$86.4m ADB loan to finance Pehur canal extension

PHLCEP is among showcase projects for gender mainstreaming

ISLAMABAD: After a delay of six months, Pakistan and the Asian Development Bank on Friday signed a loan agreement of $86.4 million for the extension of Pehur High Level Canal in Khyber-Pakhtunkhwa’s Swabi and Nowshehra districts.

The Board of Directors of the ADB had approved the loan in November last year but it took another six months in giving necessary approvals and finally gathering all ‘personalities’ in Q-Block to sign the loan agreement.

The delay in the project start-ups is one of the main reasons behind slow executions and a higher-than-anticipated cost of development schemes due to increase in input costs.



The loan will have a 25-year term, including grace period of five years, an annual interest rate determined in accordance with the ADB’s London Interbank Offered Rate-based lending facility. Pakistan will also pay a commitment charge of 0.15% per year.

The total cost of the project is $96.6 million and the government will contribute roughly $9 million for taxes and duties in the form of cash and $1.3 million as part of land acquisition and resettlement costs.

Pehur High Level Canal Extension Project (PHLCEP) is among the showcase projects for gender mainstreaming, although it has limited scope for direct gender benefits. The main elements of the project include increased employment opportunities for women, improved skills for income generation and improved access to water supply for domestic use.



This will be the second phase of the project to be completed during the next six years. The first phase that began in 1993 had taken ten years to complete. The project had been initiated by former K-P chief minister Aftab Sherpao in 1993 and now his son Sikandar Hayat Sherpao in his capacity as K-P’s senior irrigation minister will oversee the execution of the second phase.

The proposed second phase of the project will develop a new irrigated area of over 8,727 hectares in Swabi and Nowshehra districts.

Xiaohong Yang, ADB’s Country Director for Pakistan, and Tariq Mahmood Pasha, Secretary to the Economic Affairs Division, signed the loan agreement. It was the first loan agreement signed by the newly appointed ADB country director.



The project realised the full agricultural potential of about 40,300 hectares by doubling irrigation supplies to about 35,800 hectares, reclaiming about 8,000 hectares of waterlogged land and developing irrigation in about 4,310 hectares of mainly rain-fed land.

“Bolstering water resource management is an important step to increase farm productivity across Pakistan,” said Ms Yang.

She said that the Pehur Canal irrigation project will help support agriculture output and raise income opportunities of the farming families in the KP province.



The project will build on the earlier phase of the Pehur High Level Canal developed with the ADB’s assistance by further increasing the availability of water to farmers through new irrigation canals and pipeline over 65 kilometres and improving water-use efficiency and farm management capacity to secure the province’s food security targets.