domestic product, and 75% of the labor-force are engaged in farming.2 Agriculture in Afghanistan is dependent upon irrigated agriculture, which accounts for about 80% of all agricultural production.3 However decades of conflict has weakened the institutions responsible for operation and maintenance (O&M) and as a result much of the irrigation infrastructure is badly damaged or inoperable. A Food and Agriculture Organization study estimated there is 0.19 million hectares (ha) of intensive irrigation, 1.37 million ha of single crop irrigation, and 1.60 million ha of irregular irrigation.4 Therefore, about half of the country’s irrigable area is only under partial irrigation, and significant rehabilitation and upgrading investment are required to restore existing infrastructure and thus improve agricultural productivity and household incomes. Significant warming and decrease in precipitation are expected across all regions of Afghanistan. Reduced water supplies and changes in seasonality of flows will impact crop growing conditions and affect agricultural production.5 4. The Country Partnership Strategy (CPS) (2009-2013) prioritizes development of agriculture and natural resources through improved irrigation and water resource management.6 The overriding objective of the Afghanistan National Development Strategy (ANDS) is to substantially reduce poverty, improve the lives of the people, and create the foundation of a secure and stable country.7 To achieve this objective, one of the ANDS pillars is economic and social development, which includes water and irrigation development. 5. The WRDIP Tranche 1 has four components: (i) northern basins development, which includes rehabilitation and upgrading of irrigation infrastructure, and development of a river basin agency and water user associations (WUAs) for water management; (ii) Nangahar Valley Development Authority (NVDA) improvement that includes irrigation rehabilitation and upgrading, development of WUAs, and a management reform plan for the NVDA, (iii) flood management

1 $300 million ADF and $3.3 million cofinancing from Government of United Kingdom for Tranche 1.

2 Government of Afghanistan. Afghanistan Statistical Year Book 2010-11, Central Statistics Organization.

3 About 80% of irrigation in Afghanistan is from traditional (mirab) systems that are not engineered and are

constructed from rudimentary materials, and thus have low irrigation efficiency. 4 Aquasat – http://www.dao.org/nr/water/aquastat/irrigationmap/afg/index.stm.

5 Department for International Development (DFID). 2007. Socio-Economic Impacts of Climate Change in

Afghanistan. London. 6 ADB. 2008. Afghanistan: Country Partnership Strategy, 2009-2013. Manila.

7 Islamic Republic of Afghanistan. 2008. Afghanistan National Development Strategy. Kabul.

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that includes development of flood protection infrastructure along the Amu Darya river and development of a national flood management program; and (iv) project management.8 6. The Government submitted on 4 June 2013 a second periodic financing request (PFR) for a $100 million grant for Tranche 2 of the WRDIP (the project). The project is designed to rehabilitate and improve two main irrigation canals and associated intake structures: (i) the Shahrawan canal system, and (ii) the Archi Main canal system. This will result in reliable irrigation supplies to 74,300 ha in the Lower Kokcha Irrigation System (LKIS). 7. ADB, through missions, due diligence and coordination with the Afghanistan Government and other donors reached the conclusion that the project will significantly contribute to the outcome and outputs of the MFF. The Design and Monitoring Framework (DMF) for the project is in Appendix 2.

II. ASSESSMENT OF MFF IMPLEMENTATION

8. Physical and Nonphysical Progress. Tranche 1 became effective on 7 January 2010 and the progress is rated on track as validated by the second quarter 2013 performance rating, with contract awards of $41.1 million, and disbursements of $8.8 million so far. Project implementation has suffered initial delays due to (i) restructuring of the project to improve program efficiency and effectiveness; and (ii) subsequent late recruitment and mobilization of the consultants. Four main contracts have been awarded: (i) three consultancy contracts (totaling $30.8 million), (ii) one civil works contract ($7.1 million). A further $3.2 million in contract awards is attributable to project management costs. 9. The consultant to support the government in the preparation of the Helmand River Basin Plan was contracted in April 2011 and mobilized in July 2011. A contract with the design and supervision consultant ($6.2 million) was signed on 28 December 2011. A contract with the engineering supervision consultant ($22 million) was signed on 31 December 2011 and mobilized in March 2012. An international competitive bidding (ICB) contract for the rehabilitation of the main canal infrastructure ($7.1 million) was awarded in October 2011. 10. MFF requirements. The government is complying with the requirements of the framework financing agreement: (i) maintaining effective policy dialogue with ADB on the water resources sector; (ii) projects have been selected in accordance with agreed criteria; (iii) WUAs and concept of water user fees are being introduced to ensure adequate operations and maintenance; (iv) counterpart staff have been provided; (v) sufficient facilities were provided to government and consultant staff; (vi) auditing and accounting issues are being addressed; (vii) agencies are committed to ADB’s anticorruption policy; (viii) ADB’s environment, involuntary resettlement and indigenous peoples policies have been complied with; (ix) no issues contrary to requirements of the execution of civil works contracts have been identified; (x) gender, and labor and health standards requirements are complied with; and (xi) although security remains a challenging issue within Afghanistan, the security conditions are complied with. 11. In line with the sector roadmap the government continues to implement the Water Sector Strategy for the ANDS: (i) about 1.9 million ha of the target 2.5 million ha is under full irrigation; (ii) the concept of integrated water resources management and establishment of river basin and sub-basin agencies are being introduced; (iii) the northern river basin authority has been

8 An engineering supervision consultant firm (SNC-Lavalin) was awarded a contract on 31 December 2011 for

$21.95 million.

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established in 2011 and is in the process of becoming fully operational; (iv) monitoring and evaluation (M&E) units are yet to be established in the river basin authorities, however, two units have been established within the Ministry of Energy and Water (MEW); (v) a National Water Resources Development Plan is under preparation; and (vi) there is no data to assess performance of the strategy of 47% of villages benefiting from improved small scale irrigation. 12. Most of the Tranche 1 covenants are complied with, while four are categorized as partly complied. These include (i) the late appointment of external auditors as a result of delays in starting the recruitment process (not yet completed), low quality of implementing agency (IA) bid document submissions, and a change in implementation arrangements;9 (ii) the Ministry of Finance (MOF) has been delayed in establishing a program coordination office (PCO) (not yet completed); (iii) the program steering committee (PSC) was inaugurated in July 2012, however, the committee has yet to meet; and (iv) the project performance management system is not yet fully operational, pending the establishment of the PCO. 13. MFF Utilization. The first tranche approval was for $86.6 million of ADF funds and $3.3 million cofinancing from the Government of the United Kingdom. Combined with the proposed second tranche of $100 million, this would leave a balance of $113.4 million for the third tranche.

Tranche Grant Amount

($ million)

Approval Date

Tranche 1 89.9 23 September 2009

Tranche 2 100.0

Balance MFF 113.4

Total 303.3

14. Major Challenges and Lessons Learned. Start-up delays were due to the reorganization of the management structure and the redefining of program roles and responsibilities. This resulted in recruitment and mobilization of the two consultancy firms, which were deferred by two years. The security situation in Afghanistan continues to deter many reputable international consultancy firms from bidding for work. After contract award, firms find it difficult to attract and retain quality staff. This is compounded by the limited capacity of the IAs to manage both consultant and civil work contracts, and the overriding security situation, which contribute to implementation delays, unless effective mitigation measures are in place. The prior establishment of two PMOs, and recruitment of an engineering and supervision consultant financed under Tranche 1 should minimize implementation delays for the project.

III. PERIODIC FINANCING REQUEST

A. Impact and Outcome

15. The impact of the project will be increased agricultural production in Kunduz and Takhar provinces in northern Afghanistan. The outcome will be improved water resources management in the LKIS. 16. The efficiency and reliability of the Shahrawan and Archi main canals will be upgraded, resulting in 74,300 ha in LKIS receiving sanctioned irrigation supplies. The irrigation intensity in the LKIS will increase from 122% to 155%.

9 The audit of the project financial statements for 2010 was waived in July 2011 due to limited financial activity. The

audit of the financial years 2011 (including part of 2010) and 2012 is to be completed in October 2013.

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B. Outputs

17. The project outputs will be (i) the Shahrawan and Archi main canals deliver reliable irrigation supplies, (ii) improved capacity of water management and agricultural extension institutions, and (iii) efficient project management. The project outputs will be achieved through rehabilitation of the Shahrawan and Archi main canal and branches, and associated intakes on the Amu Darya and Kokcha rivers, and through development of WUAs and irrigation associations. Contribution to ADB’s results framework is summarized in Appendix 6. C. Investment and Financing Plans 18. The total project cost is $103.39 million (Table 1). This includes base cost, contingencies, and taxes and duties during implementation. The detailed cost estimates by expenditure category and by financier are given in the project administration manual (PAM) (Appendix 3).

Table 1: Project Investment Plan ($ million)

Item Amount

A. Base Costa

1. Shahrawan and Archi main canals deliver reliable irrigation supplies 74.98

2. Improved water management and institutional capacity 10.57

3. Project managementb 3.09

Subtotal (A) 88.64

B. Contingenciesc

14.75

Total (A+B) 103.39 a In April 2013 prices. Includes taxes and duties of $3.04 million (including business receipts tax) to be

financed from ADB grant resources. Land acquisition and resettlement costs are financed by the government.

b Project management includes PMU staff salaries, individual consultants, office equipment and audit costs.

c Physical contingencies computed at 10% for civil works and 5% for non-civil works. Inflation factors were

included in estimating price contingencies; local: 5.8% (2014), 5.0% (2015 to 2017); foreign: 2.2% (2014), 1.9% (2015), 1.8% (2016 and 2017).

Source: Asian Development Bank estimates.

19. The government has requested a grant of $100 million from ADB’s Special Funds resources to help finance the project. ADB will finance civil works, consultancies, goods, recurrent costs, and taxes and duties (including business receipts tax).10 The government will finance land acquisition and resettlement costs. The financing plan is in Table 2.

Table 2: Financing Plan

Source Amount ($ million)

Share of Total (%)

Asian Development Bank 100.00 96.7 Government 3.39 3.3

Total 103.39 100.0

Source: Asian Development Bank estimates.

10

A change in the MFF was approved by the President on 3 September 2013 to allow for ADB financing of taxes and duties following agreement reached by ADB and the Government of Afghanistan on 27 February 2012.

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D. Implementation Arrangements

20. MOF is the executing agency (EA), and the MEW and the Ministry of Agriculture, Irrigation and Livestock (MAIL) are the implementing agencies. Output 1 will be implemented by MEW (through a PMO), while Output 2 will be implemented by MAIL and MEW (also through PMOs). Both PMOs were already established under Tranche 1. The PSC will provide oversight and policy guidance to the project. The PCO will facilitate coordination between MOF, MEW and MAIL and support the PSC as required. In line with the arrangements of Tranche 1, the PCO will also support the two PMOs, implement the project performance management system, and coordinate audit. An engineering and supervision consultant (contracted and financed under Tranche 1) will support the MEW and MAIL PMOs in project management and supervision, selection of contractors and construction management, including support to various specialists on technical issues. The implementation arrangements are summarized in Table 3.

Table 3: Implementation Arrangements

Aspects Arrangements

Implementation period February 2014 – June 2018

Estimated completion date 30 June 2018

Management

(i) Oversight body Project Steering Committee Deputy Minister, MOF (chair) Deputy Minister, MAIL (member) Deputy Minister, MEW (member) Technical Deputy Director, NEPA (member)

(ii) Executing agency Ministry of Finance

(iii) Key implementing agencies Ministry of Energy and Water Ministry of Agriculture, Irrigation and Livestock

(iv) Implementation units PMO MEW PMO MAIL

Procurement ICB 1 contract $71.0 million

CC >50 contracts $5.07 million

Shopping 8 contracts $55,000

Consulting services QCBS (80:20) 2 NGOs 565 person-months

$6.96 million

ICS 2 individual consultants 45 person-months

$0.53 million

LCS/SSS 1 contract $40,000

Retroactive financing and/or advance contracting

None

Disbursement The grant proceeds will be disbursed in accordance with ADB's Loan Disbursement Handbook (2012, as amended from time to time) and detailed arrangements agreed upon between the government and ADB.

CC = community contracting, ICB = international competitive bidding, ICS = individual consultants’ selection, LCS = least cost selection, MAIL = Ministry of Agriculture, Irrigation and Livestock, MEW = Ministry of Energy and Water, MOF = Ministry of Finance, NEPA = National Environment Protection Agency, NGO = nongovernment organization, QCBS= quality- and cost-based selection, SSS = single source selection. All procurements for services will follow ADB’s Guidelines on the Use of Consultants (2013, as amended from time to time) and for goods and works will follow ADB’s Procurement Guidelines (2013, as amended from time to time). The loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2012, as amended from time to time) and detailed arrangements agreed upon between the government and ADB.

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E. Project Readiness

21. Feasibility study and preliminary engineering design for the project are completed, and the detailed engineering design is currently under preparation. Safeguard plans are in place. Significant land acquisition and resettlement is not envisaged. The PMOs have already been established, and all government internal approvals have been secured. The concurrence of the government and the EA on the project scope has been obtained. Details of the implementation plan, procurement plan and fund flow mechanism are included in the PAM. F. Advance Contracting and Retroactive Financing

22. The government has not requested advance contracting for civil works and consulting services. Correspondingly, no retroactive financing is required for this project.

IV. DUE DILIGENCE

23. The EA submitted the project documents including the feasibility report, initial environment examination (IEE), updated land acquisition and resettlement framework (LARF), and draft land acquisition and resettlement plan (LARP). 11 The project team conducted an extensive due diligence on the preliminary engineering design, investment plan and safeguard requirements. The project preparation will be backed by a final design to be completed by October 2013. The project team reviewed the preliminary design and found it acceptable. A. Technical

24. The project will rehabilitate and improve the Shahrawan and Archi canals and associated intake structures. The performance and operation of the Shahrawan intake will be improved and the approach and return channels strengthened to prevent them being washed away. Failure of the headworks would have serious implications for about 46,000 ha of crops in Zone I (served by Shahrawan canal). The effectiveness of the sediment exclusion measures will also be improved to reduce the ingress of silt into the canal. The Archi intake and main canals will be rehabilitated and upgraded to carry the original design flow of 36 m3/sec. Without the project the capacity of the canal (currently 30 m3/s) will continue to degrade due to siltation and the poor performance of the headworks, further reducing the current Zone II (served by Archi canal) crop area of 23,041 ha (i.e. 85.3% crop intensity). The technology proposed is compatible with local conditions. The canal will be unlined but special attention is given to a proper water level and flow control system with measures to minimize the need for operating gates to limit the likelihood of tampering with infrastructure in order to ensure the equitable distribution of the available resource. 25. The project will strengthen water management institutions through creating WUAs, and strengthening river basin and subbasin agencies. The capacity of local MEW and MAIL officers will also be developed through the project to promote water resources management and on-farm practices more resilient to climate variability. 26. The project will contribute to reduce vulnerability to climate change in the target area. Climate change in Afghanistan is likely to lead to scarcer water resources. Current climate prediction models indicate warming across all regions of the country with temperature increase in the Amu Darya river basin of 1.7 degree Celsius by 2050, warmer winters and less

11

Supplementary appendixes A, B, C and D.

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precipitation falling as snow at the lower elevations. As mountains are the major sources of water, widespread mass losses from glaciers and reductions in snow cover over recent decades are projected to accelerate throughout the twenty-first century, reducing water supplies as well as changing the seasonality of flows supplied by melt-water from snow and ice. Increased soil loss, reduced river flow from earlier snow melt, and less frequent rain during peak cultivation seasons will impact upon agricultural productivity and crop choice availability. Rain-fed agriculture, particularly in the northern and western river basins will become less viable. The project will reduce vulnerability by rehabilitating irrigation infrastructure and building capacity of local authorities and farmers on farming techniques more resilient to droughts and climate variability. B. Economic and Financial

27. The project will enhance farm productivity through an efficient and equitable irrigation distribution system, safe disposal of drainage runoff from the surrounding hills and surplus irrigation water, reduction in waterlogging and salinity, and fostering better on-farm water management practices. Improved efficiency of water delivery will increase crop yields, while the additional water supply (mostly to tail end of systems) will lead to increased areas of irrigated crops, and consequently cropping intensity at the system level. The area of annual crops is projected to increase from 90,446 to 115,311 ha. 28. The economic internal rate of return (EIRR) was estimated at 18.6% indicating economic feasibility of the project. The sensitivity analysis indicates that, even if the benefits decrease by 20%, the EIRR is 15.7%; while it is 16.2% if the costs increase by 20%. Similarly, with simultaneous benefit decrease and cost increase by 20% each, the EIRR at 13.6% remains above the threshold of 12% (Appendix 5). 29. Currently farmers pay on average $11 per hectare to mirabs for O&M. To ensure the sustainability of project facilities the mirab system will be replaced by establishing WUAs to assume responsibility for O&M and for collection of an irrigation service fee. The irrigation service fee will be levied to account for the estimated full maintenance cost of $17 per hectare. A participatory and diagnostic conducted during the problem identification stage indicated farmer’s willingness to pay more for reliable irrigation water supply. The MEW will maintain O&M responsibility for main canal and headworks, and government financing has been allocated for this task. C. Governance

30. Anticorruption. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the government. The specific policy requirements and supplementary measures are described in the PAM. ADB reserves the right to investigate, audit, and examine the records and accounts of MOF directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the investment program and the project. To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the grant agreement and the bidding documents under the project. Staff from MEW and MAIL received integrity training by ADB in May 2013. 31. Financial Management. The financial management and procurement capacity of MOF, MEW and MAIL satisfies ADB requirements. The current financial management system of MOF, MEW and MAIL is capable of: (i) recording the required financial transactions and balances; (ii) providing regular and reliable financial statements and monitoring reports during project

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implementation; (iii) safeguarding financial assets; and (iv) subjecting required financial documents to audit acceptable to ADB. The PMO is staffed with experienced personnel, who are familiar with ADB’s Handbook for Borrowers on the Financial Management and Analysis of Projects, 2005. MOF has financial management capabilities to satisfy ADB’s requirements for an EA and records required financial transactions and balances, provides regular and reliable financial statements and monitoring reports, safeguards financial assets and submits the required financial documents in an auditable form and format. 32. Disbursement Arrangements. Grant disbursements will be made using direct payment methods as outlined in the Loan Disbursement Handbook (2012, as amended from time to time) and the PAM. The MEW and MAIL will establish imprest accounts at a commercial bank acceptable to ADB, with a ceiling of 10% of the grant amount. The imprest account will be established, managed, and liquidated in accordance with ADB’s Loan Disbursement Handbook (2012, as amended from time to time) and detailed arrangements agreed by the government and ADB. 33. Accounting, Auditing, and Reporting. The MEW and MAIL will maintain separate accounts and records for all expenditures incurred on the project. The PMOs, after consolidating their own accounts with the Kunduz project implementation office’s accounts as applicable, will submit required financial statements to the PCO, who will consolidate and review the accounts, and after auditing, will submit them to the MEW, MAIL, MOF and ADB. Project financial statements will be audited annually by a private audit firm acceptable to ADB. The audited financial statements and audit report will be submitted to ADB no later than 6 months after each closing of the corresponding fiscal year. ADB will disclose the audited financial statements for the project and the auditor’s opinion on the financial statements within 30 days of receipt by posting them on the ADB website. The audit report will include separate opinions on proper use of the imprest fund and statements of expenditure procedures have been used for the purpose for which they were provided. PMOs will submit quarterly financial and physical progress reports within one month following the end of the quarter to which they relate. In addition, PMOs will prepare other such information and reports relating to the project and its implementation as ADB may reasonably request. Within 3 months of project completion, PCO will submit to ADB a project completion report quantifying physical progress and monitoring the use of the grant.

34. Project Performance Management System. A project performance management system will be established in the PCO within 6 months of grant effectiveness. The system will be tailored to project-specific requirements and prepared in consultation with MEW and MAIL. A database of key benchmark indicators will be established by the PCO in consultation with ADB. This will become part of the project monitoring system and will be routinely updated and monitored at least twice a year, including prior to midterm review and project completion.

D. Poverty, Social and Gender Dimensions

35. According to the National Risk and Vulnerability Assessment for 2007-2008, the poverty rate in rural areas is 36% and in urban areas 29%.12. The national poverty level (36%) is similar to the rural poverty rate given that people living in rural areas represent 80% of the population. The ANDS indicates that the key to poverty reduction is development of agriculture and water resources so as to ensure social, economic and political well being of rural people.13 The direct

12

Islamic Republic of Afghanistan. 2010. Poverty Status in Afghanistan: A Profile Based on National Risk and Vulnerability Assessment (NRVA) 2007/08. Kabul.

13 See footnote 7.

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beneficiaries of the project will be farmers within the LKIS from increased incomes through more reliable water deliveries, increased crop areas and yields, and capacity building on adaptive farm management and techniques. Indirect beneficiaries include broader rural communities from improved economic activity associated with increased agricultural production. The total population of 373,400 people within the project area (88% rural, 12% urban) will benefit through reduced poverty. 36. The role of women in the project area is dictated by tradition, with women largely engaged in unpaid work within the house compound. Women have expressed concerns about lack of food, income, work opportunities, lack of health facilities and potable water. Gender roles in the project area are unlikely to change and, apart from improving irrigation water supplies which has an impact on household food security, the project will have a limited gender impact.

E. Safeguards

37. Land Acquisition and Resettlement. The project is Category B for involuntary resettlement and C for indigenous peoples impact. The estimated area of land acquisition for the project is 172 ha, which is comprised of land required for construction of canals (84 ha) and drains (88 ha). The number of affected persons requiring resettlement as a result of these activities is estimated at 195 (40 households). Under the LARF for the Investment Program following the government’s laws and regulations, and ADB’s Safeguard Policy Statement (SPS) (2009) and subsequently updated, all displaced persons will be entitled to compensation for land acquired and lost assets at their replacement cost. They will also be assisted in improving, or at least restoring, their pre-intervention income and livelihood standards, and productive capacity. The updated LARF was posted on ADB’s website on 19 June 2013. A LARP for the project has been prepared. The draft LARP was posted on ADB’s website on 1 July 2013. The LARP will be disclosed in Dari at MEW PMO and local offices and amongst the affected persons in the project area. The LARP will be updated after the detailed designs are sent to ADB for approval. The PMO will supervise LARP updating, and implementation will be by a resettlement specialist within the PIO. The engineering and supervision consultant and a nongovernment organization (NGO) will provide support to the PMO for LARP implementation. 38. Environment. The project is classified category B for environment. The environmental assessment and review framework (EARF) for the Investment Program has been updated, and an IEE for the project including an environmental management plan (EMP) has been prepared. The updated EARF and IEE were disclosed on the ADB website on 19 June 2013. Among potential adverse environmental impacts during construction are liquid and solid waste generation, dust, noise, and other routine construction impacts. They will be adequately mitigated through implementation of the EMP. The EMP envisages additional surveys and screening of potential impacts on archeological sites, biodiversity, and decommissioning of abandoned canals during design stage. The impacts of operation and maintenance of rehabilitated irrigation and drainage works such as likely conflicts over water distribution will be managed by irrigation associations, WUAs, MEW, and MAIL. Public consultation with project stakeholders has been conducted. The capacity of the MEW and MAIL PMOs for environmental management will be strengthened through training. MEW and MAIL PMOs will be responsible for submitting semiannual environmental monitoring reports to ADB. F. Risks and Mitigating Measures

39. Major risks and mitigating measures are summarized in Table 4 and described in detail in the risk assessment and risk management plan (Supplementary Appendix E).

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Table 4: Summary of Risks and Mitigating Measures

Risks Mitigating Measures

Delayed awarding of contracts Close supervision of the procurement activities by ADB. The implementation schedule will be closely monitored.

Unstable security conditions delay construction activities

Adequate security resources are included in the budget for communication, transportation and security facilities. A security plan will be developed for each set of activities. Continuous consultations will take place with district governments, shura elders and communities.

Difficulty in attracting quality consulting and construction firms to bid in Afghanistan

A large civil works package will assist in attracting quality international contractors. Locally based NGOs will be contracted to provide consulting services.

Source: Asian Development Bank.

G. Risk Categorization

40. The project is categorized as low risk. ADB has had 10-year experience in the natural resources sector through two irrigation projects in Afghanistan, which have been rated successful.14 MOF, MEW and MAIL have implemented a number of projects for ADB, World Bank, Japan International Cooperation Agency, European Union and other donors. Further, this project is not categorized A for safeguards and the proposed grant amount is less than $200 million.

V. CONDITIONS AND ASSURANCES

41. The government and the MOF have assured ADB that implementation of the project will conform to all applicable ADB policies including those concerning anticorruption measures, safeguards, gender, procurement, consulting services, and disbursement as described in detail in the PAM and grant documents. The government and MOF have agreed with ADB on certain covenants for the project, which are set forth in the grant agreement. The government also agreed that the submission of audited project financial statements for 2010 to 2012 and the appointment of the PCO coordinating officer and the monitoring and evaluation officer at the PCO will be completed before the grant becomes effective.

VI. RECOMMENDATION

42. On the basis of the approval of ADB’s Board of Directors for the provision of grants under the multitranche financing facility in an aggregate principal amount not exceeding the equivalent of $303,300,000 to the Islamic Republic of Afghanistan for the Water Resources Development Investment Program, it is recommended that the President approve the proposed tranche as described in paragraph 19 of this report and the grant agreement for the proposed tranche substantially in the form attached to this report.

14 ADB. 2009. Afghanistan: Emergency Infrastructure Rehabilitation and Reconstruction Project. Completion Report.

Manila. ADB. 2009. Islamic Republic of Afghanistan: Agriculture Sector Program. Completion Report. Manila.

Appendix 1 11

SECOND PERIODIC FINANCING REQUEST

Date: 4 June 2013 To: Asian Development Bank

6 ADB Avenue Mandaluyong City, Metro Manila.

Attn: Director General

Central and West Asia Department (CWRD) Fax: +632 632 6138

Water Resources Development Investment Program: Second Periodic Financing Request Dear Sir, 1. Please refer to the Framework Financing Agreement (FFA) for Water Resources Development Investment Program (WRDIP- the Program) dated 18 August 2009 between Asian Development Bank (ADB) and the Islamic Republic of Afghanistan. Unless otherwise indicated in this periodic financing request (PFR) expressions defined in the FFA shall have the same meaning herein. 2. Pursuant to the provision in the FFA, the Islamic Republic of Afghanistan requests ADB to process this PFR for a tranche in the form of a grant from its Special Funds resources. The proposed financing amounts, terms and conditions and financing plan are in Attachment 1 hereto. Descriptions of the project for which financing is hereby requested are set out in Annexes A through E of Attachment 1 hereto. 3. The Islamic Republic of Afghanistan hereby certifies that it is in full compliance with the understanding set out in the FFA. Sincerely, On behalf of Government of Afghanistan

12 Appendix 1

Project 2 Description, Estimated Cost and Financing Plan

Project Description The project proposed for financing under the requested PFR is:

The proposed Lower Kokcha Irrigation Project will rehabilitate and improve the Shahrawan and Archi canals. Both canals suffer under both scour and sedimentation, and water levels (Shahrawan canal) and capacity (Archi canal) are compromised if no works are undertaken. The Shahrawan intake, the approach channel and outflow channel have degraded significantly and are in danger of being washed away. Failure of water delivery would negatively impact around 46,000 ha of crops. The Shahrawan intake headworks will be rehabilitated and upgraded to fully discharge its design flow (60 m3/s) in a controlled manner into the Shahrawan canal. The Archi main canal will be rehabilitated and upgraded to its original design capacity of 36 m3/s (current flow rate is estimated at 30 m3/s). The flow capacity of the canal will continually degrade in the future in the absence of the project, further reducing the current area of crops of 23,041 ha (ie 85.3% crop intensity). The technology proposed is compatible with local conditions and comprises mostly unlined canals, with lined canals in areas of high flows. The project will strengthen water management institutions through creating irrigation and water users associations, and strengthening river basin and sub-basin authorities. To ensure sufficient operations and maintenance (O&M) the concept of an irrigation service fee will be introduced in Lower Kokcha Irrigation Scheme (LKIS), tied to equity and reliability of water supply and incremental benefits. The Design and Monitoring Framework is in Annex A.

Cost Estimate and Financing Plan

Total cost of the project is estimated at $103.39 million inclusive of taxes duties. The detailed cost estimate and financing plan are in Annex B.

Table 1: Summary Investment Plan for Tranche 2 ($ million)

Item Amount

A. Base Costa

1. Shahrawan and Archi Main Canals Deliver Irrigation Supplies 74.98

2. Improved Water Management and Institutional Capacity 10.57

3. Project Management 3.09

Subtotal (A) 88.64

B. Contingenciesb 14.75

Total (A+B) 103.39 a In April 2013 prices. Includes taxes and duties of $3.04 million (including business receipts tax) to be financed

from ADB grant resources. Land acquisition and resettlement costs are financed by the Government. b Physical contingencies computed at 10% for civil works and 5% for non-civil works. Inflation factors were

included in estimating price contingencies; local - 5.8% (2014), 5.0% (2015 to 2017); foreign – 2.2% (2014), 1.9% (2015), 1.8% (2016 to 2017).

Appendix 1 13

Table 2: Summary Financing Plan for Tranche 2 ($ million)

Source Total %

ADB’s Special Funds Resources 100.00 96.7 Government of Afghanistan 3.39 3.3 Total 103.39 100.0

Grant Amount and Terms

The request is for a grant amount of $100.00 million from the Special Funds Resources of the Asian Development Bank (ADB) in accordance with the terms and conditions as agreed in the FFA and further supplemented under the Grant Agreement.

Period of Grant Utilization

The project is expected to be completed by June 2018. No disbursements from the grant account will be requested or made later than December 2018.

Advance Contracting

Advance contracting is not requested.

Retroactive Financing

No retroactive financing is requested. The Government of Afghanistan will bear the expenses incurred before grant effectiveness.

Implementation Arrangements

The Executing Agency will be the Ministry of Finance (MOF). The implementing agencies will be the Ministry of Energy and Water (MEW), and the Ministry of Agriculture, Irrigation, and Livestock (MAIL). The existing Program Steering Committee (PSC) for the Water Resources Development Investment Program will provide oversight and policy guidance for Tranche 2. Construction supervision consultants will assist the PMO as the role of Engineer for the works.

Procurement and Consulting Services

The Procurement Plan is attached as Annex C.

Confirmation of Continuing Validity of and Adherence to Provisions of FFA, Previous Agreements, and the Design and Monitoring Framework

The Government of Afghanistan confirms that the understandings set out in the FFA and project and grant agreements under Tranche 1 have been adhered to, and remains true to-date. A report on the status of the covenants is attached as Annex D.

Readiness of the Project for Implementation

A feasibility study was completed and approved by relevant authorities in April 2013. Due diligence has been carried out to assess the technical, economic, and financial viability of the project. The concurrence of the Government and the EA on the project scope has been obtained. The land acquisition and resettlement framework (LARF) was updated and a draft land acquisition and draft

14 Appendix 1

resettlement plan (LARP) has been prepared. Details of the implementation and procurement plans and a fund flow mechanism are in the PAM.

Safeguards For first PFR. Status of compliance with ADB’s safeguard

requirements for Tranche 1 is in Annex E. Environment: Tranche 2 is categorized environmental category B since the project will have no major environmental effects. An IEE has been prepared which has assessed the environmental impacts of the rehabilitation of canals and intake structures and prescribed environmental protection and mitigation measures. No major negative impacts are expected. Resettlement: Tranche 2 is classified as involuntary resettlement category B since it does not involve any major land acquisition, involuntary resettlement, or affect minority groups. Indigenous Peoples: Tranche 2 does not trigger safeguards for and requirements from indigenous peoples under SPS (2009) and no indigenous development framework or plan is required.

Appendix 2 15

TRANCHE 2 DESIGN AND MONITORING FRAMEWORK Design Summary Performance

Targets/Indicators Data Sources/

Reporting Mechanisms

Assumptions and Risks

Impact Increased agricultural production in Kunduz and Takhar provinces in northern Afghanistan

Rate of agricultural productivity in LKIS is increased by 10% in 2020 (2013 = 0%) Rice yield in LKIS in 2020 is 2.75 t/ha (2013 = 2.50 t/ha) Wheat yield in LKIS in 2020 is 2.53 t/ha (2013 = 2.30 t/ha)

MAIL/DAIL statistics MAIL/DAIL statistics MAIL/DAIL statistics

Assumption Central and provincial governments in Afghanistan will continue to prioritize sustainable agriculture and natural resources development

Outcome Improved water resources management in the Lower Kokcha Irrigation System

In 2019 74,300 ha in LKIS received sanctioned irrigation supplies Cropping intensity in 2019 in LKIS is 155% (2013 = 122%) Cropping intensity in 2019 in LKIS Zone I is 170% (2013 = 142%) Cropping intensity in 2019 in LKIS Zone II is 117% (2013 = 85%) Area of annual crops in 2019 is 115,311 ha (2013 = 90,446 ha)

MEW’s and MAIL’s quarterly reporting MEW’s quarterly reporting MEW’s quarterly reporting MEW’s quarterly reporting MEW’s and MAIL’s quarterly reporting

Assumptions Development of water resources and irrigation remains a government priority O&M strategies and financing options developed by the project are implemented by the Government and water users

Outputs 1. The Shahrawan and Archi main canals deliver reliable irrigation supplies

Shahrawan intake supplies water according to the original discharge for 100% of the time during critical crop periods in 2018 Shahrawan canal rehabilitated to equitably discharge the original 60 m

3/s 100%

of time in critical growth periods in entire command area in 2018

MEW quarterly and annual reporting MEW quarterly and annual reporting

Risk On-ground security situation delays construction activities

16 Appendix 2

Design Summary Performance Targets/Indicators

Data Sources/ Reporting

Mechanisms

Assumptions and Risks

Archi intake supplies water according to the original discharge for 90% of the time during critical crop periods in 2018 Archi canal capacity reverts to original 36 m

3/sec in 2018 (2013 =

30 m3/sec)

MEW quarterly and annual reporting MEW quarterly and annual reporting

2. Improved capacity of water management and agricultural extension institutions

22 WUAs are operational in 2018 (2013 = 0) 40 IAs are operational in 2018 (2013 = 0) 150 RBA and SBA staff trained in water management in 2018 (2013 = 0) 50 DAIL staff trained in irrigation extension and OFWM in 2018 (2013 = 0) 1,500 farmers per year received training on climate-resilient practices in 2018 (2013 = 0) From 2015 25 PTD demonstrations are conducted across LKIS each year (2013 = 0) An irrigation service fee applied across all of the LKIS in 2017

MAIL/DAIL quarterly and annual reporting MAIL/DAIL quarterly and annual reporting PMO quarterly report PMO quarterly report PMO quarterly report MAIL/DAIL quarterly and annual reporting MAIL/DAIL quarterly and annual reporting

Risk Security conditions deter trainers traveling to areas within LKIS

3. Project management

Contracts are awarded and completed on time and within contingencies Quarterly progress reports, annual reports, audit reports, are submitted within four weeks of due date

Quarterly and annual progress reports Quarterly, annual progress and audit reports

Appendix 2 17

Activities with Milestones

Rehabilitated LKIS

1.1 Rehabilitate and upgrade natural drainage systems, including provision of cross drainage facilities (Jan 2015 – Dec 2017)

1.2 Rehabilitate and upgrade Shahrawan headworks, including provision of gates and protection from river erosion (Jan 2015 – Dec 2017)

1.3 Upgrade Archi intake to a design flow of 36 m3/s (Jan 2015 – Dec

2017) 1.4 Rehabilitate and upgrade the Zone II main canal network and

associated water control and other structures (Jan 2015 – Dec 2017)

1.5 Rehabilitate bridges and foot bridges along Archi canal (Jan 2015 – Dec 2017)

1.6 Construct water access points along Archi canals (Jan 2015 – Dec 2017)

1.7 Construct cross-regulators/drop structures and rehabilitate offtakes on Shahrawan main canals (Jan 2015 – Dec 2017)

1.8 Rehabilitate main drains and secondary drains in Zone II and I and construct interceptor drains and drainage structures (Jan 2015 – Dec 2017)

1.9 Rehabilitate pilot watershed (6,000 ha) with soil conservation practices (Jan 2015 – Dec 2017)

Improved capacity of institutions

(i) Participatory water management: 2.1 Develop irrigation plans for each sub basin agency (Jan 2015 –

Dec 2016) 2.2 Establish water user associations (WUA) in the project area and

conduct training programs for each WUA (Jan 2016 – Dec 2017) (ii) Participatory irrigation management: 2.3 Prepare and implement training programs for DAIL staff (Jan

2015 – Dec 2017) 2.4 Establish irrigation associations (IAs) at the secondary and

tertiary canal levels (Jan 2016 – Dec 2017) 2.5 (a) Establish demonstration sites on improved agricultural and

water management practices, (b) implement training programs based upon the demonstrations (Jan 2015 – Dec 2017)

2.6 Rehabilitate and upgrade secondary and tertiary level small works in Zone I and II (Jan 2015 – Dec 2017)

2.7 Establish participatory technology development demonstrations in the command of each secondary canal (Jan 2015 – Dec 2016)

2.8 Establish demonstration sites for best on-farm water management practices (Jan 2015 – Dec 2016)

(iii) System maintenance: 2.9 Establish an irrigation service fee in LKIS (Jan 2016 – Dec 2017) Project management

3.1 Award contract for civil works (Jan 2014 – Jun 2015) 3.2 Contract NGOs and individual consultants (Jan 2014 – Dec 2014) 3.3 Establish a M&E system (Jan 2014 – Sep 2014)

Inputs

ADB - $100.00 million - Civil Works - $76.10 million - Equipment - $0.06 million - Consultancies - $7.50 million - Project management - $1.90 million - Contingencies - $14.44 million

Government - $3.39 million - Land acquisition/resettlement - $3.10

million - Contingencies - $0.29 million

NGOs: 565 person-months Individual consultants: 45 person-months

ADB = Asian Development Bank; EA = Executing Agency; LKIS = Lower Kokcha Irrigation System; MAIL = Ministry of Agriculture, Irrigation and Livestock; MEW = Ministry of Energy and Water; O&M = operation and maintenance; PMO = project management office; M&E = monitoring and evaluation; NGO = nongovernment organization; RBA = river basin authority; SBA = sub basin authority; DAIL = Department of Agriculture, Irrigation and Livestock; OFWM = on-farm water management.

Appendix 3 18

PROJECT ADMINISTRATION MANUAL

(PAM is available as a separate volume)

19 Appendix 4

SUMMARY OF POVERTY REDUCTION AND SOCIAL STRATEGY

Country: Afghanistan Project Title: Lower Kokcha Irrigation Project

Lending/Financing Modality:

Multitranche Financing Facility Department/ Division:

Central and West Asia Regional Department Environment, Natural Resources and Agriculture Division

I. POVERTY AND SOCIAL ANALYSIS AND STRATEGY

Targeting classification: general intervention

A. Links to the National Poverty Reduction and Inclusive Growth Strategy and Country Partnership Strategy

The Republic of Afghanistan does not have a National Poverty Reduction Strategy. The latest data reveals that 36% of the people are living below the poverty line

a, with a Gini index of 29

b, while 20% are living slightly above the poverty

line of $14 or less per month. Approximately 45% of the population experience food poverty. It is in the above context that the Afghanistan National Development Strategy (ANDS) suggests that key to poverty reduction should be the development of agriculture and water resources so as to ensure social, economic and political well-being of the rural people. The ANDS sector strategy on Agriculture and Rural Development highlights the importance to ensure food security and rural development. The ANDS further states that the development of agriculture in the country is plagued by several constraints the first of which is availability of good water resources. The Afghanistan country partnership strategy (CPS) 2009–2013 is fully aligned with the Afghanistan National Development Strategy (ANDS) priorities and planned outcomes. ADB’s ongoing and future investments will continue to support Afghanistan’s further economic growth, thus contributing to the country’s economic and social development and poverty reduction. At the Government’s request, and in line with ADB’s Strategy 2020, ADB’s assistance to Afghanistan will continue to focus on a limited number of priority sectors and subsectors which includes agriculture and natural resources, including irrigation and water resource management and agriculture market infrastructure. The Tranche 2 (Lower Kokcha Irrigation Project) (the project) of the Water Resources Development Investment Program (WRDIP) is designed to rehabilitate and improve the main irrigation canals in the district of Imam Sahib (Zone I) and in the districts of Archi and Kwhaja Ghar (Zone II). The project is a general intervention (GI), and therefore not specifically aimed at poverty reduction as such. However, this will have a positive impact on poverty reduction by means of increased income and increased food security. All categories will benefit, whether they are farmers who manage their own land or sharecroppers, and wage laborers. Improvements in irrigation development and flood control are likely to produce several indirect impacts on livelihood improvement and poverty reduction, it may be anticipated that household income will rise, which will give households opportunity to seek other ways of spending household income, e.g., spending more on education.

B. Results from the Poverty and Social Analysis during PPTA or Due Diligence

1. Key poverty and social issues. Poverty is widespread in Afghanistan. The percentage of Afghans not able to meet their basic needs is 36%. Afghanistan is largely an agrarian society with the agriculture sector accounting for 27% of gross domestic product, and 75% of the labor-force is engaged in farming. Agriculture in Afghanistan is dependent upon irrigation, with irrigated agriculture accounting for about 80% of all agricultural production. With reliable and equitable supplies of irrigation water and the subsequent increase in agricultural production, food security and farm income the project will indirectly contribute to overall development and poverty reduction. 2. Beneficiaries. The direct beneficiaries of the project will be farmers within the LKIS who currently suffer from low incomes due to unreliable water delivery, fallow crop areas due to water shortage, low yields and damage to crops from flash floods. Indirect beneficiaries include broader rural communities, including the poor and vulnerable that will benefit from improved economic activity associated with increased agricultural production. The total population of 373,400 people within the project area (88% rural, 12% urban) will benefit through reduced poverty. 3. Impact channels. Farm productivity will be enhanced through an efficient and equitable irrigation distribution system, safe disposal of drainage runoff from the surrounding hills and surplus irrigation water, reduction in water logging and salinity, and better on-farm water management fostered through capacity building. Improved efficiency of water delivery will increase crop yields, while the additional water supply (mostly to the tail end of systems) will lead to increased areas of irrigated crops. The area of annual crops is projected to increase from 90,446 to 115,311 ha and have a positive bearing on underemployment and food security issues.

20 Appendix 4

4. Other social and poverty issues: The project area also suffers from a range of deprivations in the areas of health, drinking water supply, education and security, addressed under other programs.

5. Design features. The project design is characterized by a prominent component for community participation to prevent elite capture, promote transparency and equity in water delivery and infuse ownership and sustainability of O&M on secondary and tertiary canals. The project design has made provision for rehabilitation and upgrading of the secondary and tertiary canal infrastructure as well as improvements in field drainage to be executed by water user associations or under their supervision. A related element of the design emphasized capacity building of WUAs.

II. PARTICIPATION AND EMPOWERING THE POOR

1. Participatory consultations with various stakeholder groups, including farmers, landless, sharecroppers, community shura, community leaders, mirabs, and government authorities have been undertaken by the consulting team as part of the feasibility study. The WUAs which are community based civil society organizations of irrigators will form a mechanism for participation, inclusion, equity, transparency and deterrent to elite capture. Poor, small and tail end member farmers will be empowered. An indicator for the second project output specifies that WUAs are operational by 2018. There are no other relevant CSO stakeholders warranting participation. 2. If civil society has a specific role in the project, summarize the actions taken to ensure their participation. NA 3. Explain how the project ensures adequate participation of civil society organizations in project implementation. NA 4. What forms of civil society organization participation is envisaged during project implementation N Information gathering and sharing N Consultation N Collaboration N Partnership 5. Will a project level participation plan be prepared to strengthen participation of civil society as interest holders for affected persons particularly the poor and vulnerable? Yes. No. Capacity building of Water User Associations and their participation is part of overall design of the project and project implementation.

III. GENDER AND DEVELOPMENT

Gender mainstreaming category: no gender elements

A. Key issues. Field assessments indicate that gender roles are specified by tradition with women engaged only in

some selected activities of which unpaid domestic work is most important. Women have several concerns such as lack of food, income, work opportunities, lack of health facilities and potable water shortage. They are not free to work on income generation projects due mainly to cultural reasons. Several changes under the National Solidarity Program, implemented by MRRD are contributing to women’s empowerment throughout the country as well as in project villages. The NSP lead women empowerment process has resulted in the formation of Women Shura who work together with the Men Shura in the same community, which are involved in planning and implementing community development programs. The recently approved Women Action Plan has established gender units in the center and provinces. The above initiatives have already begun to unfold a new chapter on women’s roles, to address their concerns and the way women are treated in public life. The program component is not expected to address existing gender concerns. Efforts were made during project design to involve women in participatory irrigation management and by making irrigation water accessible for non-farm use. However, entrenched gender roles and strict controls on women’s movement outside the house in this remote area make women’s substantial participation in

project activities very unlikely.

B. Key actions.

Gender action plan Other actions or measures No action or measure

IV. ADDRESSING SOCIAL SAFEGUARD ISSUES

A. Involuntary Resettlement Safeguard Category: A B C FI

1. Key impacts. There will be limited LAR impact, since rehabilitation is mostly within the existing ROW of canals and drains . 2. Strategy to address the impacts: A draft LARP prepared on preliminary design based on the Investment Program LARF bridging the gaps between ADB SPS (2009) and Afghanistan Land Acquisition Law will ensure the compensation of lost assets at replacement cost and the provision of commensurate allowances for vulnerable APs. This draft LARP will be updated after final design and the final LARP disclosed on the ADB website and within the project area. 3. Plan or other Actions.

Resettlement plan Resettlement framework

Environmental and social management system arrangement

Combined resettlement and indigenous peoples plan Combined resettlement framework and indigenous peoples

planning framework

Social impact matrix

Appendix 4 21

No action

B. Indigenous Peoples Safeguard Category: A B C FI

1. Key impacts. There are no IPs in the project area as defined for operational purposes in ADB SPS (2009)

Is broad community support triggered? Yes No

2. Strategy to address the impacts NA

3. Plan or other actions.

Indigenous peoples plan Indigenous peoples planning framework Environmental and social management system

arrangement

Social impact matrix No action

Combined resettlement plan and indigenous peoples plan

Combined resettlement framework and indigenous peoples planning framework

Indigenous peoples plan elements integrated in project with a summary

V. ADDRESSING OTHER SOCIAL RISKS A. Risks in the Labor Market

1. Relevance of the project for the country’s or region’s or sector’s labor market. The impact on the labor market can be considered as low or not significant. The project will benefit farming and could increase the number of people working in the agricultural sector. During the construction phase, unskilled labor will be recruited on a temporary basis. This number of temporary jobs will not exceed 1,000 at any given time.

unemployment underemployment retrenchment core labor standards 2. Labor market impact. The project will benefit farming and could increase the number of people working in the agricultural sector. During the construction phase unskilled labor will be recruited on a temporary basis. The number of temporary jobs will not exceed 1,000 jobs at any given time. The project loan documents include covenants on core labor standards.

B. Affordability

Initially it will be mainly the non-poor (i.e. those farmers who own and manage their land) who will benefit from the project. Sharecroppers (considered to be poor) can benefit since the land that they manage will have an increased capacity due to the increased availability of irrigation water. At this stage it will be difficult to say in what way that share of sharecropping will change.

C. Communicable Diseases and Other Social Risks

A risk is not likely in this matter. There will be a constructing period of 3 years. During this time the contractor(s) will bring in their own equipment and operators outside the project area. In the Afghan context it seems unlikely this will have an impact in spreading communicable diseases. Afghanistan is a source, transit, and destination country for men, women, and children subjected to forced labor and sex trafficking. According to UNHCR trafficking within Afghanistan is more prevalent than transnational trafficking. The majority of victims are children, and during the year, younger boys and girls were increasingly subjected to forced labor in carpet-making factories and domestic servitude, and in commercial sexual exploitation, forced begging, and transnational drug smuggling within Afghanistan, Pakistan, Iran, and Saudi Arabia. Opium cultivation is widespread in areas with weak government control. Measures will need to be taken to prevent opium cultivation in the project area. 1. Indicate the respective risks, if any, and rate the impact as high (H), medium (M), low (L), or not applicable (NA):

L Communicable diseases L Human trafficking L Others (please specify) Opium cultivation

2. Describe the related risks of the project on people in project area. Extension programs need to be put in place for the labor force outside the project area on communicable diseases and how to communicate with the local population.

VI. MONITORING AND EVALUATION

1. Targets and indicators: A household survey has been augmented with data from MAIL. Based on these data, additional surveys will be performed during the construction phase and after the construction on agricultural production and irrigation methods and patterns. a CSO/MRRD. 2009: National Risk and Vulnerability Assessment 2007/8. A profile of Afghanistan. Main Report.

Kabul. b This Gini ratio has been based on 2007/8 NRVA data and has been established by a World Bank team. It should

be noted that this figure is in line with some middle-income countries. This shows that statistical data from Afghanistan should be assessed with great caution.

Appendix 5 22

ECONOMIC AND FINANCIAL ANALYSIS 1. The economic and financial analyses of the project, to be funded out of the Tranche 2 of the multifinance facility (MFF) for the Water Resources Investment Program, are presented to assess the economic viability of the proposed investment. 1 The analyses follow the approach and methodology contained in the Asian Development Bank (ADB) Guidelines for the Economic Analysis of Projects.2 2. The main outputs include (i) rehabilitated Shahrawan and Archi main canal systems; (ii) improved water management at the secondary and tertiary level and strengthening of water management institutions; and (iii) support to management and implementation of the proposed project, including implementation of a pilot initiative for watershed development. The main economic benefit of the proposed project is enhanced agriculture production through increased cropping intensities, crop diversification, and better water management practices. Assumptions and Methodology 3. The following approach and assumptions have been adopted in the analysis:

(i) All prices of investments items and accrued benefits are valued in domestic price numeraire that prevailed in the first quarter of 2013.

(ii) The project will be implemented over four years. (iii) Economic prices of capital works, goods, and services, and operation and

maintenance expenditure are estimated by converting financial domestic prices using a standard conversion factor (SCF) of 0.9.3

(iv) Economic prices of farm inputs and outputs are estimated by converting financial prices using SCF, as no subsidies or significant taxes and duties are levied.

(v) Financial cost of works, goods, and services are engineers estimates (detailed in the project feasibility report) arrived as least-cost alternatives.

(vi) The financial price of farm inputs and outputs is based on the farm gate prices as received by the farmers in the project area.

(vii) The economic life of project is 30 years. (viii) The economic analysis uses the base prices, net of physical and price

contingencies, taxes and duties. (ix) It is assumed that the full development stage (FDS) for farm productivity is

reached following four years after completion of the implementation period. (x) The economic opportunity cost of capital (EOCC) is 12%. (xi) To convert domestic cost estimates to foreign exchange equivalent the

conversion rate is assumed at $1.00 = 55.00 Afghanis (AFs).

1 ADB. 2009. Report and Recommendation of the President to the Board of Directors on a proposed Multitranche

Financing Facility and the Administration of a Grant and Cofinancing Facility to the Islamic Republic of Afghanistan: Water Resources Development Investment Program. Manila. 2 ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila.

3 As the share of the informal trade is significant in the total imports and exports, SCF based on official data for

imports and exports may be erroneous. One option is to opt for the ratio open market rate to official bank rate as proxy for SCF at 0.94. The other option is the average ratio in the period from 2002/03 to 2008/12 at constant prices between GDP at factor cost and GDP at market prices is 0.98 in Afghanistan. The ratio of factor cost GDP and market price GDP, which includes tax component, could also be considered as SCF for all traded and non- traded items. Given the absence of relevant data, an SCF of 0.9 was adopted for converting financial prices to economic prices.

Appendix 5 23

Rationale for Investment 4. The project area and the adjoining districts were historically considered the bread basket of Afghanistan. However, 30 years of conflict has severely degraded the water resources infrastructure in the country, particularly in the project area. Over this period the management capacity of institutions has weakened and severely impaired the productivity of the agricultural sector. 5. The main objective of the project is to enhance farm productivity through an efficient and equitable irrigation distribution system, safe disposal of drainage effluent and hill torrents, a reduction in waterlogging and salinity, and through fostering better on farm water management practices. It is anticipated that the investment will have a positive impact on farm productivity both through horizontal and vertical expansion, vis-à-vis increase in the cropped area, cropping intensity, and higher crop yields. Project Benefits and Project Scope 6. The project primarily intends to ensure sustainable and reliable supply of irrigation, ensuring equity in distribution. The rehabilitation and improvement of the drainage system will reduce waterlogging effects and result in reclaimed land for cultivation. The drainage system will also provide safe and timely disposal of the torrential flows that cause damage to the distribution system. The project will also improve water management through improving the secondary and tertiary distribution system and will strengthen the capacity of institutions to adopt best water management practices. 7. The main benefit of the project is increased agricultural production. The improved delivery efficiency and better water management will translate into increased cropping intensity, area productivity, crop diversification and the area of the high value crops. The command area of the two canals in the project area is 74,300 ha. It is anticipated that by the FDS to be achieved by 2020 the cropping intensity will increase from (current) 122 to 155%. In terms of area, the cropped area will increase from 90,500 to 115,300 ha. 8. Presently wheat is grown on around 34,000 ha of the cultivable command area (CCA) and is expected to increase to 40,000 ha (i.e. 46% - 54% CCA), followed by paddy (rice) which will increase from 24,000 to 31,000 ha (33% - 41% CCA), and oilseed crop area will increase from 9,300 to 12,500 ha (13% - 17% CCA). Amongst the high value crops, vegetables will increase from 5,300 to 7,100 ha (7% - 10% CCA), followed by melons which will increase from 2,700 to 3,500 ha (4% - 5% CCA), and fruit area will increase from 1,590 to 2,000 ha (2% - 3% CCA). The most notable change is expected to be achieved in the area under grapes which is expected to be increase from an insignificant area to 1,500 ha (2% CCA). Table A5.1 presents the current and proposed cropping areas in the project area. The percentage share of various crops in the total cropped area in the with-project and without-project scenarios suggest that with reliable irrigation supplies there will be a shift towards high value crops, such as vegetables and fruits trees. Their share will increase both in the CCA and total cropped area. 9. The current and proposed production of different crops in the project area is given in Table A5.2. It is expected that at the FDS there will be additional yearly production of around 39,000 mt of wheat, and 37,000 mt of paddy. Significant increases are also expected in the additional production of vegetables (63,000 mt), grapes (25,000 mt), and fruits (14,000 mt).

24 Appendix 5

Financial Analysis 10. Current yields are substantially less than potential. It is anticipated that the project will result in better crop husbandry and improved water management practices. The conservative estimate is that by the FDS yields would increase by about 20%. Wheat, rice and pulses are an essential part of the daily diet, and are mainly grown for household consumption, while the surplus is marketed. 11. To assess the value of the increment in the agricultural production, per hectare crop enterprise budgets were evaluated for both with-project and without-project scenarios. Tables A5.3 and A5.4 present the per hectare yield, revenues, cost of production, and gross margins (GMs) for individual crops. To estimate per hectare returns realized from the increase in the cropping intensities and the improvement in yields, one hectare model farm budgets were developed for the two scenarios. Table A5.5 shows that the without-project gross margin is estimated at around AF17,469/ha, while with-project it is expected to reach AF37,866/ha due to the increased cropping intensity and yields. Financing of Operation and Maintenance Cost 12. The annual expenditure for operation is estimated at $1.28 million (approximately $17.30 per ha). At present farmers are paying about $11 per ha. To meet the gap between present and projected incidence an increase of $6.30 per ha needs to be levied. This accounts for 1.72% of the increase in the gross margins/ha, and should be acceptable to farmers. The mirab system will be replaced by establishing WUAs to assume responsibility for O&M and for collection of an irrigation service fee (ISF). The ISF will be levied to account for the estimated full maintenance cost of around $17 per hectare. A participatory and diagnostic conducted during the problem identification stage indicated farmer’s willingness to pay more for reliable irrigation water supply. The MEW will maintain O&M responsibility for main canal and headworks, and government financing has been allocated for this task. Demand Analysis 13. Notwithstanding the lower than potential yields, the region is a food surplus area and produce is sold to adjoining food deficient regions. Vegetables and fodders are generally grown for home consumption, with surpluses sold in the markets. The vegetable growing is in a nascent stage, and with the development of adequate market infrastructure (particularly farm to market roads and storage facilities) there is potential for commercial vegetable production. Despite attractive per hectare incomes from poplar, grapes and other fruits, the area under these crops is less than 2% of cropped area. This may increase following provision of better marketing infrastructure. A recently approved ADB supported project will also assist in realizing better prices for the vegetables.4 14. Most regions within Afghanistan are extremely food deficit and meet the domestic requirement from formal and informal imports from the neighboring countries. Traditionally the project area has been able to market production surpluses to the food deficit areas. The increased surplus production will comfortably meet the national gap in the production and availability without depressing the prices and returns to the farmers. The surplus production of

4 ADB. 2012. Proposed Grant Assistance to the Islamic Republic of Afghanistan: Enhanced Agricultural Value Chains

for Sustainable Livelihoods. Grant Assistance Report. Manila.

Appendix 5 25

other crops, particularly grapes and other fruits will boost the exports of these commodities to the regional countries. Economic Analysis 15. The financial values of incremental agricultural production, investment cost (base cost) and operation and maintenance costs was converted to economic values by applying the SCF, after adjusting for transfer payments (taxes and duties). The economic prices are net of contingencies. 16. Most of the total capital cost is related to the construction/rehabilitation of the irrigation equipment, NGO services, engineering and supervision consultants, and project management costs. The annual O&M cost has been assumed at 1.5% of the total cost of civil works. 17. To assess the economic viability of the proposals three parameters were estimated; the economic internal rate of return (EIRR), economic net present value (ENPV), and economic benefit-cost ratio (EBCR). In addition, switching values (SV) and sensitivity index (SI) were derived. Sensitivity analysis was carried out assuming a decline in benefits and increase in the investment costs (by 10% and 20%), and simultaneous decrease in benefits and increase in costs at the same change factors. 18. The estimated parameters are presented in Table A5.6. The yearly benefit and cost streams for the with-project and without-project scenarios are presented in Table A5.7. 19. The overall EIRR of the project is estimated at 18.6% and, as it is above EOCC, suggests that the project is economically viable. The sensitivity analysis indicates that even if the benefits decrease by 20% the EIRR is 15.7%, while it is 16.2% if the costs increase by 20%. Similarly with simultaneous decrease in benefits and cost increase by 20%, the EIRR at 13.6% remains above the EOCC. The SVs indicate that even if the benefits need to decrease by greater than 42% or costs increase by greater than 50% before the project becomes uneconomic. The project becomes uneconomic if benefits decrease and costs increase simultaneously by greater than 27%. The SVs and the SIs suggest the economic viability results are robust against downside risks. Non-Quantifiable Benefits 20. The project will generate significant non-quantifiable benefits, such as demand for seasonable farm labor to tend and harvest the increased cropped area, trading opportunities for itinerant local traders and transporters, and enhanced farm household to meet the expenditure on education, health, and better nutrition. In addition, the productivity of livestock products are likely to improve due to increased availability of fodder and forage. The construction of the drainage system will reduce the stagnation time for the storm water and the stream flows in the depressions, thus improving the environment in the project area. The project will also reduce the uncertainty of canal water availability and encourage farmers to shift to high value crops, vineyards, and tree crops. Most of the farmers own about one hectare of land and an increase of about AF20,000 per hectare is expected to reduce the poverty incidence in the farm households.

26 Appendix 5

Table A5.1: Current and proposed FDS cropping pattern

Crops

Current cropping pattern Proposed cropping pattern

Area (ha)

Proportion of cropped

area (%)

Proportion of CCA

(%)

Area (ha)

Proportion of cropped

area (%)

Proportion of CCA

(%)

Wheat 34,415 38.1 46.3 40,422 35.1 54.4

Barley 2,059 2.3 2.8 2,715 2.4 3.7

Paddy Rice 24,400 27.0 32.8 30,640 26.6 41.2

Maize 5,980 6.6 8.0 6,982 6.1 9.4

Cotton 2,977 3.3 4.0 3,471 3.0 4.7

Oilseeds 9,261 10.2 12.5 12,500 10.8 16.8

Pulses 127 0.1 0.2 2,548 2.2 3.4

Fodders 1,485 1.6 2.0 1,848 1.6 2.5

Vegetables 5,284 5.8 7.1 7,072 6.1 9.5

Melons 2,744 3.0 3.7 3,475 3.0 4.7

Others 45 0.0 0.1 52 0.0 0.1

Poplar 76 0.1 0.1 87 0.1 0.1

Grapes - 0.0 0.0 1,500 1.3 2.0

Orchards 1,593 1.8 2.1 2,000 1.7 2.7

Total 90,446 100.0 121.7 115,311 100.0 155.2 CCA (cultivable command area) = 74,300 ha. Source: ADB estimates.

Table A5.2: Current and projected crop production

Crops Current

production (mt)

Projected production

(mt)

Increase

(mt)

Wheat 94,985 133,877 38,892

Barley 3,830 6,059 2,229

Paddy Rice 73,200 110,304 37,104

Maize 12,558 17,595 5,037

Cotton 6,430 8,997 2,567

Oilseeds 10,558 17,100 6,542

Pulses 160 3,852 3,692

Fodders 20,493 30,599 10,106

Vegetables 104,623 168,040 63,417

Melons 64,210 97,564 33,354

Others 97 134 37

Poplar (Trees) 63,840 88,099 24,259

Grapes 0 24,840 24,840

Other fruits 27,718 41,760 14,042

Source: ADB estimates.

Appendix 5 27

Table A5.3: Without-project yield, revenue, production cost, and gross margins

Crops

Yield (kg/ha) Revenue (AF/ha) Production cost

(AF/ha)

Gross margin (AF/ha)

Main crop

Straw Main crop

Straw Total

Wheat 2,760 2,484 31,464 4,248 35,712 28,845 6,867

Barley 1,860 1,674 20,460 2,762 23,222 14,788 8,435

Paddy Rice 3,000 2,700 42,857 5,786 48,643 38,836 9,807

Maize 2,100 1,890 21,420 2,892 24,312 15,663 8,648

Cotton 2,160 0 55,543 0 55,543 44,097 11,446

Oilseeds 1,140 0 32,571 0 32,571 26,671 5,900

Pulses 1,260 0 33,390 0 33,390 26,285 7,105

Fodders 13,800 0 41,400 0 41,400 21,285 20,115

Vegetables 19,800 0 141,429 0 141,429 85,036 56,393

Melons 23,400 0 140,400 0 140,400 60,760 79,640

Others 2,160 0 33,958 0 33,958 28,433 5,524

Poplar (Trees) 840 0 327,600 0 327,600 45,690 281,910

Grapes 13,800 0 209,760 0 209,760 118,446 91,314

Orchards 17,400 0 149,143 0 149,143 89,143 60,000 Source: ADB estimates.

Table A5.4: With-project yield, revenue, production cost, and gross margins

Crops

Yield (kg/ha) Revenue (AF/ha) Production

cost (AF/ha)

Gross margin (AF/ha)

Main crop

Straw Main crop

Straw Total

Wheat 3,312 2,981 37,757 5,097 42,854 30,260 12,593

Barley 2,232 2,009 24,552 3,315 27,867 15,708 12,158

Paddy Rice 3,600 3,240 51,429 6,943 58,371 40,764 17,607

Maize 2,520 2,268 25,704 3,470 29,174 16,627 12,547

Cotton 2,592 0 66,651 0 66,651 46,597 20,055

Oilseeds 1,368 0 39,086 0 39,086 28,137 10,949

Pulses 1,512 0 40,068 0 40,068 27,787 12,281

Fodders 16,560 0 49,680 0 49,680 21,492 28,188

Vegetables 23,760 0 169,714 0 169,714 85,743 83,971

Melons 28,080 0 168,480 0 168,480 61,462 107,018

Others 2,592 0 40,750 0 40,750 29,962 10,788 Poplar (Trees) 1,008 0 393,120 0 393,120 47,328 345,792

Grapes 16,560 0 251,712 0 251,712 127,885 123,827

Orchards 20,880 0 178,971 0 178,971 92,871 86,100 Source: ADB estimates.

28 Appendix 5

Table A5.5: One hectare model farm budget for with- and without-project scenarios

Crops

Without-project With-project

Area (ha)

Total revenue

(AF)

Total costs

(AF)

Gross margin

(AF)

Area (ha)

Total revenue

(AF)

Total costs

(AF)

Gross margin

(AF)

Wheat 0.46 16,541 13,361 3,181 0.54 23,314 16,463 6,851

Barley 0.03 644 410 234 0.04 1,018 574 444

Paddy Rice 0.33 15,974 12,754 3,221 0.41 24,071 16,810 7,261

Maize 0.08 1,957 1,261 696 0.09 2,741 1,562 1,179

Cotton 0.04 2,225 1,767 459 0.05 3,114 2,177 937

Oilseeds 0.12 4,060 3,324 735 0.17 6,576 4,734 1,842

Pulses 0.00 57 45 12 0.03 1,374 953 421

Fodders 0.02 827 425 402 0.02 1,235 534 701

Vegetables 0.07 10,058 6,047 4,010 0.10 16,155 8,162 7,993

Melons 0.04 5,185 2,244 2,941 0.05 7,879 2,874 5,004

Others 0.00 21 17 3 0.00 28 21 8

Poplar (Trees) 0.00 335 47 288 0.00 462 56 407

Grapes 0.00 - - - 0.02 5,082 2,582 2,500

Orchards 0.02 3,198 1,911 1,286 0.03 4,818 2,500 2,318

Total 1.22 61,082 43,613 17,469 1.55 97,867 60,002 37,866

Source: ADB estimates.

Table A5.6: EIRR, ENPV, EBCR, switching values and sensitivity index

Parameters EIRR

(%) ENPV

(AF million) EBCR

Switching value

(%)

Sensitivity index

Base case 18.6 2,371 1.73

Change in benefits and costs (10%)

Decrease in benefit 17.2 1,809 1.56 42.2 2.1

Increase in cost 17.3 2,046 1.50 72.9 1.9

Simultaneous change 16.0 1,484 1.41

Change in benefits and costs (20%)

Decrease in benefit 15.7 1,247 1.38

Increase in cost 16.2 1,721 1.50

Simultaneous change 13.6 596 1.15

EIRR = economic internal rate of return; ENPV = economic net present value; EBCR = economic benefit-cost ratio. Source: ADB estimates.

Appendix 5 29

Table A5.7: Derivation of incremental cash flows, EIRR, ENPV and EBCR (AF million)

Without-project With-project Incremental benefit

Year Gross margin

O&M cost

Gross margin

Investment cost

O&M cost

Total cost

Net benefits

Net costs

Net cash flow

2014 1,264 45 1,264 612 45 656 0 612 (612)

2015 1,264 45 1,264 1,230 45 1,275 0 1,230 (1,230)

2016 1,264 45 1,264 1,483 45 1,528 0 1,483 (1,483)

2017 1,264 45 1,264 904 45 949 0 904 (904)

2018 1,264 45 1,824 63 63 560 19 541

2019 1,264 45 1,964 63 63 700 19 681

2020 1,264 45 2,104 63 63 840 19 821

2021 1,264 45 2,244 63 63 980 19 961

2022 1,264 45 2,384 63 63 1,120 19 1,101

2023 1,264 45 2,524 63 63 1,259 19 1,241

2024 1,264 45 2,664 63 63 1,399 19 1,381

2025 1,264 45 2,664 63 63 1,399 19 1,381

2026 1,264 45 2,664 63 63 1,399 19 1,381

2027 1,264 45 2,664 63 63 1,399 19 1,381

2028 1,264 45 2,664 63 63 1,399 19 1,381

2029 1,264 45 2,664 63 63 1,399 19 1,381

2030 1,264 45 2,664 63 63 1,399 19 1,381

2031 1,264 45 2,664 63 63 1,399 19 1,381

2032 1,264 45 2,664 63 63 1,399 19 1,381

2033 1,264 45 2,664 63 63 1,399 19 1,381

2034 1,264 45 2,664 63 63 1,399 19 1,381

2035 1,264 45 2,664 63 63 1,399 19 1,381

2036 1,264 45 2,664 63 63 1,399 19 1,381

2037 1,264 45 2,664 63 63 1,399 19 1,381

2038 1,264 45 2,664 63 63 1,399 19 1,381

2039 1,264 45 2,664 63 63 1,399 19 1,381

2040 1,264 45 2,664 63 63 1,399 19 1,381

2041 1,264 45 2,664 63 63 1,399 19 1,381

2042 1,264 45 2,664 63 63 1,399 19 1,381

2043 1,264 45 2,664 63 63 1,399 19 1,381

ENPV 2,371

EBCR 1.73

EIRR 18.6%

EBCR = economic benefit cost ratio, EIRR = economic internal rate of return, ENPV = economic net present value, O&M = operations and maintenance. Source: ADB estimates.

Appendix 6 30

CONTRIBUTION TO THE ADB RESULTS FRAMEWORK

No. Level 2 Results Framework Indicators

Targets Method / Comments

1 Land improved through irrigation, drainage and/or flood management (hectares)

74,300 Degraded Shahrawan and Archi Main canals and associated intakes rehabilitated for improved performance

Source: ADB Estimates.

31

SUPPLEMENTARY APPENDIXES A. Updated EARF http://www.adb.org/projects/documents/water-resources-development-

investment-program-project-2-earf B. Updated LARF http://www.adb.org/projects/documents/water-resources-development-

investment-program-project-2-larf C. IEE http://www.adb.org/projects/documents/water-resources-development-investment-

program-project-2-lower-kokcha-iee D. LARP. http://www.adb.org/projects/documents/water-resources-development-

investment-program-project-2-lower-kokcha-rp E. Risk Assessment and Risk Management Plan