Report and Recommendation of the President

to the Board of Directors

Sri Lanka
Project Number: 39631
December 2005

Proposed Loan, Pakistan Earthquake Fund Grant,

and Technical Assistance Grant
Islamic Republic of Pakistan: Earthquake Emergency
Assistance Project

CURRENCY EQUIVALENTS
(as of 30 November 2005)
Currency Unit

Pakistan rupee/s (PRe/PRs)

PRe1.00
=
$0.0167
$1.00
=
PRs59.72
ABBREVIATIONS
ADB
ADF
AGP
AJK
AJKED
CGA
CSO
DCC
DOH
DSC
EARF
EMP
EPA
ERRA
FCU
FHA
GAP
GDP
ICB
IEE
IESCO
IRP
IS
kV
LAA
LCB
LGRDD
MOF
NADRA
NIC
NGO
NWFP
P&DD
PDNA
PDWP
PEPA
PESCO
PIFRA
PIU
PMU
PPMS

Asian Development Bank

Asian Development Fund
Auditor General of Pakistan
Azad Jammu and Kashmir
Azad Jammu and Kashmir Electricity Department
Controller General of Accounts
civil society organization
district coordination committee
Department of Health
design and supervision consultant
environmental assessment and review framework
environmental management plan
Environmental Protection Agency
Earthquake Reconstruction and Rehabilitation Authority
Federal Coordination Unit
Frontier Highway Authority
gender action plan
gross domestic product
international competitive bidding
initial environmental examination
Islamabad Electricity Supply Company
involuntary resettlement policy
international shopping
kilovolt
Land Acquisition Act of 1894
local competitive bidding
Local Government and Rural Development Department
Ministry of Finance
National Database and Registration Authority
national identity card
nongovernment organization
North-West Frontier Province
Planning and Development Department
preliminary damage and needs assessment
Provincial Departmental Working Party
Pakistan Environmental Protection Agency
Peshawar Electricity Supply Company
Protect to Improve Financial Reporting and Accounting
project implementation unit
project management unit
project performance monitoring system

PWD
RA
SBP
SC
SDR
SHYDO
TA
UNDP
UNESCO

UNICEF
WAPDA

Public Works Department

reconstruction agency
State Bank of Pakistan
steering committee
special drawing rights
Sarhad Hydro Development Organization
technical assistance
United Nations Development Programme
United Nations Educational, Scientific, and Cultural
Organization
United Nations Childrens Fund
Water and Power Development Authority
NOTES

(i)

The fiscal year (FY) of the Government ends on 30 June. FY before a calendar year
denotes the year in which the fiscal year ends, e.g., FY2005 ends on 30 June 2006.

(ii)

In this report, "$" refers to US dollars.

(iii)

The proposed Project will be partially carried out in Azad Jammu and Kashmir, an area
over which Pakistan and India have been in dispute since 1947. By financing the
proposed Project, the Asian Development Bank does not intend to make any judgment
as to the legal or other status of any disputed territories or to prejudice the final
determination of the parties claims.

Vice President
Director General
Director

L. Jin, Operations Group 1

K. Senga, South Asia Department (SARD)
N. Patel, Officer-In-Charge, Transport and Communications Division, SARD

Team leader
Team members

F. Garcia, Senior Transport Specialist, SARD

I. Caetani, Social Development Specialist, SARD
A. Djusupbekova, Counsel, Office of the General Counsel (OGC)
E. Haugh, Senior Advisor, SARD
A. Ignacio, Operations Officer, SARD
A. Jorgensen, Principal Urban Specialist, SARD
A. Mohammed, Counsel, OGC
K. Niaz, Project Implementation Officer, SARD
J. Perera, Senior Compliance Specialist, SARD
M. Shafi, Project Implementation Officer, SARD
R. Stroem, Principal Energy Specialist, SARD
D. Utami, Senior Environment Specialist, SARD
H. Yamaguchi, Transport Specialist, SARD

CONTENTS
Page
LOAN AND PROJECT SUMMARY

I.

THE PROPOSAL

II.

RATIONALE: ANALYSIS, PROBLEMS, AND OPPORTUNITIES

A.
Natural Disasters in Pakistan and the Region
B.
Impact of the Earthquake on Northern Pakistan and Azad
Jammu and Kashmir
C.
The Governments Response
D.
Needs Assessment
E.
Impact of the Earthquake
F.
Earthquake Reconstruction and Rehabilitation Authority
G.
Response of Development Partners
H.
ADBs Response and Strategy
I.
Hazard Risk Management
J.
Lessons Learned

1
1
1
2
2
3
7
8
8
9
9

III.

THE PROPOSED PROJECT

A.
Impact and Outcome
B.
Outputs
C
Special Features
D.
Sector Components
E.
Legal Assistance, Governance, and Institutional Building
F.
Cost Estimates
G.
Financing Plan
H.
Cofinancing
I.
Implementation Arrangements

10
10
11
12
13
14
15
15
16
17

IV.

TECHNICAL ASSISTANCE

26

V.

PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS

A.
Economic and Poverty Impacts
B.
Social Impacts
C.
Resettlement Issues
D.
Indigenous People Issues
E.
Environmental Impacts
F.
Sustainability
G.
Risks, Mitigation Measures and Assumptions

27
27
27
28
28
29
29
29

VI.

ASSURANCES
A.
Specific Assurances
B.
Condition for Grant and Loan Effectiveness
C.
Conditions for Disbursement

31
31
34
34

VII.

RECOMMENDATION S

34

APPENDIXES
1.
Design and Monitoring Framework
2.
Summary of Damage and Needs Assessment
3.
List of Permissible Imports
4.
Transport Sector Assessment and Proposed Assistance
5.
Power Sector Assessment and Proposed Assistance
6.
Social Sectors Assessment and Proposed Assistance
7.
Legal Assistance, Governance, and Institutional Building
8.
Cost Estimates
9.
Funds Flow and Project Implementation Arrangement
10.
Procedures for Selection, Approval, and Implementation of Subprojects
11.
Project Implementation Schedule
12.
Outline Terms of Reference for Steering Committees,
Reconstruction Agencies and other Implementation Agencies
13.
Summary Poverty Reduction and Social Strategy
14.
Initial Environmental Examination
15.
Resettlement Framework
16.
Gender Action Plan
17.
Vulnerable People Action Plan
18.
Outline Terms of Reference for Consulting Services for Providing Capacity
Building for the Office of the Auditor General of Pakistan
SUPPLEMENTARY APPENDIXES (available on request)
A.
2005 Pakistan Earthquake Preliminary Damage and Needs Assessment
B.
Economic Impact of the Earthquake
C.
Financial Management and Disbursement
D.
Terms of Reference for Consulting Services

36
39
42
47
51
55
60
66
67
69
72
73
79
81
89
97
101
104

LOAN AND PROJECT SUMMARY

Borrower

Islamic Republic of Pakistan

Classification

Targeting Classification: Targeted intervention

Sector:
Multisector
Subsectors: Education sector development, energy sector development,
health systems, law and judiciary, roads, subnational
government administration
Themes:
Sustainable economic growth, inclusive social development,
governance
Subthemes: Fostering physical infrastructure development, gender equity
in opportunities

Environment
Assessment

Category B. An initial environmental examination was undertaken

(Appendix 14).

Project
Description

The Earthquake Emergency Assistance Project (the Project) will

rehabilitate and restore infrastructure damaged and destroyed by the
earthquake of 8 October 2005 in affected areas of Azad Jammu and
Kashmir (AJK) and North-West Frontier Province (NWFP), thereby
restoring the livelihoods of affected people. The Projects design is based
on the findings of the preliminary damage and needs assessment (PDNA),
prepared for the Government by a multidonor mission led by the Asian
Development Bank (ADB) and World Bank from 24 October to 12
November 2005.
The investment component of the Project is designed as a sector project
and will address urgently required rehabilitation and reconstruction in the
transport, power, and health and education sectors. The Projects quickdisbursing component will finance urgently needed imports. Local
communities and beneficiaries will actively participate in the selection,
design, implementation, and operation and maintenance of all works
carried out under the Project. The Project additionally addresses the needs
of vulnerable groups, including women and children, and assists affected
people by supporting the reissue of lost identification cards and other
documentation, as well as protecting their legal rights.

Rationale

The 8 October 2005 earthquake was the most debilitating natural disaster
in Pakistans history. According to figures provided by the Government of
Pakistan, as of 3 November 2005, approximately 73,000 people had died
and more than 70,000 were severely injured or disabled. Over 2.8 million
people have been left without shelter, and 2.3 million persons are without
adequate food. The overall cost associated with the earthquake is
estimated at $5.2 billion, which includes the costs of relief, livelihood
support for victims, and reconstruction. The cost of reconstructing of lost
assets and restoring services is estimated to be $3.5 billion. Estimates
show the total loss in employment to be around 324,000 jobs, equal to
about 29% of the previously employed population in the affected districts

ii
and affecting nearly 1.6 million people. Vulnerable groups are at risk of
becoming poorer. In particular, female-headed households, widows, and
orphaned children are at a risk of having little or no access to supplies and
services and of losing property claims, often because they lack proper
identity papers. By providing financing for the most urgently needed
components and works, the loan and grant will enable the Government to
finance a portion of the overall reconstruction and rehabilitation program,
provide assistance to vulnerable groups, and help to restore the economic
activity essential to the survival of residents in the heavily affected areas.
Impact and
Outcome

The expected impact of the Project is to contribute to reversing the

devastating impact of the earthquake and so revive economic activity and
enable people to resume their livelihoods and return to normal life. This will
be achieved primarily through rehabilitating and reconstructing damaged
and destroyed infrastructure as quickly as possible, which will particularly
assist the poor and other vulnerable people.
The Project will have the following components:
(i)

Quick-disbursing component. In accordance with ADBs Disaster

and Emergency Assistance Policy, a portion of the proposed Project
will be used for quick-disbursing assistance to partly finance the
unusually high and unexpected expenditures required for
rehabilitation and reconstruction. The quick-disbursing component
will be used to finance only those imports identified as necessary for
an effective recovery program. The Government and ADB have
agreed on a list of permissible imports for financing under the quickdisbursing facility.

(ii)

Project's sector components. In consultation with the Government,

and taking into account the assistance being proposed by other
development partners, project components will finance rehabilitation
and reconstruction in the following sectors: (a) transport; (b) power;
and (c) health and education. The Project will rehabilitate and
reconstruct high-priority earthquake-damaged educational, health
and road infrastructure facilities by providing civil works, equipment
and materials. These activities will be undertaken with the adoption
of appropriate and cost-effective earthquake-resistant design and
construction standards. Civil works designs will follow a sector
approach in selecting the highest-priority subprojects. This will allow
a quick response and maximum flexibility regarding both geographic
coverage and the selection of subprojects, within an agreed
framework and criteria.

(iii)

Implementation assistance. Consulting services will include

services for project design, implementation, monitoring, and
evaluation. Legal assistance, governance, and institutional building
subcomponents will be used to address governance, legal, and
documentary issues arising from the earthquakes impact.

iii
Cost Estimates

The estimated cost of the Project is $374.2 million equivalent. For the
Projects sector components, the Government will contribute 24% of the
estimated cost of reconstruction and rehabilitation, mainly in the form of
taxes and duties, land acquisition, rehabilitation, resettlement, and
administrative support. As a sector approach is being followed, the cost
estimates are broken down by sectors.

Financing Plan

ADB will provide a grant of $80 million from the Pakistan Earthquake Fund,
and a loan of $220 million from ADBs Special Funds resourcesas Asian
Development Fund (ADF) loanto finance the Project.
This covers the entire foreign exchange cost (except interest during
implementation) of $236.3 million, as well as $63.7 million equivalent of
local currency cost.
($ million)
Foreign
Source
Exchange
A. Quick-Disbursing Component
100.0
1. Asian Development Bank Grant
65.0
2. Asian Development Bank ADF Loan
35.0
3. Government
0.0
a

B. Project Components
1. Asian Development Bank Grant
2. Asian Development Bank ADF Loan
3. Government
C. Interest during Implementation
Total
Asian Development Bank
ADF= Asian Development Fund
a
Includes cost of consulting services.
Source: Asian Development Bank estimates.

Local
Currency
8.0
0.0
0.0
8.0

Total
Cost
108.0
65.0
35.0
8.0

136.3
5.0
131.3
0.0

125.5
10.0
53.7
61.8

261.8
15.0
185.0
61.8

100
6
70
24

4.4

0.0

4.4

100

240.7
236.3

133.5
63.7

374.2
300.0

100
80

Percent
100
60
32
8

Grant and Loan

Amount and
Terms

The proposed Project will be (i) a grant of $80 million from the Pakistan
Earthquake Fund and (ii) a Special Drawing Rights loan of SDR
154,227,000 ($220 million equivalent) from Special Funds resources. In
accordance with ADBs Disaster and Emergency Assistance Policy, the
loan will have a 40-year term, including a grace period of 10 years, an
interest rate of 1% per annum, and repayment of principal at 2% per
annum for the first 10 years after the grace period and 4% per annum
thereafter.

Allocation and
Relending
Terms

The Government will make the loan and the grant proceeds of the Project
available to the governments of AJK and NWFP in accordance with the
existing policies and practices of the Government or any changes approved
by the Governments Economic Coordination Committee (ECC). Likewise,
a portion of the loan and grant proceeds will be made available to
Peshawar Electricity Supply Company (PESCO) and Islamabad Electricity
Supply Company (IESCO) in accordance with the existing policies of the
Government or any changes approved by the Governments ECC. The
Government will bear all foreign exchange risk. In addition, the
Government will provide required counterpart funds for implementing the

iv
Project to the governments of AJK and NWFP, IESCO, and PESCO in a
timely manner and on a grant basis.
Period of
Utilization

30 June 2009

Estimated
Project
Completion
Date

31 December 2008

Implementation
Arrangements

The Earthquake Rehabilitation and Reconstruction Authority (ERRA)

established by presidential decree, in response to the 8 October 2005
massive earthquake, will be the executing agency for the Project. The
mechanisms and implementation strategies, institutional framework and
related terms of reference for the recovery efforts under the umbrella of
ERRA are still being developed. Based on current understanding of ERRA
functions, the authority is expected to facilitate, guide, coordinate, approve
and monitor the reconstruction effort, develop the overall policy and
planning framework for the reconstruction effort, standard setting and
quality control and manage the operation and accounting of rehabilitation
and reconstruction funds. ERRA is also expected to lead revision of the
current arrangements for subproject approval, implementation and fund
flow to simplify procedures and so ensure quick implementation and full
transparency. ERRAs Governing Council, chaired by the Prime Minister,
will approve overall programs and large work packages, basically fulfilling
the role of the Central Departmental Working Party in normal development
projects, but with a much shorter timeframe. ERRAs Board will oversee the
implementation of the Project through provincial and district line agencies
following current/revised procedures but on a fact-track basis. ERRA will
also approve major changes in the scope and cost of the subprojects,
annual plans and budgets, and support the Projects implementing
agencies with financial and technical management.
ERRA will be staffed by various specialist professionals deputed from
relevant government departments (including those of the federal
Government and other provinces) and hired from the private sector as
necessary for ERRA to carry out its functions. Periodic social and technical
monitoring, regular review, and overall fund flow and internal audits of the
Project will be carried out by ERRA. The Controller General of Accounts
(CGA) will prescribe the related procedures and requirements for fiduciary
monitoring. The AJK and NWFP implementing agencies will develop the
subprojects following the selection criteria and social compliance, through
public consultation as outlined in Appendix 10, which will be formalized in
an operational manual to be prepared by ERRA.
The Governments of AJK and NWFP, through their steering committees
(SCs) specially constituted for the purpose of reconstruction in the quake
affected areas, chaired by the Additional Chief Secretaries of AJK and
NWFP and having representation of ERRA, provincial line departments and
the district governments (in case of NWFP), will be responsible for over

v
seeing the provincial planning and implementation of subcomponents.
These committees will be supported by professionally staffed
reconstruction agencies (RA)the NWFP Reconstruction Agency and the
AJK Reconstruction Agency, containing various specialist staff, will be for
implementation of subprojects for which capacity does not exist at with
provincial and district line departments contracted as decided by the
respective steering committees of NWFP and AJK. RAs will design and
approve subprojects falling within the powers delegated to the RA by the
provincial Government and within the overall annual budget and work plan
approved by ERRA. The steering committees and ERRA will approve sub
projects, work plans, budgets and provide overall guidance, in line with
emergency procedures to be put in place by the ERRA Council and/or
Board. For the subprojects implemented through the provincial line
departments/implementing agencies, and the district governments, where
technical capacity exists as decided by the respective SCs, additional
support will be provided by deputing staff and by appointment of additional
expertise as required to meet the additional work load and fast track
requirements, due diligence and reporting. The ERRA, RAs, and line
departments staff requirements, and related operating costs, will be funded
through incremental administration support, supported in part by ADB
grant.
The district advisory committees (DACs)/district development committees
(DDCs) headed by district coordination officer (DCO) or Nazims in NWFP
and deputy commissioners in AJK, will be responsible for the identification
of subprojects and needs, and recommend plans for approval of the
steering committees. These plans will be approved annually by the steering
committees or ERRA and implemented through RA (through their district
reconstruction units), line departments and district governments, as
recommended bv SCs. Implementing agencies additional incremental staff
and overhead cost for subproject implementation, and technical
backstopping and technical assistance support for implementing agencies
to plan, design, supervise and implement the subprojects, will be financed
by the Project.
Financial
Management

The Ministry of Finance will manage the multidonor Consolidated Fund for
the Emergency Earthquake Assistance established in the State Bank of
Pakistan (SBP) through which the project funds will flow. ERRA is putting in
place the related fiduciary arrangements to ensure transparency in funds
flow, financial management, accounting, internal control processes,
procurement, periodic financial reporting, monitoring and internal and
external audits. The CGA will provide the related guidelines, and ensure
that all relevant Government statutory provisions and prudent regulations
are followed. Disbursement of project funds will generally follow existing
accounting procedures. The Auditor General of Pakistan (AGP) will be
responsible for determining the appropriate auditing arrangements and
ensuring the timely completion of audits conducted in accordance with
internationally accepted auditing practices.

vi
The Project funds will be disbursed through the Consolidated Fund in SBP,
to the imprest account operated by the fund managerthe Ministry of
Finance (MOF) for the quick-disbursing components and ERRA for the
other componentsto finance components of the Project. MOF will make
budget allocations for counterpart funds in the budget, and release the
Governments counterpart share as a grant in a separate account operated
by the fund manager in the form of budget allocation, as a grant, released
from the MOF to the ERRA Fund (a special deposit fund in public
accountassignment account). The ADB funds for the Project, and
Governments counterpart funds will be released to ERRA as executing
agency (excluding quick-disbursing component, for which MOF will be the
executing agency). ERRA will maintain separate accounts for ADB loan
and grant (imprested accounts), the Government counterpart funds and will
release funds to the respective implementing agencies (second generation
imprest accounts) as advances against approved budget/work plan at the
federal, provincial and district levels. All funds will be utilized for their
intended purposes as per the financing plan, in accordance with the
procedures set down by CGA and ERRA. ADB funds will be issued with
specified codes for the rehabilitation and reconstruction program, and all
payments and disbursements will be made based on those codes. A fund
flow arrangement is in Appendix 9.
ERRA will provide ADB with quarterly financial and physical progress
reports, as well as annually audited financial statements, of the use of
donor and ADB funds. Given the magnitude of funds, which will be passing
through ERRA, the MOF has already proposed that ERRA should establish
periodic internal audits and reviews mechanisms, in consultation with other
donors and ADB. These will provide systemic feedback to improve financial
management, fund flow timeliness, accountability and transparency.
Project imprest accounts will be operated in accordance with the ADBs
Loan Disbursement Handbook (January 2001). AGP will nominate private
chartered accountants, if required, to meet the increased burden on CGA
and to demonstrate transparency.
All donor funds channeled through ERRA will be subject to the same
operating procedures and processes, provided as Supplementary
Appendix C. Based on the preliminary assessment and subject to
finalization of implementation and financial management arrangements
satisfactory to ADB, the financial management arrangements for the
Project are found to be satisfactory.

vii
Executing and
Implementing
Agencies

ERRA will be the executing agency for the Project. MOF will be the
executing agency for the quick-disbursing component. In order to fast-track
the Project, ERRA is located within the Prime Ministers Secretariat and
has been mandated with extraordinary authority to expedite the recovery,
reconstruction, and rehabilitation in the earthquake-affected areas. ERRAs
Governing Council consists of the Prime Minister of Pakistan (Chair), the
prime minister for AJK, the chief minister of NWFP, minister for Kashmir
Affairs and Northern Areas, advisor to the Prime Minister of Pakistan,
deputy chairman of the Planning Commission, and the chairman of ERRA.
Under ERRA, the implementing agencies for the Project will be (i) NWFP
Reconstruction Authority, (ii) AJK Reconstruction Authority, (iii) PESCO,
and (iv) IESCO. In NWFP and AJK, the various line departments will also
be the implementing agencies as well as Sarhad Hydro Development
Organization (SHYDO), which come under NWFP Irrigation and Power
Department and the Frontier Highways Authority (FHA) which comes under
the NWFP Works and Services. The steering committees established for
the purpose, chaired by the respective Additional Chief Secretary and
having representation from ERRA, provincial line departments and districts
will decide about the existence or otherwise of sufficient capacity for the
purpose of implementation of the subprojects. The implementation of the
Project will generally follow procedures already in place for ADB-financed
projects, but will be supported by additional fast-track mechanisms and
fund flow due diligence provided by ERRA.

Procurement

Given the urgent Project needs, procurement of goods, works, and

services will be carried out in a manner consistent with the simplified and
expedient procedures under the ADB Disaster and Emergency Assistance
Policy and ADB Guidelines for Procurement and the contemplated
implementation schedule. Local competitive bidding procedures will be the
preferred mode of procurement. Basically, the procurement procedures as
that already in place with the various line agencies for ongoing ADB loans
are simplified as allowed under the special procedures for emergency
lending. The procurement of goods and related services estimated to cost
more than $1 million will be procured following international competitive
bidding procedures. International shopping procedures will be followed for
procurement of goods and related services estimated at between $100,000
and $1 million. For small, specialized equipment and materials contracts
valued at less than $100,000, direct procurement procedures acceptable to
ADB will be followed. Due to the urgent nature of this Project, the bidding
period for international competitive bidding will be shortened to 30 days
and, for local competitive bidding, to 14 days. Civil works contracts worth
over $5 million will be procured through international competitive bidding,
and those estimated to cost $5 million or less will be procured through local
competitive bidding procedures acceptable to ADB. Community
participation in the procurement of small works of a simple nature is
encouraged.

viii
For the quick-disbursing component, all items on the positive list imported
by the Government, including packages procured by private entities on
behalf of the Government, following normal local commercial procedures
for the private sector and standard Government procurement procedures
for the public sector procurement, where such procedures are functioning
and appropriate and acceptable to ADB, are eligible.
Consulting
Services

The implementation of the earthquake reconstruction program will more

than double the normal level of development activities in NWFP and AJK,
putting unprecedented stress on the responsible agencies. The most
efficient way to boost their human and skills capacity is to recruit
experienced consultants. This implementation support, will take three
forms: (i) legal assistance, governance, and institutional building ($2.5
million); (ii) incremental administrative support ($5 million); and (iii)
consulting services ($7.5 million). All the implementation support will be
funded from the ADB grant proceeds. All consulting firms and individual
international consultants will be engaged in accordance with ADBs
Guidelines on the Use of Consultants and other arrangements satisfactory
to ADB. As the rehabilitation and reconstruction work to be financed under
the Project must be completed within 36 months due to its urgent nature,
expeditious selection and fielding of consultants is necessary. Accordingly,
ERRA and the executing and implementing agencies may recruit directly
from consultants already engaged on ADB-financed projects in Pakistan
and now providing services similar to those required for the Project. This
arrangement will provide an efficient way to recruit consultants under the
circumstances. In any other cases, the consulting services from firms will
be provided through quality- and cost-based selection using simplified
technical proposals. Individual consultants will be procured through ADBs
procedures for the recruitment of individual consultants.

Project Benefits
and
Beneficiaries

The Project will contribute to the Governments efforts to regenerate the

economy, rehabilitate public infrastructure and utilities, and generate
employment. Priority will be given to providing work for earthquake-affected
people, including women, to help reestablish their livelihoods. The
rehabilitation of damaged and lost infrastructure, particularly road and
power infrastructure will improve the quality of life and revive economic
activities. Reconstruction of education and healthcare facilities will offer
long-term benefits for affected people.
The legal assistance, governance, and institutional building subcomponent,
which is an important part of reconstruction, will also support improvements
in gender mainstreaming and the elimination of legal discrimination and
cultural marginalization. Orphans, female heads of households, and
widowers will be trained in new social and income-earning roles to improve
the well-being of their families. No major resettlement impacts are
envisaged under the Project. Restoration of the means of livelihood of poor
people who were farmers and shepherds, on government land or other
land not privately held will be addressed. Any land acquisition and
resettlement will be done in accordance with Governments laws and
regulations and ADBs Involuntary Resettlement Policy.

ix
The Projects initial environmental examination (IEE) determined that it is a
category B project. The environmental assessment and review framework
provides the procedures to be followed for a sector loan modality. Based
on the Projects initial environmental examination, the environmental
impacts will be mostly limited to construction related aspects, of which the
disposal of millions of tons of rubble is the major issue. These impacts will
be mitigated through careful construction procedures.
Risks and
Assumptions

The four major overarching risks for the Project include the physical risks
associated with unstable mountain slopes, problems of access and
logistics, the Governments capacity to implement such a massive
reconstruction effort in a reasonable timeframe, and the local governments
capacity to properly operate and maintain the new facilities. The physical
and logistical risks include (i) aftershocks causing further damage to
already weakened structures and infrastructure; (ii) landslides that could
cause delays in restoration of services and reconstruction; (iii) remote
locations and difficult topography that make any reconstruction logistically
difficult; (iv) high elevations in some areas that will limit reconstruction to a
few months in the summer season, (iv) massive relief operations and
temporary housing camps that could hinder or delay reconstruction,
especially in the vicinity of the larger towns; and (v) lack of available land
for infrastructure.
The governments capacity in NWFP, and especially in AJK are severely
weakened by the loss of many of their own buildings, facilities, and staff
members. Compounding the difficulties is their relative lack of experience
with externally funded projects, which constitutes another risk. Substantial
strengthening will need to be done to enable them to fast-track the
emergency reconstruction works. The Government has established ERRA
and has mandated it with extraordinary authority to open bottlenecks in
current procedures and so fast-track implementation.
Physical risks will be mitigated by relocating roads, bridges, electrical lines,
human habitations and other infrastructure away from the existing and
potentially unstable slopes and/or new slide areas. All new facilities will
incorporate earthquake strengthening and other damage-mitigation
measures. Logistics of access and climate will be addressed through
prioritization of reconstruction requirements so that for this Project only
works that can realistically be completed in the 3-year timeframe are
included. ERRA, the executing and implementing agencies, in addition to
the normal project consultants, will be supported by specialists recruited,
from the private sector to strengthen the governments own staff, and to
ensure that they can attract quality personnel. The implementation
assistance component will finance this specialized help, estimated to
include more than 700 person-months.

x
The Government has indicated that the usual counterpart funding
requirement from the local governments will be waived for this emergency
project, as counterpart funding will be paid by the central government.
Similarly, the Government is aware of the need to provide operating
support to some local utilities, education and health facilities, and electricity
distribution companies until their normal revenue sources can be restored.
Implementation risks related to capacity for timely delivery of quality
subprojects in the various project sectors will be mitigated in several ways.
First, detailed subproject criteria will be developed, in addition to general
subproject selection criteria already agreed to. Second, in terms of
implementation, specific monitoring mechanisms will include regular
financial audits as well as regular design and construction supervision and
performance audits through random audits and special post-completion
audits.
Technical
Assistance

Given the relatively high degree of fiduciary risk associated with this
Project, and the extraordinary challenges over the Office of the AGP and
the office of the CGA, which are created by this Project as well as by other
donor Projects, ADB will ensure that these agencies will be provided with
adequate resources to meet their fiduciary responsibilities. In conjunction
with the Project, a technical assistance (TA) is proposed for building the
capacity of the office of the Auditor General of Pakistan (AGP) and the
office of the CGA. The TA is estimated to cost $2.5 million, of which ADB
will finance $2.0 million on a grant basis from ADBs TA funding program.
The TA includes provision of 192 person-months domestic and 9 personmonths international consultant. Consultants will provide training and
technical advice in various aspects of audit, accounts and performance
monitoring and evaluation. The AGP and CGA will be the executing
agencies for the TA. The proposed TA is scheduled to be implemented for
36 months from January 2006 to January 2009. Administration of the
proposed TA will be delegated to ADBs Pakistan Resident Mission.

I.

THE PROPOSAL

1.
I submit for your approval the following report and recommendation on (i) a proposed
grant and loan to the Islamic Republic of Pakistan for the Earthquake Emergency Assistance
Project (the Project), and (ii) a proposed technical assistance (TA) for Capacity Building for the
Office of the Auditor General of Pakistan (AGP). The Project will assist the early reconstruction
of damaged infrastructure and restore livelihoods that were severely affected by the earthquake
of 8 October 2005. The design and monitoring framework is in Appendix 1.
II.
A.

RATIONALE: ANALYSIS, PROBLEMS, AND OPPORTUNITIES

Natural Disasters in Pakistan and the Region

2.
The northern parts of South Asia have a history of earthquakes arising from its
geological and tectonic history. The basic geological fact is that the Euro-Asian Plate is colliding
with the Indian Plate along an alignment that more or less coincides with the Himalayan
Mountains. Earthquakes of low magnitudes occur from time to time in this area as the
subduction of the Indian Plate continues. An occasional high-magnitude earthquake occurs
when there is a sudden release of energy in this process. Accurate forecasting of earthquakes
is very difficult, if not impossible, with current technologies. In the province of Balochistan, the
earthquake of 1935 is well documented and it killed some 26,000 people. Taking into account all
natural disasters that the country has experienced, the earthquake of 8 October 2005 is clearly
the worst in terms of deaths, injuries, property loss, and damage to infrastructure.
B.

Impact of the Earthquake on Northern Pakistan and Azad Jammu and Kashmir

3.
On 8 October 2005, at 8:50 a.m. Pakistan Standard Time, an earthquake measuring 7.6
on the Richter scale was recorded in Pakistan, Afghanistan, and India. The earthquakes
epicenter was 100 kilometers north-northeast of Islamabad, along the fault line where the Indian
Plate meets the Eurasian Plate. Tremors were felt across a wide swath of South Asia, from
central Afghanistan to western Bangladesh. As of 27 October 2005, the Geological Survey of
Pakistan registered more than 1,000 aftershocks, many of which ranged from 5.0 to 6.0 on the
Richter scale.
4.
Lasting for about 2 minutes, the 8 October 2005 earthquake is arguably the most
debilitating natural disaster in Pakistans history. Pakistan-administered Azad Jammu and
Kashmir (AJK)1 and the eastern districts of the North-West Frontier Province (NWFP) bore the
full force of the earthquake in terms of number of lives lost, injuries sustained, and destruction of
infrastructure and economic assets. Substantial public and private assets in social services
delivery, governance, commerce, communications, and shelter were either badly damaged or
destroyed in at least three districts of AJK and five districts of NWFP.
5.
According to the figures provided by the Government, as of 3 November 2005,
approximately 73,000 people had died and more than 70,000 were severely injured or disabled.
Over 2.8 million people have been left without shelter, and it is estimated that about 2.3 million
persons are without adequate food primarily due to the disruption of the transport system and
loss of stored food. The terrain in affected areas of both NWFP and AJK is highly diversified and
1

Azad Jammu and Kashmir (AJK) is an area over which India and Pakistan have been in dispute since 1947. ADB
does not intend to make any judgment as to the legal or other status of any disputed territories or to prejudice the
final determination of the parties claims.

2
includes densely populated areas as well as rugged, mountainous areas with small, dispersed
rural settlements. Official estimates of the damage remain conservative as many isolated
communities in the earthquake-affected region remain inaccessible, which foreshadows an
increase in official figures as these areas are eventually reached. Furthermore, the United
Nations has issued a warning indicating that more lives will be lost if additional relief does not
materialize before the imminent onset of the Himalayan winter.
6.
Many government buildingsincluding hospitals; health clinics; provincial and local
government administration offices; police, judiciary and penal facilities; and schools and
collegeswere destroyed or severely damaged. The earthquake has had a devastating impact
on the delivery of all social services in the affected areas. The most seriously affected sectors
are transport, health and education, power, and water supply and sanitation. They have suffered
not only destruction or serious damage to physical facilities, but also through the death or
serious injury of care providers including nurses, doctors, health workers, teachers, and schools
staff.
C.

The Governments Response

7.
The Government responded quickly to the earthquake emergency. Although
communications with the most severely affected areas and populations were severed, the
President and Prime Minister visited affected sites the first day after the disaster. Two army
divisions moved into NWFP and AJK and set up five advanced staging posts to facilitate the
distribution of relief goods. The geography of some affected areas has led the Government to
call for an unprecedented number of helicopters to assist with the distribution of relief goods. As
of 2 November 2005, a fleet of more than 125 helicopters and fixed wing aircraft, both foreign
and domestic, have made over 5,000 sorties to affected areas.
8.
The Prime Minister has outlined a 12-point national strategy for reconstruction and
rehabilitation. The Prime Ministers office has appointed a Federal Relief Commission and
corresponding relief coordinator, with the overall responsibility for overseeing relief efforts
targeting shelter, food, clean water, and immediate medical care. At the district and grassroots
levels, military relief personnel have been stationed to facilitate the distribution of relief goods.
Furthermore, the President has established an Earthquake Reconstruction and Rehabilitation
Authority (ERRA) to facilitate the rebuilding and repair of damaged infrastructure, including
housing, roads, bridges, government buildings, schools, and hospitals.
9.
As of 11 November 2005, the Government had distributed 350,000 tents, 3.2 million
blankets, and 3,000 tons of medicine, and had established tent villages for earthquake-affected
persons. The Government has made available army medical teams comprised of medical
officers and paramedics in at least 13 stations in and around the affected districts of AJK and
NWFP. The Government has also announced a program that includes compensation of
PRs100,000 for each family that has lost members, PRs50,000 for each individual who
sustained serious injury, and PRs25,000 for each individual with minor injuries. The maximum
amount of assistance given to each family under this program is PRs500,000, and
disbursements have already begun.
D.

Needs Assessment

10.
At the request of the Government, a mission led by the Asian Development Bank (ADB)
and the World Bank conducted a preliminary damage and needs assessment (PDNA) to
estimate the scale of damage caused by the 8 October 2005 earthquake. Experts from other

3
international organizations, including the European Union, Department for International
Development, United Kingdom, Japan Bank for International Cooperation, Japan International
Cooperation Agency, United States Agency for International Development, Food and
Agricultural Organization (FAO) of the United Nations, United Nations Childrens Fund
(UNICEF), United Nations Development Programme (UNDP) and other United Nations (UN)
agencies also participated in this assessment. Team members visited the nine most heavily
affected districts of Abbottabad, Battagram, Kohistan, Mansehra, and Shangla in NWFP and
Bagh, Neelum, Muzaffarabad, and Poonch in AJK to verify and evaluate the intensity of disaster
damage and to meet with both civil administration authorities and people from affected
communities. The assessment team also met with a range of civil society, international,
governmental and development partner organizations to gain an understanding of the full
spectrum of issues that are likely to influence the recovery strategy. The major donors
conference in Islamabad on 19 November 2005 further defined the final breakdown of donors
sectoral responsibilities.
11.
The PDNA began on 24 October 2005 and concluded on 12 November 2005. It has
been revised based on comments received from the Government and other stakeholders. The
Government endorsed the findings of the report on 11 November 2005. Appendix 2 is a
summary of the PDNA, which is available in full as Supplementary Appendix A. The ADB
website (www.adb.org) offers relevant publications.
E.

Impact of the Earthquake

12.
The overall cost associated with the earthquake is estimated at approximately $5.2
billion, which includes estimated costs for relief, livelihood support for victims, and
reconstruction. The cost of reconstructing lost assets and restoring services is estimated to be
PRs208.1 billion ($3.5 billion).
1.

Estimated Damages and Reconstruction Costs

13.
Direct Damage. Preliminary estimates of direct damage sustained due to the
earthquake total to PRs135.1 billion ($2.3 billion), as presented in Table 1. These estimates are
based on the book value of the assets. The largest component is private housing, which
amounts to PRs61.2 billion ($1.03 billion), followed by transport sector totaling PRs20.2 billion
($340 million), and to the education sector equaling PRs19.9 billion ($335 million). Direct
damage to agriculture and livestock is also sizeable, totaling PRs12.9 billion ($218 million). The
losses to industry and services amount to PRs8.6 billion ($144 million).
14.
The level of direct damage is worse in AJK than in NWFP. For AJK, it amounts to
PRs76.4 billion ($1.3 billion) and for NWFP, PRs56.4 billion ($950 million). In most sectors, the
destruction of physical assets in AJK is greater than that in NWFP.
15.
Indirect Losses. The indirect losses resulting from the direct damage are PRs34.2
billion ($576 million). The indirect losses are comparable in absolute values between NWFP and
AJK. The estimated indirect losses do not take into account the beneficial effect of rehabilitation
and reconstruction activities on future output. Reconstruction will not only restore physical
assets but also permit improved production of goods and services. Hence, the estimates of
indirect losses presented above are likely to be on the higher side in the case of output losses.
16.
Reconstruction Costs. The cost of reconstruction of lost assets and restoration of
public services is estimated at PRs208 billion ($3.5 billion). Reconstruction costs are valued at

4
improved standard replacement rate, including the cost of rebuilding to earthquake-resistant
standards in a manner suitable to local conditions. This is necessary given the high degree of
exposure to future natural disasters in the affected areas.
Table 1: Preliminary Estimate of Total Losses and Reconstruction Costs
Direct
Damage
(PRs million)

Sector
A. Social Infrastructure
1. Private Housingb
2. Health
3. Education
4. Environment
5. Public Administration
B. Physical Infrastructure
1. Transportc
2. Water Supply and Sanitation
3. Irrigation
4. Energy, Power and Fuel
C. Economic Sectorsd
1. Agriculture and Livestock
2. Industry and Services
Total
o/w : Azad Jammu and Kashmir
: North-West Frontier Province
o/w : Public Assets
: Private Assets
o/w : Urban Areas
: Rural Areas

Indirect
Losses
(PRs million)

Share of
Reconstruction Reconstruction
Total
a
a
Costs
Costs
Reconst.
(PRs million)
($ million)
Costs (%)

92,160
18,012
28,057
8,985
4,254

1552
303
472
151
72

44
9
13
4
2

1,561

24,699
1,900
623
2,377

416
32
10
40

12
1
0
1

6,770
8,379
34,187
17,671
16,516
12,175
22,012
13,675
20,512

17,846
9,178
208,091
116,625
91,467
82,187
125,904
46,163
161,928

300
155
3,503
1,963
1,540
1,384
2,120
777
2,726

9
4
100
56
44
39
61
22
78

61,220
7,114
19,920
12
2,971

7,218
1,378
4,133

20,165
1,165
324
744

4,061

12,933
8,578
135,146
76,375
56,436
45,795
87,015
25,789
107,021

687

o/w = of which.
a
Includes cost of reconstruction of both immovable and movable assets and restoration of public services.
b
Includes the value of household contents such as consumer durables. Reconstruction costs exclude replacement of these assets.
c
Includes roads and bridges.
d
Total losses and reconstruction costs in agriculture, industry and services are over and above what is accounted for by the sectors
listed above.
Source: Asian Development Bank and World Bank-led Preliminary Damage and Needs Assessment, 12 November 2005.

2.

Macroeconomic Impact

17.
The impact of the earthquake on Pakistans official gross domestic product (GDP), which
excludes GDP from AJK, is expected to be limited to about 0.4%. In fiscal year (FY) 2006, GDP
growth was projected in June at 7%, with recent data suggesting the growth will be around 6.5%.
The additional impact of the earthquake is likely to bring output growth further down, to around
6.1%.2 This loss is due to a projected reduction in NWFP output in FY2006. In addition, the
output loss in AJK could amount to PRs76.4 billion ($297 million), or 27% of AJKs 200405
output. As reconstruction activity starts, the impact on GDP growth could actually be positive,
felt mostly in FY2007 and FY2008.
18.
At the macroeconomic level, the most significant impact of the earthquake is expected to
be on the fiscal deficit of the Government. In the absence of any offsetting revenue increases
2

This assumes that all of the income loss will fall in fiscal year 2006, an assumption that may overstate the impact of
the earthquake on growth.

5
and expenditure reductions, the earthquake is projected to increase the FY2006 deficit of the
Government between 0.6% and 1.0% of GDP. The budgets of NWFP and AJK will be unable to
accommodate a significant share of the relief and reconstruction expenditures, although it is to
be expected (and desirable) that they would have significant role in the reconstruction process.
19.
The earthquake has now created additional expenditure needs to cover for relief,
reconstruction, and rehabilitation costs. These pressures could pose difficulties for Pakistans
macroeconomic balances and may undermine the achievement of its long-term development
goals, unless additional concessional financing is made available by the international
community. A key element of the Pakistans Poverty Reduction Strategy Paper is the utilization
of the additional fiscal space created by prudent fiscal policy and aid to meet development and
poverty-reduction objectives. It is, therefore, important that priority public expenditures be
protected, so that Pakistan can continue to improve service delivery of health, education, and
public infrastructure. The Government has indicated that it would be prepared to absorb a part
of the budgetary impact of the earthquake by making cuts in low-priority expenditures and
raising additional domestic revenue. These adjustments would be needed irrespective of the
amount and type of financing that the donor community would provide. However, given the
limited magnitude of resources for rehabilitation of the affected areas, it is unlikely that the
Government will be able to fully absorb the fiscal impact of the earthquake without significantly
affecting public sector development activities.
20.
Pressure on the external trade balance has arisen from strong aggregate demand and
factors not directly related to the earthquake. The earthquake may cause an increase (albeit
limited) in imports of fuel, food, and construction materials. A delay in aid inflows to finance the
Governments earthquake expenditures would aggravate pressure on balance of payments.
3.

Social, Poverty, Environment, and Livelihood Impact

21.
Social Impact. The earthquake has so far claimed more than 73,000 lives, while 70,000
are injured and 2.8 million left homeless. In addition to the immense damage and loss of life, the
earthquake increased vulnerabilities among the surviving population. In particular, the factors
creating new vulnerabilities or contributing to existing ones include internal displacement and
marginalization based on gender, age, and disabilities.
22.
Marginalized and vulnerable groups may not be able to access emergency assistance
on an equal basis with others. In particular, female-headed households, widows, and orphaned
children are at risk of (i) having little or no access to supplies and services and (ii) losing
property claims owing to their lack of proper identity papers. Many elderly and disabled are likely
to have lost their support network. Physical and psychological disabilities suffered as a
consequence of the earthquake need to be taken into account, as they incur lasting liabilities in
terms of economic costs and social exclusion. Long-term health expenses and rehabilitation will
be important burdens on families and the Government alike.
23.
The new poor, created by the disaster, may also face financial problems and social
pressure if they are unable to repay formal or informal loans obtained before the earthquake.
24.
The health and nutrition of the vulnerable people are threatened by a diminished and
unbalanced diet.
25.

Poverty. The earthquake-affected areas were not the poorest in Pakistan, but they were,

6
even before the earthquake, among the most vulnerable. Geographical remoteness and a harsh
climate have made these areas particularly vulnerable to sudden disasters.
26.
Of the total of 2.4 million people employed at the time of the earthquake, almost 84%
were living below the poverty line of $2 per day. In addition, women and youths in the affected
provinces had difficulty finding employment.
27.
The depletion and degradation of natural resources have been particularly severe in the
earthquake-affected areas. The reduction in average land availability per household due to land
fragmentation, erosion, and landslides has resulted in households becoming increasingly poorer.
Demographic pressure and price increases have also worsened vulnerable groups exposure to
poverty.
28.
Most of the jobs in the affected provinces are in relatively less productive sectors,
particularly agriculture, livestock, and informal services. These sectors are without social safety
nets and supplemented by secondary income sources (such as off-farm jobs) and remittances.
Thus, the loss of employment, even for a short time, is likely to precipitate a decline into
conditions of extreme poverty for many families.
29.
The vulnerable groups described in the previous section are at risk of becoming poorer.
The situation is particularly critical for children, many of whom may be orphaned, homeless, and
out of school, which may force them to seek alternative forms of support. Without help, poverty
among these groups will constantly grow, with little hope for the future. A social security
mechanism should be put place for the survival of people who are not able to provide for
themselves.
30.
Environment. The earthquake has damaged the environment. Impacts on ecosystems
are often less dramatic than structural damage due to their slower manifestation. Considering
that the environment of the affected area was vulnerable even before the earthquake,
comprising fragile mountain ecosystems, significant long-term adverse impacts are likely. A
detailed environmental assessment of the impacts of the earthquake is urgently needed to
quantify losses to forest, aquatic, and terrestrial ecosystems, including biodiversity, and to
restore damaged ecosystems.
31.
The most visible consequence of the earthquake is the enormous quantity of debris and
rubble from damaged and destroyed structures. Preliminary estimates indicate that up to 200
million tons of rubble may need disposal.
32.
The main environmental impacts from the earthquake resulted from landslides. While the
exposed soil surfaces now appear to be in a state of equilibrium, a second phase of landslides
is likely, and largely unpreventable, with the onset of seasonal rains and the melting of snow in
the spring. The loss of forest cover over the last decade due to encroachment, illegal timber
felling, and agriculture will likely exacerbate the adverse impacts of the landslides. This risk
continues today as demand for lumber for reconstruction could further denude slopes of forests.
33.
Social Network, Employment, and Livelihoods. Community cohesion is threatened by
forced migration. However, the interdependence of surviving members on each other and on
comparatively resource-rich households may restore some measure of social cohesion.
34.
Community-based organizations and civil society networks administering to vulnerable
groups before the quake are not functioning as they did. The quakes impact on government

7
infrastructure and services has crippled the ability of individuals to exercise their rights and to
seek legal redress and protection. One of the major challenges will be to reduce the procedural
burden and legal requirements for obtaining compensation.
35.
The livelihood assets of affected people have been substantially reduced. Human
resources and capacities are weakened; traditional and skilled labor in the informal sector does
not provide any form of job security.
36.
Estimates show the total loss in employment to be around 324,000 jobs, equal to about
29% of the employed population above the age of 10 in the affected districts. About 38% and
25% of total employment in the affected districts of AJK and NWFP, respectively, are estimated
to be lost. The largest job losses are in agriculture, small businesses and shops, and
construction, while no employment loss is assumed for migrant workers and public sector
employees. Employment losses will likely have impact on nearly 1.6 million people.
F.

Earthquake Reconstruction and Rehabilitation Authority

37.
The ERRA was established by the Government on 24 October 2005 to guide
reconstruction work, undertake strategic planning in the affected districts, and coordinate the
implementation of works in the two affected provinces. It is located within the Prime Ministers
Secretariat with a mission to expedite the reconstruction, rehabilitation, and final recovery of the
earthquake-affected areas. ERRA has the following functions:
(i)
assess damage and needs in the quake-affected areas;
(ii)
formulate a comprehensive program to provide for planned settlements, housing,
government buildings and offices, utilities and services, infrastructure, health and
education facilities, and irrigation and agriculture facilities including watershed
protection and environmental programs;
(iii)
ensure that resettlement plans are formulated for subprojects with resettlement
impacts prior to the award of contracts;
(iv)
oversee the identification of projects;
(v)
prescribe cost-effective technology;
(vi)
review and revise building codes to incorporate earthquake-resistant design in all
repairs and new construction;
(vii)
promote the development of reconstruction-related industry in the affected area;
(viii) facilitate and organize direct contributions by the private sector and bilateral
donors for reconstructing housing, hospitals, schools, and other facilities;
(ix)
provide oversight and overall monitoring; and
(x)
facilitate disbursement of funds to the provincial agencies responsible for the
day-to-day implementation of reconstruction.
38.
ERRAs Governing Council consists of the key senior-most Government officials
responsible for reconstruction including the Prime Minister of Pakistan (chair), the prime minister
for AJK, the chief minister of NWFP, minister for Kashmir Affairs and Northern Areas, advisor to
the Prime Minister of Pakistan, deputy chairman of the Planning Commission and the chairman
of ERRA. ERRA will prepare an annual budget and maintain proper accounts, which will be
audited by the Auditor General of Pakistan (AGP).
39.
ERRA is responsible for the timely implementation of reconstruction and has been given
authority to expedite various central and provincial government processes, such as land
acquisition and the rapid transfer of disbursement funds, and to support provincial and district
level line agencies planning and implementation of works. ERRA is charged with ensuring that

8
the usual slow pace of implementation by the provincial agencies is stepped up to meet the 3year timeframe for restoring services and facilities.
G.

Response of Development Partners

40.
The Government requested international assistance, which started arriving within days
of the earthquake. As of 11 November 2005, according to Government reports, assistance
totaling nearly $2.5 billion had been pledged by a total of 83 bilateral and multilateral donors,
with many also providing to the relief effort significant in-kind support, including logistical and
manpower assistance. Major contributions have been pledged by Australia, Canada, Peoples
Republic of China, Denmark, Germany, India, Iran, Japan, Kuwait, Netherlands, Norway, Saudi
Arabia, Sweden, Switzerland, Turkey, United Arab Emirates, United Kingdom, and United
States. Other donors include Algeria, Austria, Belgium, Finland, France, Greece, Ireland, Italy,
Republic of Korea, Luxembourg, Malaysia, Oman, and Ukraine, among others. The World Bank
approved supplemental financing of $200 million within weeks of the earthquake to help the
Government meet emergency expenditure requirements. The United Nations immediately
deployed its Disaster Assessment and Coordination team to provide technical assistance for
assessing the scale of the disaster and to help manage the international response. UNDP is
helping to coordinate relief efforts both nationally and locally. Other UN specialized agencies
such as UNICEF, World Food Programme, and United Nations Population Fund have also
provided emergency relief assistance.
41.
On 26 October 2005, the secretary-general of the UN hosted a ministerial-level
international donors conference in Geneva to discuss Pakistans short-term requirements for
relief assistance. The UN launched a flash appeal for $550 million in immediate relief assistance
to Pakistan. About $140 million has been earmarked for an emergency push to feed and provide
shelter to those affected. The Geneva conference was followed by another multidonor event in
Islamabad on 19 November 2005 aimed at boosting resources for the medium- to longer-term
reconstruction and rehabilitation programs. The total pledged from all international donors is
estimated at about $6.1 billion.
H.

ADBs Response and Strategy

42.
At the international donors conference on earthquake reconstruction and rehabilitation
held on 19 November 2005 in Islamabad, ADB President Haruhiko Kuroda announced that ADB
would provide up to $1 billion in reconstruction and recovery assistance to Pakistan during
20052006.
43.
On 14 November 2005, ADBs Board approved $105 million from loan savings to the
Decentralization Support Program (DSP). DSP is an existing program loan with an
implementation mechanism in place, including accounting, disbursement, and fiduciary riskmanagement measures. On the same day, the Board approved the establishment of Pakistan
Earthquake Fund, including an initial contribution from ADB of $80 million in grant financing.
44.
The first phase of ADBs assistance to earthquake reconstruction and rehabilitation,
comprising the $105 million for the DSP and $300 million for the proposed Project, brings total
proposed assistance to $405 million. The second phase of the proposed assistance, targeted
for approval in 2006, is estimated at about $595 million. ADB also actively seeks support from
bilateral donors as well as the private sector to use the fund as a mechanism to deliver prompt
and effective assistance.

9
45.
ADBs Pakistan Resident Mission is reviewing a number of ongoing loans in the
earthquake-affected areas that can be redesigned to more effectively address earthquake
damage. In some cases, savings within these loans will be reallocated to address earthquake
rehabilitation.
I.

Hazard Risk Management

46.
It is important to take into account some of the factors that may have exacerbated the
damage in affected areas. These critical factors should be reflected in the design and
implementation of the recovery strategy, as existing vulnerabilities should be mitigated as much
as possible rather than repeated.
47.
Seismotectonic considerations indicate that similar or larger events in the same or
neighboring regions may be possible. A seismological observation network exists but needs
modernization. Efforts to undertake a new seismic risk analysis of Pakistan should also be
intensified. Similarly, assessments of risks in the affected areas should guide reconstruction
decisions. Further multi-hazard risk mapping for the country, including the affected areas,
should guide future development plans.
48.
A national disaster management strategy that enhances existing entities and
mechanisms should be devised and implemented. Communities, local authorities, and
nongovernment organizations (NGOs) should be encouraged to cooperate and be better
prepared.
J.

Lessons Learned

49.
A review of ADB-wide experience with rehabilitation assistance indicates the following
essential factors: (i) projects must be prepared as quickly as possible; (ii) projects should focus
on restoring facilities; (iii) to the extent possible, rehabilitation works should be completed within
23 years; (iv) as implementation places a heavy burden on executing agency staff, and
therefore, strong consulting support and ADB supervision is needed during implementation; and
(v) efforts should be made to ensure that ADBs rapid response to disasters is matched by
equally quick action by the government. Lessons learned from ADBs earlier emergency
projects include the following: (i) beneficiary participation must be ensured and increased in
project preparation and implementation, especially in the maintenance of facilities; (ii)
environmental and social aspects should be considered during project implementation, even
though the need for a rapid response may not permit a detailed treatment of these issues prior
to the approval of the assistance; (iii) arrangements for disbursement, including retroactive
financing and the use of imprest accounts,should give the executing agencies quick and simple
access to funds; (iv) project objectives and scope need to be carefully defined; and (v) criteria
for subproject selection should permit simple prioritization of subprojects and demand short
implementation periods.
50.
Post-earthquake reconstruction is a major investment. The Government should take this
opportunity to protect the reconstruction of public and private buildings and infrastructure from
various types of hazards. Lessons learned from the damage should be fed into reconstruction
planning, and future risks reduced, through improved building standards and design. The safety
of public buildings such as schools and hospitals is particularly important and should incorporate
appropriately improved building standards to reduce their risks. Both in the reconstruction phase
and in urban development plans, land-use plans need to integrate the identification of risk areas.
Buildings collapsed in northern Pakistan because of very poor construction quality and the

10
absence of any seismic consideration in their design. The primary lesson learned is that new
buildings need to be seismically designed and built to a higher quality. Compliance with present
regulations and more stringent codes in the future needs stronger enforcement. During the
reconstruction phase, the repair of damaged buildings needs to include seismic strengthening.
Additionally, the feasibility of a national seismic retrofitting program for buildings should be
examined, with schools and hospitals as priorities.
51.
The lessons and experiences of current relief and recovery coordination should be used
to develop an appropriate disaster-management mechanism and authority, as well as a national
plan that clarifies the roles and responsibilities of different government agencies and
strengthens coordination among them. Risk management education and training the staff of
appropriate agencies would greatly improve risk management in the country. Primary and
secondary schools should also raise awareness of risks as part of the curriculum. Incorporating
risk-mitigation safety measures into the basic training of engineers, contractors, and builders
should also be considered as part of the reconstruction process. A major public awareness
campaign on risks, preparedness, and vulnerability reduction should be implemented as soon
as possible. The feasibility of tailoring an insurance package to the poor that addresses their
main post-disaster risks should be investigated, as should investing in ex ante risk-reduction
measures.
52.
These lessons have been considered and incorporated in the design of the proposed
Project. Indeed, ADBs response has been very rapid. Within a few days of the calamity, a team
of ADB-funded disaster management experts started to provide assistance to the Government;
within 2 weeks, a multidonor Damage and Needs Assessment Mission led by ADB and the
World Bank was fielded to help the Government assess the damage and evolve a short- and
medium-term recovery and rehabilitation strategy. With an implementation period of 36 months,
the Project focuses on the immediate rehabilitation of physical and social infrastructure in the
affected areas and the restoration of livelihoods for those affected. The proposed Project has
been prepared to complement assistance from other multilateral and bilateral agencies and
donors.
53.
To ensure timely implementation, the responsibility for project administration will be
delegated to the Pakistan Resident Mission in Islamabad, immediately upon loan effectiveness.
If appropriate, ADB will also consider establishing an extended mission in Muzzafarabad for the
duration of project implementation to provide day-to-day support and guidance to the AJK line
agencies provide on the spot review of various documents and closely monitor compliance with
ADB requirements. Pakistan Resident Mission or the possible extended mission will assist with
quality control, speedy implementation of subprojects, and rapid assistance to ERRA, AJK,
NWFP, the line agencies and districts on any project implementation matters. It will carry out
random spot checks on procurement and project accounts of subprojects, and inspect project
facilities for quality control and proper financial management.
III. THE PROPOSED PROJECT
A.

Impact and Outcome

54.
The expected impact of the Project is to contribute to reversing the devastating impact of
the earthquake and so revive economic activity and enable people to resume their livelihoods
and return to normal life. This will be achieved by rehabilitating and reconstructing damaged and
destroyed infrastructure as quickly as possible, which will particularly assist the poor and other
vulnerable people.

11

55.
The Project will focus on the selected sectors identified through consultation with the
Government, the private sector, civil society, and other donors. The Project will rehabilitate
public infrastructure and adopt appropriately revised earthquake-resistant design and
construction standards in all construction undertaken. In addition, the Project will provide
capacity building to enhance rehabilitation capacity and institution building for sustainable
development.
56.
The Project has been developed in close cooperation with other donors, all of which are
intimately involved in post-earthquake rehabilitation and reconstruction in the affected areas of
Pakistan. The choice of sectors and the project design is based on the findings of the ADB and
World Bank-led PDNA. Specifically, the World Bank is likely to concentrate on housing, national
highways, and social sectors. Close coordination among the donors and Government has been
maintained throughout the processing of the Project.
57.
Members of the project team visited affected districts and held discussions with relevant
Government and relief agencies on the ground, as well as with affected people. Subsequent
discussions with development partners and the Government helped project formulation to
evolve based partly on comparative advantage and sectoral presence in the affected region,
and also in regard to project scope. The project design also draws on ADBs considerable
experience in delivering emergency assistance in developing member countries over the past 2
decades. The Project is linked with and complements relief and assistance provided by the
Government, NGOs, UN, and other donors, and it takes the necessary next steps to ensure that
assistance will be sustainable.
58.
In terms of its broad overall scope and objectives to support poverty reduction and
protect and promote livelihoods, the Project is consistent with the goals of Pakistan's MediumTerm Development Framework 20052010. It is also in line with ADBs Country Strategy and
Program for Pakistan, which prioritizes improving physical and social infrastructure to support
pro-poor growth and poverty reduction throughout the country. The Project is consistent with
ADBs Disaster and Emergency Assistance Policy.3
B.

Outputs

59.
The Project comprises three components: (i) quick-disbursement, (ii) project sector
components, and (iii) implementation assistance. These components are designed to operate in
a mutually supportive fashion to achieve the overall objective of mitigating earthquake losses to
the affected communities and providing urgent rehabilitation and reconstruction of priority
infrastructure assets.
60.
Quick-Disbursing Component. In accordance with ADBs Disaster and Emergency
Assistance Policy, a portion of the proposed Project will be used for quick-disbursing assistance
to partly finance the unusually high and unexpected expenditures required for rehabilitation and
reconstruction. The Project will extend a quick-disbursing component of $108 million (a $65
million grant from the Pakistan Earthquake Fund and a $35 million loan from ADBs Special
Funds resources, and about $8 million in Government counterpart funding from taxes and
duties). As per ADBs Disaster and Emergency Assistance Policy, the quick-disbursing
component will be used to finance only those imports identified as necessary for an effective
3

ADB. 2004. Disaster and Emergency Assistance. Operations Manual. Sections D7/BP and D7/OP. Manila.

12
recovery program. The Government and ADB have agreed on a list of permissible imports for
financing under the quick-disbursing project facility (Appendix 3).
61.
Project Sector Components. Project sector components will be $246.8 million,
including $185 million from ADBs Special Funds resources and $61.8 million from the
Governments counterpart funding. It will be used to rehabilitate earthquake-damaged education
and health facilities and other high-priority infrastructure by providing civil works, equipment and
materials, working capital, and consulting services for project design, implementation,
monitoring, and evaluation. During the rehabilitation phase, appropriate and cost-effective
design and construction standards will be adopted. Civil works designs will follow a sector
approach and select the highest-priority subprojects during implementation. This will allow a
quick response and maximum flexibility in both geographic coverage and selection of
components within the agreed framework and criteria. In consultation with the Government, and
taking into account the assistance being proposed by other development partners, the project
sector components will finance rehabilitation and reconstruction in the following sectors: (i)
transport with $140.0 million; (ii) power with $53.5 million; and (iii) social sectors, including
health and education, with $53.3 million.
62.
Implementation Assistance. Consulting services for Project implementation will be
financed by $15.0 million in grants from the Pakistan Earthquake Fund.
63.
The legal assistance, governance, and institutional building subcomponent will be $2.5
million and is included in the $15 million for implementation assistance.
C.

Special Features

64.
The Project will address urgent basic needs and restore social services lost as a result
of the earthquake. If life in the affected and neighboring areas is to return to normal, transport,
power and social services must be restored, destroyed infrastructure must be rebuilt, and
access to employment opportunities must be made available. The Project has, therefore, been
processed under ADBs Disaster and Emergency Assistance Policy. Since interventions will
typically replace preexisting assets, reconstructed to appropriate technical and earthquakeresistant standards, an economic analysis is not required. Investments will be made on the
basis of least-cost restoration of preexisting facilities. The procedures for project loan and grant
processing, procurement, consultant engagement, subproject selection, and the type of works to
be done reflect this flexibility, without sacrificing quality, transparency, and safeguards. However,
the Project is designed to ensure proper targeting, subproject control and monitoring, and
community participation while addressing area resource and capacity constraints.
65.
ADB will focus on ensuring that the Project implementation is efficient, effective, and
expedient. Following the Disaster and Emergency Assistance Policy, additional resources have
been dedicated to implementation, supervision and monitoring, including (i) support for ERRA,
(ii) provision of resettlement specialists, and (iii) environment specialists to assist environmental
assessment of earthquake-related projects by the provincial environmental protection agencies.
66.
The Project has been prepared through a high consultative, multidonor exercise led by
ADB and the World Bank. 4 Needs assessment, Project design and implementation
arrangements have been harmonized among donors, and aligned, to the greatest extent
4

The World Bank is funding reconstruction of the National Highways through additional financing to its ongoing
Highway Rehabilitation Project.

13
possible, with the prevailing system in Pakistan in an attempt to minimize the administrative
burden on the Government.
D.

Sector Components
1.

Transport

67.
The transport sector component of the Project will rehabilitate earthquake-damaged
major roads and bridges, except national highways, within the four affected districts in AJK
(Bagh, Muzaffarabad, Neelum, and Poonch) and the five affected districts in NWFP (Abbottabad,
Battagram, Kohistan, Mansehra, and Shangla). The component will cover repairing and
rehabilitating the damaged major roads and bridges under the Public Works Department and
Local Government and Rural Development Department in AJK and the Frontier Highway
Authority (FHA) and district governments in NWFP. Road clearance now in place is not
anticipated to last beyond the coming snow season. More thorough and permanent road
rebuilding measures are required, particularly protection works to minimize landslides and river
erosion and improved drainage for slope stabilization. Rehabilitation works will restore roads
and bridges to the pre-quake or higher standard, as this is considered cost-effective in the long
run. Where technically feasible and justified, rehabilitation will include protection measures to
mitigate damage from future landslides. Land acquisition and relocation may be required where
the original road cannot be reconstructed and requires partial realignment. The transport sector
assessment is in Appendix 4.
2.

Power

68.
The power sector faired better overall than expected immediately after the earthquake.
The power companies responded quickly and restored the power supply within days of the
quake. It should be noted that nearly all repairs were of a temporary nature and need to be
replaced by permanent solutions. There are still areas that have not yet been inspected
because damaged roads make access to them not yet possible. In the aftermath of the
earthquake, it was necessary to establish tent villages and relief camps for the dislocated
population. These camps need to be electrified to ensure lighting and security at night, power
for pumping water, and the efficient operation of schools and other common facilities.
Temporary electrification of tent villages and relief camps needs to be funded, and the recurring
costs of electricity consumption in tent villages and camps should be paid to the supplying
electricity distribution companies to ensure their financial sustainability.
69.
The power sector component comprises rehabilitation of the power generation and
supply system that were damaged by the earthquake. In detail, the Project will cover (i)
repairing the nine hydropower generation stations, including access roads, buildings, equipment
and ancillary facilities; (ii) supplying and installing equipment and lines related to the 132 kV, 33
kV, and 11 kV substations; (iii) constructing of operational substations buildings and staff
quarters; (iv) supplying and installing 0.4 kV and 0.22 kV low-voltage lines; (v) installing service
connections to consumers; (vi) providing spare parts, operational vehicles, and tools (vii)
installing transformers, meters, and service connections to the tent villages and relief camps
established after 8 October 2005; (viii) paying electricity supply for up to two years to the tent
villages and relief camps; and (ix) installing transformers, meters, and service connections to
the anticipated new model villages to be established for the victims of the earthquake.
Reconstruction and rehabilitation works will be carried out to restore the facilities to preearthquake levels or to a higher standard as this is considered cost-effective in the medium to
long term. Details of the component are in Appendix 5.

14
3.

Social Sectors

70.
The social sector component will focus on reconstruction and rehabilitation of selected
health and education facilities geographically located in the affected districts of AJK and
benefiting other areas where affected people are currently concentrated. The health
subcomponent to be implemented by the AJK Reconstruction Agency and AJK Department of
Health, will include: (i) reconstructing one district hospital and three Tehsil headquarter hospitals,
including wards, operating theatres, outpatient departments, staff quarters and other necessary
services; (ii) providing all the essential medical equipment to the hospitals including ambulances
and supplies; and (iii) constructing proper waiting areas with public toilets and clean drinking
water for visitors. The education subcomponent to be implemented by the Reconstruction
Agency and AJK Department of Education will include: (i) repairing and reconstructing about
550 partly and completely destroyed government middle schools buildings with improved
seismic designs, latrines and office accommodation; (ii) providing all essential furniture and
equipment for all the middle schools reconstructed and repaired; (iii) training trainers for
teachers training; and (iv) assessing and advising on school health services for physical and
physiological health. The social sectors assessment is in Appendix 6. The AJK Steering
Committee will decide whether there is sufficient capacity within the line department to
undertake a particular subproject or the implementation is to be undertaken through the
specially constituted Reconstruction Agency.
E.

Legal Assistance, Governance, and Institutional Building

71.
Destruction arising from the earthquake has generated legal and documentary issues for
earthquake affected people, and enormously strained governmental administration and
resources, at the national, provincial, and local levels. The legal assistance, governance, and
institutional building subcomponent seeks to address these issues. The replacement of birth,
death, marriage and disability certificates, property titles, and national identification cards will be
supported. Methods used for replacing documents will include supporting the collection and
coordination of data by the relevant departments and offices and facilitating the connectivity,
coordination and networking of such information; it will provide legal assistance to earthquake
affected victims to help them address legal and documentary issues arising from the earthquake.
This will include the earthquake legislative framework that is currently under consideration for
making special provision for persons and property affected by the earthquake. It will also
establish (if necessary) a decentralized mechanism for earthquake victims for private dispute
resolution and grievance review against public officials. In addition, training and awareness
workshops will be conducted for judges, district officials, and the public on the potential
earthquake or disaster emergency related legal issues, disputes or cases that are likely to arise.
There will also be provision to strengthen the capacity of local government to provide for
vocational training for women and disabled people who may need to enter the labor market for
the first time together with a designed program for post training assistance for finding jobs.
72.
The legal assistance, governance, and institutional building subcomponent will support
transparency of earthquake and emergency assistance, through ERRA by supporting the
publication in English, Pushtoo and Urdu, on the internet and in local newspapers, as well as
broadcast on national and provincial television and radio, of (i) modes of earthquake assistance
from the Government, development partners and NGOs; (ii) contract and procurement details in
relation to earthquake assistance; and (iii) any proposed laws or policy relating to earthquake
assistance. To keep the public notified, these broadcasts and publications will be regularly
updated at least every quarter. Assistance will also be provided to the Government to centralize
the collection of data on earthquake affected people and earthquake-affected property in order

15
to maximize rehabilitation efforts and minimize duplication of efforts. Details of the component
can be found in Appendix 7.
F.

Cost Estimates

73.
The total cost of the Project is estimated at $374.2 million equivalent, including the
quick-disbursing component, taxes and duties (of approximately $18.3 million) and interest
during implementation. The Government will contribute 24% of the estimated cost of
reconstruction and rehabilitation, mainly in the form of taxes and duties, land acquisition,
rehabilitation, resettlement, and administrative support. As a sector approach is being followed,
the cost estimates are broken down by sectors (Table 2 and Appendixes 46). Detailed cost
estimates are provided in Appendix 8.
Table 2: Cost Estimates
($ million)
Foreign
Exchange

Item

Local
Currency

Total
Cost

A. Quick-Disbursing Component

100.0

8.0

108.0

B. Project Sector Components a

1. Transport
2. Power
3. Social Sectors (Health and Education)

131.3
84.6
24.0
22.7

115.5
55.4
29.5
30.6

246.8
140.0
53.5
53.3

5.0

10.0

15.0

4.4
240.7

0.0
133.5

4.4
374.2

C. Implementation Assistance
D. Interest during Implementation
Total
a
Including taxes and duties of $18.3 million.
Source: Asian Development Bank estimates.

G.

Financing Plan

74.
The Government has asked for a grant of $80 million from the Pakistan Earthquake
Fund and an additional $220 million from ADBs Special Funds resources (Asian Development
Fund [ADF] loan) to help finance the Project.
75.
The ADF loan will have a 40-year term, including a grace period of 10 years, an interest
rate of 1% per annum, and repayment of principal at 2% per annum for the first 10 years after
the grace period and 4% per annum thereafter. The Government advised that it will make the
loan and the grant proceeds of the Project available to the governments of AJK and NWFP on
terms and conditions in accordance with the existing policies and practices of the Government
or any changes approved by the Governments Economic Coordination Committee (ECC).
Likewise, a portion of the loan and grant proceeds will be made available to Peshawar
Electricity Supply Company (PESCO) and Islamabad Electric Supply Company (IESCO) NWFP
on terms and conditions in accordance with the existing policies and practices of the
Government or any changes approved by the Governments ECC. The Government will bear all
foreign exchange risk. In addition, the Government will provide required counterpart funds for
implementing the Project in a timely manner to the governments of AJK and NWFP, IESCO,
and PESCO on a grant basis.

16
Table 3: Financing Plan
($ million)
Foreign
Exchange

Source

Local
Currency

Total Cost

Percent

A. Quick-Disbursing Component
1. Asian Development Bank Grant
2. Asian Development Bank ADF Loan
3. Government

100.0
65.0
35.0
0.0

8.0
0.0
0.0
8.0

108.0
65.0
35.0
8.0

100
60
32
8

B. Project Componentsa
1. Asian Development Bank Grant
2. Asian Development Bank ADF Loan
3. Government

136.3
5.0
131.3
0.0

125.5
10.0
53.7
61.8

261.8
15.0
185.0
61.8

100
6
70
24

4.4

0.0

4.4

100

240.7
236.3

133.5
63.7

374.2
300.0

C. Interest during Implementation

Total
Asian Development Bank
ADF = Asian Development fund
a
Includes cost of consulting services.
Source: Asian Development Bank estimates.

H.

100
805

Cofinancing

76.
An underlying objective of ADB's Disaster and Emergency Assistance Policy is to
coordinate with development partners, minimize duplication, encourage cofinancing and have
catalytic effect on the provision of additional resources. It is likely that a number of these
partners may be willing to complement ADB's funds for this Project through cofinancing. ADB
has typically sought Board approval for the administration of loan or grant funds from
cofinanciers only when cofinancing commitments are in place. In light of the need for
expediency and efficiency in ADB's response to the earthquake disaster and emergency,
Management requests Board approval of the administration of any cofinanced funds obtained
from development partners subsequent to the date of Board approval. Approval of such
cofinanced funds will be confirmed and approved by Management, and reported to the Board in
accordance with the standard reporting procedures. This procedure will be adopted only to the
extent that the additional funds provided by cofinanciers will not materially alter or fundamentally
affect the objectives, purposes and scope of the existing Project. Any proposed cofinancing that
will materially affect the objectives, purpose, or scope of the Project would be processed as a
major change of scope and circulated to the Board in accordance with ADB's Project
Administration Instructions 5.04 and the usual practice.
77.
Simultaneously with loan and grant negotiation, ADB received indications from the
European Commission (EC) of its interest in providing 30 million to finance a part of the Social
Sectors Component. The EC has indicated that its formal commitment to provide such financing
may be expected by the end of 2005. To avoid any Project delay, Board approval for the
administration of the EC grant is sought. An information paper will be provided to the Board to
describe the impact of EC grant on the financing of the Project when the arrangements with the
EC are finalized.
78.
As described above, EC is prepared to commit to provide cofinancing with ADB, allowing
ADB to catalyze additional resources for the Project. For the EC to participate, it requires
5

Given the exceptional circumstances of the emergency, it is proposed that ADB fund 80% of the Project costs.

17
nondiscrimination against all its members in procurement processes. Thus, while most of the
investments to be supported by the Project are expected to come from within Pakistan or to
involve some procurement from ADB member countries, to facilitate the ECs commitment to
cofinance 30 million for Social Sectors Component, Board approval is sought to allow
procurement in, and procurement of eligible goods and services from, member countries of the
European Union, including ADB nonmember countries. This would facilitate maximum and
expeditious development and catalyze additional resources from development partners in the
current emergency circumstances.
79.
The request for Board approval is being made pursuant to Article 14(ix) of the ADB
Charter, which states that the Board may, by a vote of the Directors representing not less than
two thirds of the total voting power of the members, approve procurement from ADB
nonmember countries in appropriate circumstances. The Charter provides one, non-exclusive,
example of what may constitute appropriate circumstances for allowing procurement in nonADB member countries or procurement of goods and services produced in ADB nonmember
countries. It states that the Charters requirement that procurement occur only in member
countries may be lifted in the case of a nonmember country in which a significant amount of
financing has been provided to the Bank. This example is similar to the current proposal. The
EC is expected to provide a grant of 30 million, which is a significant contribution to the Social
Sectors Component. The European Union, which is supporting the ECs provision of such
financing includes ADB members and nonmembers that are together providing this contribution
by way of joint cofinancing for the Project. The Boards approval for lifting the procurement
restriction is being requested only in support of Social Sectors Component of the Project.
I.

Implementation Arrangements
1.

Project Management and Coordination

80.
ERRA, established through presidential decree in response to the 8 October 2005
massive earthquake, will be the executing agency for the Project, and MOF will be the executing
agency for quick-disbursing component. The mechanisms and implementation strategies,
institutional framework and related terms of reference for the recovery efforts under the umbrella
of ERRA are still being developed. Based on the current understanding of ERRA functions, the
authority is expected to facilitate, guide, coordinate, approve, and monitor the reconstruction
effort, develop the overall policy and planning framework for the reconstruction effort, standard
setting and quality control and manage the operation and accounting of the rehabilitation and
reconstruction funds. ERRA is also expected to lead revisions of the current arrangements for
subproject approval implementation and fund flow to simplify procedures and so ensure quick
implementation and full transparency. As a priority, ERRA will develop and adapt appropriate
earthquake resistant designs and construction codes for immediate adoption by civil
construction industry. ERRAs Governing Council, chaired by the Prime Minister, will approve
overall programs and large work packages, basically fulfilling the role of the Central
Departmental Working Party in normal development projects, but with a much shorter timeframe.
ERRAs Board, chaired by ERRAs Chairman, will oversee the implementation of the project
through provincial and district line agencies following current/revised procedures, on fact track
basis. ERRA will also approve major changes in scope and cost of the subprojects, annual
plans, and budgets. It will support Project implementing agencies with financial and technical
management. The implementing agencies include Reconstruction Agencies in NWFP and AJK,
IESCO, and PESCO. In addition, the implementing agencies in AJK include the Departments of
Local Government and Rural Development, Electricity, Health, Education, and Public Works.

18
The implementing agencies in NWFP include the line department, five district governments,
FHA, and Sarhad Hydro Development Organization (SHYDO).
81.
ERRA will be staffed by various specialist professionals deputed from relevant
government departments (including those of the federal Government and other provinces), and
hired from the private sector as necessary for ERRA to carry out its functions. Periodic social
and technical monitoring, regular review and overall fund flow and internal audits of the Project
will be carried out by ERRA. The Controller General of Accounts (CGA), AGP and MOF will
prescribe the related procedures and requirements for fiduciary monitoring. The AJK and NWFP
implementing agencies will develop the subprojects following the selection criteria and social
compliance, through public consultation, based on procedures outlined in Appendix 10 and to
be formalized in an operational manual to be prepared by ERRA.
82.
The governments of AJK and NWFP, through their steering committees specially
constituted for the purpose of reconstruction in the quake affected areas, chaired by the
Additional Chief Secretaries of AJK and NWFP and having representation of ERRA, provincial
line departments and the district governments (in case of NWFP), will be responsible for
overseeing the provincial planning and implementation of subcomponents. These committees
will be supported by professionally staffed Reconstruction Agencies (RA)the NWFP
Reconstruction Agency and the AJK Reconstruction Agency, containing various specialist staff,
will be responsible for implementation of subprojects for which capacity does not exist at with
provincial and district line departments contracted as decided by the respective steering
committees of NWFP and AJK. RAs will design and approve subprojects falling within the
powers delegated to the RA by the provincial Government and within the overall annual budget
and work plan approved by ERRA. The steering committees and ERRA will approve work plans,
budgets and provide overall guidance, in line with emergency procedures to be put in-place by
ERRA Council and/or Board. For the subprojects implemented through the provincial line
departments/implementing agencies, and the district governments, where technical capacity
exists as decided by the respective SCs, additional support will be provided by deputing staff
and by appointment of additional expertise as required to meet the additional work load and fast
track requirements, due diligence and reporting. ERRA, RAs and line departments staff
requirements, and related operating costs, will be funded through incremental administration
support, supported in part by ADB grant funds.
83.
The district advisory committees (DACs)/district development committees (DDCs)
headed by district coordination officer (DCO) or Nazims in NWFP and deputy commissioners in
AJK, will be responsible for identification of subprojects and needs, and recommend plans for
approval of the steering committees. These plans will be approved annually by the steering
committees or ERRA and implemented through RA (through their district reconstruction units),
line departments and district governments, as recommended by steering committees.
Implementing agencies additional incremental staff and overhead cost for subproject
implementation, and technical backstopping and technical assistance support for implementing
agencies to plan, design, supervise and implement the subprojects, will be financed by the
projects.
84.
Identification of subprojects will be done by respective implementing agencies in
consultation with the local stakeholder, using official records and applications received from
communities, NGOs and elected representatives, to identify schemes and the sites. Selection of
sites and subprojects will be made from the identified list using a pre-determined selection
criteria. The selected list will be verified and appraised for social compliance (through public
consultation) by NGOs/specialized agency directly hired by ERRA for the 8 affected districts in

19
AJK and NWFP. The RAs of NWFP and AJK, with the assistance of hired consultant teams, will
undertake the technical and safeguard appraisal, before the list is submitted DAC
recommendation/advice and approval of the SCs and ERRA. ERRA Council, SCs and
implementing agencies will approve the subprojects to be executed by district/provincial
agencies, within their approval limits and after screening send the list of subprojects to be
implemented by federal line agency for their approval.
85.
In addition to the incremental staff support and/or consultants hired by the RAs and line
departments of AJK and NWFP, to implement the project components, ERRA will use their own
staff and/or hire short term consultants to assist them with due diligence and monitoring and to
guide implementing agencies in project appraisal, coordination and incorporation of social and
environmental safeguards. Consulting firms recruited directly by RA and line departments will
assist the RA, provincial line agencies and district government (depending on the agency
implementing the subprojects) with design, processing approvals, and internal monitoring,
procurement, and construction supervision.
86.
Financial Management. Ministry of Finance (MOF) will manage the multidonor
Consolidated Fund for Emergency Earthquake Assistance established in the State Bank of
Pakistan (SBP) through which the project funds will flow. ERRA is putting in place the related
fiduciary arrangements to ensure transparency in the flow of funds, financial management,
accounting, internal control processes, procurement, periodic financial reporting, monitoring and
internal and external audits. The CGA will be responsible for establishing accounting and
reporting practices and requirements. The CGA, MOF and AGP will provide the related
guidelines, and ensure that all relevant government statutory provisions and prudential
regulations are followed. Disbursement of project funds will generally follow existing accounting
procedures. The AGP will have the overall responsibility for the audit of earthquake assistance,
and as such will be responsible for determining the appropriate auditing arrangements and for
ensuring the timely completion of audits and that audits will be conducted in accordance with
internationally accepted auditing practices.
87.
The Project funds will be disbursed through the Consolidated Fund in SBP to the imprest
account operated by the fund managerthe MOF for the quick-disbursing components and
ERRA for the other componentsto finance loan and grant components of the Project. MOF will
make budget allocation for counterpart funds in the Budget, and release the Governments
counterpart share as a grant in a separate account operated by the fund manager in the form of
budget allocation, as a grant, released from the MOF to ERRA Fund (a special deposit fund in
Public Accountassignment account). The ADB funds for the Project, and Governments
counterpart funds will be released to ERRA as executing agency (excluding quick-disbursing
component, for which MOF will be the EA). ERRA will maintain separate accounts for ADB loan
and grants (imprested accounts), Governments counterpart funds and will release funds to the
respective implementing agencies (second generation imprest accounts) as advances against
approved budget/work plan at the federal, provincial and district levels,. All funds will be utilized
for their intended purposes as per the financing plan, in accordance with the procedures set
down by CGA and ERRA. ADB funds will be issued with specified codes for the rehabilitation
and reconstruction program, and all payments and disbursements will be made based on these
codes. The fund flow arrangement is in Appendix 9.
88.
ERRA will provide ADB with quarterly financial and physical progress reports on the use
of ADB and other donor funds, as well as annually audited financial statements. Given the
magnitude of funds that will pass through ERRA for implementation, MOF had proposed that
ERRA should establish periodic internal audits and reviews mechanisms, in consultation with

20
other donors and ADB. These will provide systemic feedback to improve financial management,
fund-flow timeliness, accountability and transparency. Project imprest accounts will be operated
in accordance with the ADBs Loan Disbursement Handbook (January 2001). The AGP may
nominate private chartered accountants, if required, to meet the increased burden on and to
demonstrate transparency.
89.
All donor funds channeled through ERRA will be subject to the same operating
procedures and processes. The World Bank has completed a preliminary financial management
assessment, which is available as Supplementary Appendix C. Based on the preliminary
assessment, and subject to finalization of implementation and financial management
arrangements satisfactory to ADB, financial management arrangements for the Project are
found to be satisfactory.
90.
Monitoring and Anticorruption Measures. ADB and other donors will rely on the
agreed funds-flow mechanism, as well as the periodic disbursement, procurement, and output
monitoring reports generated by ERRA, to fulfill their assurance requirements. A generic
performance monitoring system will be established by ERRA in consultation with donor
agencies, including ADB. This system will take into account the key indicators and targets
outlined in the project framework. With the assistance of project-financed consultants, ERRA will
facilitate the development of this framework and its implementation plan within 3 months of loan
effectiveness. Basic damage assessment has already been conducted and information provided
in this assessment will be updated within 3 months of loan effectiveness to validate the damage
baseline. ERRA and provincial RAs and line departments will use this baseline to undertake
regular reviews and provide routine monitoring reports, for which the requirements and
structures will be agreed with al the donors by ERRA and provided in the operations manual.
Monitoring bodies are envisaged at both the provincial level (including the AJK) and the district
level. These will consist of technical, environmental and social safeguard specialist; elected
representatives and NGOs, who will produce regular monitoring reports and undertake periodic
reviews of project implementation.
91.
Apart from the regular monitoring framework and reporting requirement established
under ERRA operations, the Project will be reviewed jointly by ERRA and ADB, with frequencies
and timeframes agreed by ADB and ERRA. The terms of reference of external donor review will
also be negotiated and agreed between donors, including ADB, and ERRA for the purpose of
consistency, effectiveness, and efficiency, and also to avoid overloading the agencies involved
in the reconstruction activity. A comprehensive midterm review planned after the first year of the
Project will: (i) evaluate the projects scope, design, and implementation arrangements; (ii)
assess the effectiveness of implementing agencies, and structure in terms of achieving project
objectives and targets; (iii) evaluate the progress on contract awards disbursement and
procurement, and appropriateness of the related procedures for these aspects to achieve
project targets; (iv) evaluate the efficiency and effectiveness of the monitoring, safeguard and
fund flow arrangement; (v) evaluate the performance of the consultants and consultancy
arrangement in delivering project outputs and technical assistance terms of reference; (vi)
identify changes needed in any or all of the arrangement and components; (vii) identify critical
issues and constraints, if any; and (viii) recommend adjustments to the project design and/or
implementation arrangements, if necessary. The midterm review will identify any slow-moving
component and make recommendations for remedial measures. Reallocation of funds from
poorly performing components to better performing components may be recommended by the
Midterm Review Mission.

21
92.
ADBs Anticorruption Policy (1998) was explained to and discussed with the Government
and executing agencies. Consistent with its commitment to good governance, accountability,
and transparency, ADB reserves the right to investigate, directly or through its agents, any
alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support
these efforts, relevant provisions of ADBs Anticorruption Policy are included in the Loan and
Grant Regulations and the bidding documents for the Project. In particular, all contracts
financed by ADB in connection with the Project shall include provisions specifying the right of
ADB to audit and examine the records and accounts of the Executing Agencies and all
contractors, suppliers, consultants and other service providers as they relate to the Project.
93.
In addition, ERRA will publicly disclose on the website for the Project information on how
the funds are being used for the intended beneficiaries following applicable procedures. The
website will present financial statements and track procurement contract awards, as well as
include information on, among other things, the list of participating bidders, name of the winning
bidder, basic details on bidding procedures adopted, amount of the contract awarded, the list of
goods and/or services purchased, and their intended and actual utilization.
2.

Subproject Selection Criteria and Approval

94.
The implementing agencies will formulate and propose a list of subprojects through the
SC and line departments. The implementing agencies will conduct initial screening of the
proposals and submit these to the provincial steering body for final selection and approval in
accordance with general selection criteria for purposes of eligibility criteria for each project
component. The general eligibility criteria are listed in Appendix 10.
95.
The first two subprojects to be carried out by each implementing agency will be subject
to prior review and approval by ADB before commencement. Any subsequent subproject
exceeding $500,000 equivalent but less than $3 million equivalent will be sent to the relevant
steering committee for approval and ADB for information, while subprojects exceeding $3 million
equivalent will require prior review and approval by ADB. Subprojects estimated to cost
$500,000 equivalent or less will be subject to approval by the respective PDWP and random
audit and checks by ADB to ensure compliance with requirements of subproject selection
criteria and the implementation arrangement.
3.

Implementation Schedule

96.
As the Project is for emergency assistance, implementation will start immediately after
approval and be completed within 36 months. 6 A detailed implementation schedule is in
Appendix 11.
4.

Procurement

97.
Given the urgent Project needs, procurement of goods, works, and services will be
carried out in a manner consistent with the simplified and expedient procedures permitted under
the ADBs Disaster and Emergency Assistance Policy and ADBs Guidelines for Procurement
and the contemplated implementation schedule. ADB procedures for providing reconstruction
6

The period of 36 months for project implementation was requested by the Government, and is considered justified
based on the extreme destruction and dislocation caused by the earthquake of 8 October 2005, and the weakened
absorptive capacity of the country, particularly the provincial and district administrations of the affected areas,
following the disaster. The 36-month implementation schedule under the ADBs Disaster and Emergency
Assistance Policy is considered appropriate.

22
assistance after disasters allow maximum flexibility so that project activities can start promptly.
Local competitive bidding procedures will be the preferred mode of procurement.
98.
Goods and related services estimated at more than $1 million will be procured following
international competitive bidding procedures. International shopping procedures will be followed
for procurement of goods and related services estimated at between $100,000 and $1 million.
For small, specialized equipment and materials contracts valued less than $100,000, direct
procurement procedures acceptable to ADB will be followed. Due to the urgent nature of this
Project, the bidding period for international competitive bidding will be shortened to 30 days and
for local competitive bidding, to 14 days.
99.
Civil works contracts over $5 million will be procured through international competitive
bidding and those estimated to cost $5 million or less will be procured through local competitive
bidding procedures acceptable to ADB. Post-qualification with single stage: two-envelope
procedures, and usage of the existing contractor registration system or contractors previously
prequalified for works of similar size and nature is acceptable. Further, in order to effectively
respond to the urgent Project needs, contracts estimated at less than $100,000 may be
awarded to local contractors or those contractors who are working in the affected region on
direct contracting basis at negotiated rates or at rates of ongoing contracts. Civil works
estimated between $100,000 to $500,000 may be awarded following limited local competitive
bidding procedures by inviting a limited number of registered or qualified contractors to
participate in the bidding, including where practicable, the invitation for bids will be advertised in
a national newspaper. ADB will conduct prior review of bidding documents, technical and price
evaluation reports and award recommendations for all packages estimated to cost $1,000,000
and above. For contracts estimated to cost less than $1,000,000, ADB will review and approve
the first contracts for each implementing agency/PIU; post-facto approval procedures will follow
if procurement procedures are satisfactory. However, if ADB determines at a later stage that its
guidelines were not followed, ADB may not accept the award, or terms, of the contract in which
case the Government cannot use loan or grant proceeds to finance the contract. If the loan or
grant proceeds have already been used to finance such contracts at the time of such
determination, the Government will refund to ADB any such expenditure incurred. Rebidding
and extending bid validity will be subject to ADB prior approval. Community participation in the
procurement of small works of a simple nature is encouraged.7
100. For the quick-disbursing component, all items on the positive list imported by the
Government, including packages procured by private entities on behalf of the Government
following normal local commercial procedures for the private sector and standard Government
procurement procedures for the public sector procurement, where such procedures are
functioning and appropriate and acceptable to ADB, are eligible.
5.

Consulting Services

101. The implementation of the earthquake reconstruction program will more than double the
normal level of development activities in NWFP and AJK, putting unprecedented stress on the
responsible agencies. The most efficient way to boost their human and skills capacity is to
recruit experienced consultants. Implementation support will take three forms: (i) legal advisory,
governance, and institutional building ($2.5 million); (ii) incremental administrative support ($5
7

To encourage community participation and use of indigenous materials, methods to incorporate community
participation in procurement may be used for rural and municipal infrastructure. Small works contract with an
estimated cost of $20,000 or less in each case may be awarded to community organizations in accordance with
practices and procedures acceptable to ADB.

23
million); and (iii) consulting services ($7.5 million). All implementation support will be funded
from ADB grant proceeds.
102. The decision on consultancy packaging and whether to recruit the specialist consultants
individually or through a firm will be determined during the inception phase. The incremental
administrative support will include the cost of staff to strengthen the capacity of ERRA and the
implementing agencies and the PIUs. These staff would be a mixture of deputed government
personnel and individual specialist from institutes, private sector or consulting firms. It is
estimated that ERRA would require about 30 such new staff, including three international
advisors (earthquake seismic/structural, construction manager/planner and safeguard specialist)
in the first year. The estimated budget is $2.5 million for first year, but decreasing as the initial
capacity building is attained. Since ERRA is responsible for overseeing implementation by all
agencies, not just ADB, it is proposed that ADB will finance about a third of the total cost or $1.7
million, over the 3-year period.
103. Similarly, the implementing agencies will need an estimated five specialists, including
one international construction/procurement specialist, for the first 12 months. As with ERRA, the
implementing agencies will support implementation of all externally financed projects. The
estimated cost is $0.4 million per year for 3 years or $1.2 million total, for each province.
Provincial and district line and implementing agencies will also need capacity building in
construction and safeguard aspects and support for implementation. It estimated that each
implementing agency will require at least four domestic specialists in project planning and
design, procurement, construction management and quality control and safeguards. The
estimated cost of the incremental administration for these implementing agencies is $150,000
per year per implementing agency, or $2.1 million in each of NWFP and AJK over the 3 years.
104. In addition, to the incremental administrative support for the Reconstruction Agencies in
AJK and NWFP, design and construction supervision consultants are required. The consulting
services will consist of about 1,500 person-months.
105. All consulting firms, and individual international consultants, will be engaged in
accordance with ADBs Guidelines on the Use of Consultants and other arrangements
satisfactory to ADB. Since the rehabilitation and reconstruction work to be financed under the
Project must be completed within 36 months due to the nature of the Project, expeditious
selection and fielding of consultants is necessary. Accordingly, qualified and existing consulting
services on the ground should be extended and retrofitted to address emergency needs,
provided that these consultants meet the following conditions: (i) appropriate expertise for the
proposed assignment, (ii) capacity for immediate mobilization, and (iii) satisfactory performance
in previous projects.8 This arrangement will provide an efficient way to recruit consultants under
the circumstances. Consulting services from firms will also be provided through quality- and
cost-based selection using simplified technical proposals. Individual consultants will be procured
through ADBs procedures for recruitment of in individual consultants. Since the Project is to be
completed in only 36 months, selection and fielding of consultants must be expeditious. Outline
terms of reference for consulting services are in Supplementary Appendix D.

This is in conformity with para. 114 of ADBs Disaster and Emergency Policy, which states: Direct selection,
negotiation, and hiring are desirable when justified to expedite technical services required in emergency
situations. Time-consuming competitive bidding processes should be avoided wherever possible. Qualified and
existing consulting services on the ground should be extended and retrofitted to address emergency needs, as in
the recent Gujarat earthquake project.

24
6.

Advance Action

106. Given the urgency of the Project, advance action before the date of loan and grant
effectiveness was endorsed including ADBs approval of the recommendations for awarding
contracts for procuring goods, services, and civil works and the recruitment of consultants. The
Government has been advised that ADBs approval of such advance action does not commit
ADB to finance the Project.
7.

Disbursement Arrangements

107.
Implementation and Project Sector Components. Disbursements will be made in
accordance with ADBs Loan Disbursement Handbook (January 2001) as amended from time to
time and detailed arrangements agreed between ADB and the Government. Each executing
agency and implementing agency, through qualified accounting staff, will prepare disbursement
projections, request budgetary allocations for counterpart funds, maintain books of accounts
and supporting documents and prepare withdrawal applications. On loan and grant
effectiveness, imprest accounts will be established as necessary at the National Bank of
Pakistan for ERRA and the MOF for the loan and the grant to cover eligible expenditures under
the Project. Existing government fund flow arrangements will be used to disburse funds from the
executing agencies imprest account down to the district levels.
108. The advance to each imprest account will not exceed the lesser of 3 months estimated
project expenditures or 10% of the loan and grant amount. ADBs statement of expenditure
procedures will be followed to liquidate the imprest accounts and to reimburse individual
payments of up to $100,000. The imprest accounts will be established, managed, replenished
and liquidated in accordance with ADBs Loan Disbursement Handbook (January 2001) as
amended from time to time, and with detailed arrangements between the Government and ADB.
109. ERRA will disburse funds directly for the activities including (i) capital and operating
costs of the ERRA; (ii) consultants, technical support team offices, capacity building and training
activities; and (iii) related expenditures for monitoring, review, and evaluations.
110. Quick-Disbursing Component. The quick-disbursing component will be disbursed
based on a list of imports identified as necessary for an effective recovery program. The
proceeds will be disbursed based on certification by the Government that, with regard to imports
not earlier than 8 October 2005, the value of the total imports, less imports from ADB
nonmember countries, ineligible imports, and disbursements made by other donors, is greater
than the amounts claimed for disbursements.
111. The Government will be required to submit with each withdrawal request certification
confirming compliance with the above formula in respect of the period covered by the
withdrawal request. Disbursements will be in the form of reimbursement to the Government.
Supporting documentation for this component will be limited to customs clearance documents
and records of the Department of Customs. For purposes of disbursement, submission of these
documents will not be required. However, these documents will be audited during the annual
audit and a separate audit opinion shall be provided on the use of loan and grant proceeds
under the quick-disbursing component.

25
8.

Retroactive Financing

112. The Project provides for retroactive financing of eligible expenditures. ADB has agreed
to provide retroactive financing of up to 30% of Project for eligible expenditures incurred not
earlier than 8 October 2005, provided that the expenditures are procured in accordance with
agreed procedures. The Government has been advised that provision of retroactive financing
does not commit ADB to finance any part of the Project.
113. The Government has requested, and ADB has agreed, subject to Board approval, to
finance on a retroactive basis, the (i) cost of consulting services related to surveys with respect
to damage and needs assessment provided that the consultants have been engaged in
accordance with procedures acceptable to ADB; and (ii) cost of procurement activities related to
the Power Sector Component provided that such activities have been carried out in accordance
with procedures acceptable to ADB. ADB shall have the right to refuse to finance any contract
that has been entered into and does not meet ADBs requirements.
9.

Accounting, Auditing, and Reporting

114. Each executing and implementing agency will maintain records and accounts adequate
to identify works, goods, and services financed by the loan and grant proceeds. Specifically,
each executing agency and implementing agency will (i) maintain separate accounts for the
Project; (ii) ensure that project accounts and financial statements are audited annually in
accordance with sound accounting principles by independent auditors acceptable to ADB; and
(iii) provide to ERRA for consolidation and delivery to ADB, not later than 4 months after the
close of each fiscal year with certified copies of audited accounts and financial statements and
the report of the auditor on these, including the auditors opinion on the use of the imprest
accounts, statement of expenditure procedures and certification of imports (for the quickdisbursing component). Given the relatively high degree of fiduciary risk associated with this
Project, the audited accounts and financial statements will be provided to ADB within 4 months
of the end of the fiscal year.9
115. Consistent with the harmonization and alignment agenda, ADB, the World Bank and
other major donors are attempting to harmonize their requirements and alight to the greatest
extent possible, align them with Pakistan's own systems and procedures to reduce the
administrative burden on the Government. Harmonized accounting and reporting requirements
should improve both the accuracy and timeliness of financial reporting. ADB will hold the
Government of Pakistan accountable that funds will be used in an efficient and effective manner
and for their intended purpose. ADB will rely on CGA to ensure that adequate accounting
procedures and practices (including internal controls) satisfactory to ADB are developed and
implemented, and on AGP to ensure that audits are conducted in line with internationally
acceptable auditing practices. ADB will reserve the right to substitute auditors and/or to conduct
its own audit should irregularities comes to light.10
9

10

The auditing requirement has been harmonized with that of the World Bank. Although both institutions typically
require submission of audited financial statements within 6 months, it was felt that the risks associated with this
transaction, together with a 36-month implementation period warranted a slightly tighter deadline for submission.
The World Bank has supported the Project to Improve Financial Reporting and Accounting (PIFRA) in Pakistan.
Under this project, the audit component has succeeded in upgrading the audit methodology, depth of compliance
testing, regularity of audit practices, performance audit, audit reporting and audit report follow-up. A significant
number of auditors has been trained in the use of modern auditing techniques. While audit quality has improved
markedly with the increased professionalism of auditors, the timeliness of completion of the audit has not
improved significantly. This has been due primarily to devolution and the need to provide separate audit services

26

116. Each executing agency/implementing agency will prepare quarterly progress reports in a
format acceptable to ADB, which will provide information on (i) progress made against
established targets, including pre-identified monitoring indicators; (ii) delays and problems
encountered, and actions taken to resolve them; (iii) compliance with loan covenants; and (iv) a
proposed program of activities for the next quarter. ERRA will consolidate the reports of all
implementing agencies and deliver them to ADB. Within 3 months of physical completion of the
Project, each implementing agency will prepare a project completion report and submit it to
ERRA for delivery to ADB.
10.

Environmental Assessments and Monitoring

117. The Project is classified as environmental category B in accordance with ADBs

Environment Policy (2002), as the primary focus is on rehabilitation of existing social
infrastructure. The Project has been designed and will be flexibly implemented following a
sector loan modality. Unlike a sector project, the proposed Project has no sample subproject
selected at present, due to its emergency nature, and, therefore, no sample subproject initial
environmental examination (IEE). The Projects IEE provides overall preliminary scoping and
highlights potential environmental impacts and mitigation measures to be further explored
during subproject formulation. The Projects IEE includes also the environmental assessment
and review framework (EARF), which provides a set of guidelines on how the environmental
assessment for subprojects will be prepared and reviewed. The summary of project IEE
including the EARF is attached in Appendix 14.
11.

Project Performance Monitoring and Evaluation

118. A performance monitoring system, satisfactory to ADB will be established, based on the
key indicators and targets outlined in the project framework. With the assistance of project
financed consultants, ERRA will develop comprehensive project performance monitoring system
(PPMS) procedures and plans in accordance with ADB's Project Performance Monitoring
System Handbook within 9 months of loan effectiveness. The PPMS procedures, performance
indicators, and their targets will be reviewed and approved by ADB. Benchmark surveys will be
conducted before project implementation. With the help of its consultant, ERRA will then
undertake every 6 months quantitative and qualitative project-performance monitoring for each
project component to evaluate the delivery of planned facilities and the project benefits that
accrued. The RAs and other implementing agencies will assist ERRA in collecting baseline data
and carrying out PPMS activities.
IV.

TECHNICAL ASSISTANCE

119. Given the relatively high degree of fiduciary risk associated with this Project, and the
extraordinary challenges over the Office of the Auditor General of Pakistan (AGP) and the office
of the Controller General of Accounts (CGA), which are created by this Project as well as by
other donor Projects, ADB will ensure that these agencies will be provided with adequate
resources to meet their fiduciary responsibilities. A TA for $2 million to be financed on a grant
basis by ADBs TA funding program, titled Capacity Building for the Office of the Auditor
General of Pakistan, will assist AGP and CGA to support ERRA to ensure that (i) all executing
to the district governments. Now that the district audit infrastructure is in place, AGP is better placed to complete
audits in a timely fashion. Through PIFRA, the Government is adopting international best practice in auditing,
and AGP is moving further into areas such as performance and risk-based auditing.

27
and implementing agencies receiving earthquake funds maintain auditable accounts; (ii)
financial, compliance and performance audits are conducted by the newly established Director
General Audit ERRA wing of the AGP in accordance with International Organization of Supreme
Audit Institutions standards; and (iii) ERRA performance monitoring and evaluation systems are
coherent and provide information to enable timely preparation of reports for management and
donors and ensure that implementation lessons inform policy makers.
120. The TA includes provision of 192 person-months domestic and 9 person-months
international consultants. Consultants will provide training and technical advice in various
aspects of audit, accounts and performance monitoring and evaluation. The terms of reference
for consultants are in Appendix 18. The AGP and CGA will be the executing agencies for the TA.
The proposed TA is scheduled to be implemented for 36 months from January 2006 to January
2009. Administration of the proposed TA will be delegated to ADBs Pakistan Resident Mission.
V.
A.

PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS

Economic and Poverty Impacts

121. The Project will contribute to the Governments efforts to regenerate the economy,
rehabilitate public infrastructure and utilities, and generate employment. It will help restore
access to public infrastructure and services. The priority given to providing unskilled work to
affected people, including women, will be an important intervention for people who cannot
reestablish their livelihoods and are living in temporary shelters.
122. The rehabilitation of damaged and lost infrastructure, particularly roads and power
systems, will improve the quality of life, revive industry and agriculture, and facilitate affected
households reconnection to the rest of the country. Support for physical reconstruction in key
sectors like education and healthcare will have positive effects on enhancing human capital and
protecting the vulnerable.
123. In addition, rehabilitation works that entail clearing debris with labor on a cash-for-work
basis, and rebuilding basic infrastructure using appropriate labor-intensive methods, can create
both temporary and permanent jobs for the poor. The benefits of the Project will be evident
through economic rehabilitation arising from the speedy reconstruction of infrastructure and
facilities and livelihood restoration in the earthquake-affected areas.
124.

A summary poverty reduction and social strategy is in Appendix 13.

B.

Social Impacts

125. The earthquake has been as much a socioeconomic disaster for individual households
as a disaster affecting physical infrastructure. About 2.8 million people, out of the total
population of 5 million in the affected areas, were left homeless. Many have lost all their basic
necessities for survival, including clothing and household essentials. Since damage is unusually
bad in certain villages and towns, the percentage of households affected locally will be markedly
higher, implying that a higher percentage of people have entered the ranks of the poor. The
new poor will also come from the most vulnerable and marginalized groups, both socially and
economically. Considering the extent of the damage, the cost of rebuilding houses and
infrastructure is exorbitant both for affected households and for the state. Support in terms of
financial assistance and the introduction of improved earthquake-resistant technology will be of
considerable benefit in protecting both the old poor and the new from sinking further into poverty.

28

126. The legal assistance, governance, and instititutional building subcomponent will also
offer a great opportunity to tackle some major social issues, such as gender and other
vulnerabilities, legal discrimination and cultural marginalization. Legal constraints may be lifted
to face the emergency and set ground for further changes. Creating an environment that is
conducivefor vulnerable and marginalized groups in the earthquake-affected areas to participate
fully in reconstruction activities is an urgent need. Orphans, wives of the missing, single heads
of households, and widowers have to deal with transformations in their social roles that place
new burdens on them. Helping them to become economically independent and to improve the
well-being of their families involves reducing existing inequalities and discrimination. To this
end, a gender action plan is presented in Appendix 16.
C.

Resettlement Issues

127. As reconstruction and rehabilitation of roads, power, health, and education infrastructure
will be done mostly at their original locations, no major resettlement impacts11 are envisaged
under the Project. The need for involuntary resettlement or land acquisition in a specific
subproject area will be known only during project implementation, when site-specific plans are
available for subprojects. However, improvement of existing facilities or new construction could
require land acquisition and relocation. Moreover, relocation of households and communities
may take place where severely affected locations are specifically declared by authorities as too
high-risk to allow rehabilitation. A measure of voluntary resettlement may also be expected in
places affected by major landslides, or where affected people have been either squatters or
renters. In some affected districts of NWFP, a few big landlords employ large numbers of
tenants to cultivate their land on long-term leases. Such land tenure arrangements will need
careful examination to develop fair compensation and relocation entitlements. In addition, the
permanent or temporary removal of squatters from road rights-of-way could generate
resettlement impacts on them. Another issue is how to re-establish the property rights of those
who were temporarily displaced by the earthquake, as most of them enjoyed only user rights
over the land on which they earned their living as cultivators and shepherds. The death of
household heads could similarly generate difficulties for their surviving household members in
re-establishing ownership over destroyed or damaged household property. The principal
entitlements of those who will be affected by subprojects are listed in the entitlement matrix of
the resettlement framework (Appendix 15). A subproject involving resettlement impacts will be
approved by ADB only after the executing and/or implementing agency submits a satisfactory
resettlement plan for the subproject, prepared in accordance with the agreed resettlement
framework.
D.

Indigenous Peoples Issues

128. In NWFP, some of the earthquake-affected communities are tribal. Tribes typically
dominate the areas they occupy and participate in the mainstream economic and political
activities. Tribal people are well represented in mainstream public institutions, the civil service,
and educational institutions. The social inequality and vulnerability of most such people thus
arise from economic differentiation rather than from social exclusion or cultural differences. In
the earthquake-affected areas, for example, land is owned by a few large, powerful tribal
families. They rent out their land to members of the same tribe or sub-tribe to cultivate crops
11

Resettlement impacts are social and economic impacts that are permanent or temporary and are (i) caused by
acquisition of land and other fixed assets, (ii) by change in the use of land, or (iii) restrictions imposed on land as
a result of an ADB operation (F2 OM/BP).

29
and to raise livestock. All of them will certainly benefit from the rehabilitation of roads, power
systems, and social services such as education and health facilities that were destroyed or
damaged by the earthquake.
129. A social assessment 12 will be conducted focusing on the potential vulnerability of all
affected groups, including tribal people, to ensure effective consultations and that culturally
appropriate benefits reach each such affected group, instead of focusing only on groups defined
as indigenous peoples. As part of this assessment, the executing and implementing agencies of
each subproject will examine the vulnerabilities of all groups in terms of potential exclusion from
project benefits, negative project impacts, if any, and the need for specific culturally compatible
mechanisms for participation (e.g., for women and the permanently disabled). If such exclusions
are found in the subproject area, the executing and implementing agencies will incorporate
adequate measures in subproject design to address such vulnerabilities. If land acquisition or
relocation becomes necessary, peoples entitlements will be ensured by the subproject through
its resettlement plan, which will be prepared in accordance with the approved resettlement
framework. This is the most appropriate and efficient approach to rebuild and reconstruct
E.

Environmental Impacts

130. The Projects IEE indicates that the Project is not expected to have significant adverse
environmental impacts. What adverse environmental impacts the Project will likely have will be
limited mostly to the construction stage. These impacts will be reversible, short term, affecting
only a limited area, and therefore manageable. However, it is necessary to ensure that
subprojects subject to the Governments and ADBs environmental assessment requirements
will carry them out prior to their approval. It is also necessary that the environmental
management plan for each subproject be strictly implemented.
F.

Sustainability

131. A key selection criteria for subprojects to be financed through the Project will be an
assessment of financial sustainability. This will include an assessment of availability of
counterpart financing for implementation purposes as well as for future incremental recurrent
costs. Based on these arrangements and given the current macroeconomic environment, the
Project is felt to be financially sustainable.
G.

Risks, Mitigation Measures, and Assumptions

132.

Major risks associated with this emergency project include

(i)

(ii)

12

physical risks due to aftershocks causing further damage to already weakened

structures and infrastructure and land slides could cause delays in restoration of
services and reconstruction. The upcoming snow fall will lead to snow melt and
runoff in spring and summer seasons which could trigger further land slides and
erosion, potentially damaging reconstructed infrastructure;
the remote locations and difficult topography makes any reconstruction
logistically difficult and will lead to longer time frames;

The World Bank has planned to conduct a similar social assessment in the affected areas prior to formulating
plans for subprojects. During implementation, however, attention will be given to bakarwals, or nomadic tribes
that periodically migrate into the affected areas.

30
(iii)

(iv)

(v)
(vi)

(vii)

(viii)

(ix)

(x)

the high elevations in some of the areas means that there is heavy snow cover
and low temperatures during winter months, which means that reconstruction
must take place mostly during summer months, leading to longer than normal
elapsed time to complete works;
massive relief operations and temporary housing camps could hinder/delay
reconstruction, especially in the vicinity of the larger towns, in order to relocate
people to make room for reconstruction work;
lack of available land for new rights of way, could delay access by contractors to
work sites;
lack of human capacity of NWFP and especially AJK local governments due to
loss of much of their own buildings and facilities, and many staff, and lack of
experience with externally funded projects, especially the due diligence
requirements;
weakened capacity of local consultants and contractors and more specifically the
overstretching of these capacities in the short term could undermine
implementation;
the World Bank fiduciary assessment has concluded that the fiduciary risk high,
given the complexity of funds flow arrangements, the multi-sector, multigovernment nature of the Project, nascent stage of ERRA (including lack of
financial management capacity), and weak auditing capacity and potential for
mismanagement of funds and corruption;
lack of financial capacity of NWFP and AJK and the electrical companies to meet
the 25% counterpart funding requirement, and need to budget for sufficient funds
to properly operate and maintain the new facilities; and
ERRA is a new agency and while it has extraordinary authority to implement
reconstruction quickly it has no experience.

133. Physical risks will be mitigated by relocating roads, bridges, electrical lines, human
habitations, and other infrastructure away from the existing and potentially unstable slopes and
new slide areas. ERRA will conduct detailed seismic evaluations to determine alternate routes
and locations. All new facilities will incorporate earthquake strengthening and other damagemitigation measures. The logistics of access and climate will be addressed through prioritization
of reconstruction requirements so that for this emergency loan, only those works that can
realistically be completed in the 3 years timeframe are included. Works with longer timeframes
will be scheduled under the longer term reconstruction programs that the Government is also
preparing, which could be financed in part by future ADB loans.
134. Many of the existing relief camps will be dismantled by next summer as the
Governments housing program progresses and people go back to their villages to rebuild their
homes. But many will need to remain for at least 1824 months, while new urban areas are
planned and developed and basic infrastructure installed. These camps will be consolidated and
located in areas of available government land. ERRA is already locating government lands for
development as new town sites within a reasonable distance of existing urban development, to
enable lower population densities in the larger towns. Land acquisition will be from existing
government land as much as possible. ERRA has been vested with adequate authority to follow
emergency land acquisition procedures, which will only take a couple of months. The
Government has agreed to conform to ADBs frameworks for resettlement and environmental
impact.
135. ERRA has been provided with extraordinary authority, through the very high level
Council, chaired by the Prime Minister of Pakistan. The capacity of ERRA, the P&D and the line

31
agencies of the provinces and the two electrical companies will be strengthened through
provision of in house specialists that will be deputed or hired from other government agencies,
institutes and the private sector, including some foreign experts to assist in the first year of the
project. In addition adequate consulting services, through private consulting firms, will be
recruited by the implementing agencies to support the various provincial and district line
agencies with all aspects of implementation.
136. Implementation and fiduciary risks related to capacity for timely delivery of quality
subprojects in the various project sectors will be mitigated in several ways. First, detailed
subproject criteria will be developed, in addition to general subproject selection criteria already
agreed to. Second, in terms of implementation, specific monitoring mechanisms will include
regular financial audits as well as regular design and construction supervision and performance
audits through random audits and special post-completion audits. To undertake such
supervision and performance auditing, ERRA will be supported by the dedicated provincial units
of ERRA and specialized consulting inputs. ERRA will have a strong governance framework that
will combat corruption risks and to ensure that the assistance reaches the intended victims of
the earthquake. These include (i) ERRA/provinces to ensure equitable and transparent
distribution of rehabilitation, including beneficiary identification and publishing a computerized
list of affected people; (ii) transparency in procurement (iii) field monitoring through the line
agencies and their consultants/NGOs; and (iv) financial control mechanisms by ERRA and the
provinces.
137. As the nature of this Project demands that the response be rapid, the flow of funds will
also need to be rapid. However, ERRA is a newly created organization, with no experience,
which is nevertheless expected to follow existing procedures and fast-track them. To ensure
mitigation of the risk of corruption and mismanagement of funds, extensive and comprehensive
fiduciary arrangements will need to be put in place. Fiduciary risks will be further mitigated by (i)
strengthening the financial management capacity of ERRA and the implementing agencies, (ii)
developing financial management procedures as part of the operations manual to be prepared
in advance of disbursement against sector components; and (iii) a shortened auditing deadline.
138. The weakened capacity of local consultants and contractors will be addressed through
ERRA by associating them with international consultants and contractors where possible for onthe-job training and capacity building.
139. The provinces and the electrical distribution companies will need budgetary support from
the central Government to meet their 25% counterpart funds. Because of the massive damage
many revenue sources for the provinces have been reduced and they have extensive additional
expenditures due to the damaged infrastructure. Similarly, the central Government will have to
support the provinces with funds for operation and maintenance of the reconstructed facilities,
power systems, schools and hospitals and other basic services, at least in the short term until
provincial and electric company revenues can be restored to sustainable levels.
VI.
A.

ASSURANCES

Specific Assurances

140. In addition to the standard assurances, the Government has given the following
assurances, which are incorporated in the legal documents:

32
(i)

The Government will ensure that all subprojects meet, to the satisfaction of ADB,
the agreed selection criteria and implementation arrangements, and that all
subprojects are properly monitored to the satisfaction of ADB.

(ii)

The Government will ensure that adequate budgetary allocations of required

counterpart funds are made and released in a timely manner to governments of
AJK and NWFP, and that these counterpart funds are in addition to the ongoing
development program of each of governments of AJK and NWFP. Governments
of AJK and NWFP will provide such counterpart funds to respective implementing
agencies in a timely manner.

(iii)

The Government will ensure that within one month of the loan and grant
effectiveness, the project implementation agreement in the format acceptable to
ADB is signed between (a) NWFP and SHYDO; (b) NWFP and FHA; and (c)
NWFP and each of the district governments; (d) NWFP and NWFP RA; and (e)
AJK and AJK RA.

(iv)

The Government will ensure that the executing agencies and implementing
agencies actively seek community participation in the selection, design, and
implementation of all works carried out under the Project. To that extent, a
provision will be included in all tender documents that contractors will give
preference to local labor, where applicable. For works that can be done by both
male and female workers, female workers will be given equal opportunities to
employment. The Government will ensure that for all activities carried out under
the Project, the principle of equal pay for work of equal value will be applied.

(v)

Governments of AJK and NWFP will ensure that the facilities provided under the
Project are operated and maintained appropriately, and that adequate budgetary
and other resources are provided for operation and maintenance.

(vi)

Government of AJK will ensure that all the equipment can be operated soon after
procurement and training, all vacant posts in the tehsil and district hospitals
under health sector subcomponent are filled immediately after the Project
activities start in those hospitals, and paramedical staff is provided opportunities
to work in the remote areas.

(vii)

Government of AJK will ensure that for the equipment to be procured under
health sector subcomponent, operators and technicians are assigned, or post
created and filled at the time of placing the order for that equipment.

(viii)

Government of AJK will ensure that positions required to meet the staffing
requirement are in place before the start of any subproject in accordance with the
Government of AJKs existing rules on teacher-student ratio.

(ix)

Government of AJK will ensure that the recurring and operational budget for all
schools to be reconstructed under the Project will be provided by the government
of AJK from its annual recurring budget.

(x)

The Government agrees to provide legal facilitation and assistance to earthquake

victims for accessing legal entitlements and to help them to address issues of
legal entitlement arising from the earthquake, including an earthquake legal

33
framework that will be adopted for making special provision for persons and
property affected by the earthquake and vulnerable people.
(xi)

The Government will ensure that adequate environmental mitigation measures in

accordance with (a) the Governments environmental regulations and (b) ADBs
Environment Policy (2002) are incorporated into all subproject designs and
implementation. The Government will ensure that the environmental
management plan (EMP) to mitigate any adverse environmental impacts of any
subproject is implemented, and in the event that unexpected impacts occur,
remedial measures are prepared in consultation with ADB. The Government will
ensure that the agreed environmental assessment review framework is applied in
selecting subprojects; that a subproject for which an environmental assessment
study is required has such required study completed and a subproject for which
Government environmental clearance is required obtains such clearance prior to
the award of any contracts for that subproject.

(xii)

The Government will ensure that, to the extent possible, subprojects will avoid
land acquisition and involuntary relocation. In the event land acquisition or
involuntary relocation is required for any subproject, the Government will prepare
a resettlement plan (RP) in accordance with the Governments applicable laws
and regulations, ADBs Policy on Involuntary Resettlement (1995) and the
agreed Resettlement Framework; and submit it to ADB for review and approval
before land acquisition is initiated. The RPs will be disclosed to all affected
persons in their own languages and the Project reporting will provide information
on land acquisition and resettlement.

(xiii)

The Government will ensure that each of the agreed Gender Action Plan and
Vulnerable People Action Plan is implemented and that adequate resources are
allocated for this purpose in a timely manner.

(xiv)

The Government through ERRA will publicly disclose on the website for the
Project information on how the funds are being used for the intended
beneficiaries following applicable procedures. The website will present financial
statements and track procurement contract awards, and include information on,
among others, status of earthquake damages and casualties, subproject
selection criteria, information on funding commitment by donors, the list of
participating bidders, name of the winning bidder, basic details on bidding
procedures adopted, amount of the contract awarded, the list of goods and/or
services purchased, and their intended and actual utilization. Likewise, national
and provincial/AJK news papers in English, Pushtoo, and Urdu will carry such
details on a regular basis, at least once a month. Similarly, television and radio
broadcasts will be made in these language broadcasts at national and
provincial/AJK levels giving these same details.

(xv)

The Government will ensure that proper accounting and audit procedures are in
place to ensure efficient and economic use of the ADB financing proceeds.
Accounts and financial statements in relation to the Project and the subprojects
will be maintained and certified by independent auditors acceptable to ADB. The
Government, executing agencies and implementing agencies will allow ADB
representatives to carry out spot or random checks on the flow of funds through
the imprest accounts. The Government, executing agencies and implementing

34
agencies will allow independent auditors, acceptable to ADB, to undertake
performance audits on a random basis to review, among others, implementation
of (a) the Gender Action Plan; (b) the Vulnerable People Action Plan; and (c)
compliance with ADBs safeguard policies. The Government will also ensure that
post completion audit is conducted by the independent auditors, acceptable to
ADB soon after the completion of the Project.
B.

Condition for Grant and Loan Effectiveness

141. The following is the condition for grant and loan effectiveness: Appropriate approval of
the competent authority of the Government will have been granted for the Project.
C.

Conditions for Disbursement

142.

The following are conditions for disbursement:

(i)

Detailed implementation, financial management and auditing arrangements will

have been developed and documented in an operational manual in substance
and form satisfactory to ADB prior to disbursement against Project Sector
Components.

(ii)

Financial terms and conditions for the Project will have been approved by the
ECC and found satisfactory by ADB prior to disbursement for the Project Sector
Components and the Implementation Assistance Component.
VII.

RECOMMENDATIONS

143. I am satisfied that the proposed grant and loan would comply with the Articles of
Agreement of ADB and recommend that the Board approve the following:
(i)

the grant not exceeding the equivalent of $80,000,000 to the Islamic Republic of
Pakistan for the Earthquake Emergency Assistance Project from ADBs Pakistan
Earthquake Fund on the terms and conditions as are substantially in accordance
with those set forth in the draft Financing and Project Agreements presented to
the Board;

(ii)

the provision of technical assistance not exceeding the equivalent of $2,000,000

on a grant basis to the Government of Pakistan for Capacity Building of the
Office of the Auditor General of Pakistan;

(iii)

the loan in various currencies equivalent to Special Drawing Rights 154,227,000

to the Islamic Republic of Pakistan for the Earthquake Emergency Assistance
Project, from ADBs Special Funds resources, with an interest charge at the rate
of 1% per annum, and repayment of principal at 2% per annum for the first 10
years after the grace period and 4% per annum thereafter; a term of 40 years,
including a grace period of 10 years; and such other terms and conditions as are
substantially in accordance with those set forth in the draft Financing and Project
Agreements presented to the Board;

(iv)

the administration by ADB of loans or grants in accordance with the proposal set
out in paragraph 76 of this Report to the Islamic Republic of Pakistan for the

35
Earthquake Emergency Assistance Project, to be provided by any development
partner or cofinancier on a loan or a grant basis, after the date of the Project's
Board approval; and
(v)

the administration by ADB of a grant not exceeding the equivalent of 30 million

to the Islamic Republic of Pakistan for the Earthquake Emergency Assistance
Project, to be provided by the European Commission on a grant basis subject to
the condition that the Board approve by a vote of the Directors representing not
less than two thirds of the total voting power of the members, that goods and
services for the Social Sectors Component may be procured from member
countries of the European Union, which are not ADB member countries. If the
required affirmative vote of Directors is not obtained, ADB will not administer
such grant, and goods and services will only be procured from ADB member
countries.
Haruhiko Kuroda
President

6 December 2005

36

Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design
Summary
Impact
The expected impact of
the Project is to contribute
to the revival of economic
activity and to enable
people to resume their
means of livelihood and
return to normalcy, by
minimizing the devastating
impact of the earthquake.

Outcome
Restore economic
activities and livelihood in
earthquake-affected areas

Performance
a
Targets/Indicators
Economic recovery and
increase in economic
activity in affected
areas.

Rehabilitated public
infrastructure, with
revised and appropriate
earthquake resistant
design and construction
standards in all
construction undertaken
in the chosen sectors:
transport, power, health
and education.

Data Sources/Reporting
Mechanisms
Affected areas economic
data and indicators
Affected areas statistics and
data; surveys, including
poverty reduction,
vulnerable people and
gender

Assumptions
and Risks
Assumptions
x The Project will be implemented
as designed to ensure that the
target beneficiaries who are the
affected people will receive the
intended benefits.

Surveys

Risks
x Mismanagement of funds and
slower than anticipated
implementation.

Governments progress
reports

Assumptions
x Adequate Government provision
of funds

Audit reports
Project progress reports
Project review missions
Surveys

x Strengthened capacity of ERRA,

and the provincial and line
agencies of the provinces/districts,
and the two electrical companies
through incremental administration
support and adequate consulting
services.
Risks
x Weakened human capacity of
NWFP/AJK and local governments

Improved incomes and

self-reliance

x Newly established ERRA with no

experience
x Poor governance including
corruption
Output
1. Quick-Disbursing
Component
Partially finance the
unusually high and
unexpected expenditures
that are being undertaken
by the Government on
account of earthquake
related rehabilitation and
reconstruction efforts
2. Project Sector
Components
Transport
Rehabilitate earthquakedamaged major roads and
bridges, except National
Highways, within the four
affected districts in AJK
(Bagh, Muzaffarabad,
Neelum, and Poonch,
about 1,000 km) and the
five affected districts in
NWFP (Abbottabad,
Battagram, Kohistan,

Imports of high priority

items as listed in a
'positive' list of goods
and services
undertaken by
December 2006

500km major/high roads

in AJK rehabilitated. By
December 2007.

Customs data
Government's progress
reports

Governments progress
reports

500km LGRD link roads

in AJK rehabilitated by
December 2007.

Audit reports

1,000km provincial
highways/rural access
roads in NWFP by
December 2007.

Project review missions

Project progress reports

Surveys

Assumptions
x Timely import of essential goods
and services.

Assumptions
x Timely award of civil works
contracts
x Adequate performance by
contractors
x Communities acceptance and full
involvement in project
implementation

Appendix 1
Design
Summary
Mansehra, and Shangla,
about 1,000 km)

Performance
a
Targets/Indicators

Data Sources/Reporting
Mechanisms

37

Assumptions
and Risks
Risks
x Weakened human capacity of
NWFP/AJK and district
Governments
x Remote locations and difficult
topography
x Physical risks and additional
delays due to aftershocks causing
further damage to already
weakened structures

Power Sector
(i) Repair 9 damaged
hydropower generation
stations inclusive of
access roads, buildings,
and ancillary facilities; (ii)
supply and install
equipment and lines
related to the 132kV,
33kV, and 11kV
substations; (iii) construct
operational buildings of
substations and staff
quarters; (iv) reestablishment of 0.4kV
and 0.22kV low voltage
lines and service
connections to
consumers; (v) and install
transformers, meters, and
service connections to the
tent villages and relief
camps established after 8
October 2005

5 fully rehabilitated
hydro power stations by
31 December 2006.

Governments progress
reports

Assumptions
x Timely award of civil works, supply
and installation contracts

Audit reports
4 fully rehabilitated
hydro power stations by
31 December 2007.

Project progress reports

Project review missions

10 132/33kv gridstations to be fully

rehabilitated by 31
December 2007.

Surveys

x Adequate performance by
contractors
x Communities acceptance and full
involvement in project
implementation
Risks
x Weakened human capacity of
NWFP/AJK and district
Governments

Service connections to
be installed less than
one month after receipt
of application.

x Remote locations and difficult

topography

Electrification of all tent

villages scheduled for
electrification by 1 May
2006.

x Physical risks and additional

delays due to aftershocks causing
further damage to already
weakened structures

Social Sectors
Health
(i) reconstruction of one
district hospital and three
Tehsil headquarter
hospitals, including wards,
operation theatres,
outpatient departments,
staff quarters and other
necessary services; (ii)
provision of all the
essential medical
equipment to the hospitals
including ambulances and
supplies; and (iii)
construction of proper
waiting areas and
provision of public toilets
and clean drinking water
for visitors

Survey and design,

bidding for 4 Hospital
civil works contracts in
Health by December
2006.

Governments progress
reports
Audit reports
Project progress reports

Bidding and award for

90% supply contracts
completed by
December 2007
Two hospitals are fully
operational before June
2007.
Reconstruction
completed, equipment
supplied, and hospitals
operational by June
2008.

Assumptions
x Timely hiring of consultants
x Availability of and capacity of the
consultants and contractors
x Timely award of civil works, supply
and installation contracts

Project review missions

Surveys

x Adequate performance by
contractors and timely delivery of
equipment suppliers
x Communities acceptance and full
involvement in project
implementation
Risks
x Weakened human capacity of
NWFP/AJK and district
Governments
x Remote locations and difficult

38

Appendix 1

Design
Summary
Education
(i) repair and
reconstruction of about
550 partly and completely
damaged Government
middle schools buildings,
according to improved
seismic designs, latrines,
office accommodation; (ii)
provision of all essential
furniture and equipment
for all the middle schools
reconstructed and
repaired; (iii) training of
master trainers for
teachers training; and (iv)
school health services for
physical and physiological
health assessment and
advice.

Performance
a
Targets/Indicators
Award of contract for
150 schools
(cumulative) by
December 2006.

Data Sources/Reporting
Mechanisms

Assumptions
and Risks
topography
x Physical risks and additional
delays due to aftershocks causing
further damage to already
weakened structures

Award of contract for

400 schools
(cumulative) by
December 2007.
Award of contract for all
500 schools
(cumulative) by March
2008.
Award of supply
contract for schools
(cumulative) by July
2006.
First Training of master
trainers completed by
September 2006.
Teacher training
completed by
December 2007.
School health services
provided to 150 schools
by March 2007.

Activities with Milestones

Inputs
General Milestones
Grant of $80 million from the Pakistan
1.1
Establishment of RAs and DRUs by February 2006
Earthquake Fund and $220 million
1.2
Selection and recruitment of consultants by February 2005 for existing firms
from ADBs Special Funds resources
with variation contracts. For new firms, minimum additional 3 months.
(ADF loan)
1.3
Selection of four projects in each sector by March 2006
1.4
Survey and design, preparation of costs estimates and preparation of bidding
Government counterpart funding
documents3-12 months depending on the projects.
about $74.2 million, mainly in the
Transport
form of taxes and duties, land
2.1.
Bidding and contract awards by end 2006
acquisition, rehabilitation,
2.2.
Reinstatement/rehabilitation of all destroyed/damaged roads and bridges
resettlement and administrative
under the project by December 2008
support
Power
3.1
Survey and detailed designs by March 2006
3.2. Bidding and contract awards completed by end 2006
3.3. Construction, equipment delivery, and installation: April 2006December 2008
Social Sectors
4.1.
Hire implementing agencies incremental staff and establish RAs by February
2006
4.2.
Selection and recruitment of consultants by February 2006, variation in
contracts of existing firms by Feb 2006.
4.3.
Selection of 100 projects in Education by March 2006
4.4.
Survey and design, preparation of costs estimates and preparation of
bidding documents for 4 supply or works contracts in Health by 30 April 2006
4.5.
Inviting bid for three supply contract in Educations by 31 March 2006.
Award of contract for at least 20 schools (education sector) by April 2006
ADB = Asian Development Bank, ADF = Asian Development Fund, AJK = Azad Jammu and Kashmir, DRU = district
reconstruction unit, ERRA = Earthquake Reconstruction and Rehabilitation Authority, kV = kilovolt, NWFP = North-West
Frontier Province.
a
Performance indicators and targets for individual subprojects will be developed as part of the Projects monitoring and
evaluation system during the Projects inception and implementation period. Information available during processing was
not adequate to enable numeric indicators for all sectors to be defined.

Appendix 2

39

SUMMARY OF DAMAGE AND NEEDS ASSESSMENT

1.
The earthquake that struck northern Pakistan on the morning of 8 October 2005 left
widespread destruction in its wake, killing at least 73,000 people, severely injuring another
70,000, and leaving 2.8 million people without shelter. The state of Azad Jammu and Kashmir
(AJK) and the eastern part of the North-West Frontier Province (NWFP) were dealt the most
serious blow and have suffered extensive damage to economic assets and infrastructure, with
social service delivery, commerce, and communications either debilitated or destroyed.
Vulnerable groups, mainly women and children living in inaccessible mountain areas with low
income and little service provision, have borne the brunt of the earthquakes impact.
2.
In addition to the enormous human toll, the earthquake and its aftermath will pose a
large cost to Pakistan. The overall cost associated with the earthquake is estimated at
approximately $5.2 billion, which includes the estimated costs of relief, livelihood support for
victims, and reconstruction (Table A2.1).
Table A2.1: Overall Costs of the Earthquake
Category
Relief
Death and Injury Compensation
Early Recovery
Restoration of Livelihoods
Reconstruction
Of Which Short-Term Reconstruction
Of Which Medium/Long-Term Reconstruction
Total

$ Million
1,092
205
301
97
3,503
450
3,053
5,198

Note: Excludes indirect losses (income) of $576 million (see Table A2.2)
Sources: Relief, Death and Injury Compensation and Early Recovery (UN
Agencies), Reconstruction and Restoration of Livelihoods (Asian Development
Bank/World Bank Assessment Team).

3.
Preliminary estimates of the direct damage sustained from the earthquake total
PRs135.1 billion ($2.3 billion), as presented in Table A2.2. These estimates are based on the
book value of the assets. The largest component of this damage is to private housing, which
amounts to PRs61.2 billion ($1.03 billion), followed by damage to the transport sector totaling
PRs20.2 billion ($340 million) and to the education sector equaling PRs19.9 billion ($335
million). Direct damage to agriculture and livestock is also sizeable, totaling PRs12.9 billion
($218 million). Losses to industry and services amount to PRs8.6 billion ($144 million).
4.
Direct damage is higher in AJK than in NWFP. For AJK, it amounts to PRs76.4 billion
($1.3 billion) and for NWFP, PRs56.4 billion ($950 million). In most sectors, the destruction of
physical assets in AJK is higher than in NWFP, as is its monetary value.
5.
The indirect losses are PRs34.2 billion ($576 million) and comparable in absolute values
between NWFP and AJK. The estimated indirect losses do not take into account the effect of
rehabilitation and reconstruction activities on future output. Reconstruction will not only restore
physical assets, but also lead to renewed production of goods and services. Hence, the
estimates of indirect losses presented above are likely to be on the high side for output losses.

Appendix 2

40

Table A2.2: Preliminary Estimate of Total Losses and Reconstruction Costs

as of 10 November 2005

Sector
A. Social Infrastructure
1. Private Housing b
2. Health
3. Education
4. Environment
5. Public Administration
B. Physical Infrastructure
1. Transport c
2. Water Supply and Sanitation
3. Irrigation
4. Energy, Power and Fuel
C. Economic Sectors d
1. Agriculture and Livestock
2. Industry and Services
Total
o/w : Azad Jammu and Kashmir
: North-West Frontier Province
o/w : Public Assets
: Private Assets
o/w : Urban Areas
: Rural Areas

Share of
Direct
Indirect Reconstruction Reconstruction Total
Reconst.
Damage
Losses
Costsa
Costs a
($ million)
Costs
(PRs million) (PRs million) (PRs million)
(%)

92,160
18,012
28,057
8,985
4,254

1552
303
472
151
72

44
9
13
4
2

1,561

24,699
1,900
623
2,377

416
32
10
40

12
1
0
1

6,770
8,379
34,187
17,671
16,516
12,175
22,012
13,675
20,512

17,846
9,178
208,091
116,625
91,467
82,187
125,904
46,163
161,928

300
155
3,503
1,963
1,540
1,384
2,120
777
2,726

9
4
100
56
44
39
61
22
78

61,220
7,114
19,920
12
2,971

7,218
1,378
4,133

20,165
1,165
324
744

4,061

12,933
8,578
135,146
76,375
56,436
45,795
87,015
25,789
107,021

687

o/w = of which.
a
Includes cost of reconstruction of both immovable and movable assets and restoration of public services.
b
Includes value of household contents such as consumer durables; reconstruction costs exclude replacement of these assets.
c
Includes roads and bridges.
d
Total losses and reconstruction costs in agriculture, industry and services are over and above what is accounted for by the
sectors listed above.
Source: Asian Development Bank and World Bank-led Preliminary Damage and Needs Assessment, 12 November 2005.

6.
The cost of reconstructing lost assets and restoring public services is estimated to be
PRs208 billion ($3.5 billion). A substantial portion of these costs is for housing reconstruction,
which will cost an estimated PRs92 billion ($1.6 billion). A breakdown of reconstruction costs by
sector is presented in Figure A1. Reconstruction costs are valued at improved standard
replacement rate that includes the cost of rebuilding to earthquake-resistant standards suitable
to local conditions. This is necessary given the high degree of exposure to future natural
disasters in the affected areas.

Appendix 2

41

Figure A2: Reconstruction Cost by Sector

(Total: PRs208 billion; $3.5 billion)

Education ($472
million)

Environment
($151 million)

Public administration
($72 million)

Transport ($416
million)
Water Supply and
Sanitation ($32 million)
Irrigation ($10 million)
Energy, Power and
Fuel ($40 million)

Health ($303 million)

Agriculture and
Livestock ($300
million)

Industry and Services

($155 million)

Private Housing
($1,552 million)

42

Appendix 3

LIST OF PERMISSIBLE IMPORTS

No.

Description

I.

List of General Imports for Rehabilitation and Reconstruction

1.
2.

Natural rubber latex, natural rubber and similar natural gums

Synthetic rubber latex, synthetic rubber and reclaimed rubber; waste and scrap of
unhardened rubber
Cork (natural, raw, and waste, including natural cork in blocks or sheets)
Fuel wood (excluding wood waste) and wood charcoal
Pulpwood (including chips and wood waste)
Other wood in the rough or roughly squared
Pulp and waste paper (except: 251.1, waste paper and paperboard;
scrap articles of paper or of paperboard fit only for use in papermaking)
Cotton
Jute and other textile bast fibers, raw or processed but not spun; tow and waste thereof
(including pulled or garneted rags or ropes)
Vegetable textile fibers (other than cotton and jute) and waste of such fibers
Synthetic fibers suitable for spinning
Other manmade fibers suitable for spinning and waste of manmade fibers
Wool and other animal hair (excluding wool tops)
Fertilizers, crude
Stone, sand and gravel
Iron ore and concentrates
Ores and concentrates of base metals, n.e.s.
Non-ferrous base metal waste and scrap, n.e.s.
Crude vegetable materials. n.e.s.
Coal, Iignite and peat
Briquettes; coke and semi-coke of coal, lignite or peat; retort carbon
Petroleum oils, crude, and crude oils obtained from bituminous minerals
Petroleum products, refined
Residual petroleum products, n.e.s. and related materials
Hydrocarbons
Nitrogen-function compounds
Organo-inorganic and heterocyclic compounds
Other organic chemicals
Inorganic chemical elements, oxides and halogen salts
Other inorganic chemicals; organic and inorganic compounds of precious metals
Synthetic organic dyestuffs, natural indigo and color lakes
Dyeing and tanning extracts, and synthetic tanning materials, excluding cadmiumcontaining compounds
Pigments, paints, varnishes and related materials, excluding cadmium-containing
compounds
Fertilizers, manufactured
Condensation, polycondensation and polyaddition products, whether or not modified or
polymerized, and whether or not linear (e.g., phenoplasts, aminoplasts, alkyds, polyallyl
esters and other unsaturated polyesters, silicones)

3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.

Appendix 3

No.
36.

37.

38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.

43

Description
Polymerization and copolymerization products (e.g., polyethylene,
polytetrahaloethylenes, polyisobutylene, polystyrene, polyvinyl chloride, polyvinyl acetate,
polyvinyl chloroacetate and other polyvinyl derivatives, polyacrylic and polymethacrylic
derivatives, coumarone-indene resins)
Regenerated cellulose; cellulose nitrate, cellulose acetate and other cellulose esters,
and chemical derivates of cellulose, plasticized or not (e.g., collodions, celluloid);
vulcanized fiber
Other artificial resins and plastic materials
Miscellaneous chemical products, n.e.s.
Manufactures of leather or of composition leather, n.e.s.; saddlery and harness; parts of
footwear, n.e.s.
Material of rubber (e.g., pastes, plates, sheets, rods, thread, tubes, of rubber)
Rubber tires, tire cases, interchangeable tire treads, inner tubes and tire flaps, for
wheels of all kinds (except: 625.12 tires, pneumatic, new, or rubber, for racing cars)
Articles of rubber, n.e.s.
Cork manufactures
Veneers, plywood, 'improved' or reconstituted wood, and other wood, worked, n.e.s.
Wood manufactures, n.e.s.
Paper and paperboard
Paper and paperboard, cut to size or shape, and articles of paper or paperboard
Textile yarn
Fabrics, woven, of manmade fibers (not including narrow or special fabrics)
Sacks and bags, of textile materials, of a kind used for the packing of goods
Lime, cement, and fabricated construction materials (except glass and clay materials
Clay construction, materials and refractory construction materials
Glass
Pig iron, spiegeleisen, sponge iron, iron or steel powders and shot, and ferroalloys
Ingots and other primary forms, of iron or steel
Iron and steel bars, rods, angles, shapes and sections (including sheet piling)
Universals, plates and sheets, of iron or steel
Hoop and strip, or iron or steel, hot-rolled or cold rolled
Iron or steel wire (excluding wire rod), whether or not coated, but not insulated
Tubes, pipes and fittings, of iron or steel
Iron and steel castings, forgings, and stampings in the rough state
Copper
Nickel
Aluminum
Lead for construction purposes
Zinc
Tin
Miscellaneous nonferrous base metals employed in metallurgy, and cermets
Structures and parts of structures, n.e.s., of iron, steel or aluminum
Containers for storage and transport
Wire products (excluding insulated electrical wiring) and fencing grills
Nails, screws, nuts, bolts, rivets and the like, of iron, steel or copper

44

No.
74.
75.
76.
77.
78.

79.
80.
81.
82.
83.
84.
85.
86.

87.
88.
89.

90.

91.
92.
93.

Appendix 3

Description
Tools for use in the hand or in machines
Household equipment of base metal, n.e.s.
Manufactures of base metal, n.e.s.
Steam and other vapour generating boilers, superheated water boilers, and auxiliary
plant for use therewith; and parts thereof, n.e.s.
Steam or other vapour power units, whether or not incorporating boilers (including
mobile engines but not steam tractors, steam road rollers, or steam rail locomotives);
and parts thereof, n.e.s.
Internal combustion piston engines and parts thereof, n.e.s. (except: 713.2.5 engines,
piston, internal combustion, for armored fighting vehicles)
Rotating electric plant and parts thereof, n.e.s.
Other power generating machinery and parts thereof, n.e.s. (except: 718.7 nuclear
reactors, and parts thereof, n.e.s.)
Agricultural machinery (excluding tractors) and parts thereof, n.e.s.
Tractors (other than those falling within headings 744.11 and 783.2), whether or not
fitted with power take-offs, winches or pulleys
Civil engineering and contractors' plant and equipment and parts thereof, n.e.s.
Printing and bookbinding machinery, and parts thereof, n.e.s.
Other machinery and equipment specialized for particular industries, and parts thereof,
n.e.s; other machinery and equipment specialized for particular industries, and parts
thereof, n.e.s.
Machine-tools for working metal or metal carbides, and parts and accessories thereof,
n.e.s.
Metalworking machinery (other than machine-tools), and parts thereof, n.e.s.
Metalworking machinery (other than machine-tools), and parts thereof, n.e.s.
Heating and cooling equipment and parts thereof, n.e.s. (except: (i) 741.31.10 Furnaces,
electric, for separation or recycling of irradiated nuclear fuels or for treatment of
radioactive waste; (ii) 741.31.38 Ovens, non-electric, for separation or recycling of
irradiated nuclear fuels or for treatment of radioactive waste; (iii) 741.32.14 Furnaces,
non-electric, for separation or recycling of irradiated nuclear fuels or for treatment of
radioactive waste; (iv) 741.32.34 Ovens, nonelectric, for separation or recycling of
irradiated nuclear fuels or for treatment of radioactive waste; (v) 741.5 Air conditioning
machines, self-contained, comprising a motor-driven fan and elements for changing the
temperature and humidity of air, and parts thereof, n.e.s.
Pumps (including motor and turbo pumps) for liquids, whether or not fitted with measuring
devices; liquid elevators of bucket, chain, screw, band and similar kinds; parts, n.e.s. of
such pumps and liquid elevators Pumps (including motor and turbo pumps) for liquids,
whether or not fitted with measuring devices; liquid elevators of bucket, chain, screw,
band and similar kinds; parts, n.e.s. of such pumps and liquid elevators blowers;
centrifuges; filtering and purifying apparatus; and parts thereof, n.e.s. (except: (i) 743.5.1
Centrifuges for separating uranium isotopes, (ii) 743.5.2 Centrifuges for separation or
recycling of irradiated nuclear fuels or for treatment of radioactive waste)
Pumps (other than pumps for liquids) and compressors; fans and
Mechanical handling equipment, and parts thereof, n.e.s.
Other non-electrical machinery, tools and mechanical apparatus, and parts thereof, n.e.s.
(except: 745.24 Automatic vending machines (e.g. stamp, cigarette, chocolate and food
machines), not being games of skill or chance; and parts thereof, n.e.s.)

Appendix 3

No.
94.

45

Description

110.
111.
112.

Taps, cocks, valves and similar appliances for pipes, boiler shells, tanks, etc. (including
pressure and temperature controlled valves)
Non-electric parts and accessories of machinery, n.e.s.
Office machines
Telecommunications equipment, n.e.s.; and parts, n.e.s., and accessories of apparatus
falling within telecommunications, etc.
Electric power machinery (other than rotating electric plant of heading 716), and parts
thereof, n.e.s.
Electrical apparatus for making and breaking electrical circuits, for protecting of electrical
circuits, for making connections to or in electrical circuits (e.g., switches, relays, fuses,
lightning arresters, surge suppressors, plugs, lamp holders and junction boxes); resistors,
fixed or variable (including potentiometers), other than heating resistors; printed circuits;
switchboards (other than telephone switchboards), and control panels, n.e.s.; parts,
n.e.s. of the foregoing apparatus (except: 772.3.3 dimmers, light, theatre)
Equipment for distributing electricity
Electrical machinery and apparatus, n.e.s. (except: 772.85 particle accelerators, and
parts thereof, n.e.s)
Motor vehicles for the transport of goods or materials for Earthquake rehabilitation and
reconstruction
Parts and accessories, n.e.s. of the motor vehicles falling within heading 722 and 782
Trailers and other vehicles, not motorized, n.e.s. and specially designed and equipped
transport containers (except: (i) 786.12.2 library-trailers (ii) 786.12.3 limbers, ammunition,
armoured or not (iii) 786.12.9 trailers, exhibition (iv) 786.12.13 trailers, furniture-removal
and (v) 786.81 other vehicles, not mechanically propelled)
Sanitary, plumbing and heating fixtures and fittings, n.e.s.
Furniture and parts thereof; bedding, mattresses, mattress supports, cushions and
similar stuffed furnishings
Instruments and appliances, n.e.s., for medical, surgical, dental or veterinary purposes
Meters and counters, n.e.s.
Measuring, checking, analyzing and controlling instruments and apparatus, n.e.s.; parts
and accessories n.e.s. of the instruments and apparatus of groups of 873 and 874
(except: 874.52 instruments, apparatus or models, designed solely for demonstrational
purposes (e.g., in education or exhibition), unsuitable for other uses)
Printed matter
Articles, n.e.s. of plastics
Office and stationery supplies, n.e.s.

II.

Sector Related Imports for the Project

1.

Community and household rainwater tanks, fittings, fixtures, and rainwater harvesting
piping and harvesting equipment
Desludging equipment, pumps, trailers and associated fixtures
Materials for the construction of sludge drying beds
Community and household septic tanks
Sanitary and plumbing fixtures and fittings
Solid waste management equipment for coping with debris, including glass and wood
cutters, composters and compactors. Solid waste management equipment for coping
with debris, including glass and wood cutters, composters and compactors.

95.
96.
97.
98.
99.

100.
101.
102.
103.
104.

105.
106.
107.
108.
109.

2.
3.
4.
5.
6.

46

Appendix 3

No.
7.
8.
9.
10.
11.
12.

Description
Communal solid waste bins
Plumbing and rainwater harvesting tools and installation of solid waste management
equipment.
Seed
Farming tools
Fish processing equipment
Urgent purchase and import of helicopter fuel for use by the helicopters involved in the
relief and rehabilitation operations

Source: ADB Fact-Finding Mission.

Appendix 4

47

TRANSPORT SECTOR ASSESSMENT AND PROPOSED ASSISTANCE

A.

Introduction

1.
The road network in the Azad Jammu and Kashmir (AJK) includes about 9,430 kilometer
(km) of primary, secondary, and local roads of which 4,020 km are paved, 420 km are fairweather and 4,990 km are local or unpaved. The Public Works Department (PWD) is
responsible for the 4,440 km paved and fair-weather roads and the Local Government and
Rural Development Department (LGRDD) manages the local roads that are the tertiary links
connecting villages to the existing road network. The road network in the three earthquakeaffected districts is 5,305 km of which 2,545 km are managed by PWD and 2,760 km is the
responsibility of LGRDD.
2.
In North-West Frontier Province (NWFP), the road network consists of about 9,100 km of
provincial highways, secondary roads and rural roads. About 5,000 km of these roads are paved.
The Frontier Highway Authority (FHA) is responsible for the 2,100 km of provincial highways
that connects all districts and provide links to the neighboring provinces. The remaining 7,000
km of roads are managed by the 24 district governments. In the five affected districts, the road
network is 6,034 km of which 549 km of provincial highways are under FHA and the rest are
with the districts. Three national highways serve as the primary corridor to the affected districts
in NWFP. Managed by the NHA, these highways have a total length of about 270 km.
B.

Damage and Impact of the Earthquake

3.
Due to the mountainous terrain in AJK and northern areas of NWFP, access to
population centers is by roads carved along mountainsides. The earthquake damage to these
roads was primarily caused by landslides. Five types of damages were observed: (i) major
landslides causing the loss of an entire section of the mountain slope and the road traversing it;
(ii) minor landslides depositing a large amount of debris on the road where the mountainside is
unstable; (iii) flow of debris including large boulders on the road; (iv) severe cracking in the road
due to embankment failure and the upheaval of earth; and (v) unstable mountainside slopes that
may potentially become landslides. Lack of maintenance and extreme weather conditions will
accelerate the deterioration of the damaged roads. Overall damage is estimated at PRs20.165
billion ($339.5 million).
4.
Bridges were also affected by the earthquake, but the damage to them was not
extensive. Of particular mention is Balakot bridge, on which severe damage was observed in
the reinforced concrete superstructure and the abutments. Some other, smaller concrete
bridges, culverts, and suspension bridges on rural roads were also damaged.
5.
In the four affected districts of AJK (Bagh, Muzaffarabad, Neelum, and Poonch), it is
estimated that about 2,366 km roads were damaged. Of these, 203 km are major roads, 761 km
are other paved roads, and 182 km are unpaved roads, for a total of 1,146 km, representing
45% of the total PWD-managed roads. The Neelam Valley road and, to a lesser extent, the
Jehlum Valley road were severely damaged. Both roads are the primary transport arteries in
AJK. Another 1,220 km of local unpaved roads developed with community participation and
managed by LGRD are damaged. This represents 44% of the total LGRDD roads in the affected
districts. The assessed damage in AJK is estimated at PRs9,190 million.
6.
In NWFP, about 2,063 km of roads were damaged representing 31% of the total road
network in the five affected districts (Abbottabad, Battagram, Kohistan, Mansehra, and Shangla).

48

Appendix 4

Of these, 652 km are provincial highways managed by FHA, 1,016 km are other paved
provincial roads managed by the districts, 367 km are unpaved districts roads, and 27 km are
urban roads that are managed by municipal agencies. Estimate assessed damage in NWFP are
PRs7,363 million ($124 million).
7.
The three national highways damaged by the earthquake include Mansehra-Pattan
(N35), Mansehra-Naran (N15), and Kohala-Muzaffarabad (N75). The damaged length is about
194 km representing 72% of the total length. Estimated assessed damage to the national
highways1 is PRs3,481 million.
C.

Government Response to the Earthquake

8.
As soon as initial information on the extent and scale of damages to the main national
highways was received, the Government mobilized all available resources at its disposal to
clear the transport corridors to the affected areas. This effort was led by the Army Corps of
Engineers and by the army-owned Frontier Works Organization. The latter is one of the major
construction firms in the road sector and possesses a large equipment fleet and skilled human
resources which are needed for massive emergency works. At present, the Frontier Works
Organization is continuing with the work of clearing the national highways. The armys
engineering units are also involved in clearing the other provincial roads.
9.
FHA, NWFPs Works and Services Department and AJKs PWD have mobilized all
available resources, including contractors and consultants already assigned to different works,
to quickly clear and rehabilitate major roads. The variation orders to contractors and consultants
for immediate rehabilitation in the affected areas are eligible for retroactive financing under the
Project.
D.

Scope

10.
This component will rehabilitate earthquake-damaged major roads and bridges, except
national highways (footnote 1), within the four affected districts in AJK (Bagh, Muzaffarabad,
Neelum, and Poonch) and the five affected districts in NWFP (Abbottabad, Battagram, Kohistan,
Mansehra, and Shangla). The component will cover the repair and rehabilitation of the damaged
major roads and bridges under PWD and LGRDD in AJK and under FHA and district
governments in NWFP. Road clearance now in place is not anticipated to last permanently,
especially beyond the coming snow season. More thorough and permanent road rebuilding is
required, particularly including protection works to minimize landslides and river erosion and
improved drainage for slope stabilization. Rehabilitation works will restore roads and bridges to
the prequake level or higher standard, as this is considered cost-effective in the long run. Where
technically feasible and justified, works will include protection measures to mitigate damage
from future landslides. Resettlement will be minimal and will be confined to areas where the
original road cannot be reconstructed and requires partial realignment.
11.
To enhance the governments quick response to future disasters including aftershocks of
this earthquake, road sector agencies will need to be equipped with appropriate equipment and
machinery to deploy in landslide-prone areas (through the quick-disbursing component).

The World Bank is financing reconstruction of the national highways through additional financing to its ongoing
Highway Rehabilitation Project.

Appendix 4

E.

49

Cost Estimates and Financing Plan

12.
The cost of the component is estimated at $140.0 million equivalent including a foreign
exchange cost of $84.6 million. The local currency cost is $55.4 million equivalent and includes
local taxes and duties of approximately $5.2 million. The summary cost estimate is in Table
A4.1. The interest during construction is estimated at $1.4 million, which will be paid by the
Government.
Table A4.1: Cost Estimate
($ million equivalent)
Foreign
Exchange
83.1
1.5
84.6

Item
Civil Works
Equipment
Total

Local
Currency
55.4
0.0
55.4

Total
138.5
1.5
140.0

Source: Asian Development Bank estimates.

13.
The allocation of the civil works among types of roads or implementing agencies is
based on the recovery needs identified by the Asian Development Bank (ADB)/World Bank joint
needs assessment as summarized in Table A4.2. The indicative allocation is 61% for AJK and
39% for NWFP. The allocation will be modified on the bases of updated surveys.
Table A4.2: Indicative Allocation by Type of Road or Implementing Agency

Type of Road
AJK
Major Roads
Link Roads
AJK Total

Implementing
Agency

Allocation
(% of the total)

Cost
($ million)

Cost Sharing
ADB
Governmentc
($ million)
($ million)

PWD
LGRDD

48
13
61

65.9
18.6
84.5

49.2
13.9
63.1

16.7
4.7
21.4

FHA
Abottabad
Battagram
Kohistan
Mansehra
Shangla

6
4
5
5
14
6
39

8.1
4.9
7.0
7.0
18.9
8.1
54.0

6.1
3.6
5.2
5.2
14.1
6.1
40.4

2.0
1.2
1.8
1.8
4.8
2.0
13.7

100

138.5
1.5
140

103.5
1.5
105.0

35.0

NWFP
Provincial Highway
Rural Access Roads
(district governments)

NWFP Total
Total (Civil Works)
Equipment
Total

35.0

AJK = Azad Jammu and Kashmir, FHA = Frontier Highway Authority, LGRDD = Local Government and Rural
Development Department, NWFP = North-West Frontier Province, PWD = Public Works Department.
a
Based on the joint ADB/WB damage assessment.
b
Including physical and price contingencies.
c
Including tax and duties of approximately $5.2 million.
Source: Asian Development Bank estimates.

50

Appendix 4

14.
ADB will finance the foreign exchange cost of $84.6 million, as well as $20.4 million
equivalent of the local currency cost, for a total of $105.0 million, or about 75% of the total cost
of the component. The Government will finance the remaining local currency cost of $35.0
million equivalent, which includes taxes and duties. The financing plan is given in Table A4.3.
Table A4.3: Financing Plan
($ million)
Item

Foreign
Exchange

Local
Currency

Total

84.6
0.0
84.6

20.4
35.0
55.4

105.0
35.0
140.0

75
25
100

Asian Development Bank

Government
Total

Source: Asian Development Bank estimates.

F.

Implementation Arrangements
1.

Project Management

15.
The project management follows the overall framework set out in the main text. In AJK,
the Reconstruction Agency and PWD will be the implementing agencies for major roads, and
Reconstruction Agency and LGRDD will be the implementing agencies for link roads. In NWFP,
Reconstruction Agency and FHA will be the implementing agencies for provincial highways and
RA though the district reconstruction units (DRUs) and district governments will be the
implementing agencies for rural access roads under each district. The steering committee in
NWFP and AJK will decide where there is sufficient capacity to implement the subprojects. To
address the issues of capacity the incremental staff and consulting services assistance will be
distributed among the various implementing agencies depending on the work load assigned to
them by the steering committees.
2.

Implementation Schedule

16.
The Project will be implemented over a period of 3 years including preconstruction
activities and is scheduled for completion by the end of 2008.
3.

Procurement

17.
Civil works contracts and procurement of goods and services will follow the procedures
set out in the main text.
4.

Consulting Services

18.
Consulting services will be provided for each implementing agency to: (i) carry out all
field investigations and surveys; (ii) assess the damage and reconstruction and rehabilitation
requirements; (iii) carry out design and project preparation; (iv) prepare cost estimates and
provide procurement support, including preparation of tender documents, calling for bids, bid
evaluation, and award of contracts; (v) undertake and prepare required environment and social
assessment studies including resettlement plan to ensure compliance with the Government and
ADBs environmental and social safeguard policies; (vi) assist implementing agencies in
obtaining necessary clearances from ADB and the Government; (vii) supervise construction and
ensure quality control; and (viii) report progress on a regular basis. Consulting services will be
engaged by the concerned implementing agency as approved by steering committee.

Appendix 5

51

POWER SECTOR ASSESSMENT AND PROPOSED ASSISTANCE

A.

Damages and Impact of the Earthquake

1.
The 8 October 2005 earthquake in northern Pakistan damaged and disrupted power
generation and supply systems in Azad Jammu and Kashmir (AJK) and the eastern part of
North-West Frontier Province (NWFP). Five companies are involved in generating power and
supplying it to and within the earthquake-affected areas of AJK and NWFP. In terms of power
generation AJK Electricity Department (AJKED), Sarhad Hydro Development Organization
(SHYDO), and the Water and Power Development Authority (WAPDA) Hydel have a total of 10
hydro generation stations within the affected areas. In terms of power distribution, AJKED,
Islamabad Electric Supply Company (IESCO), and Peshawar Electric Supply Company
(PESCO) supply electricity to the affected areas.
2.
The power supply system was restored within days of the earthquake, but nearly all
repairs were temporary and need to be replaced by permanent solutions. Some areas still have
not yet been fully inspected because access to them is not yet possible due to the collapse of
roads and continuing landslides. In the aftermath of the earthquake, it was necessary to
establish tent villages and relief camps for dislocated people. These tent villages and relief
camps need to be electrified to ensure security and lighting at night, power to pump water, and
the efficient operation of schools and other facilities. The installation of temporary electrification
in tent villages and relief camps needs to be funded, and the recurring costs of their electricity
consumption should be paid to the supplying distribution companies.
3.
The preliminary damage and needs assessment (PDNA) prepared for the Government
by a joint Asian Development Bank (ADB) and World Bank team estimated power sector
reconstruction costs to be PRs1.9 billion ($31.7 million). Further detailed reconstruction
estimates indicate that this amount will be higher when the costs of electrification and electricity
consumption in the growing number of tent villages and relief camps are included. In addition,
about 30% of electricity distribution networks in AJK and 20% in NWFP have yet to be surveyed
for damage and taken into consideration in the PDNA report. The contingency allocated to the
power sector component is earmarked to address the eventual damage assessment in the
areas not yet inspected.
B.

Project Scope

4.
The Project component comprises rehabilitation of the power generation and supply
system infrastructure that was damaged during the earthquake, and the electrification of tent
and relief camps as well as related electricity supply to these camps for up to 2 years. In detail,
the Project will cover (i) repair of nine hydropower generation stations inclusive of access roads,
buildings, and ancillary facilities; (ii) supply and installation of equipment and lines related to the
132kV, 33kV, and 11kV substations; (iii) construction of operational buildings of substations and
related staff quarters; (iv) 0.4kV and 0.22kV low voltage lines (v) service connections to
consumers; vi) spare parts, operational vehicles, and tools (vii) installation of transformers,
meters, and service connections to the tent villages and relief camps established after 8
October 2005; (viii) payment for electricity supply for up to two years to the tent villages and
relief camps, and (ix) installation of transformers, meters, and service connections to the
anticipated new model villages to be established for the victims of the earthquake.
Reconstruction and rehabilitation works will be carried out to restore the facilities to preearthquake levels or to a higher standard as considered cost-effective in the medium to long -

52

Appendix 5

term. The installation of electricity to the tent villages and relief camps will be done with safety of
the occupants and the network as a high priority.
C.

Cost Estimates and Financing Plan

5.
The cost of the power sector component is estimated at $53.5 million equivalent,
including a foreign exchange cost of $24.0 million. The local currency cost is $29.5 million
equivalent and includes local taxes and duties of approximately $2.5 million. Interest during
construction will be paid by the Government and amounts to $0.4 million for the power sector
component. The summary cost estimate is in Table A5.1.
Table A5.1: Cost Estimate
($ million)
Item
Civil Works
Equipment
Total

Foreign
Exchange

Local
Currency

Total

3.5
20.5
24.0

2.3
27.2
29.5

5.8
47.7
53.5

Source: Asian Development Bank estimates

6.
The detailed cost estimate per executing agency is shown in Table A5.2, which also
identifies the individual items for financing. The items are based on the needs of reconstruction
identified during the development of the PDNA report, which was done by a joint team from ADB,
the United Kingdoms Department for International Development, and the World Bank. The total
cost of PRs3.21 billion is equivalent to $53.5 million. The allocations will be modified based on
the updated survey and investigation.
Table A5.2: Total Reconstruction Costs for the Power Sector
(PRs million)
Reconstruction Costs
Hydro Power Plant

Estimated cost to reconstruct damaged infrastructure

AJKED
IESCO
PESCO
SHYDO
Total
99.80

11.00

132kV Line

17.87

17.87

123.13

123.13

4.00

4.00

3.00

7.00

20.80

114.10

31.30

23.10

54.40

183.00

61.00

244.00

83.20

20.00

103.20

132/33kV Substation
33kV Line
33/11kV Substation
11kV lines
11/0.4kV substation
LT lines
Service connection
Transformers

110.80

4.00
93.30
0

Appendix 5

53

Estimated cost to reconstruct damaged infrastructure

AJKED
IESCO
PESCO
SHYDO
Total

Reconstruction Costs

90.00

Buildings
Spares and Generators

46.00

149.70

19.80

29.70

4.40

53.90

12.00

8.90

20.90

24.30

1,139.00

Tools & Vehicles

580.60

69.80

464.30

Tent Camps - Installation of Electricity

50.00

30.00

350.00

Subtotal Fixed Assets Costs

630.60

99.80

814.30

Recurring Shelter Consumption

Costs
Tent Camps - Electricity supply
(1 year)

120.00

60.00

390.00

813.66

169.78

1,285.73

Subtotal Reconstruction Costs

285.70

Shelter Installation Costs

Total Costs (Allocation) per

Executing Agency

430.00

24.30

1,569.00

570.00

26.73

2,295.90

Contingency (unallocated)

914.10

Total Reconstruction Costs

3,210.00

AJKED = Azad Jammu and Kashmir Electricity Department, IESCO = Islamabad Electricity Supply Company,
kV = kilovolt, PESCO = Peshawar Electricity Supply Company, SHYDO = Sarhad Hydro Development
Organization.
Source: Asian Development Bank estimates.

7.
ADB will finance the foreign exchange cost of $24.0 million and $16.0 million equivalent
of the local currency cost for a total of $40.0 million or about 75% of the total cost of the
component. The Government will finance the remaining local currency cost of $13.5 million
equivalent, which includes taxes and duties. The financing plan is given in Table A5.3.
Table A5.3: Financing Plan
($ million)
Item
ADB
Government
Total

Foreign
Exchange
24.0
0.0
24.0

Local
Currency
16.0
13.5
29.5

Total
40.0
13.5
53.5

%
75
25
100

Source: Asian Development Bank estimates

8.
Although no cofinancing is presently envisioned in conjunction with the power sector
component of the earthquake related emergency assistance loan, cofinancing from both official
(loan and grant) and commercial sources may be mobilized for the follow-on power sector
expansion projects, which will most likely be developed in the affected areas during the medium
term horizon (25 years).

54

Appendix 5

D.

Implementation Arrangements
1.

Project Management

9.
There are four implementing agencies within the power sector component, namely
AJKED, IESCO, PESCO, and SHYDO. Each implementing agency has been provided an
allocated directly related to the damages and reconstruction needs within their respective areas,
and accordingly each implementing agency will be responsible for development of respective
subprojects. The implementing agencies will be responsible for the implementation of their
respective subprojects.
2.

Implementation Schedule

10.
All reconstruction works are scheduled to be completed within 3 years. The detailed
implementation schedule is in Appendix 11.
3.

Procurement

11.
The procurement procedures for the power sector component are identical to those of
the overall Project.
4.

Consulting Services

12.
The implementing agencies in the power sector have, for the most part, the capabilities
and technical expertise to implement the power sector component of the Project. However, to
assist with development of procurement packages inclusive of establishment of specifications,
to ensure transparency, and independent monitoring, consulting services will be required to
assist the implementing agencies with (i) preparation of the subproject proposals to ensure
compliance with subproject criteria, (ii) preparation of detail design, cost estimates, and bidding
documents, (iii) conduct general construction and installation supervision, (iv) random checking
for quality assurance purposes, (v) undertake and prepare required environment and social
assessment studies including resettlement plan to ensure compliance with the Government and
ADBs environmental and social safeguard policies. The consultants will have expertise in (i)
electrical engineering specifically in power supply systems, and (ii) structural engineering for
buildings.
13.
The consultants will be hired by the concerned implementing agency with the approval of
ERRA or SC as the case may be. The outline terms of reference of the consultants are in
Supplementary Appendix D.

Appendix 6

55

SOCIAL SECTOR ASSESSMENT AND PROPOSED ASSISTANCE

A.

Background

1.
Before the earthquake, Azad Jammu and Kashmir (AJK) had adequate primary and
secondary healthcare facilities as well as referral hospitals for its population of 3.4 million. There
were seven district hospitals, six subdistrict hospitals, 31 rural health centers, 184 basic health
units, and 105 dispensaries. The district hospitals provided coverage to both the urban and rural
populations of the districts.
2.
The damage assessment survey jointly undertaken by the Asian Development Bank
(ADB) and World Bank found that the extent of damage to the health sector in AJK far exceeds
initial expectations. The assessment reported that health facilities were completely destroyed or
made irreparable in Bagh and Poonch districts. The damage in Muzaffarabad is reported at 70
80% of the entire health infrastructure of the district. Besides the infrastructure, most of the
medical and office equipment, furniture, drugs, and laboratories were destroyed. Information on
ambulances and supervisory vehicles is not available but 21 four-wheel vehicles and six
motorcycles have been reported destroyed. These losses have resulted in a complete
breakdown of the health system, severely disrupting the provision of both secondary and
primary healthcare services. In addition, health management at the central, district, and facility
level was paralyzed, and most official and health management information records and systems
were lost.
Table A6.1: Summary of Damage to the Healthcare System in Affected Areas
Type of Health
Institution/Offices
Tertiary care hospital
Secondary care (district,
subdistrict, and civil hospitals)
First-level healthcare facilities
(RHCs, BHUs and MCH centers)
Other health facilities
(dispensaries, first-aid posts, etc)
Health management offices
Total health facilities
Lost vehicles/motorcycles
Total

Number
Fully
Damaged
0
16

Number
Partly
Damaged
1
13

Estimated
Replacement Cost in
PRs (millions)
500
6,798

203

68

218

32

17
454
21/6

3
117
0

8,091
159
318
15,866
22
15,888

3.
Prior to the earthquake, the literacy rate in AJK was estimated to be 64% of the total
population, or about 56% among females and 80% among males. Education has remained a
priority with the AJK government, as about 27% of its total recurring budget is allocated to
education. The damage assessment survey has identified Bagh, Muzaffarabad, Neelum, and
Poonch (Rawlakot) as the worst affected districts in AJK with regards to education. The total
number of government schools and colleges in AJK prior to the earthquake was 7,258. Of these,
3,879, or 53%, were in the three worst affected districts. There were 290,000 students (44%
girls) and 12,971 teachers in these three districts.
4.
Educational institutions of all levels, from primary schools to degree colleges and the
university, have suffered substantial damage. Apart from damage to the institutions and
buildings, the sector has lost people. According to a United Nations Childrens Fund (UNICEF)

56

Appendix 6

report, almost half of the casualties of the earthquake were children of school age. The number
of lost school staff and teachers is 853 for both AJK and NWFP.
Table A6.2: Summary of Damage to Educational Institutions

Institutions
Government primary

Number of
Damaged
Institutions
2,153

AJK
Estimated
Cost
(PRs million)
3,064

% of Total
Cost
22

Government middle

565

1,341

10

Government high

312

1,473

11

Government higher second

27

188

Government intercollege

25

78

Government colleges and

postgraduate

28

1,260

574

2,620

19

AJK University

3,463

12

Materials and furniture

2,036a

15

Administration buildings
Total

3,685

13,660

Technical/vocational
Private

100

AJK = Azad Jammu and Kashmir.

a
Cost of materials, equipment, and furniture includes PRs540 million for AJK University.

5.
ADB is processing an emergency assistance package for the earthquake-affected areas.
Apart from other sectors, the government of AJK has shown interest in securing funds to
support the rehabilitation and reconstruction of the essential social sector infrastructure. The
social sector component will focus on reconstructing and rehabilitating selected health and
education facilities located within the affected districts.
B.

Objective

6.
The objective of this component is to address the greatest social-sector needs of
earthquake-affected people. District and subdistrict headquarters being the major urban centers
of AJK, people from remote areas use the health and educational facilities in these places. The
task of reconstructing and rehabilitating social-sector facilities is gigantic and will take place over
a period of time. Most of the locations where primary health and education services are
damaged are remote and difficult to get to because of damaged roads. The capacity and
outreach required to build these services both in the public and private sector has to be put in
place before work can begin on rebuilding these facilities. However, work can begin immediately
in such urban areas as district and subdistrict headquarters and in accessible rural areas, and
where capacities are currently concentrated. The urban centers and larger rural settlements are
the worst affected, as these were densely populated. Immediate restoration of heath facilities
and education in these centers will benefit the most people, apart from accommodating people
from surrounding areas in the short term. This approach is advocated in the short-term recovery
strategy recommended in the damage and need assessment and agreed with the Government.

Appendix 6

57

7.
In the health sector, the present arrangement in the emergency relief phase is that
various field hospitals provide emergency healthcare assistance to people in Bagh,
Muzaffarabad, and Rawlakot. The seriously injured are being referred to Rawalpindi and
Abbotabad for treatment. Prior to the earthquake, there was one referral health facility at each
district headquarters. In addition, there was a hospital in each subdistrict headquarters. In
Muzaffarabad, the capital of AJK, the 400-bed Combined Military Hospital was administratively
under the armed forces but with the government of AJK providing 80% of its administrative
costs. The other hospital in Muzaffarabad was the 300-bed Abbas Institute of Medical Sciences,
which provided referral services to the civilian population of AJK. As these facilities have
suffered irreparable damage for the most part, practically no referral facilities exist today. In the
short term, many relief agencies are providing these services through makeshift hospitals that
have concentrated the population seeking medical aid in Muzaffarabad and other major urban
centers in AJK. This temporary relief infrastructure is expected to start thinning out very soon,
and there will be immense pressure to provide referral services in districts and subdistricts. The
health component will focus on reconstructing one hospital in district headquarters with 150250
beds each and three hospitals in subdistrict headquarters with 6080 beds each. All of these
hospitals will be equipped with diagnostic and treatment facilities to provide referral facilities for
people from all parts of AJK, but particularly from earthquake-affected districts. Health
administration buildings have also been seriously damaged, which seriously hampers the ability
of the Health Department to respond to the emergency. The component will also provide for the
reconstruction and rehabilitation of health management buildings.
8.
In ongoing relief and rescue operations, many agencies focus on providing temporary
structures for primary education institutions, but middle and high schools are too big for these
agencies to handle. In addition, as in the health sector, primary education facilities are scattered,
situated at remote locations and currently difficult to reach. As the immediate need identified in
the reconstruction strategy for education is to restart classes, the reconstructed and
rehabilitated middle and high schools can also be used to accommodate students of the nearby
primary schools over the short term. The resumption of routine school activities would help
establish some kind of normalcy in the lives of the school children, teachers, and staff. The
component will focus on reconstructing and rehabilitating 550 government middle schools and
300 high schools, including the provision of all essential furniture and equipment. The
component will also assess, and advise on, the physical and psychological health of students,
as well as train trainers for teacher training.
C.

Scope

9.
The health subcomponent will include (i) construction of one (150 to 250 bedded) district
hospital and three (4080 bedded) Tehsil headquarter hospitals, including wards, operation
theatres, outpatient departments and other necessary services; (ii) provision of all the essential
medical equipment to the hospitals including ambulances and supplies; (iii) construction of
proper waiting areas and provision of public toilets and clean drinking water for visitors; and iv)
consultancy and administrative assistance including health management planning. German
Agency for Technical Cooperation is actively negotiating a soft component for the health sector,
which will include training management support and systems, and planning to be
operationalized in parallel with the ADB emergency assistance loan.
10.
The education subcomponent would include: (i) repair and reconstruction, according to
improved seismic designs of about 550 partly and completely damaged government middle
schools building, latrines, office accommodation (ii) provision of all essential furniture and
equipment for all the middle schools reconstructed and repaired; (iii) training of master trainers

58

Appendix 6

for teachers training; (iv) school health services for physical and physiological health
assessment and advise; and (v) consultancy and administrative assistance.
D.

Cost Estimates

11.
The cost of the health subcomponent is estimated at $29.7 million including taxes and
duties of approximately $1.6 million. The cost of the education subcomponent is estimated at
$23.6 million including taxes and duties of approximately $1.0 million. The summary cost
estimates are provided in Tables A6.3 and A6.4.
Table A6.3: Reconstruction and Repair Cost for the Health Sector
($ million)
Foreign Exchange
Local Currency
Item
Total Cost
Cost
Cost
Civil Works
7.0
10.3
17.3
Equipment
7.4
5.0
12.4
Base Cost
14.4
15.3
29.7
Source: Asian Development Bank estimates.

Table A6.4: Reconstruction and Repair Cost for the Education Sector
($ million)
Foreign Exchange
Local Currency
Item
Total Cost
Cost
Cost
Civil Works
7.8
10.6
18.4
Equipment
0.5
4.7
5.2
Base Cost
8.3
15.3
23.6
Sources: Asian Development Bank estimates.

12.
ADB will finance the foreign exchange cost of $22.7 million as well as $17.3 million
equivalent of the local currency cost, for a total of $40.0 million, or about 75% of the total cost of
the component. The Government will finance the remaining local currency cost of $13.3 million,
which includes taxes and duties. The financing plan is provided as Table A6.5.

Source
ADB
Government
Total

Table A6.5: Financing Plan

($ million)
Foreign
Local
Total Cost
Exchange Cost
Currency Cost
22.7
17.3
40.0
0.0
13.3
13.3
22.7
30.6
53.3

Percent
Financing (%)
75
25
100

Source: Asian Development Bank estimates.

E.

Selection Criteria

13.
The selection of the various facilities under the Project will be based on the needs
assessment exercise jointly undertaken by the World Bank and ADB. It also takes into
consideration the priorities determined by the government of AJK for additional activities to be
undertaken as part of the Multisector Rehabilitation and Improvement Project in AJK. The
selection is based on the following criteria:
(i)
Social sector facilities located in the earthquake affected zone in AJK;
(ii) Addressing the basic emergency needs in the affected areas;
(iii) No overlap of assistance from other donors for the assistance;

Appendix 6

(iv)
(v)
F.

59

Determined as priority for ADB assistance by Government of AJK; and

Subprojects are technical feasible, cost efficient and financially sustainable.

Implementation Arrangements

14.
The social component of the emergency assistance will be implemented through the
implementation arrangement established under the ongoing Loan 2153 PAK (SF) Multisector
Rehabilitation and Improvement Project for AJK, by further strengthening the existing project
management units and project implement units (PIUs) with staff and technical assistance
consultants, if the SC decides to use this existing mechanism as implementing agency for
subprojects. The Multisector Rehabilitation and Improvement Project for AJK is at the take-off
phase with implementation arrangements in place and activities in the various sectors about to
be initiated. Department of Health (DOH) will undertake civil works through the Works
Department or RA. Consulting services will be required to assist the DOH or RA as the case
may be: (i) in the preparation of the layout for the hospitals including detailed engineering with
seismic provisions, bid preparation, assistance in procurement and construction,
supervision/contract administration of civil works, and procurement of equipment; (ii) determine
the needs of the equipments in consultation with the administration of the hospital and specialist
consultants; (iii) project management and reporting; and (iv) assess and undertake any
necessary study to ensure compliance with ADB and the Governments environmental and
social safeguards policies. The health subcomponent will require 20 person-months of
international consultancy services, mainly providing health management specialist services and
technical advice, and 200 person-months of domestic consulting services for surveys, design,
supervision, and project management. In addition, the implementing agency (which can be RA
or DOH) of health will require strengthening in terms of both human resources and capacity, for
which administrative support will be provided.
15.
For education, the AJK Department of Education (DOE) will be the implementing agency.
A previously existing headed by a project implementation officer with essential staff has been
established within the DOE to oversee implementation. The PIU will be responsible for overall
management of the education component, including (i) procurement of civil works and
equipments, (ii) coordination with other departments and line agencies, (iii) progress monitoring,
and (iv) audit of accounts and preparation of progress reports. The PIU will undertake
procurement through an interdepartmental purchase committee established within the DOE but
having representation of the Finance Department and P&D Department. DOE will undertake
civil works through their own Public Works Department. Consulting services will be required to
assist the DOE with (i) the preparation of the layout for high and middle schools including
detailed engineering with seismic provisions, bid preparation, assistance in procurement and
construction, supervision/contract administration of civil works, and procurement of equipment;
and (ii) project management and reporting. The education subcomponent will require 20 personmonths of international consultancy services, mainly providing education management specialist
services and technical advice, and 200 person-months of domestic consulting services for
surveys, design, supervision, and project management. In addition, the PIU will require
strengthening in terms of both human resources and capacity, for which administrative support
will be provided.

60

Appendix 7

LEGAL ASSISTANCE, GOVERNANCE, AND INSTITUTIONAL BUILDING

1.
The destruction caused by the earthquake has created legal and documentary issues for
earthquake affected people and generated a tremendous strain on government administration
and resources, at national, provincial and local levels. This subcomponent seeks to assist the
federal, North-West Frontier Province (NWFP) and Azad Jammu and Kashmir (AJK)
governments to build institutional strength and capacity to effectively deal with issues and risks
associated with restoring lost documents and helping earthquake victims retain their legal rights
and entitlements in a timely and effective manner. This subcomponent also seeks to build local
government capacity to provide special services to earthquake-affected people, especially those
who are more vulnerable. The subcomponent aims to compliment and support existing
administration structures, wherever possible. This subcomponent will be implemented in
accordance with the following principles: (i) affected people are offered people-centered
solutions and recognition is given, at an early stage that vulnerable groups require special and
urgent arrangements; (ii) rehabilitation activity is designed for, and implemented by, the lowest
level of mandated and competent agency; (iii) durable arrangements are made, which assign
clear responsibilities for central and localized strategic coordination; (iv) needs and sectoral
technical responses are assessed and defined in ways that avoid unmanageable demands; (v)
innovative institutional arrangements are created (even if only temporary) through which
specialized expertise can be quickly mobilized and held accountable; and (vi) validation, audit,
accountability, judicial and quasi-judicial arrangements are stipulated with a clearer view of
enhancing the predictability of outcomes for disaster-affected people. Details of implementation
arrangements under this subcomponent, including the appointment of the implementing
agencies, will be developed, taking into consideration changing circumstances. The
implementing agencies with assistance from ADB resource person will be responsible for the
implementation of this subcomponent. Details on each activity under this subcomponent are
described below.
2.
The constituent parts of the legal assistance, governance, and institutional building,
which may be streamlined or augmented following discussions with the Government and other
development partners, are described below:
A.

Provision of National Identity Cards

3.
The National Database and Registration Authority (NADRA) is the agency that issues
national identity cards (NICs). Following the earthquake, thousands of NICs will need to be
replaced, and those people previously without NICs will need to be issued NICs in order to
secure compensation entitlement and other rights. NICs are also used in legal proceedings and
establishing property and inheritance rights. Issuing of new or replacement NICs will
significantly reduce the incidence of fraud. Consideration also needs to be given to providing
NICs to children in order to facilitate the identification and repatriation of abandoned or
displaced children with their families or relatives, requiring a review of the legal framework to
make provision for childrens NIC.
4.
Currently, NADRA is attempting to issue NICs under its existing modalities, however this
will not be sufficient to meet the urgent needs of the earthquake-affected people. Issuing NICs
to earthquake-affected people cannot be delayed. It will be necessary to develop new modalities
in order to meet the demand arising from the earthquake. This may include relaxation of certain
procedures used to verify identity, (e.g. Union Council members or other appropriate local
leaders will be involved in attesting the accuracy of information provided by villagers, so that an
alternative form of attestation will be developed), the requirement for the payment of fees and

Appendix 7

61

the establishment of localized offices and additional mobile units with the necessary equipment.
Other Government departments such as the Central Board of Revenue and local revenue
departments could be used to assist in the identification process in order to speed up the
process.
5.
This subproject will support NADRA in its efforts to improve its capacity to issue NICs to
earthquake affected people as expeditiously as possible and to develop its outreach to
vulnerable people such as women and children. Support may also be considered for additional
staff, necessary additional computer equipment, networking and connectivity components,
photographic equipment, as well as the purchase of mobile units and office items. The staff of
the mobile units will include at least one woman to ensure that female villagers have
opportunities to obtain NICs.
B.

Provision of Documents

6.
The Local Government, Elections, and Rural Development Department of NWFP and
the Local Government and Rural Development Department of the AJK would normally oversee
the registration of births, deaths, and marriages. With respect to title or ownership documents
for land, these would be issued by revenue officers, variously known as district officer (revenue)
and deputy district officer (revenue) in NWFP and collector or assistant collector in AJK. These
departments would be responsible for providing duplicates of documents destroyed in the
earthquake.
7.
The Project will provide support to these departments by assisting them in developing
new modalities in order to expedite the process of providing duplicates of documents.
Computerization will be considered where feasible as well as provision of mobile units. Special
procedures will be required to be provided for quake affected areas with regard to death
certification. Provision will be required to be made for acceptance of this certification by courts
of law for grant of succession certificates, declaratory suits, and revenue officers for mutation of
rights in the name of legal heirs. There will also be the need to consider alternative processes
for the presumption of death. Currently, the presumption of death in relation to a missing person
is seven years. Support will be provided to allow local government officers/revenue officers to
visit areas affected by the earthquake in order to issue duplicates of birth and marriage
certificates and issue death certificates and outreach to the most seriously affected and
vulnerable people. In addition to these efforts, there will also be a need to launch an effective
public awareness campaign so that earthquake affected people are made aware of their rights
to be issued with duplicates of documents and the new modalities regarding their issue.
8.
Disability certificates need to be issued by the Medical Superintendent, District
Headquarters Hospital, to ensure that disabled persons have access to disability entitlements.
Co-ordination needs to be strengthened between the executive district officer (health) in NWFP
and the district health officers in AJK, who are responsible for local basic health units and
regional health units, and the medical superintendent to reach out to local communities.
Capacity-building may be necessary to deal with disability, health and entitlement issues.
9.
The Auditor General of Pakistan (AGP) needs to ensure that pensioners, including
widows, are facilitated to obtain their pension entitlements. Where public servants have been
disabled, the AGP may consider pensioning the disabled on the basis of early retirement.
Coordination is necessary between AGP and medical superintendent and local government
official to facilitate affected people to obtain pension entitlements.

62

Appendix 7

C.

Legal Facilitation and Assistance

10.
The destruction brought about by the earthquake has, as discussed above, generated
legal and documentary issues for earthquake-affected people and the Government. Such legal
issues arise from the loss of documents, such as property titles; birth, death, marriage, and
disability certificates; court records; and bank account and pension documents. They also arise
from the devastating loss of life caused by the earthquake, as following these mass deaths,
proof of death, disability, custody, fostering, and adoption of children, and the inheritance of real
and personal property have all arisen as problems. Issues such as insurance coverage,
enhancing the limitation period for claiming compensation, property disputes, and other
entitlement issues are follow-on concerns.
11.
This activity will support the Government in developing a legislative framework for the
post earthquake reconstruction period to enable special legal provisions for people and property
affected by the earthquake, and related purposes. Legislation under the framework will include (i)
shortening the period for the presumption of death, (ii) providing for the custody, fostering, and
adoption of children, (iii) establishing special institutional and legal arrangements for the
protection of orphaned or displaced children, women and the disabled persons, and their
property, and (iv) increasing the vigilance against abduction and human trafficking. Provisions
relating to the protection of property rights through inheritance would also need to be introduced.
Consideration should also be given to enhance the penalty for any crime, if it is committed in
relation to property or money intended for earthquake affectees or relief.
12.
To translate formal legal solutions into solutions for earthquake-affected people will
require them, and divisional and district level government officials and affected citizens, to
understand the new legal requirements, and be able to proceed along appropriate channels.
They will also need to have assistance to resolve any legal questions that may arise. Members
of the law and administration of justice system in earthquake-affected areas will similarly need
to be made aware of the mechanisms for resolving earthquake related legal and administrative
problems. In the earthquake affected areas already poor and vulnerable people will have
difficulty negotiating formal avenues, and will clearly need assistance to avail themselves of any
new laws and procedures.
13.
As an activity of this subcomponent, legal facilitation and assistance for earthquakerelated legal and documentary issues would be provided to earthquake affected people. The
provision of assistance would be functionally decentralized in the affected areas of NWFP and
AJK. Staff would have access to transportation in order to conduct outreach, by visiting affected
communities, and to service all relevant areas. ADB will coordinate with the Government and
officials of the earthquake affected districts to determine the number of legal facilitators required
for a particular area. However, certain districts may need more assistance than others.
14.
A subcomponent coordinator or director, with assistance from at least one staff member,
will coordinate this activity, facilitate cross learning amongst the decentralized offices and
monitor the conduct of legal services. This activity will be closely coordinated with the civil
society organizations (CSOs), and nongovernment organizations (NGOs), and other relevant
development partners.

Appendix 7

D.

63

Judicial, Police and Public Officials Training Workshops and Legal Awareness

15.
Judges, court officials, police and revenue officers in the earthquake-affected areas
need to be familiarized with the property and custody legal issues likely to arise post-earthquake,
and the special post earthquake legislative framework when enacted. The types of legal issues
that are likely to arise can be anticipated, including, for example, property, inheritance,
compensation, rights of orphans, disabled and widows, however the details of the sorts of
disputes have not yet been identified. Based on more detailed data identifying the nature of
earthquake-related legal disputes likely to come before the courts, ADB in conjunction with the
Government would coordinate training of judicial revenue officials and police, and public legal
awareness workshops in or for the earthquake-affected areas.
16.
The earthquake legislative framework referred to in paragraph 10 above, will presume
knowledge of the law and imposes harsh jail penalties for violations. Legal awareness
workshops will be coordinated for district officials, local law enforcers, and the public, in
conjunction with, or independently from the judicial workshops for earthquake related issues.
E.

Public Grievance Review Mechanism

17.
The legal and factual issues generated by the earthquake, are likely to lead to increased
disputes and grievances both among earthquake affected people, and possibly against
government officers and departments. The Government will need to ensure that all earthquake
relief and reconstruction efforts promote transparency, participation, accountability, and a zerotolerance for any corruption associated with earthquake assistance. Similarly the proposed
earthquake legislative framework would increase penalties for earthquake related crimes and
improprieties.
18.
The pre-earthquake public redress procedures were a patchwork of federal and
provincial systems with mixed resources and mixed results. Those systems that can operate
effectively following the earthquake will be supported. Consideration will be given as to whether
the regulatory framework, capacity, accessibility and reach of the existing institutions are
adequate.
19.
In furtherance of the Governments objectives, and to assist earthquake affected people
with disputes and grievances, it may be necessary to create a decentralized provincial system
of public grievance review and alternative dispute resolution will be established or supported in
the earthquake affected areas and staffed by independent persons. The mechanisms would
seek to resolve private disputes, and investigate claims of impropriety against public officials
relating to earthquake assistance. Proposals for achieving this end are currently being
considered. In consultation with the Government, NWFP, AJK and NGOs, a number of tried and
tested mechanisms will be reviewed, in order to determine the most appropriate way to provide
forms of dispute resolution, public grievance review, and anti-corruption forum, in the context of
conditions on the ground in earthquake affected areas.
F.

Transparency and Earthquake Data Collection

20.
The Office of the President, through the Earthquake Reconstruction and Rehabilitation
Authority (ERRA), will begin to coordinate the many separate efforts to collect data in relation to
earthquake affected infrastructure and earthquake affected people. This coordination will
include NADRA, the Central Board of Revenue, relevant local government departments, CSOs
and NGOs. Centralization of data collection will minimize duplications of efforts, focus relief

64

Appendix 7

efforts to those earthquake affected people who need it the most and limit the extent to which
earthquake affected people are approached by multiple government agencies and NGOs for
similar data collection questions. In the longer term, such data collection will be invaluable to the
governmental and other relief agencies for future planning and understanding lessons learned.
21.
This activity will support ERRA in coordinating this activity by providing data collection
managers who can train staff and advice on connectivity of data and networking issues. Subject
to an initial technical and needs assessment, consideration may also be given for the provision
of computer equipment, software licenses and the recruitment of new staff.
22.
Transparency and access to information standards need to be agreed so that
stakeholders are aware of transparency and access to information obligations. Local institutions
such LGO monitoring committees and NGOs, CSOs and local media may be engaged to
enhance transparency and the flow of information. Provision of information management
systems, computerization and networking will need to be supported.
23.
In addition, ERRA will facilitate the coordination required to ensure that information on
earthquake assistance, post earthquake rehabilitation and reconstruction, names of affectees
and extent of damage suffered by them, and related laws and policies, will be placed on an
earthquake website, and published in English, Pushtoo, and Urdu in local newspapers as well
as on national and provincial television and radio. To keep the public notified, these publications
and broadcasts will be regularly updated at least every quarter. This would require some
coordination amongst departments, donors, and NGOs to obtain the appropriate information.
The information to be included should present financial statements, track procurement contract
awards, including its amount, and basic information on the processes adopted, list of goods or
services purchased and their utilization.
G.

Vocational Training

24.
The earthquake left many households without any income-generating capacity. Many of
these household have lost their breadwinner. Single women and widows now face the need to
provide for their families. Many of them will have to enter the job market, often for the first time.
The need arises to provide them with free vocational training, designed to give them the
possibility to approach the market as semi-skilled labor for positions which are socially
acceptable. Another group of vulnerable people, who may need to enter the job market and
need special training, are the disabled. In fact, disabled are equally capable to produce income
and can be a valuable source of income for their families. For this reason they need to be given
equal opportunity of access to the labor market and accordingly, they will also need special
assistance. In both cases, there is also the need to assist the trainees in finding a job, once the
training has been completed. This activity aims at building and strengthening the capacity of
local governments in delivering and managing training programs designed to reach vulnerable
people who have been particularly affected by the earthquake and need targeted assistance
and complements the vulnerable people action plan in Appendix 17 and the gender action Plan
in Appendix 16.
25.
The special training needs to be designed by specialized consultants. These consultants
will work with the relevant departments of NWPF and AJK to strengthen their capacity to deliver
such trainings and to facilitate the participation of the target groups to the courses. The
consultants will also design and implement a program of post-training assistance to find jobs.

Appendix 7

H.

65

ADBs Approach to Implementation

26.
From its involvement in other natural disasters, ADB has learned that post disaster
rehabilitation and recovery is most effective when (i) affected people are offered peoplecentered solutions and recognition is given, at an early stage, that vulnerable groups require
special and urgent arrangements; (ii) rehabilitation activity is designed for, and implemented by,
the lowest level of mandated and competent agency; (iii) durable arrangements are made,
which assign clear responsibilities for central and localized strategic coordination; (iv) needs and
sectoral technical responses are assessed and defined in ways that avoid unmanageable
demands; (v) innovative institutional arrangements are created (even if only temporary) through
which specialized expertise can be quickly mobilized and held accountable; and (vi) validation,
audit, accountability, judicial and quasi-judicial arrangements are stipulated with a clear view of
enhancing the predictability of outcomes for disaster affected people.
27.
ADB will work with the federal Government and with NWFP province and AJK state
Governments to ensure that this subcomponent is implemented in a manner which incorporates
the principles set out in paragraph 21 above. As the Government and other development
partners are working in related areas, there will be a need to continue coordination to ensure
that Government and development partner activities, as well as those of the ADB, complement
each others activities.
28.
Consistent with the sector approach adopted for the entire Project, ADBs assistance will
seek to support good governance, anti-corruption, and the legal and public administrative
infrastructure through cofinance, and gap-filling in areas not yet covered, and in areas where
ADB has a comparative advantage. ADB will actively coordinate with development partners and
the Government to minimize duplication, encourage cofinancing and have a catalytic effect on
the provision of additional resources. To provide against the duplication of efforts, the allocation
of ADB funds for this activity may be adjusted to ensure delivery of balanced and demand
responsive institutional assistance.
29.
This subcomponent will be coordinated through ERRA. Advisory technical assistance
engaged by ADB and associated contracts to implement activities in an agreed annual work
plan will be administered by ADB under ADBs Guidelines on the Use of Consultants and other
arrangements satisfactory to ADB.

66

Appendix 8

Table A8: Cost Estimates

($ million)

Category
A. Asian Development Bank Financing
1. Quick-Disbursing
a. Grant Financing
b. Loan Financing
2. Project Components
a. Equipment and Materials
i. Education
ii. Health
iii. Transport
iv. Power
b. Civil Works
i. Education
ii. Health
iii. Transport
iv. Power
c. Implementation Assistance
i. Legal Assistance, Governance,
and Institutional Building
ii. Incremental Administrative Support
iii. Consulting Services
Subtotal (A)
B. Government Financing (Counterpart)
1. Physical Works
i. Education
ii. Health
iii. Transport
iv. Power
2. Taxes and Duties a
i. Education
ii. Health
iii. Transport
iv. Power
v. Quick-Disbursing
3. Interest During Implementation
Subtotal (B)
Total

Foreign
Exchange

Local
Currency

100.0
65.0
35.0

0.0
0.0
0.0

100.0
65.0
35.0

29.9
0.5
7.4
1.5
20.5
101.4
7.8
7.0
83.1
3.5
5.0

19.1
2.0
3.1
0.0
14.0
34.6
7.2
5.0
20.4
2.0
10.0

49.0
2.5
10.5
1.5
34.5
136.0
15.0
12.0
103.5
5.5
15.0

1.0
1.5
2.5
236.3

1.5
3.5
5.0
63.7

2.5
5.0
7.5
300.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.4
4.4
240.7

51.5
5.1
5.6
29.8
11.0
18.3
1.0
1.6
5.2
2.5
8.0
0.0
69.8
133.5

51.5
5.1
5.6
29.8
11.0
18.3
1.0
1.6
5.2
2.5
8.0
4.4
74.2
374.2

WSS = water supply and sanitation.

a
Equipment and materials (10%), civil works (5%), quick-disbursing (8%).
Source: Asian Development Bank estimates.

Total
Cost

NWFP Finance
Department
Public Account

Azad Kashmir Finance

Department
Public Account

Public Account (non lapseable)

ERRA/NBP

Budget Counterpart
Fund

Consolidated
Fund

MOF/SBP

ERRA = Earthquake Rehabilitation and Reconstruction Authority, FHA = Frontier Highway Authority, MOF = Ministry of Finance, NBP = National Bank of
Pakistan, NWFP = North-West Frontier Province, P&DD = Planning and Development Department, PMU = project management unit, SHYDO = Sarhad Hydal
Development Organization, SBP = State Bank of Pakistan.

ADB

Figure A9.1: ADB Funds Flow

FUNDS FLOW AND PROJECT IMPLEMENTATION ARRANGEMENT

Appendix 9

67

ACS = Additional Chief Secretary, DDU = due diligence unit, DRU = district reconstruction unit, ERRA = Earthquake Rehabilitation and Reconstruction Authority,
FHA = Frontier Highway Authority, LG&RDD = Local Government and Rural Development Department, NWFP = North-West Frontier Province, SHYDO = Sarhad
Hydro Development Organization.

ERRA Management

ERRA

ERRA Council

Figure A9.2: Project Implementation Arrangement

68
Appendix 9

Appendix 10

69

PROCEDURES FOR SELECTION, APPROVAL, AND IMPLEMENTATION OF

SUBPROJECTS
A.

Eligibility Criteria for Subprojects

1.
The subprojects will be for rehabilitation of earthquake-damaged infrastructure in the
transport, power, and health and education sectors. The eligibility criteria listed represent
threshold general selection criteria for a subproject to be satisfied prior to application of sectorspecific criteria.
(i)

(ii)

(iii)
(iv)
(v)

(vi)

(vii)
(viii)

(ix)

The subproject will rehabilitate or restore damaged infrastructure and facilities

caused by the earthquake, based on the preliminary damage and needs
assessment, and assessments carried out by the project consultants.
The subproject is technically feasible, cost-effective and financially sustainable,
incorporates multi-hazard-resistant design standards of the Government of
Pakistan or equivalent authorities; and represents a least-cost alternative.
The subproject will incorporate beneficiary consultation and input in the selection
process where applicable.
The subproject will be completed within the project implementation period.
The funding of the subproject will not overlap with funding from other agencies,
though such agencies may cofinance specified support, including monitoring,
capacity building, and identified poverty reduction.
All necessary approvals of the national and respective state/provincial
governments will be obtained for the subprojects before submission by the
implementing agencies to the Asian Development Bank (ADB) for approval.
Subprojects will be prioritized on the basis of their social and economic impacts.
The subproject is: (a) in compliance with applicable national and state laws and
ADB Environment Policy (2002); and (b) prepared in accordance with the
requirements of an agreed environmental assessment and review framework.
Subprojects that do not satisfy the framework will not be included under the
Project. For subprojects that require an initial environmental examination (IEE):
(a) the IEE is included in the subproject proposal; (b) the related environment
management and monitoring plan is prepared for design and implementation;
and (c) Government environment clearance including all necessary clearances
as applicable for respective states is obtained prior to award of the subproject
contract. In the exceptional cases of subprojects that require an environmental
impact assessment (EIA), the EIA will be prepared according to the procedures
specified in the environmental assessment review framework (EARF) and
approved by the State Governments and ADB prior to approval of the
subproject.1
The subproject is (a) in compliance with applicable national and state laws and
ADB Policy on Involuntary Resettlement (1995); (b) minimizes land acquisition
and resettlement, and limits resettlement to unencumbered public lands to the
extent possible and that has not been squatted upon; and (c) is prepared in
accordance with an agreed resettlement framework. For subprojects involving
land acquisition and resettlement of affected persons, a resettlement plan in
accordance with the agreed resettlement framework will be formulated and

The summary EIA of this particular subproject will be disclosed through ADB website 120 days prior to approval of
it.

70

Appendix 10

forwarded to ADB for review and approval prior to acquisition of any land or the
award of subproject contracts.
B.

Procedures

4.
All subprojects will be prepared and processed in accordance with the following
procedures (Table A10):
(i)

The implementing agencies will select a subproject from the list agreed with ADB
during the loan inception mission for the Project, or propose other subprojects that
qualify given the eligibility criteria and prepare a project concept paper, which
describes the main elements of the proposed subprojects and main justification,
and (a) categorize resettlement significance using resettlement categorization
checklist and (b) environmental screening checklist. As this Project is in
environment category B, the relevant procedures apply.
(ii)
The above checklists will be submitted to the implementing agencies in the
respective states for review. If the implementing agencies find that the proposed
subproject is eligible in light of the eligibility criteria and the reports are in order,
implementing agencies will send the reports to ADB for further review, to obtain
necessary guidance with regard to the extent of relevant analysis, assessment,
plan, etc.
(iii) ADB will review the subproject concept reports submitted by the implementing
agencies/SCs. If ADB finds that a proposed subproject is not likely to satisfy the
eligibility criteria and/or the agreed procedures, ADB will advise the implementing
agency either (a) to modify the subproject proposal in a manner that will make it
eligible for approval or (b) that the subproject must be rejected. If a subproject is
rejected, the IA may propose a replacement subproject. If the proposed subproject
satisfies the eligibility criteria and procedures, based on the resettlement checklist,
ADB will advise on the requirements of preparation and application of the
resettlement plan.
(iv) Following approval of a subproject concept by implementing agencies, SCs and
ADB, the relevant implementing agency will conduct a feasibility study and
preliminary design or other similar design works, and based on those works,
develop a resettlement plan (if required) and undertake an IEE including an
environmental management plan.
(v) The implementing agency will disclose the resettlement plan and IEE to the
affected persons and incorporate the results of the consultation.
(vi) The report of the feasibility study and preliminary design/other design work,
including the resettlement plan and IEE, will be submitted by the implementing
agency to the SC for its appraisal. The implementing agencies and SCs will
appraise the reports in light of the relevant frameworks. Based on the review, the
implementing agencies/SCs will prepare a summary appraisal report for each of
the subprojects as the case may be. If the implementing agency finds that one or
more proposed subprojects are technically, environmentally, and socially viable,
and all reports are in order, the implementing agency will send those reports, with
attachments including the resettlement plan (if required) and IEE, to ADB for
further review and approval.
(vii) ADB will review the summary appraisal reports, together with required attachments.
If ADB finds that the proposed subproject satisfies the eligibility criteria and
procedures, ADB will approve the subproject. If ADB finds that the proposed
subproject does not satisfy the eligibility criteria and procedures, or does not

Appendix 10

71

comply with sector-specific criteria, and ADB safeguard policies, ADB may advise
the implementing agency on remedial actions to be taken for the proposed
subproject for it to comply or reject the subproject.
Table A10: Summary Procedures for Selection and Approval of Subprojects
Activities
Initial list of subprojects

Required Action
Prepare an initial list of subprojects
with a brief description of activities to
be implemented in each subproject,
and, along with rough cost estimates,
submit the proposal to the steering
committees through the technical
section.

Responsibility
Implementing agencies
with assistance
from consultants as
required

2.

Compilation and initial

review of subprojects

Compile and review, as appropriate

based on the selection criteria, the
subproject proposals submitted by the
implementing agencies.

Earthquake Reconstruction and

Rehabilitation Authority (ERRA) or
steering committee with
assistance from consultants

3.

Selection and approval of

subprojects

Based on agreed selection criteria and

the priorities of the state governments,
select and approve subproject
proposals.

Empowered Committee for the

respective state

4.

Survey and detailed design

Conduct a survey and prepare detailed

design; hold consultations with
different beneficiary groups and civil
societies to determine local needs and
priorities; consider social impacts of
the subprojects, including the
environment and resettlement effects;
and apply the requirements set forth in
the initial environmental examination
and the resettlement framework.

Implementing agency with

assistance from consultant, with
inputs from communities and
civil societies

5.

Detailed cost estimates and

bidding documents

Based on the detailed design, prepare

detailed cost estimates, bidding
documents, and technical specification.

Implementing agencies and

reconstruction agencies(RAs) with
assistance of consultant

6.

Prepare detailed subproject

proposal and submit to ADB

Submit the approved subproject

proposal to the Asian Development
Bank (ADB), with relevant
environmental and social safeguard
compliances, for review and approval.

Implementing agency

7.

Final subproject approval

Review and approval of the subproject

proposals.

Respective implementing
agencies and steering committees
of the state/ADB as applicable

1.

Preparation
Establishing fund flow and management system
Incremental staff recruitment and PIU/PMU establishment
Staff training and orientation
Establishing financial and physical monitoring system
a
Survey, verification, and identification of subprojects/Due diligence

Transport and Communication

Survey and design/due diligence
Bidding and contract award
Construction

Power Component
a
Survey and design/due diligence
Bidding and contract award supply contracts
Bidding and contract award civil works contracts
Construction

Health and Education component

a
Survey and design/due diligence
Bidding and contract award supply contracts
Bidding and contract award for civil works
Construction

2.

3.

4.

5.

2006
3

2007
3

Environmental, resettlement, and social appraisal of subprojects. Initially, only those subprojects will be contracted which
do not require resettlement, environmental, and social management plans. All compensations must be paid before construction begins.

Recruitment of Consultants
Short-listing of Consultants
Selection and Contract Signing
Fielding of consultants

1.

Project Implementation Years

Quarters
Activities

PROJECT IMPLEMENTATION SCHEDULE

2

2008
3

72
Appendix 11

Appendix 12

73

OUTLINE TERMS OF REFERENCE FOR STEERING COMMITTEES, RECONSTRUCTION

AGENCIES AND OTHER IMPLEMENTATION AGENCIES
A.

Steering Committees
1.

Objectives of the Steering Committees

1.
The provincial level steering committees are responsible for planning, approval of work
plans and budgets and coordination of the proposed infrastructure development through the
specially constituted Reconstruction Agencies and the provincial and district level agencies.
2.

Duties and Responsibilities of the Steering Committees

a.

2.

The general management tasks of the steering committees are as follows:

(i)

(ii)

(iii)

(iv)
(v)
(vi)
(vii)

B.

General Management Tasks

Decide whether sufficient capacity exists in a particular IA for undertaking the

subprojects and assign subprojects to RA or the line departments/district
governments accordingly.
Approve procedures and guidelines for evaluation of design and supervision
consultants (DSC), and approve the recruitment the DSCs and other consulting
packages for the respective implementing agencies.
Confirm procedures and guidelines for pre-qualification of contractors and their
selection for bidding by the implementing agencies under advance procurement
actions.
Review and approve standard bid documents and standard technical
specifications of works prepared by implementing agencies/DSC;
Approve procedures and issue guidelines for evaluation of bids of contractors/
suppliers including their post-qualification wherever necessary.
Provide monthly progress reports to ERRA on progress of reconstruction activity
by the respective implementing agencies.
Coordinate and oversee the work of the implementing agencies and DSCs,
including review and approval of annual work plans, consultancy and contract
packages, master plans, and large subprojects.

Reconstruction Agencies
1.

Objectives of the Reconstruction Agencies

3.
The Government of NWFP and the Government of AJK will establish specialized
Reconstruction Agencies to support the implementation. The Reconstruction Agencies are
responsible for: (i) providing managerial and institutional capabilities for implementation where
the provincial line departments and district agencies dont have capacities to implement the
subprojects, and (ii) to support the steering committees in the performance of their functions.

74

Appendix 12

2.
4.

Role of Reconstruction Agencies as Implementation Agencies

The role of reconstruction agencies as implementing agencies are as follows:

(i)

Undertake all the works assigned to it by the steering committees where the
existing implementation arrangements lack the requisite capacity to undertake
subprojects;
(ii)
Reconfirm all project components and identify, specify and check required
additional surveys and investigations as necessary and prepare the appraisal
reports for each subprojects;
(iii)
Confirm land acquisition requirements and assess each sites environmental
aspects for detailed design of the project component;
(iv)
Prepare a detailed implementation schedule covering all stages of the
implementation process for each subproject from field survey and investigations
to acceptance of finished work;
(v)
Identify the possibility of private participation in subprojects, prepare community
development and public awareness programs, and identify training
requirements;
(vi)
Confirm project component packages and contract documents, check, verify and
update designs, engineering estimates and contract documents. Amend as
necessary to comply with ADB procedures;
(vii)
Confirm procurement methods (ICB, IS or LCB) for each project component;
(viii) Collect available data from different sources and conduct detail physical surveys,
investigations and studies as necessary to generate data for design of the
project subcomponents;
(ix)
Prepare detailed designs, construction drawings, cost estimates, tender
documents, and associated contract documentation to include LoI, conditions of
contract, specifications, drawings, design reports, bills of quantities, etc. for all
subproject subcomponents;
(x)
Prepare required environmental and social studies to comply with the
Government and ADBs safeguard requirement;
(xi)
Confirm procedures and guidelines for pre-qualification of contractors and their
selection for bidding under advance procurement actions;
(xii)
Review and confirm standard bidding documents and standard technical
specifications of works under advance procurement actions prior to appointment
of PMC/DSC;
(xiii) Invite tenders for civil works (ICB/LCB), evaluate as per set procedure and
recommend awards;
(xiv) Procurement of equipment, materials and services procured under ICB, IS or
LCB, procedures, including preparation of tender documents, tendering, tender
evaluation and contract award;
(xv)
Evaluation of bids, and preparation of abstract of bids and recommendation for
award;
(xvi) Supervise, coordinate and monitor the civil works and supply of equipment and
materials ensuring sound supervision and quality control and any other technical
matters and issue certificates for acceptance;
(xvii) Record measurement of acceptable works, check contractors/suppliers invoices
and recommend payment;
(xviii) Undertake overall contract management and preparation of variation orders;

Appendix 12

75

(xix)
(xx)
(xxi)

Preparation of subproject appraisal reports and obtaining approvals of ADB;

Formulating satisfactory resettlement plans, where necessary for subprojects;
Ensure compliance of loan covenants; Conduct Benefit Monitoring and
Evaluation study;
(xxii) Prepare monthly, quarterly mid term and final progress reports; and
(xxiii) Prepare final measurement and as built drawings
3.
5.

Institutional Strengthening

The institutional strengthening tasks of the reconstruction agencies are as follows:

(i)
(ii)

Assist the steering committees in the performance of their functioning;

Guide the existing implementing agencies in the implementation of subproject
assigned to them;
(iii)
Assist the steering committee in appraising the annual work plans submitted to it
by the implementing agencies;
(iv)
Ensure that training services contracted to outside organizations are effective
and fit within the Project's plans for strengthening the capacity of the
implementing agencies;
(v)
Create awareness in the implementing agencies as to the importance of
maintaining an up-to-date management information system and assist in its
operation;
(vi)
Identify opportunities within the Project for Private Sector Participation (PSP)
and Public Private Partnership (PPP);
(vii)
Coordinate and guide financial management reforms management in the
implementing agencies;
(viii) Coordinate improvement in Management Information Systems (MIS) in the
project districts and Geographical Information System (GIS) conducted by other
agencies;
(ix)
Assist the line departments in establishing, testing and reviewing financial
accounting and control systems and ensuring accurate and timely report
submissions and funds flow from the ADB and onwards to the implementing
agencies;
(x)
Assist the line departments in developing annual Project work plans, job
descriptions, staffing schedules and equipment budgets;
(xi)
Assist Steering Committees in reviewing Project progress;
(xii)
Assist the implementing agencies in monitoring and advising the steering
committees on financial, staffing, and administrative improvements;
(xiii) Prepare an overall Project Performance Management System (PPMS) for the
Project and ensure that the necessary independent inputs are in place when and
where required;
(xiv) Assist implementing agencies in the preparation of subproject appraisal reports
and obtaining approvals of ADB;
(xv)
Assist and guide implementing agencies in compliance of loan covenants;
(xvi) Conduct Benefit Monitoring and Evaluation study;
(xvii) Prepare Project accounts and submit timely statements to steering committee
and ERRA;
(xviii) Prepare monthly, quarterly mid term and final progress reports; and

76

Appendix 12

(xix)

Monitor compliance with ADBs involuntary resettlement safeguard requirements

in subproject design and develop a tracking system to ensure that necessary
resettlement plans are prepared, and submitted to ADB for review and approval,
and that all requisite resettlement monitoring reports are prepared and submitted
to ADB in a timely fashion.

4.

Community Awareness and Participation

6.
The community awareness and participation tasks of the reconstruction agencies are as
follows:
(i)
(ii)

(iii)
(iv)
(v)
(vi)
(vii)
(viii)

(ix)
(x)
(xi)

C.

Confirm procedures and guidelines for incorporation of affected persons inputs;

Inventory and review recent and current community-based development
initiatives in the provinces, the organizations involved, mechanisms used,
successes achieved;
Assist in identification and hiring of NGOs by implementing agencies;
Assist implementing agencies in the design, preparation, planning and
management of the community participation components;
Plan and deliver initial briefing, training and orientation of DSCs and
implementing agencies in community awareness and participation programs;
Assist and advise the implementing agencies to manage and coordinate the
implementation of the environmental and social due diligence;
Provide continuous guidance on suitable mechanisms for participatory
interaction with and training of local government and affected communities;
Monitor performance of community participation in the field, where necessary
make adjustments in the program set-up and mechanisms employed, review
field reports and advise implementing agencies on actions required;
Plan and organize regular training events, including workshops and seminars for
the duration of the Project;
Monitor impact of community participation in the project districts; and
Prepare annual reports on performance and impact of community participation
and development activities.

Other Implementation Agencies

1.

Provincial and District Implementation Agencies

7.
The steering committee will decide if sufficient capacity exists within an existing
provincial line department and/or district agency for undertaking the implementation of sub
projects.
2.

Duties and Responsibilities of Provincial and District Implementation

Agencies
a.

General Management Tasks

8.
The general management tasks of the provincial and district implementation agencies
are as follows:

Appendix 12

(i)

77

Undertake all the works assigned to it by the steering committee where the
existing implementation arrangements lack the requisite capacity to undertake
subprojects;
(ii)
Confirm land acquisition requirements and assess each sites environmental
aspects for detailed design of the project component;
(iii)
Prepare a detailed implementation schedule covering all stages of the
implementation process for each subproject from field survey and investigations
to acceptance of finished work;
(iv)
Identify the possibility of private participation in subprojects, prepare community
development and public awareness programs, and identify training
requirements;
(v)
Confirm project component packages and contract documents, check, verify and
update designs, engineering estimates and contract documents. Amend as
necessary to comply with ADB procedures;
(vi)
Confirm procurement methods (ICB, IS or LCB) for each project component;
(vii)
Collect available data from different sources and conduct detail physical surveys,
investigations and studies as necessary to generate data for design of the
project subcomponents;
(viii) Prepare detailed designs, construction drawings, cost estimates, tender
documents, and associated contract documentation to include LoI, conditions of
contract, specifications, drawings, design reports, bills of quantities, etc. for all
subproject subcomponents;
(ix)
Prepare required environmental and social studies to comply with the
Government and ADBs safeguard requirement;
(x)
Confirm procedures and guidelines for pre-qualification of contractors and their
selection for bidding under advance procurement actions;
(xi)
Review and confirm standard bid documents and standard technical
specifications of works under advance procurement actions prior to appointment
of PMC/DSC;
(xii)
Invite tenders for civil works (ICB/LCB), evaluate as per set procedure and
recommend awards;
(xiii) Procurement of equipment, materials and services procured under ICB, IS or
LCB, procedures, including preparation of tender documents, tendering, tender
evaluation and contract award;
(xiv) Evaluation of bids, and preparation of abstract of bids and recommendation for
award;
(xv)
Supervise, coordinate and monitor the civil works and supply of equipment and
materials ensuring sound supervision and quality control and any other technical
matters and issue certificates for acceptance;
(xvi) Record measurement of acceptable works, check contractors/suppliers invoices
and recommend payment;
(xvii) Undertake overall contract management and preparation of variation orders;
(xviii) Preparation of subproject appraisal reports and obtaining approvals of ADB;
(xix) Formulating satisfactory resettlement plans, where necessary for subprojects;
(xx)
Ensure compliance of loan covenants, and conduct Benefit Monitoring and
Evaluation study;
(xxi) Prepare monthly, quarterly midterm and final progress reports; and
(xxii) Prepare final measurement and as built drawings.

78

Appendix 12

b.

Community Awareness and Participation

9.
The community awareness and participation tasks of the provincial and district
implementation agencies are as follows:
(i)
(ii)
(iii)
(iv)

(v)
(vi)

Design, prepare, plan and manage the community participation components;

Invite and select of NGOs to be involved in the community participation
programs;
Manage and coordinate the implementation of the environmental mitigation and
due diligence;
Monitor performance of community participation in the field, where necessary
make adjustments in the program set-up and mechanisms employed. Prepare
field reports for submission to the steering committee;
Monitor impact of community participation in the project cities; and
Prepare annual reports on performance and impact of community participation
and development activities.

Appendix 13

79

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

A.
Linkages to the Country Poverty Analysis
Sector identified as a national priority in
Sector identified as a national priority in country
country poverty analysis? Yes
poverty partnership agreement? Yes
Contribution of the sector/subsector to reduce poverty in Pakistan:
The rehabilitation components for the transport, power, and social sectors will reestablish services and infrastructure that
are crucial for the social and economic life of the affected areas. In particular, transport and power infrastructure
rehabilitation and reconstruction will revive economic activity, resulting in income generation, employment, and
rehabilitation of affected people. Health and educational facilities will provide fundamental social services that are needed
to rebuild the human capital that was lost.
The legal assistance, governance, and institutional building component will provide relief to the legal and documentary
problems that earthquake-affected people will encounter. Major targets will be the issue or replacement of identity cards
and birth, death, and marriage certificates. The component will also provide a legal framework with special provisions for
people and property affected by the earthquake, especially vulnerable people.
Finally, the use of labor-intensive techniques in the civil works will provide job opportunities in all affected areas.
B.

Poverty Analysis

Proposed Classification:

Poverty intervention

What type of poverty analysis is needed?

Prior to the earthquake, North-West Frontier Province (NWFP) and Azad Jammu and Kashmir (AJK) were not the poorest
regions in the country. They were nevertheless among the most vulnerable to external shocks. Geographical isolation, the
harshness and fragmentation of the land, the lack of security as a consequence of conflicts, and adverse climatic
conditions put the population at risk of being thrown into poverty.
The earthquake claimed some 80,000 lives, almost half of whom are thought to be children, and some 70,000 were
injured, and 2.8 million were left without shelter. Of the 70,000 who were injured, many will be permanently disabled.
Many of the affected people will also need counseling. Crops and other livelihood assets were destroyed, and savings
were lost. Many communities are completely isolated, and they are particularly threatened by epidemic diseases, famine,
and cold. Productive human capital was deeply compromised, as was the productive capacity of the affected region as a
whole. Risks of abuse, discrimination, and militia recruitment are very high.
The earthquake had impacts in the short and the long term. In the short term, the lack of food and shelter threatens the
survival of affected people. In the long term, productive capacity is threatened in that many men died, leaving women who
will have to enter the labor market, many for the first time. Disabilities will constitute a great burden on affected families
and the Government.
A mass of new poor will have to first go through the harshness of winter and then find their way out of poverty.
Before the earthquake, both NWFP and AJK had relatively few people living on less than $1 per day9.9% in NWFP and
2.5% in AJK, against a national average of 13.9%. Yet poverty was substantial when including those living on $2 per
day76.2% in NWFP and 51.0% in AJK, against a national average of 69.7%. Hence the extreme vulnerability.
C.
Participation Process
Stakeholder Analysis: No
Participation Strategy: Yes
All stakeholders will be actively involved in order to reduce the risk of grievance and ensure that benefits are fairly
distributed. High rates of participation are also proven to increase ownership. In addition, contractors will discuss the
selection of unskilled labor in the project area with township labor officials and village leaders to ensure that labor will be
hired on a nondiscriminatory basis.

80

Appendix 13

D.

Gender and Development

Strategy to maximize impacts on women

Women traditionally suffer discriminated in Pakistan and, in the aftermath of the earthquake, face the burden of providing
for their families. Disabilities place additional burdens on women and other family members. Family and household
structures may need to be recast, with many families forming one household, other households headed by one person
(female or male), and other families composed of grandparents and grandchildren. Widows will embrace the role of head
of household, combining the traditional roles of breadwinner and caregiver.
Vocational training will be essential, as will special rehabilitation and training for disabled women. Equal opportunities and
access to jobs will be crucial. Equal property rights and proper identification are also very important. Targeted provisions
are present in the gender action plan for the Project.
Gender plan prepared? Yes
E.

Potential Issues
Significant/
Not-significant/
Issues
None

Strategy to Address Issues

Output prepared

Resettlement

Not significant

All proposed infrastructure development, rehabilitation,

and reconstruction will be at existing sites and on
original routings and alignments. Buffer zones may
require some temporary land acquisition. Particular
attention will be paid to non-titled land users (squatters
and unregistered tenants) and women. Special
mechanisms will be arranged to overcome problems
arising from the absence of title deeds to land where
affected people had user rights.

A resettlement
framework was
prepared and will
guide the
preparation of
appropriate
resettlement plans
for all subprojects
with resettlement
impact.

Gender

Significant

In Pakistan, women have always been one of the most

vulnerable groups. The earthquake has exacerbated
their already precarious position. Particular attention
will be devoted to gender issues in implementing all of
the Projects components. The institutional building
component in particular will constitute a great
opportunity to address gender issues nationally.

A gender action
plan was prepared.

Affordability

Not significant

People will have equal access to public services. The

affordability of other services will be monitored.

None

Labor

Significant

The Project will provide short- and long-term

employment opportunities. Contractors will be asked
to use labor-intensive techniques. Equal opportunities
and wages will be afforded to men and women,
regardless of ethnicity, religion, or other factors that
have been grounds for discrimination.

None

Indigenous
People

Not significant

Indigenous peoples are fully mainstreamed, and their

vulnerability
arises
mainly
from
economic
differentiation within tribal communities. Project
impacts on them will arise mainly from land acquisition
and disturbances to livelihood. These will be
adequately addressed through resettlement planning.

None

Other Risks/
Vulnerabilities

Significant

The elderly and disabled are notably at risk of

marginalization, discrimination, and abuse. The
earthquake increased the number of physically and
psychologically disabled and, in many cases, also
deprived them of support.

A vulnerable
groups action plan
was prepared.

Appendix 14

81

INITIAL ENVIRONMENTAL EXAMINATION

A.

Introduction

1.
The objective of the proposed Project is to support the efforts of the Government of
Pakistan (the Government) to rehabilitate areas affected by the recent earthquake in northern
Pakistan, especially in Azad Jammu and Kashmir (AJK) and North-West Frontier Province
(NWFP). The Project will employ a sector loan modality to allow the selection of the highest
priority subprojects during implementation. Based on the preliminary damage and needs
assessment, the Project will cover the following sectors: transport, energy, and the social sector
areas of health and education. Due to the emergency nature of the Project, no sample
subproject has been selected, so no sample subproject initial environmental examination (IEE)
is available.
2.
The Projects IEE provides overall preliminary scoping and highlights potential
environmental impacts and mitigation measures to be further explored during subproject
formulation. The Projects IEE includes an environmental assessment and review framework
that provides a set of guidelines on how the environmental assessment for the subprojects will
be prepared and reviewed. This IEE was based on the preliminary damage and needs
assessment and the environmental and social screening framework prepared by the World
Bank.
B.

Overview of the Project

3.
The Project aims to support reconstruction and recovery from the affects of the
earthquake with particular focus on (i) reconstructing basic infrastructure and services and (ii)
reviving economic activity in the affected areas. The Project has three sector components. The
scope of the proposed project components is summarized in Table A14.1.
Table A14.1: The Summary of the Scope of Project Components
Project Component
Transport Sector

Energy Sector

x
x
x
x
x
x
x
x
x
x

Social Sector: Health

x
x
x

Scope of Works
Remove landslide debris and open roads to traffic
Restore roads and bridges
Stabilize road embankments to withstand snow
Comprehensively survey to guide planning and prioritization of the
reconstruction and recovery works
Reconstruct unpaved local roads
Reconstruct the main provincial access roads
Procure on an emergency basis high- and low-voltage lines,
transformers, grid station equipment, and materials for power station
operational buildings and staff quarters
Electrify the 10 tent villages and supply power
Repair and reconstruct on an emergency basis damaged electricity
networks and related buildings
Upgrade and expand power systems to improve access for the poor
and provide electricity to promote economic development in the
earthquake-affected area
Reestablish public health centers
Provide services to people living in relief camps and disabled people
Reconstruct, repair, and provide equipment for health management
offices and health facilities

82

Appendix 14

Project Component
Social Sector:
Education

x
x
x

C.

Scope of Works
Reconstruct and consolidate schools and resume classes
immediately in semi-permanent structures
Survey and map where schools are needed and teachers are
available
Reconstruct and repair schools

Description of the Environment

4.
The project components will be located in earthquake-affected areas of AJK and NWFP.
The general environmental conditions are as follows:
5.
Physical Environment. The Project area is part of the mountainous region in the north,
in which summers are temperate and winters intensely cold. Rainfall generally occurs in two
distinct crop-growing seasons, from December to March and from June to September, with the
onset of the summer monsoon in the first or second week of June. In the intervening periods of
April-May and October-November, almost no rain falls. The three main rivers in the project area
are the Jhelum, Kunhar, and Neelum.
6.
Ecological Environment. The Project area is located in the Himalayan Mountains and
is famous for its high-altitude coniferous and broad-leaved forests and great biodiversity.
Forests, game reserves, and cold rivers, lakes, and wetlands characterize the landscape.
Around 4% of the land in AJK has been declared protected forest. The Machiara National Park
is located in the heart of the earthquake-affected area. In NWFP, about 6% of the land is
designated as protected, with Ayubia National Park located at the periphery of the earthquakeaffected zone.
7.
Social, Cultural, and Economic Development. The area most heavily damaged by
earthquake is home to a scattered population of some 5.7 million people. The social structure in
this region is closely knit, with an average of 7 family members per household. About 88% of the
people live in the mountains in rural settlements ranging from two households to more than 300.
The regions population is relatively young, with 42% below the age of 15 years and only 6.7%
above the age of 60. A high portion of the population lacks basic services, clean drinking water,
and safe waste disposal. Agriculture and livestock rearing are the primary sources of
employment in the rural areas, with most rural residents engaged in subsistence agriculture.
Public administration accounts for a significant proportion of employment in the affected urban
areas, followed by small trading, business, construction, and transport.
D.

Anticipated Environmental Impacts

8.
The Projects main objective is to reconstruct and restore infrastructure damaged or
destroyed by the earthquake and is therefore not expected to have a significant adverse
environmental impacts. What adverse environmental impacts there may be will mostly be limited
to the construction stage. They will affect a limited area only over the short term and be
reversible, so the mitigation measures indicated in the attached matrix should be manageable.
9.
To address any potential impacts, subprojects will be screened and classified at an early
stage, and an environmental assessment will be carried out. The environmental assessment
and review framework will guide the preparation of the environmental assessments of
subprojects. The scoping of the potential environmental impacts and proposed mitigation
measures are presented in Table A14.2.

Appendix 14

83

10.
The preliminary damage and needs assessment indicates that the following postearthquake environmental conditions require consideration:
(i)
Debris and rubble need to be removed before reconstruction can start. There
was evidence of debris and rubble being dumped in rivers adjacent to the cities
and along the road, as well as in open fields, drainage ditches, and forested
areas. These practices should be stopped, and the areas restored. Dumping in
rivers affects the water quality and causes clogging and flooding, and dumping in
the forest destroys new vegetation. It is necessary to identify safe locations for
disposing of debris and rubble.
(ii)
Petroleum leakage has been a serious environmental problem since the
earthquake. It is estimated that around 10,000 liters of petroleum fuel in
underground storage have leaked due to earthquake damage. As water for
drinking and irrigation come mainly from surface sources, it is therefore
necessary to undertake monitoring of surface water contamination.
(iii)
Landslides are the main environmental impact of this natural disaster. Landslides
affect not only slope drainage, but also the habitats of fauna and flora. All project
components with significant physical intervention in landslide areas need to be
properly prepared by taking this into account.
E.

Institutional Arrangement and Monitoring Plan (Environmental Assessment and

Review Framework)

11.
The Project will be executed by using sector modality and the environmental
assessment framework, which covers environmental criteria for project selection and
responsibilities of the parties involve are summarized as follows:
1.

Environmental Criteria for Selection of Subprojects

12.
As much as possible, not to include a category A project in accordance to the Asian
Development Banks (ADBs) Environmental Assessment Requirements (2003) for the first
batch of the Project. If an environmental category A subproject needs to be included, the
summary environmental impact assessment (EIA) of this particular subproject will need to be
prepared and be disclosed to the public 120 days prior the approval of the subproject. The EIA
should be carried out in accordance with ADB and Government of Pakistan requirements. In
addition, a two-step staff consultations with affected people needs to be carried out.
2.

Environmental Assessment Requirement

13.
Taking into account the potential impacts related with the follow up subprojects, the
Government of Pakistan notification on Environmental Impact Assessment Requirement, and
the ADB environmental assessment guidelines, the environmental classification of the
subprojects will be as follows:
(i)
Subprojects will be categorized A if the subproject generates significant adverse
environmental impacts that requires a complex management plan, or if the
subproject located within or pass through: (a) wildlife sanctuaries, (b) national
parks, (c) other sanctuaries, (d) areas declared by the Government of Pakistan
as environmentally sensitive, (e) areas of international significance (e.g.,
protected wetland as designated by the Ramsar Convention), or (f) areas
designated by the United Nations Educational, Scientific, and Cultural
Organization (UNESCO) as cultural heritage sites. This type of project requires
EIA report including an environmental management plan (EMP).

84

Appendix 14

(ii)

A subproject will be categorized as B if the project is likely to have an adverse

environmental impact, but of lesser degree or significance than those for
category A subprojects and all the mitigation measures to handle the impact are
manageable. This type of project will need IEE report including EMP.

3.

Review Procedure for Environmental Assessment of Subprojects and

Responsibilities and Authorities

14.
The environmental assessment study for the follow up subprojects and the review
procedure for the follow up subproject will be carried out to comply with the Governments and
ADBs environmental safeguard policies. The study will also identify mitigation measures.
15.

Each implementing agency will assume the following responsibilities:

(i)
Hiring the qualified environmental consultant to prepare the environmental
screening to classify the subprojects in consultation with respective Provincial
Environmental Protection Agency (EPA) either AJK EPA or NWFP EPA.
(ii)
Conducting environmental assessment study based on the classification of the
sub project with adequate consultation with affected people. For category A
subproject two step consultation with affected people needs to be carried out.
(iii)
For category B project, each implementing agency responsible for submitting the
environmental screening and environmental assessment report and its summary
to the AJK EPA or NWFP EPA for review in order to obtain an environmental
clearance for execution of the subprojects. However, if the EPA AJK is not
available, the environmental clearance from PEPA should be obtained.
(iv)
For category A project, aside following the procedure as stated in
(ii),implementing agency needs to submit also the EIA report and its summary to
ADB as soon as possible to meet the 120 days public disclosure prior to
obtaining an ADBs approval for this subproject.
(v)
Forwarding the environmental clearance and its conditions to ADB.
(vi)
Ensuring that the contract document for implementing each subproject includes:
(a) environmental monitoring and management plan taken from the
environmental assessment report, and (b) the environmental clearance certificate
and its conditions.
(vii)
Ensuring that environmental clearance certificate from NWFP EPA or AJK EPA
should be obtained prior to granting contract award.
(viii) Monitoring the implementation of environmental management plan throughout
the whole project implementation stage particularly during preparation of detail
engineering design and construction stage and preparing the report in monitoring
the implementation of environmental management plan.
(ix)
Undertaking remedial action in close consultation with respective EPA and ADB
to handle unexpected environmental impacts.
(x)
Submitting the monitoring report on EMP to the relevant agencies and ADB.

16.

ADB will assume the following responsibility:

(i)
Providing comments for the preparation of the EIA and its summary of any
subproject that categorized as A project.
(ii)
Disclosing the SEIA report for category A subproject through ADBs website 120
days prior to approving subproject.
(iii)
Approving subproject by taking into account the environmental assessment
report and conditions of environmental clearance certificates.
(iv)
Undertaking random monitoring in the implementation the environmental
safeguard policy at any time within the implementation period of the Project.

Appendix 14

85

(v)

Providing suggestion and recommendations on remedial actions to handle

unexpected environmental impacts.

4.

Environmental Due Diligence to Ensure Compliance with the ADBs

Environmental Policy

17.
The Government should ensure that ADB is given access to undertake environmental
monitoring for all subprojects, if needed. However, the line department where the subprojects is
implemented has the responsibility for monitoring of the implementation of environmental
management plan for its respective subprojects. The report on monitoring the implementation of
EMP needs to be systematically documented.
5.

Public Disclosure

18.
Each implementing agency is responsible for ensuring that all environmental
assessment documentation, including the monitoring reports, is properly and systematically kept
as part of the subproject-specific records.
19.
All environmental assessment documents are subject to public disclosure and
documents must be made available to public, if requested.
6.

Staff Requirement and Budget

20.
Each implementing agency at present has no environmental officer, therefore, it has
been included in the project implementation arrangement that each implementing agency
(where required) and both reconstruction agencies will be supported with a qualified
environmental consultant.
F.

Public Consultation and Disclosure

21.
Consultation with affected people was not specifically done during the preparation of this
summary IEE due to the emergency nature of the Project. However, the Government and other
donors were closely involved in the preliminary damage and need assessment, which is the
basis for preparing this summary. In addition, during the preliminary damage and needs
assessment and the Fact-Finding Mission, the proposed environmental assessment and review
framework was discussed, and agreement was reached that it will be implemented for the
subprojects. Therefore, during subproject preparation, especially when the environmental
assessment is being prepared, consultation with concerned parties will be conducted to comply
with the Governments and ADBs requirements.
G.

Findings and Recommendation

22.
The Project and its subprojects will focus on reconstructing and rehabilitating
infrastructure. Therefore, it is expected that an adverse environmental impact will mostly occur
during the construction phase. These impacts are insignificant, short term, and reversible.
Mitigation measures should be integrated into the engineering and construction works as part of
subproject design. However, it is necessary to ensure that subprojects meet the Governments
and ADBs environmental assessment requirements prior to their approval and that the
environmental management plan for each subproject is strictly implemented.

Sector

Education
Schools

Health

x Biomedical waste
handling and disposal
(from debris and new
waste)

x Rehabilitation of
damaged healthcare facilities
x Provision of health
services

x Rehabilitation
of health care
facilities

x Planning
x Construction of
structures

x Improve health services &

delivery
x Priority to rehabilitation of
toilets and water tanks/
systems
x Improve public health
awareness
x Provide disabled access
where possible
x Improve access to poor

x Use of quality materials

x Disaster-resistance (e.g. lowcost seismic designs)
x Designs with adequate
inclusion of safe water supply,
sanitation and waste
management
x Provision of access for the
disabled where possible

x Site location could be

inappropriate (e.g. very
vulnerable to disasters)
x Sourcing of materials
from unsustainable
sources

x Use of quality materials

x Disaster-resistance
x Priority for rehabilitation of
toilets and water tanks and
systems
x Provision of access for the
disabled where possible

x Improper debris disposal

x Sourcing of materials
from unsustainable
sources
x Impacts on cultural
property

x Building new
structures on
small-scale
(emergencyrelated)

Typical Environmental and

Social Opportunities

Typical Environmental and

Social Concerns

Subproject Characteristics

x Removal of debris
x Repair and
rehabilitation

Typical Activities
Envisaged in
Emergency
Assistance Phase

x Rehabilitation
of previously
existing
structures

Subproject
Type and
Thresholds

x Redesign checked by qualified

experts
x Identify disposal options and
waste management protocol;
clearance of waste
management plan by qualified
experts
x Training and awareness
programs

x Inclusive (gender, vulnerable

groups, etc.,) consultation and
community involvement in
planning
x Designs cleared by qualified
personnel
x Incorporation of more disasterresistant building codes for
design and construction
x Determine any
decommissioning triggers and
procedures

Consultation
Debris disposal in safe areas
Sourcing of materials cleared
Use of disaster-resistant
techniques and materials where
possible
x Activities on or adjacent to
historic buildings or sites are
reviewed and/or designed by
qualified specialists

x
x
x
x

Typical Mitigation/Enhancement
Measures to be included in
Project

Table A14.2: Overall Guidelines for Carrying Out Environmental Assessment Studies

86
Appendix 14

Sector

Roads

x Reconstruction and
rehabilitation,
including
roads

x Repair of
existing roads

Subproject
Type and
Thresholds

x
x

x
Determine
locations (for
short
connections)
Determine
alignment
Conduct
surveys
Detailed designs
Construct road

x Repair of roads

Typical Activities
Envisaged in
Emergency
Assistance Phase

x
x
Improper Siting
Limited resettlement
expected
Inadequately
rehabilitated borrow
areas
Cross-drainage
problems

x No resettlement expected
x Inadequately
rehabilitated borrow pits

Typical Environmental and

Social Concerns

x
x
x

Erosion protection
Roadside plantation
Durable construction

x Erosion protection
x Durable construction

Typical Environmental and

Social Opportunities

Subproject Characteristics

x
x
x

Inclusive consultation and

community involvement in
planning
Suitable design and
construction supervision by
qualified experts (including
cross-drainage, energy
dissipators, balancing cut and
fill, vegetative measures for
erosion-prone areas)
Minimize loss of trees/natural
vegetation and, where minor
loss unavoidable, provide
compensatory planting
Suitable labor camp water,
sanitation and waste disposal
arrangements
Rapid assessment of
alternatives from
environmental/social
perspective
Resettlement action plan
Borrow area rehabilitation
Maintenance responsibility
assigned
Training

x Inclusive consultation
x Borrow pit rehabilitation

Typical Mitigation/Enhancement
Measures to be included in
Project

Appendix 14

87

Sector

x Rehabilitation
of power
transmission/
distribution
systems

x New roads for

missing
connections

Subproject
Type and
Thresholds

x Determine location
x Determine
Alignment
x Conduct surveys
x Detailed designs

x Improper debris disposal

x PCB disposal

x Significant resettlement
expected
x Restrictions on crossdrainage and stagnation
of drainage
x Increased sedimentation
of water bodies due to
erosion
x Increased run-off and
flooding
x Loss of trees and other
vegetation
x Cultural property-related
to chance finds
x Inadequately
rehabilitated borrow pits

x Debris disposal
x Rehabilitation of
systems

Typical Environmental and

Social Concerns
Erosion protection
Roadside plantation
Durable construction
Labor camp arrangements
(water, fuel, sanitation, waste
management)
Construction period worker
health and safety
Compensatory tree plantation
and revegetation
Explore beneficial use of
borrow-pits (e.g. for fishing)
Local conflict-resolution
mechanism strengthening
(e.g., for managing migration)

x Reduce system losses

x
x
x
x

Typical Environmental and

Social Opportunities

Subproject Characteristics
Typical Activities
Envisaged in
Emergency
Assistance Phase

x Consultation
x Clearance of sites and debris
disposal
x Waste transformer coolant oil
should be stored in sealed
containers and disposed of
safely
x Training
x Resettlement Plan

x Environmental and social

assessment for schemes

Typical Mitigation/Enhancement
Measures to be included in
Project

x Consultation
x Clearance of sites/ debris
disposal
x Ensure fuel sourcing is
x Improper debris disposal
x Rehabilitation
sustainable
x Debris disposal
x Use cleaner technology
x Fuel sourcing
of power
where possible and improve
x Meet emission standards
x Rehabilitation of
generation
x PCB disposal
energy efficiency
systems
x Waste transformer coolant oil
systems
x No resettlement expected
should be stored in sealed
containers and disposed of
safely
x Training
Source: Modified from The World Bank, Environmental and Social Screening and Assessment Framework, November 2005.

Energy

88
Appendix 14

Appendix 15

89

RESETTLEMENT FRAMEWORK
A.

Introduction

1.
The proposed project will support the efforts of the Government of Pakistan (the
Government) in the recovery, reconstruction, and rehabilitation of the earthquake-affected areas
of Azad Jammu and Kashmir (AJK) and North-West Frontier Province (NWFP).
2.
The Asian Development Bank (ADB) will assist the rehabilitation of damaged or
destroyed infrastructure of the transport, power, and health and education sectors, and will
provide legal assistance and support for institutional building. Reconstruction and rehabilitation
of damaged or destroyed facilities will be done at their original sites. The Government will try to
use its own land if additional land is required for physical infrastructure. The Government will
acquire private land only if vacant government-owned land is not available
3.
Resettlement impacts 1 of a specific subproject will be known only during project
implementation. As a result, the preparation of resettlement plans for such subprojects cannot
be done before Board consideration of the loan and grant. Therefore the resettlement
framework will be part of the report and recommendation of the President and the legal
agreements considered by the Board at project approval. This resettlement framework, agreed
between the Government and ADB, sets out compensation and other entitlements of all projectaffected people as well as how to prepare satisfactory resettlement plans for subprojects with
resettlement impacts.
4.
Among the earthquake-affected communities are several dominant tribes and subtribes
that participate in mainstream economic and political activities and are represented in public
institutions, civil services, and educational institutions. Social inequalities and vulnerabilities in
these communities usually arise from economic differentiation, as land is owned by a few large,
powerful families who rent it out to others who cultivate crops and raise livestock. The project is
unlikely to change this dominant mode of economic system. A social assessment 2 will be
conducted focusing on the vulnerabilities of all affected groups including tribal groups and
cultural minorities in the earthquake-affected areas. This is to ensure effective consultations and
that culturally appropriate benefits will reach each affected group. As part of this assessment,
the executing agency of each subproject will examine the vulnerability of different groups in
terms of potential exclusion from subproject benefits, negative subproject impacts, and the need
for specific culturally compatible mechanisms for participation by women, the permanently
disabled, and other vulnerable groups. If any of the above are found in a subproject area, the
executing agency will incorporate adequate measures to address such vulnerabilities in project
design. If land acquisition or relocation becomes necessary, peoples entitlements will be
ensured through the resettlement plan that will be prepared in accordance with the approved
resettlement framework.
B.

Policy and Legal Framework

5.
The resettlement framework has been prepared in accordance with ADBs Involuntary
Resettlement Policy (IRP), its disaster and emergency assistance policy, and the Land
1

Resettlement impacts are social and economic impacts that are permanent or temporary, and are caused by (i)
acquisition of land and other fixed assets, (ii) change in the use of land, or (iii) restrictions imposed on land as a
result of an ADB operation.
The World Bank has planned to conduct a similar social assessment in the affected areas. ADB and World Bank
could jointly conduct this assessment.

90

Appendix 15

Acquisition Act (LAA) of 1894 (with amendments).3 Whereas the LAA considers those eligible
for compensation to be legal owners and tenants who are registered with the Land Revenue
Department or possess formal lease agreements, the IRP emphasizes that the absence of
formal legal title to land is not a bar to entitlements and assistance. The second important policy
issue is that, while the LAA assesses compensation based on the market value of acquired
property, the IRP emphasizes the payment of replacement value of all affected assets. The third
policy issue is the participatory approach to grievance resolution provided by the IRP through
information disclosure and discussions with affected communities, and the appointment of
special committees such as grievance redress committees. In contrast, under the LAA, the sole
authority to resolve disputes lies with the Land Acquisition Collector. Thus the IRP provides for
consultation and disclosure of resettlement information much more than does the LAA. The IRP
emphasizes of rehabilitation of all affected people so that they will not be worse off because of
land acquisition and resettlement. The LAA does not provide such assistance but does declare
a land owner eligible for a 15% acquisition surcharge and 8% compounded interest per year if
compensation payment is delayed.
6.
Having taken into consideration the above differences between the LAA and IRP, the
following resettlement policy principles were adopted for the purpose of the Project. If a
subproject requires land acquisition or resettlement or both, the executing agency will prepare a
satisfactory resettlement plan based on the following core principles and will obtain ADBs
approval prior to awarding contracts.
7.
The main involuntary resettlement principles and procedures that are applicable to the
Project are the following:
(i)
Involuntary resettlement will be avoided; if it cannot be avoided, it will be
minimized.
(ii)
Where involuntary resettlement is unavoidable, affected persons will be assisted
in reestablishing themselves and improving their quality of life.
(iii)
Lack of formal legal land title is not a bar to compensation or rehabilitation
assistance under the Project.
(iv)
Land-for-land is an option for compensation in the case of loss of land; however,
in the absence of replacement land, cash compensation for the property acquired
will be paid at its replacement value4 in addition to any transaction costs.
(v)
Each affected person is entitled to receive assistance to restore income and
livelihood to a pre-project standard, and all vulnerable affected people are
entitled to assistance to improve their income and livelihood.
(vi)
All affected people will be fully informed and consulted on compensation and
other entitlements, relocation programs, and rehabilitation assistance. The
resettlement plan will be posted on the ADB website.
(vii)
Affected people will be fully involved in the selection of relocation sites, if any,
and livelihood compensation and development options at the earliest opportunity.

The draft resettlement policy and associate ordinance was prepared with ADBs assistance in 2002. These
instruments have still not been approved by the Government.
Replacement cost means the cost of replacing lost assets and income. In the case of land, it means the cost of
buying replacement land near the lost land with equal productive potential plus the cost of preparing the land to
levels similar to those of the affected land and the cost of any registration and transfer taxes. If alternative land is
not available in the vicinity of the lost land, it means the cost of buying land with similar attributes and productive
and/or residential potential plus the cost of preparing the land to levels similar to those of the affected land and cost
of any registration and transfer taxes. In selecting alternative lands, affected people will be informed and consulted.

Appendix 15

(viii)

(ix)
(x)
(xi)

(xii)
(xiii)
C.

91

All affected people will be integrated economically and socially into their host
communities, if relocated. For this, participatory measures will be designed and
implemented by the executing agency.
Affected peoples social and cultural institutions will be protected and supported.
Common property resources and community and public services will be provided
to relocated communities.
Compensation and rehabilitation programs will be carried out with equal
consideration for women and men; in the case of these subprojects, particular
attention will be paid to the rights of women, widows, orphans, the elderly, and
other vulnerable people and groups such as indigenous peoples and religious
and cultural minorities. Appropriate and sufficient assistance will be provided to
help them improve their socioeconomic status.
Compensation and resettlement assistance will be fully provided before the
approval of any subproject if it involves resettlement.
Full compensation and resettlement costs are included in subproject costs.

Entitlements

8.
The application of policies, laws and regulations pertaining to displacement,
dispossession and resettlement is outlined below. The entitlement matrix is not exhaustive:
more entitlements may be added if any resettlement impact not listed in the matrix is identified
during project implementation. However, the entitlements may not be reduced or lowered.

Entitled Person
Land owner

Tenant or
sharecropper

Daily wage worker in

agriculture or in nonagricultural enterprises
including business
Land owner

Land owner

Non-titled (squatter)

Type of Losses
Permanent loss of
land

Loss of agricultural
land and loss of
income or livelihood

Loss of livelihood or
income

Temporarily affected
land (during
construction)

Business
establishment

Business
establishment

x
x

x
x

Replacement value for structures they

constructed without deduction for
depreciation
Salvageable materials belong to the
establishment owner
Moving or shifting allowance, if displaced

Subsistence assistance until alternate

employment is found
Assistance in obtaining skill training and
seed money to restore income and
livelihood
Land rent during the temporary use of
land
If displaced, shifting or moving assistance
(as above)
Replacement value of land and
commercial establishment without
deduction for depreciation or salvageable
materials.
Shifting or moving costs as above.

Entitlement
Land-for-land or cash-for-land at
replacement value of lost land.
Shifting or moving allowance, if displaced.
Livelihood and income restoration grant
and skill and vocational training.
Living allowance until livelihood restored.
Land registration expenses and taxes, if
any.
Cash payment for loss of standing crops
at market value
Cash payment for the remaining portion in
agreement with the land owner
Assistance in negotiating a new
sharecropper agreement on another plot
of land
Subsistence allowance of up to 6 months
until alternative employment is found

Table A15: Entitlement Matrix

Implementation Issues
Priority in selecting replacement land will be given to
those who are identified as vulnerable, based on
needs and relevance.
Special attention will be paid to vulnerable people to
ensure their inheritance rights.
Relevant departments of NWFP and AJK will issue or
replace property titles and national identity cards as
early as possible to facilitate the process.
Entitlements apply equally to both registered and
unregistered tenants and sharecroppers.
At least 30-day notice of land clearance
The Department of Agriculture will determine market
value.
Subsistence and assistance in finding new
employment
Tenants and sharecroppers displaced by the
earthquake will get the entitlements.

Support to find alternate land for business and

settlement by executing or implementing agencies.
The estimated value of the business affected will be
included in replacement value.

The land will be restored to its previous status or will be

improved. Rent will be decided by the executing or
implementing agencies in consultation with affected
people.
x
The estimated value of the business will be included
in replacement value.
x
The relevant departments of NWFP and AJK will
issue or replace property titles and national identity
cards as early as possible to facilitate the process.

Identification of daily wage workers is to done in

consultation with local authorities and village leaders

x
x

92
Appendix 15

Owner

Loss of structures
(complete loss or
deemed loss if cost of
repair is more than
40% of replacement
value) and immovable
assets (including
residential houses).
Loss of structures
(complete loss or
deemed loss if cost of
repair is more than
40% of replacement
value) and immovable
assets (including
residential houses)
Cultural and/or
community structures
Community

Non-titled (squatters)

Entitled Person
Title owner and nontitled owner

Type of Losses
Loss of crops and
trees (both temporary
and permanent)

Replacement value for structures they

constructed, without deduction for
depreciation. Salvageable materials
belong to the establishment owner.
Moving or shifting allowance, if displaced.

Entitlement
If sown or standing crops are damaged
or uprooted, the cultivator of the affected
crops will be compensated in cash at the
mature crop value to be assessed on the
basis of current market rates.
Compensation for loss of fruit trees at
market value, based on the present
income and crop-bearing capacity.
Compensation for structures/assets at full
replacement costs without deduction for
depreciation or salvageable materials.
Transportation costs.

The executing or implementing agency will

rebuild community structures at relocation
sites.

The building of structures will be done in

consultation with the community.

The executing agency will assist in finding alternate

residential land.
Relevant departments of NWFP and AJK will issue
or replace property titles to facilitate the process.

Relevant departments of NWFP and AJK will issue

or replace property titles to facilitate the process.

Owners will be given at least 30 days notice before

removal.

Implementation Issues
The value of trees or crops that will be affected by a
subproject will be decided by local agricultural
offices in consultation with affected peoples.

Appendix 15

93

94

Appendix 15

D.

Procedure of Formulating a Resettlement Plan

9.
Subprojects will be selected based on several selection criteria agreed upon by the
Government and ADB. The executing agency of a subproject will do its best to avoid or at least
to minimize land acquisition and resettlement as much as possible. If resettlement impacts are
unavoidable in implementing a subproject, the executing or implementing agency will formulate
a resettlement plan for the subproject by following the procedure given below:
(i)
Initially categorize anticipated resettlement impacts in consultation with the ADB
Pakistan Resident Mission and identify the financial and expert resources
required to prepare a resettlement plan if resettlement impacts are identified.
(ii)
Conduct stakeholder consultations to obtain their inputs regarding how to avoid
or at least minimize involuntary resettlement, and to identify their needs and
preferences; undertake a social assessment to identify different categories of
affected people, including indigenous peoples, based on the degree and scale of
subproject impacts on them.
(iii)
Outline an applicable policy and legal framework (if the policy and legal
framework discussed in the resettlement framework are adequate to address
resettlement impacts, only a summary of the policy and legal framework is
required, along with a reference to the resettlement framework).
(iv)
Undertake a census and complete an asset inventory of all affected people and
households, and provide resettlement information to all affected people in their
own language.
(v)
Develop an entitlements matrix to outline the entitlements of all affected people
including non-titled people (e.g., squatters, encroachers, tenants, and wage
workers) following the above entitlement matrix (if new categories of affected
people and types of losses are identified during project implementation,
appropriate entitlements will be added to the resettlement plan and forwarded to
ADB for review and approval, and all affected people should be informed of such
changes).
(vi)
Explain relocation plans and the rehabilitation strategy, including income
restoration and improvement, to affected people.
(vii)
Describe the institutional framework of resettlement programs.
(viii) Itemize a budget for all resettlement activities in the resettlement budget and
financial plan.
(ix)
Outline, if applicable, the environmental impacts of relocation.
(x)
Formulate a time-bound schedule for resettlement plan implementation.
(xi)
Outline procedures contained in the grievance redress mechanism.
(xii)
Describe both the internal and external monitoring program and the final
evaluation.
(xiii) Disclose the draft resettlement plan to all affected people in their own language
and keep copies of the documents at public offices; the executing agency will
endorse it before submitting it to ADB for review and approval.
(xiv) Disclose the resettlement plan to all affected people again after ADBs approval,
if it is revised according to ADBs advice and comments (the plan will be posted
on ADBs involuntary resettlement website).
(xv)
At a minimum, pay compensation and complete any required relocation before
awarding subproject construction contracts.

Appendix 15

E.

95

Implementation Arrangements

10.
The resettlement specialists of the safeguard compliance group within the project
coordination unit will ensure that the each project implementing agency formulates satisfactory
resettlement plans for each subproject with any resettlement impacts. Each implementing
agency will have resettlement specialists among its consultants who will assist each
administrative department or implementing agency with initial screening of subprojects for
resettlement impacts. If any are found, the resettlement specialists will assist in undertaking
social assessments at subproject sites and in formulating resettlement plans, were necessary,
in accordance with the approved resettlement framework. If significant resettlement impacts are
identified, the line department or implementing agency is responsible for engaging resettlement
specialists to ensure resettlement safeguard compliance and for submitting satisfactory
resettlement plans to the implementing agency and ADB for review and approval prior to any
acquisition or resettlement of affected persons and the award of civil works contracts.
F.

Consultation and Participation

11.
Executing agencies will invite vulnerable households and people for stakeholder
consultations during the formulation of resettlement plans. The decisions of such meetings will
be recorded, and these records will indicate the responsibility and timeline for implementing the
decisions. Each resettlement plan will include a note on all public consultations held and the
disclosure of resettlement information. During resettlement plan preparation, resettlement
information will be disclosed to all affected people in their own language, and their views and
opinions will be taken into consideration in finalizing the plans. Final resettlement plans will be
translated into local languages and disclosed through public notices posted at implementing
agency offices, published in newspapers, and posted on ADBs website. Affected people will be
closely consulted in resettlement site selection and livelihood restoration.
G.

Eligibility Provisions

12.
All affected people are entitled to compensation and rehabilitation. However, eligibility to
receive compensation and other assistance will be limited by a cut-off date to be set for each
subproject on the day corresponding to the beginning of its preliminary impacts assessment.
The cut-off date defines eligibility and affected person. Given the destruction caused by the
earthquake, some affected people may have difficulty proving their ownership of, or user rights
to, any affected property. In such cases, affected people will be assisted and supported under
the legal assistance, governance and institutional building activities of the Project. Such support
will include reissuing and replacing national identity cards, property titles, birth certificates,
disability certificates, and marriage certificates.
H.

Grievance Redress Mechanism

13.
The LAA provides for aggrieved persons at different stages of land acquisition to present
their grievances to the Land Acquisition Collector or a court of law for redress. The executing
agency of each subproject with resettlement impacts will establish a grievance redress
committee headed by the district land acquisition collector and including among its members
concerned union councils, local nongovernment and community-based organizations, and
community leaders. The committees will be open forums for raising objections and holding
discussions to resolve conflicts. Each committee will record its deliberations and inform the
concerned parties within 4 weeks of its findings and recommendations.

96

Appendix 15

I.

Monitoring and Evaluation

14.
SCs, assisted by RAs will monitor compliance of resettlement plans with ADBs
involuntary resettlement safeguard requirements in subproject design. It will also develop a
tracking system to ensure that necessary resettlement plans are formulated, and submitted to
ADB for review and approval.
15.
Each resettlement plan will include monitoringinternal and externalindicators. The
EA will conduct its own internal monitoring of RP implementation and will submit quarterly
reports to SC. A private firm, NGO, or university will be engaged by executing
agency/implementing agency as an external monitor. External monitoring reports will be
submitted quarterly during the first year of subproject implementation, and twice a year from the
second year to SC. SC will submit these reports to ERRA and ADB for review. There will be a
separate section in the projects midterm review report on the progress in resettlement
implementation in the entire project.
J.

Resettlement Budget

16.
The ERRA will be responsible for providing adequate funds for land acquisition and
relocation arising from subprojects. Detailed estimates will be prepared by executing
agency/implementing agency for each RP, which will be included in the overall subproject
estimate. The budget will include (i) detailed costs of land acquisition, relocation, and livelihood
and income restoration and improvement; (ii) sources and availability of adequate funding; (iii)
arrangements for approval of RP cost estimates; and (iv) the flow of funds and contingency
arrangements.
17.
Land acquisition and resettlement are state governments responsibility. However, under
the Project, state governments might find difficult to pay for land acquisition and resettlement.
Therefore, in each subproject, it is necessary to indicate who will fund land acquisition and
resettlement costs. Costs of physical infrastructure at relocation sites and income and livelihood
restoration and improvement programs could be financed from grant funds provided such
financing has in-built check and balances to ensure ADBs requirements are met. All land
acquisition, compensation, relocation and rehabilitation of income and livelihood will be
considered as an integral component of project costs.

Appendix 16

97

GENDER ACTION PLAN

A.

Introduction

1.
The earthquake in northern Pakistan has disrupted lives of 1.6 to 2.2 million women and
children. Already considered particularly vulnerable, they have now lost homes, assets, and
family members, becoming widows or orphans. Many of those who survived are injured, and
some are permanently disabled physically and/or psychologically even as they are left without a
support network. Many are at risk due to cold, malnutrition, disease, and a lack of access to
resources and assets to address their situation. Most were never registered and lack the
identification documents they need to reclaim their properties or inherit them from family
members the have lost.
2.
Women and children in these precarious conditions are also at risk of physical and/or
psychological abuse and violence and progressive marginalization. In addition, children are at
risk, especially in Azad Jammu and Kashmir (AJK), of being recruited by militias to escape
extreme poverty and famine.
B.

The Gender Action Plan

3.
The objectives of the gender action plan (GAP) are to promote and enable the equal
participation of men and women stakeholders as agents and beneficiaries of the Pakistan
Earthquake Emergency Assistance Project (the Project). The GAP is based on analyses of
gender disparity and the gender dimension of poverty in Pakistan. In Pakistan, women are
particularly disadvantaged, suffering discrimination in the social, cultural, economic, and political
spheres of life and denied equal access to resources, services, and opportunities that will
enable them to participate in, contribute to, and benefit fully from development processes in the
country. Women have different legal status from men. For these reasons women are particularly
vulnerable, especially in the aftermath of a catastrophic event such as the earthquake. The
Project will encourage and support womens increased participation in the consultative
processes of planning and implementing the various activities to be carried out within the
different sectors through the loan project components of the Project. In addition, the GAP will
develop measures to mitigate the risks deriving from the situation. The Project includes legal
assistance, governance, and institutional building activities. This GAP will guide the
development of provisions under this component with particular attention to women. The GAP
will pay particular attention to the following:
(i)
equal participation of women in reconstruction planning;
(ii)
recovery of livelihood and economic activity for women, especially those who
have become household heads;
(iii)
equal access for women and men to infrastructure activities in relation to
planning, construction, maintenance, and as users;
(iv)
equal compensation to women for land acquisition under the Projects
components; and
(v)
equal wages for female workers in reconstruction and rehabilitation activities.

98

Appendix 16

Table A16. Gender Action Plan

Component
1. Transport

Expected risks/issues
Design
x
Equal participation of women in
reconstruction planning
Resettlement
x
Provision of identity cards to
women and minors free of
charge
x
Equal compensation to women
for land acquisition under the
Projects components.
Reconstruction and civil works
implementation
x
Recovery of livelihood and
economic activity for women,
particularly those who have
become household heads
x
Participation of women in
reconstruction works
x
Equal wages for female
workers in reconstruction and
rehabilitation activities
x
Personal security

Target actions
x

x
x
x
x

x
x

2. Power

Design
x
Equal participation of women in
reconstruction planning
Resettlement
x
Provision of identity cards to
women and minors free of
charge
x
Equal compensation to women
for land acquisition under the
Projects components
Reconstruction and civil works
implementation
x
Recovery of livelihood and
economic activities for women,
particularly those who have
become household heads
x
Participation of women in
reconstruction works
x
Equal wages for female
workers in reconstruction and
rehabilitation activities
x
Personal security

x
x
x
x

x
x

3. Social sector

Design
x
Equal participation of women in
reconstruction planning

Ensure the participation of both men

and women in local communities in the
planning, construction, and
maintenance of infrastructure.
Ensure that contractors employ female
labor where socially and culturally
acceptable.
Ensure wage parity.
Encourage contractors to use laborintensive techniques.
Encourage people from affected
communities to participate in land
clearance and road construction
through a cash-for-work scheme.
Ensure that women and female-headed
households are awarded equal
compensation for land acquisition.
Ensure the creation of a mechanism to
ensure property rights to women, even
without formal identification, and the
issuing of new identification cards free
of charge.
Where female labor is present on
construction sites, provide secure and
separate sanitary facilities and security
for women.
Ensure the participation of both men
and women in local communities in the
planning, construction, and
maintenance of infrastructure.
Ensure that contractors employ female
labor where socially and culturally
acceptable.
Ensure wage parity.
Encourage contractors to use laborintensive techniques.
Encourage people from affected
communities to participate in land
clearance and transmission line, substation, and other infrastructure
construction through a cash-for-work
scheme.
Ensure that women and female-headed
households are awarded equal
compensation for land acquisition.
Ensure the creation of a mechanism to
ensure property rights to women, even
without formal identification, and the
issuing of new identification cards free
of charge.
Where female labor is present on
construction sites, provide secure and
separate sanitary facilities and security
for women.
Ensure that health facilities cater to the
special physical and psychological
needs of conflict and earthquake

Appendix 16

Component

Expected risks/issues
Resettlement
x
Provision of identity cards to
women and minors free of
charge
x
Equal compensation to women
for land acquisition under the
Projects components
Reconstruction and civil works
implementation
x Recovery of livelihood and
economic activity for women,
particularly those who have
become household heads
x Participation of women in
reconstruction works
x Equal wages for female workers
in reconstruction and
rehabilitation activities
x Personal security

Target actions
x

x
x
x
x
x

x
x
x
x
4. Legal assistance,
governance, and
institutional building
activities of
implementation
assistance

x
x

x
x
x
x

Provision of identity cards to

women and minors free of
charge
Recovery of livelihood and
economic activity for women,
particularly those who have
become household heads
Access of women and minors to
legal status, property rights, and
inheritance rights
Inalienability of the land for
minors, including girls
Access of women to vocational
training
Access of disabled women to
rehabilitation and special
training to integrate or
reintegrate them into the labor
market
Equal compensation to women
for land acquisition under the
Projects components

affected men, women, children, elderly,

and disabled.
Ensure the participation of both men
and women in local communities in the
planning, construction, and
maintenance of infrastructure.
Ensure that contractors employ female
labor where socially and culturally
acceptable.
Ensure wage parity.
Encourage contractors to use laborintensive techniques.
Ensure that women and female-headed
households are awarded equal
compensation for land acquisition.
Ensure the creation of a mechanism to
ensure property rights to women, even
without a formal identification, and the
issuing of new identity cards free of
charge.
Where female labor is present on
construction sites, provide secure and
separate sanitary facilities and security
for women.
Encourage people from affected
communities to participate in land
clearance and structure construction
through a cash-for-work scheme.
Provide separate sanitary facilities in
schools for female and male staff and
students.
Provide suitable quarters for female
teachers so that they will be encouraged
to move to these areas.
Ensure all structures are assessable to
the disabled.
Ensure all structures meet safety
requirements.
Support the development of an
identification mechanism for issuing
identification cards free of charge and
defining property rights.
Promote livelihood restoration
programs, with particular attention to
the needs of single women and femaleheaded households.
Ensure that inheritance and property
rights are suitable to meet the needs of
earthquake-affected people, particularly
women and children.
Promote the development of a
guardianship legal framework with
provisions to ensure the inalienability of
land and other property of a minor,
either female or male.
Promote the development of new
vocational training programs specifically
targeted to women as they enter or
reenter the labor market.
Promote the development of

99

100

Appendix 16

Component

Expected risks/issues
x

C.

Equal wages for female workers

in reconstruction and
rehabilitation activities

Target actions
rehabilitation and special training
programs for disabled women to
integrate or reintegrate them into the
labor market.
x Promote the development of special
support units to help earthquakeaffected people.
x Ensure the development of a legal
framework for an equitable,
nondiscriminatory labor and wage
system.

Implementation

4.
The GAP will be implemented through existing and planned implementation mechanisms
for the project components, comprising subprojects that are not yet identified. The capacity of
implementing agencies and units will be strengthened under the implementation assistance
component, and the support of consultants will be obtained, where necessary, to enable the
effective implementation of the GAP.
D.

Monitoring and Evaluation

5.
Gender-disaggregated data will be collected during project monitoring and evaluation.
Monitoring systems will incorporate such data, and processes of review and evaluation will
cover both quantitative and qualitative gender-based information.

Appendix 17

101

VULNERABLE PEOPLE ACTION PLAN

A.

Introduction

1.
The earthquake-affected areas of Pakistan were not the poorest in the country, but they
were among the most vulnerable. Years of conflict in Azad Jammu and Kashmir (AJK) and
neighboring Afghanistan, geographical remoteness, and climatic harshness have made these
areas particularly vulnerable.
2.
The earthquake exacerbated the plight of the existing marginalized groups while creating
new ones. Both existing and newly marginalized groups may not be able to access assistance
on an equal basis. In particular, female-headed households, widows, and orphaned children are
at risk of having little or no access to supplies and services and of losing property claims, often
because they lack proper identification. The elderly and the disabled are likely to have lost their
support network, notably family members. Physical and psychological disabilities caused by the
earthquake need to be taken into account, as they carry long-term effects in terms of economic
costs and social exclusion. Long-term health expenses and rehabilitation will be important
burdens for families and the Government alike.
B.

The Action Plan

3.
The empowerment of those affected by the earthquake needs to be integrated into all
project interventions. The need to (i) protect the vulnerable from exploitation, violence, and
abuse; (ii) ensure their access to entitlements and assets; and (iii) ensure the inclusion of the
disabled in education, vocational training, and employment schemes are guiding principles that
need to be communicated to policymakers, public servants, camp managers, the media,
nongovernment organizations, and affected and displaced people themselves. These actions
need to be implemented using a rights-based approach, with institutional building activities
legally supporting such changes.
4.
The objectives of this action plan are to promote and enable the equal participation of
vulnerable stakeholders as agents and beneficiaries of the Pakistan Earthquake Emergency
Assistance Project (the Project). These groups are particularly disadvantaged and discriminated
against in the social, cultural, economic, and political spheres of life, and are denied equal
access to resources, services, social and official structures, and opportunities that will enable
them to participate in, contribute to, and fully benefit from development processes in the country.
The Project will encourage and support vulnerable peoples increased participation in the
consultative processes of planning and implementing the various activities to be carried out in
the loan components of the Project. In addition, the action plan will develop measures to
mitigate the risks arising from the post-earthquake situation. This action plan will guide the
development of provisions under the legal assistance, governance, and institutional building
component with particular attention to all vulnerable groups. The action plan will focus particular
attention on the following:
(i)
equal participation of all vulnerable people in reconstruction planning;
(ii)
recovery of livelihood and economic activity for the vulnerable, particularly the
disabled and those who have lost their support networks;
(iii)
equal access for vulnerable groups to infrastructure activities in relation to
planning and, where possible, construction, use, and maintenance;
(iv)
equal compensation to vulnerable people for land acquired under the project
components; and

102

Appendix 17

(v)

5.

equal wages for workers from vulnerable groups in reconstruction and

rehabilitation activities.

Vulnerable people include the following:

(i)
female-headed households (also covered by the GAP);
(ii)
widows (also covered by the GAP);
(iii)
orphaned children;
(iv)
the elderly, especially those who have lost their support network;
(v)
the physically and/or psychologically disabled, especially those who have lost
their support network;
(vi)
ethnic, linguistic, and religious minorities;
(vii)
nomadic tribes in the effected areas;
(viii) people living in extreme poverty; and
(ix)
internally displaced people, particularly minors.
Table A17: Vulnerable People Action Plan
Component
1. Transport

x
x
x
x
x
x
x
x

2. Power

x
x
x
x
x
x
x
x

3. Social sector

x
x
x
x

Target actions
Ensure the participation of vulnerable people in local communities in the
planning, construction and maintenance of infrastructure.
Provide that contractors employ disabled (when possible) and other vulnerable
labor.
Ensure wage parity.
Encourage contractors to use labor-intensive technologies.
Encourage people from affected communities to participate in land clearance and
road construction through a cash-for-work scheme.
Ensure that vulnerable groups are awarded equal compensation of land
acquisition.
Ensure the creation of a mechanism to ensure property rights to vulnerable
people, even without a formal identification. New identification cards shall be
issued free of charge.
Where disabled labor is present on construction sites, provide disabled-friendly
facilities and security for them.
Ensure the participation of vulnerable people in local communities in the
planning, construction and maintenance of infrastructure.
Provide that contractors employ disabled (when possible) and other vulnerable
labor.
Ensure wage parity.
Encourage contractors to use labor-intensive technologies.
Encourage people from affected communities to participate in land clearance and
transmission line, sub-stations and other infrastructures construction through a
cash-for-work scheme.
Ensure that vulnerable groups are awarded equal compensation of land
acquisition.
Ensure the creation of a mechanism to ensure property rights to vulnerable
people, even without a formal identification. New identification cards shall be
issued free of charge.
Where disabled labor is present on construction sites, provide disabled-friendly
facilities and security for them.
Ensure that health facilities cater to the special physical and psychological needs
and earthquake-affected men, women, children, elderly, disabled and other
vulnerable people.
Ensure the participation of vulnerable people in local communities in the planning,
construction and maintenance of infrastructure.
Provide that contractors employ disabled (when possible) and other vulnerable
labor.
Ensure wage parity.

Appendix 17

Component
x
x
x
x
x
x

4.

Legal
Assistance,
Governance,
and Institutional
Building

x
x
x
x
x
x
x
x

C.

103

Target actions
Encourage contractors to use labor-intensive technologies.
Ensure that women and female-headed households are awarded equal
compensation of land acquisition.
Ensure the creation of a mechanism to ensure property rights to vulnerable
people, even without a formal identification. New IDs shall be issued free of
charge.
Where disabled labor is present on construction sites, provide disabled-friendly
facilities and security for them.
Encourage people from affected communities to participate in land clearance and
structures construction through a cash-for-work scheme.
Provide separate sanitary facilities for female and male staff and students and
disabled.
Ensure all structures are disabled-friendly.
Ensure all structures meet safety requirements.
Support the development of an identification mechanism for issuing of
identification cards and definition of property rights. New IDs shall be issued free
of charge.
Promote livelihood restoration programs, with particular attention to the needs of
vulnerable people, particularly those who have lost their support network.
Ensure that inheritance and property rights are suitable to meet the need of
earthquake affected people, particularly women and children and other vulnerable
people.
Promote the development of rehabilitation and special training programs for
disabled to (re-) integrate them in the labor market.
Promote the development of special support units to help earthquake affected
people.
Ensure the development of a legal framework to ensure equal, nondiscriminatory,
labor and wage system.

Implementation

6.
This action plan will be implemented through existing and planned implementation
mechanisms for project components, comprising subprojects that are not yet identified. The
capacity of implementing agencies and units will be strengthened under the implementation
assistance component, and support from consultants will be obtained, where necessary, to
enable the effective implementation of this action plan.
D.

Monitoring and Evaluation

7.
Data disaggregated for vulnerabilityparticularly for people living under the poverty line
and the elderly and disabledwill be collected during project monitoring and evaluation.
Monitoring systems will incorporate such data, and processes of review and evaluation will
cover information on vulnerable people both quantitatively and qualitatively.

104

Appendix 18

OUTLINE TERMS OF REFERENCE FOR CONSULTING SERVICES FOR PROVIDING

CAPACITY BUILDING FOR THE OFFICE OF THE AUDITOR GENERAL OF PAKISTAN
A.

Background

1.
With reference to accounting and audit, each executing agency and implementing
agency will maintain records and accounts adequate to identify works, goods, and services
financed by the loan proceeds. Specifically, Earthquake Reconstruction and Rehabilitation
Authority (ERRA) and each executing agency/implementing agency will maintain separate
accounts for the Project and ensure project accounts are audited annually and submitted to
ADB. Given the relatively high degree of fiduciary risk associated with this Project, the audited
accounts and financial statements will be provided to ADB within 4 months of the end of the
fiscal year. The auditing requirement has been harmonized with that of the World Bank.
Although both institutions typically required submission of audited financial statements within 6
months, it was felt that the risks associated with this transaction together with a 36-month
implementation period warranted a slightly tighter deadline for submission.
2.
The Ministry of Finance, Auditor General of Pakistan (AGP) and Controller General of
Accounts (CGA) are working with ERRA, as the client for services of the AGP and CGA, to
develop and institutionalise financial management systems and procedures including
accounting systems that will produce auditable accounts and financial and performance auditing
arrangements governing all resources for post-quake rehabilitation and reconstruction. This
involves revising existing government systems and procedures to address the specific scope,
scale and timing requirements of the earthquake response. With regard to accounts, the CGA
will approve the accounting system, including financial management. ERRA and implementing
agencies will maintain accounts in accordance with the new accounting model (NAM). The
accounts will be computerized providing auditable information to track expenditure by
implementing agency, donor, district, province/state and activity. ERRA will follow this model for
its own accounts, and to aggregate implementing agencies accounts.
3.
The AGP audit jurisdiction will extend to all agencies involved in post-quake
rehabilitation and reconstruction operations. The AGP will conduct an annual financial audit and
periodic compliance with authority and performance audits. The AGP carries out audits in
accordance with the International Organisation of Supreme Audit Institutions (INTOSAI)
standards. In order to meet the increased workload demands of these responsibilities the AGP
is establishing a team of auditors headed by a Director General ERRA Audit with three offices in
Abbottabad, Islamabad, and Muzaffarabad. The AGP is empowered to hire incremental staff as
required.
4
ERRA is developing an earthquake monitoring and evaluation framework based on five
core principles: (i) joint and harmonized monitoring and evaluation; (ii) results focus; (iii) lesson
learning; (iv) people focus; and (v) transparency and communication. ERRA will establish a
performance monitoring and evaluation system for the Earthquake Emergency Assistance
Project loan and grant funded activities and outcomes. ERRA will need to ensure that
monitoring and evaluation systems for earthquake recovery activities are coherent, provide
information to enable timely preparation of reports for management and donors and ensure that
implementation lessons inform policy makers.

Appendix 18

B.

Scope of Services

5.

This TA has three components.

1.

105

Auditable Accounts (Component 1)

6.
This includes CGA support to ERRA to design and implement the financial management
system consistent with the NAM through a packaged solution configured in software (SAP R3)
consistent with the on-going World Bank funded project to improve financial reporting and
auditing (PIFRA). This will include computerization of the financial accounting and budgeting
system at the point of expenditure. ERRA will be required to aggregate of financial reports from
three types of agencies receiving funds against approved schemes: (i) existing government
implementing agencies e.g. Frontier Works Organisation, National Housing Authority, Water and
Power Development Authority, etc.; (ii) NGOs and other civil society organisations; and (iii)
proposed province/state and district level reconstruction institutions. The CGA, ERRA and
implementing agencies will require targeted technical assistance in areas such as system
design and computerization of accounts, and training of over 150 officers.
2.

Financial, Compliance and Performance Audits (Component 2)

7.
This includes capacity development of the newly established DG Audit ERRA office
within the AGP to ensure that timely and accurate audit reports are prepared. Technical support
and training of over 120 auditors is required by the AGP in three areas: (i) conducting
information systems audit including updating manuals and working papers; (ii) instituting
strategic audit planning, monitoring and quality assurance systems including developing an
audit plan, establishing a quality assurance cell and reviewing the process life cycle of audit
reports; and (iii) developing guidelines for procurement audit including conducting procurement
audit of sample large schemes and developing case studies and training in donor (ADB, World
Bank etc.) procurement procedures. A study tour for selected senior officials to visit a tsunamiaffected country(s) to discuss audit and accounting responses is proposed.
3.

Performance Monitoring and Evaluation (Component 3)

8.
ERRA is developing an earthquake monitoring and evaluation framework. Technical
assistance will be provided to ensure that the Earthquake Emergency Assistance Project loan
and grant monitoring and evaluation system is integral to the broader ERRA framework and
provides timely information for ADB and government.
C.

Staffing

9.
A total of 192 person-months of domestic and 9 person-months of international, long and
short term, individual consultants are proposed. This includes 36 person-months for a domestic
project coordinator. Consultants will provide training and technical advice in various aspects of
audit, accounts and performance monitoring and evaluation. It is expected that domestic
consultants providing technical advice in audit and accounts will be drawn from the pool of exAGP and CGA officers.
D.

Implementation Arrangements

10.
The AGP and CGA will be the executing agencies for the TA. The proposed TA is
scheduled to be implemented for 36 months from January 2006 to January 2009.

106

Appendix 18

Administration of the proposed TA will be delegated to the ADB PRM. It is proposed to establish
an advisory committee with representatives of AGP, CGA and ERRA chaired by ADB to (i)
assist in short-listing, including provision of the Governments concurrence of consultants; (ii)
approve progress and annual reports; and (iii) provide guidance to the team of consultants
recruited under the proposed TA. The Governance Unit, PRM will provide secretariat services to
the advisory committee. All consultants will be engaged by ADB in accordance with its
Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the
engagement of consultants. Procurement of equipment will be conducted in accordance with
ADBs Guidelines for Procurement and other arrangements satisfactory to ADB for procurement.
E.

Reporting and Documentation Requirements

11.
Biannual reports prepared by the Governance Unit secretariat will be endorsed by the
advisory committee prior to submission to the Government and ADB.
F.

Government Inputs

12.
The AGP, CGA and ERRA will provide consultants with suitable office space and
counterpart staff, local communications, office support staff and necessary equipment to
conduct their mandated responsibilities. As noted above a new DG Audit ERRA wing of AGP is
being established and ERRA will be fully staffed to address its accounting, internal audit and
performance monitoring and evaluation responsibilities. Government training venues will be
availed as appropriate.
G.

Cost Estimates
Table A18: Cost Estimates and Financing Plan
($'000)

Item
A. Asian Development Bank Financinga
1. Consultants
a. Remuneration, Per Diem and Travel
i. Internationalb
ii Domesticc
2. Training, Study Tour
3. Workshops, Communications and Documentation
4. Contingencies
Subtotal (A)
B. Government Financing
1. Office Accommodation and Transportd
2. Remuneration and Per Diem of Counterpart Staffd
3. Otherse
Subtotal (B)
Total
a
b
c
d
e

Foreign
Exchange

Local
Currency

Total
Cost

225
0

40
265

0
1,080
450
45
160
1,735

225
1,080
450
45
200
2,000

0
0
0
0
265

100
300
100
500
2,235

100
300
100
500
2,500

Financed by Asian Development Bank technical assistance funding program.

Short term international individual consultants (9 person-months) recruited by ADB
Long and short term domestic individual consultant firms (192 person-months) recruited by ADB
Includes staff from at least 10 implementing agencies and over 8 local governments
Includes training venues (federal, 2 province/states and 8 districts), government resource persons,
communications, office supplies, printing and publishing, etc.

Source: Asian Development Bank estimates.