Pakistan fails to secure $200m ADB loan for Greater Thal Canal Irrigation Project

ISLAMABAD: Pakistan has failed to secure a $200 million Asian Development Bank loan for the Greater Thal Canal Irrigation (GTC) Project, Profit learnt on Sunday. 

According to documents available, the ADB Board on December 13, 2021, had approved a loan worth $200 million from its ordinary capital resources for the GTC project, which aims to increase agricultural production and productivity of the project area by developing a new irrigation system. For this, 704,000 hectares (ha) of low productive rainfed lands in Punjab will be converted to irrigated and productive areas. This will provide reliable irrigation water supplies during the monsoon season.

The government has already constructed the Main Canal and first branch (Mankera) system using government funds. The ADB-financed project was to support construction of the irrigation canal network in the second branch (Choubara) canal system; 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 capacity enhancement of relevant government entities and water users for efficient water management, and sustainable infrastructure.

In March 2022, the Executive Committee of the National Council (ECNEC), approved the project. It recommended establishing a rigorous river flow measurement monitoring mechanism on the River Indus; 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 develop a computer model to measure water balance at specific sections of the River Indus.

The document states that the Ministry of Water Resources led multiple federal, inter-provincial and provincial consultations to reach a consensus on ECNEC’s recommendations but failed to develop  consensus within 12 months after the ADB loan approval date.

On December 2, 2022, the Ministry of Economic Affairs requested an extension of the loan signing period by 6 months due to delays in discussions with federal and provincial governments as officials were diverted to flood recovery activities.

In a letter dated December 6, 2022, ADB responded to the Ministry of Economic Affairs stating 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 consultations and continued dialogue with provincial authorities. The response also considered the 6-month extension of the loan signing period as ineffective given the need to respond to the flood crisis as priority.

However, according to the document, since the agreement was not signed within 12 months from the date of the approval, its validity lapsed in December 2022 whereas the government has been informed about this lapse on January 12, 2023.

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