Greater Thal Canal: ADB loan lapses as Punjab fails to rally support for project

LAHORE: The Asian Development Bank (ADB) has refused to grant an extension of the loan signing period as the Punjab government fails to muster support for the construction of the next phase of the Greater Thal Canal project within the stipulated deadline.

In his letter dated December 6, 2022, the Director-General, Central and West Asia Department, ADB, expressed the bank’s inability to extend the loan signing period, which expires on December 13, 2022.

The $200 million worth of “Loan 4167—PAK: Greater Thal Canal Irrigation Project” was to be spent on building the next phase of the GTC Project in Punjab.

While referring to the letter dated December 2, 2022, written by Dr. Kazim Niaz, Secretary, Ministry of Economic Affairs, requesting ADB’s consideration of a potential six-month extension of the loan signing period, Yevgeniy Zhukov, DG, ADB, reiterated that the loan would automatically lapse on December 13, 2022, unless the loan and project agreements are signed within that period.

“We fully appreciate the efforts of the federal and provincial governments to reach a consensus on the implementation of the GTC project. We recognise that this process requires further consultation and potential engagement of higher authorities, including the Council of Common Interests. This, in our understanding, may require additional time and continued dialogue with provincial authorities to reach a final agreement on project implementation. It is increasingly evident that the implementation of the project would also require more sensitive dialogue within the country given the evolving political environment,” he said.

“We recognise the challenges in building a consensus for this project related to sensitive technical aspects. Given the flood response priority for Pakistan and ADB as a leading partner, we consider it may be ineffective to extend the loan signing period. This is also because there is no certainty that a consensus will be achieved within the next six months,” he added.

Commenting on the development, sources termed the lapse of the loan a big setback to the irrigation sector. Pakistan’s agriculture already reaches saturation point, and we badly need more area for cultivation to produce a greater volume of food. The Greater Thal Canal Project would have certainly helped in increasing the area for farming purposes.

However, it is a pity that Punjab, the main stakeholder in this project, didn’t fight its case vigorously, the sources claimed.

According to the sources, the entire project will be thrown off track because everything will have to be started over after the loan signing period expires. Such an eventuality would result in delays and cost escalation, putting an additional burden on the provincial kitty.

It may be noted that the proposed loan programme has been aimed at enhancing food security and rural economic growth in Punjab. It will increase agricultural production by developing a new seasonal irrigation system in the Bhakkar, Jhang, Khushab, and Layyah districts of Punjab. The Greater Thal Canal Irrigation Scheme will convert about 704,000 hectares of unproductive land to irrigated land.

The proposed investment programme will support the construction of the remaining parts, covering about 440,000 hectares, to complete the development of the scheme and provide support to farmers for on-farm development and management.

Meanwhile, Punjab Chief Minister Chaudhry Pervaiz Elahi has expressed regret that Shehbaz Sharif has gone too far in his animosity towards the province and said that to protect his allies, he has turned to oppress Punjab’s farmers.

In a statement issued on Friday, Pervaiz Elahi said that if the Greater Thal Canal agreement with the Asian Development Bank is not signed by December 13, the agreement will automatically expire. The deadline for signing the Executive Committee of the National Economic Council (ECNEC) approved project is December 31, 2022; he highlighted and regretted the federal government’s lack of progress.

The CM explained that Punjab removed the objections of Sindh in the ECNEC meeting with relevant data and figures. Meanwhile, the repair and maintenance of the first phase of the Greater Thal Canal are also required to add more water for six lakh acres of land. The Greater Thal Canal will only have water from Punjab and no other provinces; otherwise, this water will end up in the sea, he said. In the 1991 consentaneous water agreement, he said water was allocated under the name of the Greater Thal Canal. The Kachhi Canal and Rainee Canal projects have already been completed under this agreement for the provinces of Balochistan and Sindh; he mentioned and added that the Chashma Right Bank Canal project has been approved for Khyber Pakhtunkhwa.

However, obstacles are being created for the completion of the Greater Thal Canal in the garb of enmity with Punjab, which he deplored. The CM further explained that the PTI-led government restored the Greater Thal Canal project and arranged funds as this vital project had been in cold storage since 2007. The loan agreement with the Asian Development Bank is yet to be signed, and the tenure of the loan agreement would lapse if it is not signed by December 31, 2022, he added. In the current session of ECNEC, all provinces have plans for flood rehabilitation, but not a single project is in Punjab, and the federation has not given the province a single penny for flood victims, he said.