|Project Rationale and Linkage to Country/Regional Strategy
1. Damage. The floods took place in mid 2010, affected 20 million people and caused 1,600 deaths. Basic transport infrastructure and irrigation facilities were badly damaged. The same happened to health and education centers, housing, agriculture, livestock, fisheries and livelihoods. 80 of the 110 districts across Khyber Pakhtunkhwa, Sindh, Punjab, and Balochistan were all seriously affected. About one-fifth of the country, equivalent to the size of England, was under floods. The total damage is estimated at $10 billion.
2. Government's response. The Government's response followed three phases: (i) rescue and relief, (ii) early recovery (temporary restoration), and (iii) reconstruction and rehabilitation. The first phase was handled by national agencies. The work was swift, effective and well coordinated, especially by the National Disaster Management Authority. External assistance (financial and in-kind) was mobilized quickly and from a wide range of sources, including the United Nations (UN) and leading nongovernment organizations. The UN launched a $2-billion appeal, raising $1.3 billion. This first phase of the response is now practically over with most of the affected people back in their villages, except small pockets of Khyber Pakhtunkhwa and parts of Sindh.
3. Early recovery phase started immediately after the floods subsided. The government's plan was to quickly and effectively restore services, and provide temporary housing and grants for restoring agriculture and basic livelihoods. This second phase involved all major national organizations, federal and provincial alike. The scale of work delayed the permanent reconstruction works (third phase) but this was necessary and inevitable. The early recovery response was structured primarily on unconditional cash transfer program targeting some 20 million people displaced by floods. This program was complemented by an appeal to international donors to extend new or additional financial resources in the form of grants, channeled through the national budget. The objective was to react quickly through quick-disbursing facilities. The program itself amounts to PRs40,000 rupees per family, with a first tranche of PRs20,000 made available soon after the floods. The remaining PRs20,000 have been directed at families with damaged houses. About $340 million have already been disbursed by the government for this purpose (from its own budget) and an additional $600 million were pledged by international donors including Italy, United Kingdom, United States, and the World Bank at the Development Forum held in Islamabad in December 2010. Several of these donors (including the World Bank) are now close to completing due diligence work, as well as fiduciary and fund flow arrangements, in support of the program. ADB is not part of this cash transfer program but, at the time of the floods, pledged $2 billion (over a four-year period) to help with the emergency, focusing on permanent restoration of priority services and related infrastructure reconstruction often the more complex and difficult part of the effort to finance. The World Bank pledged $1 billion. ADB did not have grant finance available for early recovery work. It did propose establishing instead a trust fund to raise grant money from donors interested in the reconstruction phase. ADB also expanded its trade facilitation program to Pakistan by $500 million, providing extra cover to emergency imports and experts during the reconstruction period and beyond. The focus by ADB on infrastructure is based on the government's request, its experience and track record in this area. This was also the sector assigned to ADB under the DNA. Housing, livelihoods and other early recovery operations were to be handled by the government and World Bank in collaboration with other donors.
4. The third phase of the response focuses on the permanent reconstruction and rehabilitation of priority physical assets. Work is underway in all provinces but the task is well short of being fully accomplished. Sindh is, by far, the worst affected province, with Punjab and Khyber Pakhtunkhwa following suit. Balochistan has much less damages than the others. Fund mobilization and initial reconstruction, including the rebuilding of schools and medical facilities, are fairly advanced in Punjab and Khyber Pakhtunkhwa, but less so in Sindh. This is mainly on account of an earlier start by the two provinces and a more successful fund-raising program from donors and internal reallocation. A number of these donors had a presence in these two provinces before the floods. This made the approval and channeling of funds easier adding new money via the existing programs. The scale of the damage and the corresponding financial burden on Sindh has been higher from the outset. Sindh responded, as well as others, to the floods but its reconstruction work was always going to lag because of time and scale. The floods spread into Sindh after subsiding elsewhere. Some parts of the province still have standing water today.
5. Transport and irrigation combined are the largest items in terms of damage (close to $3.3 billion). Housing follows with $2 billion. Education damages are around $500 million. Agriculture and livelihoods together account for $1.5 billion. With the exception of irrigation, the floods hit Sindh the hardest.
6. Highways, roads and bridges. The major damage is to national roads and bridges, followed by the road network in Sindh and Khyber Pakhtunkhwa. About 793 kilometers (km) of national highways (7% of the network), including bridges, need urgent repair to ensure their stability and public safety. About 24,000 km of provincial highways and many smaller access roads (representing 12% of the total provincial road network) are in bad shape. The bulk of problem centers on Sindh and Khyber Pakhtunkhwa (20% of their road networks affected).
7. Irrigation infrastructure. Khyber Pakhtunkhwa is the most affected, followed by Sindh, Punjab and Balochistan. The damages resulted from breaches in flood embankments along the Indus River. In Khyber Pakhtunkhwa, damages were caused mainly by flash floods. About 90% of crop production in the country is based on irrigated agriculture. In Khyber Pakhtunkhwa, over 5,700 irrigation structures were broken and a major headworks washed away. In Sindh, the major command area was inundated, affecting water sources to 1.5 million hectares (ha). Punjab's irrigation system damage was less extensive. However, its impact on the country's overall agriculture output is substantial since it accounts for 72% of the total crop area and 74% of the national production.
8. The Borrower's request: The government has requested ADB in February 2011 for a emergency assistance loan (EAL) with a three year implementation period to be completed before March 2014, for restoring priority infrastructure. The government's request was processed in 8 weeks, compared to 12 weeks provided for EAL processing after a disaster. The Operations Manual states that a proposed EAL must have an implementation period set normally up to two years for natural disasters and may be exceptionally extended for, at most, two additional years when the level of destruction and dislocation are deemed extreme. Since the flood was one of the largest in world history, the three years' implementation period proposed for FERP is reasonable.