Canal Water Pricing for Irrigation in Pakistan00020

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					poor recovery under AWBs such as absence of regulatory bi-laws, lack of institutional, financial and
technical support from government and Irrigation Department to properly guide and equip FOs in order
to manage hundred years old irrigation system effectively.


Figure 23: Abiana Assessment and Recovery under AWBs in Pakistan (Punjab and Sindh collectively)




Table 8: Abiana Assessment and Recovery under AWBs in Pakistan (Punjab and Sindh provinces)
 Year                              Assessment            Recovery          Recovery as Percentage of
                                                                             Assessed Amount (%)
 2004-05                              296                   177                        60
 2005-06                              314                   162                        51
 2006-07                              275                   150                        54
 2007-08                              274                   126                        46
 2008-09                              325                   135                        42
 Average                              297                   150                        51


6.5.4   Financial Sustainability
Figure 24 shows that canal irrigation system in Pakistan recovers an average of 24% of its annual O&M
costs during the period 2003-04 to 2009-10. Table 8 reveals that annual recovery during the mentioned
period remained almost the same while O&M cost increased by 80%. To fill this widening gap between
the escalating O&M cost and stagnated revenue, provincial governments provided a total of Rs.38 billion
subsidy during 2003-04 to 2009-10 (Rs.5 billion annually). Another worrisome aspect emerging from the

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analysis is that the revenue (from Abiana recovery) as percentage of O&M cost declined by 44% during
2003-04 to 2009-10. In summary, canal irrigation system in Pakistan is highly financially unsustainable
which has a significant negative impact on quality of irrigation service.

Figure 24: Financial Sustainability of Irrigation System in Pakistan




Table 9: Abiana Recovery and O&M Cost of Irrigation System in Pakistan (Rs. Million)

 Year                             Recovery              O&M Cost        Recovery as % of O&M Cost

 2003-04                            1686                    4936                       34

 2004-05                            1562                    5462                       29

 2005-06                            1520                    6230                       24

 2006-07                            1706                    7373                       23

 2007-08                            1700                    7681                       22

 2008-09                            1622                    8804                       18

 2009-10                            1686                    9041                       19

 Total                             11482                    49526

 Average                            1640                    7075                       24




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6.5.5   Conclusion

Following are the main points emerging from preceding discussion in Section 5.5.

       The average water charges per acre for cotton, sugarcane, rice, maize and wheat remained
        Rs.126-214, Rs.185-428, Rs.125-210, Rs.69-136 and Rs.75-131, respectively, during 2000-01 to
        2009-10
       Water charges of rice and cotton are almost same while rice consumes 60% more water than
        cotton, showing water charges being levied independent of water use by crops.
       Overall assessment amount declined by 10% while recovery improved by 8% during the period
        from 2002-03 to 2007-08.
       The average annual Abiana collection is 60% of the assessed amount, inflicting Rs. 1.2 billion
        annual losses at national level (for all provinces).
       Financial performance of four AWBs (three in Sindh and one in Punjab) was also dismal, showing
        a declining trend, as they could recover on average only half of the assessed amount.
       Canal irrigation system in Pakistan is financially unsustainable as it recovers merely 24% of its
        annual O&M costs. In absolute terms, government provided Rs.38 billion as subsidy during
        seven years period (or Rs.5.4 billion annually) to fill the gap between increasing O&M cost and
        stagnant Abiana recovery.




                                      Financially Unsustainable
                                          Irrigation System

                                   Canal irrigation system in Pakistan
                                   is financially unsustainable as it
                                   recovers merely 24% of its annual
                                   O&M costs.




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