ISMABAD (Eshfak Mughal):- The Asian Development Bank (ADB’s) loan worth $200 million for Greater Thal Canal Irrigation Project approved by Executive Board was lapsed due to both parties could not sign on the agreement within one year.
Sources told the scribe that the ADB’s Board had approved a loan in the amount of $200 million from ADB’s ordinary capital resources to Pakistan for the Greater Thal Canal Irrigation (GTC) Project on On 13 December 2021.
The project aims to increase the agricultural production and productivity of the project area by developing a new irrigation system. It will convert 704,000 hectares (ha) of low productive rainfed lands in Punjab province to irrigated and productive area. It will provide reliable irrigation water supplies during the monsoon season. The government already constructed the Main Canal and first branch (Mankera) system using government funds. The ADB-financed project was to support (i) construction of the irrigation canal network in the second branch (Choubara) canal system; (ii) on-farm command area development (CAD) in the Main Canal, Mankera and Choubara branch canal areas which cover about 263,000 ha of irrigable command area; and (iii) capacity enhancement of relevant government entities and water users for efficient water management, and sustainable infrastructure.
The government’s highest project approval authority, the Executive Committee of the National Council (ECNEC), approved the project in March 2022. It recommended to (i) establish a rigorous river flow measurement monitoring mechanism on the River Indus; (ii) establish an immediate manual flow measurement reporting system including third party monitoring at key locations on the River Indus prior to commencing the construction works on the GTC Irrigation project; and (iii) develop a computer model to measure water balance at specific sections of the River Indus. The federal Ministry of Water Resources led the multiple inter-provincial and federal–provincial consultations to reach consensus on ECNEC’s recommendations. A consensus was not achieved within 12 months after the ADB loan approval date.
Between July and September 2022, Pakistan faced unprecedented and devastating nationwide floods. Urgent rehabilitation, reconstruction and recovery of damaged infrastructure and livelihoods became the highest priority for the government. Among various development partner’s support, ADB approved Loan 4279–PAK: Emergency Flood Assistance for $475 million on 12 December 2022.
On 2 December 2022, the Ministry of Economic Affairs requested to extend the loan signing period by 6 months because of delays in discussions with federal and provincial government on the project’s implementation as a result of the floods. The delays also resulted from federal and provincial governments’ being diverted to respond to immediate flood recovery activities. The governments’ aim was to reach a consensus on the project implementation within 6 months.
In its letter dated 6 December 2022, ADB responded to the Ministry of Economic Affairs that the process to reach a consensus on the implementation of the project would likely require a longer duration than 6 months. This was because it would entail further federal and provincial government consultations and continued dialogue with provincial authorities. The response also considered the 6-month extension of the loan signing period as ineffective given the flood response priority for the government.
Since the loan agreement was not signed within 12 months from the date of ADB’s approval of the loan, the validity of ADB’s loan approval lapsed on 13 December 2022. The government has been informed about this lapse on 12 January 2023, according to the official of the ADB.