oversight

More Timely and Realistic Evaluation Needed for Capital Development Projects in Pakistan

Published by the Government Accountability Office on 1971-11-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                .a,

                                                           -”




More Timely And                                valuation

  rejects                         f3-.758163




Agency for International   Development




UNITED STATES
GENERAL ACCOUNTING                        OFFICE
                                     UNITED STATES GE~~WIL WCC~WWNG                QFFICE
                                                 WASHINGTON,    D.C.    20548


INTERNATIONAL     DIVISION




                B-1581 63




                Dear         Dr.   Hannah:

                        This        is our report entitled    “More    Timely    and Realistic
                Evaluation          Needed for Capital     Development     Projects   in Pakistan.”

                        Copies of this report   are being sent to the Senate Commit-                     _^ c’?*a
                tee on Foreign     Relations, the House Committee      on Foreign    Affairs,            &I cl I I 3
                and the Senate and House Committees        on Appropriations      and Gov-                j ; =7
                ernment    Operations.                                                                  1, I.TC>

                       Copies are also being sent to the Director,             Office of Manage-
                ment and Budget; the Secretary          of State; the Foreign        Operations
                and Government      Information     Subcommittee       of the House Commit-            /f o,f_c’r
                tee on Government       Operations;    the Foreign     Operations      Subcom-          _ ) ,_
                mittee   of the Senate Committee        on Appropriations;       and the For-           /   -’
                eign Operations     and Related     Agencies    Subcommittee        of the House
                Committee      on Appropriations.                                                           : 7
                                                                                                        *t
                                                                                                       Hgc 320
                                                            Sincerely     yours,




                                                            Director,     International     Division

                The Honorable      John A, Hannah
                Administrator,     Agency for
                International    Development      ’ .’
          \     Department     of State




                                             50-i-H ANNlVEWSAR’S t92t - t97t
 I           GENERAL ACCOUNTING OFFICE                          MORE TIMELY AND REALISTIC EVALUATION
             REPORT TO THE ADMINISTRP.Z?R                       NEEDED FOR CAPITAL DEVELOPMENTPROJECTS
 I           AGENCY FOR INTERNATIONAL                           IN PAKISTAN
 I
 I           DEVELOPMENT                                        Agency for International Development
                                                                B-158163

 I
 ;           DIGEST
                 ----

 I
 I           Wi'i'YTHE REVIEW WAS MADE
 I
  I
.I                  The United States has provided      over $2.3 billion      of economic assistance
 I                  to Pakistan   since 1951.    This is one of the largest         U.S. Agency for
 I              '   International    Development (AID) programs.         The United States has provided                  r?
 I
 I                  over $1.5 billion    worth of surplus   agricultural      commodities   to Pakistan
  I                 under the authority     of Public Law 480, in addition        to this dollar    assis-
  I
  I                 tance.
  I’
                    Capital    development  project   loans constitute  about $523 million of the
  I                 assistance    provided.    These loans .are a basic component of the economic
  I
  I
                    assistance    program administered     by AID.
  I
  1                 Earlier    General Accounting        Office (GAO) reviews of U.S. assistance             to other
  I            .    countries    identified     the need for improved administration            of project      assis-
  I                 tance loans.       This review, made by GAO as a part of its continuing                  review
  I
  I                 of the foreign       aid program, was directed         to loans to Pakistan      for malaria
     I              eradication,     electric     power expansion,      land reclamation     and irrigation,
     I
     I              road construction,        and construction     of coastal     embankments.     GAO sought
     I              to determine     whether the-development         projects    were contributing      toward the
     I
     I
                    accomplishment       of U.S. economic objectives          in Pakistan   and were being imple-
     I              mented in a reasonably         effective,   efficient,      and economical manner.

                    This report  is based on work performed   before the outbreak                of civil   str ife
                    in East Pakistan  in March 1971.    Also AID comments included                 as appendix I
                    were prepared before then.


      ;      FINDINGS AND CONCLUSIONS
      I
      I             U.S. assistance    has contributed    significantly     to progress   made toward the
      I             economic development    of Pakistan.      The effectiveness     of this assistance
      I             could have been greater,      however, if AID and the Government of Pakistan         had
      I
      I             given more attention    to finding    solutions     to problems as they developed.
      I
      I
      I             Makxria   eradication
      I
      I
                     Although AID has provided      about $52 million      for malaria   eradication    activi-
      I              ties in Pakistan,    AID has been unable to persuade the Government of West
      I
      1              Pakistan  to provide    the financial  9 administrative,      and operational     support
      I              necessary for a long-range      program to be effective.         As a result,   the
      I
      I
         I
      I
      I
      I
         I   Tear Sheet
                                                                                                          I
                                                                                                          I
                                                                                                          I
                                                                                                          I
                                                                                                          I

malaria  eradication  program is about 2 years behind schedule and malaria                        I
has reached epidemic proportions     in some areas of West Pakistan.    More-                             I
over adequate provision     has not been made to prevent the recurrence   of                              I
                                                                                                          I
malaria  once the incidence    of the disease has been controlled.                                        I
                                                                                                          I
                                                                                                          I
All parties   concerned are now agreed that the goal of complete eradication                              I
of the disease by 1975 is unrealistic.          A program of malaria       control,   as                  I
                                                                                                          I
opposed to malaria      eradication,   is planned.     In view of the problems that                       I
have plagued the program, GAO believes         that the proposed approach is real-                        I
istic.    GAO believes,     however, that future    U.S. assistance      to the malaria                   I
                                                                                                          I
program should be based on a realistic         appraisal    of Pakistan's     support of                  I
the program.     (See pp. 17 to 28.)                                                                      I
                                                                                                          I
                                                                                                          1
SaZinity   control   projects
                                                                                                          I
                                                                                                          I
AID has provided       about $81.1 million     for three salinity      control     and reclama-           I
                                                                                                          I
tion projects     in West Pakistan.       Although successful      in many respects,       they           I
have not fully      attained  planned objectives.       Large numbers of tube wells                       1
constructed     under the projects      have remained unused for long periods,                                I
primarily    because the electrification         work and the connection        of the tube                   I
wells to the watercourses        have not been coordinated        properly     with the com-                  I
                                                                                                              I
pletion    of the tube wells.                                                                                 I

Also the projects      have not been utilized        fully   because the Government of                        I
                                                                                                              I
Pakistan    has not established     an effective       program for operating       and main-                  I
taining   the projects.      These difficulties        could have been alleviated,        GAO                 I
                                                                                                              I
believes,    if AID had recognized       at an early date the shortcomings           of the                   I
Government of Pakistan       in implementing       and operating      these projects   and                    I
                                                                                                              I
had taken steps to have Pakistan           correct   these difficulties.        (See pp. 29                   I
to 36.)                                                                                                       I
                                                                                                              I
                                                                                                              I
Ehtric     power projects                                                                                     I
                                                                                                              I
                                                                                                              I
Three AID-financed      power projects    were not completed on a timely          basis,    al-               I
though AID and the Government of Pakistan           considered    it essential     to com-                    I
                                                                                                              I
plete the projects      on schedule to meet the expanding power requirements                                  I
of Pakistan.     As a result,    increased    costs of about $1.9 million         were in-                    I
curred and the availability        of power, urgently     needed, was deferred.          Since                I
                                                                                                              I
most of the difficulties      encountered
                                     -.      were   of an   administrative     nature,    GAO                 I
believes   that many of them could have been avoided or minimized               if greater                     I
efforts   had been made by AID and the Government of Pakistan              to resolve     the         '
problems more promptly.        (See pp. 37 to 46.)

The Dacea-Arieha     road project

The completion   date for the Dacca-Aricha   road project     in East Pakistan has
been set back almost 5 years, due primarily      to administrative       indecision    on
the part of AID and the Government of East Pakistan       over the scope and fi-
nancing of the project    and to delays caused by a general reallocation            of
Pakistan's   budgeted resources  following the outbreak     of hostilities       between
India and Pakistan    in 1965.
I
I
I
I
I
I               I   Funds provided were insufficient         to complete the project   as originally
                    planned so the scope of the project         has been reduced substantially.      The
t
I                   Government of East Pakistan      has had to assume responsibility        for the work
I                   not included  in the revised     project    plan, although  it is questionable    whether
I
I
                    East Pakistan   has the financial      resources   needed to carry out the work
I                   effectively.
I
I
I                   GAO believes  that many of the difficulties     could have been avoided if
I                   AID had made a realistic   analysis   of the project    cost estimate   at the
I
I                   time the loan application   was under consideration.        Such an analysis   would
I                   have revealed obvious deficiencies      in the estimate    and would have pointed
I
I
                    up the need to reduce the scope of the project        or to arrange for additional
I                   financing.   (See pp. 47 to 53.)
I
I
I                   CoastaZ   embankment project
I
 I
 I                  Construction     work on the coastal      embankment project,      which has received
 I                  $82.2 million     worth of U.S. assistance,       has continually      been behind schedule
 I
 I
                    because the Government of East Pakistan has not provided                adequate support
 I                  for the project.         This lack of support    has resulted     in inadequate   financing
I
I
                    for the project,        a high percentage   of inoperative    equipment,    the failure
I                   to acquire    land for right-of-way,       and shortages    and late deliveries      of con-
I                   struction    materials.       (See pp. 54 to 61.)
I
I
I
I
I
            RECObiWENDATIONSOR SUGGESTIONS
I
I
    I
                    In view of the current situation        in Pakistan,    GAO is making no recommenda-
                    tions.   When conditions     permit these projects      to be completed or other
    I               economic development     projects   to be undertaken      in Pakistan,    any further
    I
    I               U.S. support should be based on a realistic          evaluation     of the recipient's
    I               ability  and willingness     to support   the projects.
    I
    I
    I
    I
    I
            AGENCY ACTIONS AND UNRESOLVEDISSUES
    I
    I               AID commented fully      on a draft  of this report  in February 1971.      (See
    I
    I               app. I.)   It felt    that,  under the relationship    that existed   between AID
    I               and the borrower    (the Government of Pakistan     or its agencies),     AID had
    I
    I
                    done all that could have been expected to resolve          the problems that had
    I               arisen with the projects      covered by the review.      AID stated,  in part,   that:
    I
    I
    I                    "The GOP [Government of Pakistan]         and its agencies are, under
    I                    all existing  loan agreements,       responsible   for the execution
    I
    I                    of projects.   AID must do its best to ensure that the GOP
        I                does so, promptly   and efficiently,       but its powers to persuade
        I
        I                are not always sufficient      to avoid delays of the kind the GAO
        1                criticizes."
        I
        I
        I            GAO recognizes   that there are limitations    on the actions   that AID can take
        I
        I
                     to ensure that   projects  are carried   out on a timely   and efficient basis.
        I
        I
        I
        I
        I
        I
        I
            Tear Sheet
        I
GAO, in its review,  noted several        instances     in which it believed      that *   *
AID had taken all the actions       that reasonably        could have been expected,
and it so stated in this report.          In other instances,         however, if AID
had been more concerned with problem areas and had been more persuasive
in dealing with Pakistani    officials,       the difficulties        cited in this re-
port could have been alleviated         and the benefits       derived from the proj-
ects thus would have been increased.                                                           I




                                                                                               I
                        Contents
                                                               Page
DIGEST                                                           1
CHAPTER

  1       INTRODUCTION                                           5
              Composition of assistance        and projects
                reviewed                                         5
              Authority     for assistance    and AID re-
                sponsibility                                     7
              Economic development in Pakistan                   8
              Political     factors affecting    the eco-
                nomic development of Pakistan                  10
              External assistance       to Pakistan            11
              U.S. assistance      to Pakistan                 11
                    Assistance objectives                      11

  2       SUMMARY
                OF FINDINGS                                    13

  3       OBSERVATIONSON MALARIA ERADICATION PRO-
          GRAM                                                 17
             Background and organization         of program    17
             Increase in malaria in West Pakistan              19
             Funding problems in West Pakistan                 21
             Administrative      and operational    program
                difficulties     in West Pakistan              23
             East Pakistan malaria eradication          pro-
                s=                                              24
             Provisions      for maintenance of malaria-
                free areas                                      25
             Planned change in scope of program                 26
             Conclusions                                        27

  4       IMPLEMENTATIONOF SALINITY CONTROLAND RE-
          CLAMATIONPROJECTS                                     29
              Purpose of SCARPprogram                           29
              Project implementation    delays                  32
                   SCARPI                                       32
                   SCARPII                                      33
              Need for a more effective     operation and
                maintenance program                             34
              Conclusion                                        36
CHAPTER                                                                Page

       5   CONSTRUCTIONOF ELECTRIC POWER FACILITIES                     37
                Power    development       in West Pakistan             37
                Mangla Dam transmission      lines                      38
                Lyallpur   thermal plant                                43
                West Pakistan    power distribution           system    44
                Conclusion                                              45

       6   IMPLEMENTATIONOF THE DACCA-ARICHAROAD
           PROJECT                                                     47
               Background of project                                   47
               Inadequate cost estimates                               48
               Project revisions                                       50
               Bidding procedures                                      51
               Agency comments and our evaluation                      52
               Conclusions                                             53

       7   CONSTRUCTIONOF COASTALEMBANKMENTS                            54
              Early project      activities and changes
                in scope                                               55
              Project funding                                          56
              Equipment maintenance                                    57
              Other difficulties                                       60
              Conclusions                                              61

APPENDIX

       I   Letter dated February 19, 1971, from the
             Auditor General, Agency for International
              Development, commenting on a draft of this
             report                                                     65

  II       Principal    officials  responsible    for admin-
              istration    of the activities   discussed in
              this report                                              88

                              ABBREVIATIONS

AID        Agency for     International         Development

GAO        General Accounting          Office

SCARP      Salinity     control   and reclamation       project
GENERAL A'CCOUNTING OFFICE                       MORE TIMELY AND REALISTIC EVALUATION
REPORT TO THE ADMINISTRATOR                      NEEDED FOR CAPITAL DEVELOPMENTPROJECTS
AGENCY FOR INTERNATIONAL                         IN PAKISTAN
DEVELOPMENT                                      Agency for International Development
                                                 B-158163


DIGEST
------


WHY THE REVIEW WAS MADE

     The United States has provided      over $2.3 billion      of economic assistance
     to Pakistan   since 1951.    This is one of the largest         U.S. Agency for
     International    Development (AID) programs.         The United States has provided
     over $1.5 billion    worth of surplus   agricultural      commodities   to Pakistan
     under the authority     of Public Law 480, in addition        to this dollar    assis-
     tance.

     Capital    development project    loans constitute about $523 million of the
     assistance    provided.   These loans are a basic component of the economic
     assistance    program administered     by AID.

     Earlier    General Accounting        Office (GAO) reviews of U.S. assistance             to other
     countries    identified     the need for improved administration            of project      assis-
     tance loans.       This review,      made by GAO as a part of its continuing             review
     of the foreign       aid program, was directed         to loans to Pakistan for malaria
     eradication,     electric     power expansion,      land reclamation     and irrigation,
     road construction,        and construction     of coastal     embankments.     GAO sought
     to determine     whether the development         projects    were contributing      toward the
     accomplishment       of U.S. economic objectives          in Pakistan   and were being imple-
     mented in a reasonably         effective,   efficient,      and economical manner.

     This report  is based on work performed before the outbreak                  of civil strife
     in East Pakistan  in March 1971.    Also AID comments included                as appendix I
     were prepared before then.


FINDINGS AND CONCLUSIONS

     U.S. assistance    has contributed    significantly     to progress made toward the
     economic development    of Pakistan.      The effectiveness     of this assistance
     could have been greater,      however, if AID and the Government of Pakistan       had
     given more attention    to finding    solutions     to problems as they developed.

     MaZaria   eradication

     Although AID has provided      about $52 million     for malaria   eradication    activi-
     ties in Pakistan,    AID has been unable to persuade the Government of West
     Pakistan  to provide    the financial,  administrative,      and operational     support
     necessary for a long-range      program to be effective.        As a result,   the
malaria  eradication  program is about 2 years behind schedule and malaria                   ‘
has reached epidemic proportions     in some areas of West Pakistan.    More-
over adequate provision     has not been made to prevent the recurrence   of
malaria  once the incidence    of the disease has been controlled.

All‘parties     concerned are now agreed that the goal of complete eradication
of the disease by 1975 is unrealistic.             A program of malaria      control,   as
opposed to malaria        eradication,   is planned.     In view of the problems that
have plagued the program, GAO believes           that the proposed approach is real-
istic.      GAO believes,     however, that future    U.S. assistance      to the malaria
program should be based on a realistic           appraisal    of Pakistan's     support of
the program.       (See pp. 17 to 28.)

SaZinitg   controZ   projects

AID has provided       about $81.1 million     for three salinity      control     and reclama-
tion projects     in West Pakistan.       Although successful      in many respects,       they
have not fully      attained  planned objectives.       Large numbers of tube wells
constructed    under the projects       have remained unused for long periods,
primarily    because the electrification         work and the connection        of the tube
wells to the watercourses        have not been coordinated        properly     with the com-
pletion    of the tube wells.

Also the projects      have not been utilized      fully   because the Government of
Pakistan    has not established     an effective     program for operating       and main-
taining   the projects.     These difficulties       could have been alleviated,        GAO
believes,    if AID had recognized      at an early date the shortcomings          of the
Government of Pakistan       in implementing     and operating      these projects   and
had taken steps to have Pakistan         correct   these difficulties.        (See pp. 29
to 36.)

Electric   power projects

Three AID-financed      power projects    were not completed on a timely basis,           al-
though AID and the Government of Pakistan           considered   it essential     to com-
plete the projects      on schedule to meet the expanding power requirements
of Pakistan.     As a result,    increased    costs of about $1.9 million        were in-
curred and the availability        of power, urgently     needed, was deferred.       Since
most of the difficulties       encountered    were of an administrative       nature,   GAO
believes   that many of them could have been avoided or minimized              if greater
efforts   had been made by AID and the Government of Pakistan            to resolve     the
problems more promptly.        (See pp. 37 to 46.)

Th.e Dacca-Aricha    road project

The completion   date for the Dacca-Aricha      road project     in East Pakistan       has
been set back almost 5 years,    due primarily      to administrative       indecision    on
the part of AID and the Government of East Pakistan          over the scope and fi-
nancing of the project    and to delays caused by a general reallocation               of
Pakistan's   budgeted resources  following    the outbreak     of hostilities       between
India and Pakistan    in 1965.




                                            2
  m Funds provided were insufficient         to complete the project   as originally
    planned so the scope of the project         has been reduced substantially.      The
    Government of East Pakistan has had to assume responsibility             for the work
    not included  in the revised     project    plan, although  it is questionable    whether
    East Pakistan has the financial       resources    needed to carry out the work
    effectively.

    GAO believes   that many of the difficulties      could have been avoided if
    AID had made a realistic     analysis   of the project    cost estimate   at the
    time the loan application      was under consideration.       Such an analysis   would
    have revealed    obvious deficiencies    in the estimate     and would have pointed
    up the need to reduce the scope of the project          or to arrange for additional
    financing.    (See pp. 47 to 53.)

    Coastal   embankment project

    Construction    work on the coastal       embankment project,      which has received
    $82.2 million     worth of U.S. assistance,       has continually      been behind schedule
    because the Government of East Pakistan has not provided                adequate support
    for the project.         This lack of support has resulted        in inadequate   financing
    for the project,        a high percentage   of inoperative    equipment,    the failure
    to acquire    land for right-of-way,       and shortages    and late deliveries      of con-
    struction    materials.       (See pp. 54 to 61.)


RECOMMENDATIONSOR SUGGESTIONS

     In view of the current situation        in Pakistan,    GAO is making no recommenda-
     tions.  When conditions      permit these projects      to be completed or other
     economic development     projects   to be undertaken      in Pakistan,    any further
     U.S. support should be based on a realistic          evaluation     of the recipient's
     ability  and willingness     to support   the projects.


AGENCY ACTIONS AND UNRESOLVEDISSUES

     AID commented fully     on a draft  of this report  in February 1971.      (See
     app. I.)   It felt that, under the relationship       that existed   between AID
     and the borrower    (the Government of Pakistan    or its agencies),     AID had
     done all that could have been expected to resolve         the problems that had
     arisen with the projects     covered by the review.      AID stated, in part, that:
         "The GOP [Government of Pakistan]         and its agencies are, under
         all existing  loan agreements,       responsible   for the execution
         of projects.    AID must do its best to ensure that the GOP
         does so, promptly   and efficiently,       but its powers to persuade
         are not always sufficient      to avoid delays of the kind the GAO
         criticizes."

     GAO recognizes   that there are limitations    on the actions   that AID can take
     to ensure that   projects  are carried   out on a timely   and efficient basis.
GAO, in its review,  noted several        instances      in which it believed       that.    '
AID had taken all the actions       that reasonably         could have been expected,
and it so stated in this report.          In other instances,          however, if AID
had been more concerned with problem areas and had been more persuasive
in dealing with Pakistani    officials,        the difficulties        cited in this re-
port could have been alleviated         and the benefits        derived     from the proj-
ects thus would have been increased.




                                            4
                                CHAPTER1

                               INTRODUCTION

       The capital   development projects     discussed in this re-
port were selected for review as being representative              of
major projects which could contribute         significantly      to the
economic development of Pakistan and which could further
U.S. objectives    in that country.       Our examination     did not
include an overall     evaluation    of the activities      of the
Agency for International       Development in Pakistan.
       The examination was directed     principally       to a review
of nine projects     for which 15 U.S. loans totaling          about
$121.5 million    and grants totaling    about $7.3 million         have
been made. AID has provided,       in addition      to this dollar as-
sistance,    the equivalent   of about $160.6 million        in local
currency assistance      for these projects.      Our purpose was to
determine whether these projects       were contributing        toward
the accomplishment of U.S. economic assistance             objectives    in
Pakistan and were being implemented in a reasonably effec-
tive, efficient,     and economical manner.       The review was con-
ducted at the Washington office of AID and at the AID's
overseas Mission in Pakistan, hereinafter           referred    to as the
Mission.

        Pakistan consists of two provinces--West     Pakistan and
East Pakistan--and     the capital  of the country is Islamabad
located in West Pakistan.       Each of the provinces has a pro-
vincial    government that is responsible   for certain    functions
delegated to it by the central government.         The provincial
capital    of West Pakistan is Lahore, and the provincial        capi-
tal of East Pakistan is Dacca.

Composition    of assistance
and proiects    reviewed

      Since its inception       U.S. economic assistance      to Paki-
stan,  including    development     of  the  Indus  Basin,  has totaled
about $2.3 billion      consisting     of loans amounting to about
$1.5 billion     and grants of over $800 million.          In addition
to this dollar assistance,         over $1.5 billion     worth of sur-
plus agricultural     commodities have been provided to Pakistan


                                      5
under the authority of the Agricultural   Trade Development
and Assistance Act of 1954 (Pub. L. 480).

       Although program loans, or commodity import loans,
constitute     the major portion of U.S. assistance     to Pakistan,
project    loans are a basic component of the assistance         pro-
gram. Project loans to Pakistan at the time of our review
amounted to $523 million       and consisted of 49 AID project
loans totaling     about $303 million    and 20 project   loans,
provided by the former Development Loan Fund, totaling
about $220 million.

       These loans have been made for a wide range of needed
projects,   including  (1) a program designed to eliminate
malaria in Pakistan,    (2) land reclamation        and irrigation
projects,   (3) the construction     of electric     power plants and
related power transmission      lines and distribution        systems,
(4) the modernization    of Pakistan's     railroad    system, and
(5) the construction    or improvement of roads.

      AID loan dollars    are used to finance the foreign ex-
change costs of the projects      for such items as equipment,
supplies,   and technical   personnel.   The local currency costs
are financed either by the borrower or by AID through loans
or grants of U.S .-owned rupees accumulated through the sale
of commodities to Pakistan under Public Law 480.

      The following    schedule shows the dollar and local                                                      cur-
rency assistance    provided for the development projects                                                       dis-
cussed in this report.
                                                                                    Local currency
                                                    Number of                    (doll;o;uiilent)
                     Project                          loans            Dollars                        &g&J



  Malaria eradication          program                        5        $ 24.8           $ 27.1       $ 51.9
  Power facilities:
        Hangla Dam transmission           lines               2          11.2                          11.2
        Lyallpur      thermal plant                           1          16.4              5.0         21.4
        West Pakistan        power distribu-
           tion                                               1          12.5             15.1         27.6
  Salinity      control    and reclamation
    projects                                                4            45.6             35.5         81.1
  Dacca-Aricha        road                                  1             14.0                         14.0
  Coastal embankment                                      -L            4.3             77.9          82.2
             Total                                        g            $128
                                                                        d   8          $160 6
                                                                                        ==Yzz&z      $289  4
                                                                                                      =zzzczk
  aAt an exchange       rate   of 4.76     rupees   for       each $1.00.




                                                                   6
’   f



    AUTHORITY FOR ASSISTANCE
    AND AID RESPONSIBILITY

           The basic authority    to finance capital    activities    in
    foreign countries    is found in the Foreign Assistance Act of
    1961 (22 U.S.C. 2151).      This act provides that, under the
    direction   of the President,    the Secretary of State be re-
    sponsible for the continuous       supervision   and general direc-
    tion of economic assistance.        The Secretary of State has
    delegated this responsibility       to the Administrator,      AID.

          Direct responsibility      for the planning and preparation
    of a capital     activity   is borne by the prospective     borrower
    or grantee.      AID is responsible    for ensuring,    to the extent
    possible,    that all technical     and financial   plans are ade-
    quate and feasible.

           After a loan or grant is made, the principal          role of
    AID in project     implementation     is to keep the activity     under
    surveillance,    to ensure that physical and financial          progress
    is in compliance with all agreements and plans and to ensure
    that project   implementation      is proceeding with due dili-
    gence and efficiency     in conformity     with sound engineering,
    management, and financial       practices.     AID is responsible
    also for working directly       with the borrower or grantee on
    any problem affecting      the progress of the project.

         As a matter of policy,   AID requires    the following       evi-
    dence as a prerequisite   to project  financing.

          1. The economic analysis and such engineering,      financ-
             ing, and operating   plans as may be appropriate     have
             been completed.    These must be in sufficient     detail
             to provide the basis for a reasonably firm estimate
             of the cost of the project.
          2. All financial, management, and technical  resources
             required to complete the activity  will be available.

          3. Adequate financial,  management, and technical     re-
             sources will be available     to operate and maintain
             the activity  in an efficient    manner.
      4. Any required legislative action by the cooperating
         country has been, or can reasonably be anticipated
         to be, taken in time to permit the orderly progress
         of the project.

       With    respect to projects      financed with U.S. owned or
controlled       foreign currency,    it is AID's general policy,
although      not a statutory   requirement,       to apply the same
standards      of economic and technical        feasibility  as those
outlined      above to projects    financed with dollars.

ECONOMICDEVELOPMENTIN PAKISTAJ

       When Pakistan emerged as an independent nation in 1947,
its economic future seemed desperately             difficult.       Virtually
without any industry,        the population     of 90 million       relied
on a primitive     agriculture    for survival.          The  decade   that
followed was a period of relative           economic stagnation.
Beginning in 1960, however, internal            conditions      gradually
were stabilized     and the administration         moved to improve the
economic situation      by establishing      priorities,       matching ex-
penditures    with resources,     and providing       substantial      new
incentives    for exports.

      Pakistan's     economic growth may be illustrated           in part
by the following      facts.

      1. Agricultural     productivity,    by far the most important
         sector of Pakistan's        economy, has increased.       It
         provides 80 percent of the population            with a living
         and, in fiscal     year 1968, accounted for 52 percent
         of the country's      exports.    In West Pakistan changes
         occurring    since 1960 have resulted        in a rapidly     in-
         creasing availability        and willingness     of farmers to
         use modern inputs,       such as fertilizer,       new seeds,
         irrigation    water, and pesticides.         Fertilizer   con-
         sumption increased almost 200 percent between 1965
         and 1968.
      2. Industrial  production has increased at an annual
         rate ranging from 6 to 31 percent since 1951. Al-
         though development has been concentrated      in a
         limited number of industries   and ownership is not
         broadly based, Pakistan is now self-sufficient     in a
         wide range of consumer goods, such as cotton,
         textiles, electric fans and motors, and newsprint.

      3. With the assistance   of AID and other donors, in-
         stalled  capacity for the generation  of electricity
         rose from 114,000 kilowatts   in 1947 to the point
         where the country could supply 730,000 kilowatts           in
         1969.

      4. The gross national  product has risen since 1960 at
         an average annual rate of about 5 percent, or about
         2 percent in excess of the annual population  growth
         rate of about 3 percent.

      The high population     growth rate has absorbed part of
the economic gains, and the country, having one of the
lowest per capita incomes in the world, still           is extremely
poor.   The distance of over 1,000 miles by air and 3,000
miles by sea between the western and eastern provinces of
the country and the sharp differences         in climatic      conditions
and natural resources,     along with other disparities,          always
have created additional     problems.     Further,   political      fac-
tors have limited   the achievement of maximum economic develop-
ment in Pakistan and have had an adverse effect on the
timely implementation     of the projects     discussed in this re-
port.




                                     9
POLITICAL FACTORS AFFECTING
ECONOMIC DEVELOPMENT OF PAKISTAN

         At the time of our review,          Pakistan   was in the last
 year of the Third Five Year Plan (1965-1970).                  The resources
 available     for development,       according     to the original    Third
 Five Year Plan, had been reduced by nondevelopment                 outlays
 for extraordinary       defense measures resulting          from the war
 with India      in 1965 and by the interruption          and reduction      of
 aid flows after      the war.      Droughts     in 1967 and 1968 also
reduced     the resources     available      for development.

       AID has stated    that,    although     Pakistan    expects    to come
fairly    close to meeting     growth and export        targets    estab-
lished    in the plan,   development       expenditures     are expected
to fall     short of the original       plan targets     by at least
20 percent.

        In    March 1969 social       and economic disturbances       resulted,
in the       downfall    of the Government      and the establishment        of
martial        law.   These disturbances,       although  largely   political,
evoked       widespread    expressions     of discontent    about the Govern-
ment's       past failures     to initiate    a program for coping with
social       problems    and income disparities.

        The pressure     of the disturbances,          coupled with the
urgings     from aid donors,      caused the martial            law administra-
tion to revise       the annual plan and the budget for fiscal
year 1970 upward by about 8 percent                 to include      funds for an
attack     on income disparities         and social      problems.        In view
of the shortage        of funds,    earlier      plans did not anticipate
a shift     toward a more socially           oriented    policy     until   the
Fourth     Five Year Plan.       AID has stated        that,      in many respects,
the objectives       of the martial        law administration          are not
dissimilar      from those of the former Government.

       General      elections       were held in the fall           of 1970.      Sub-
sequently,       and preparatory          to convening      a National       Assembly
to draft      a constitution,negotiations              involving       the elected
leader     in East Pakistan,          the elected      leader     in West Pakistan,
and the Pakistani           President      were instituted.          These negotia-
tions    failed     quickly,      and civil     strife    developed       between
Pakistani       soldiers      and civilians       in East Pakistan         in March
1971.      At the present         time the political         situation       in Paki-
stan has deteriorated             considerably,

                                            10
EXTERNAL ASSISTANCE TO PAKISTAN

        Pakistan    has received      large amounts of external            financ-
ing which has had a major effect               on its economic development.
In 1961 a consortium         of Pakistan       aid donors,      consisting      of
several     nations    and including       the United States,         was estab-
lished    under the chairmanship          of the World Bank.            The World
Bank and consortium        countries      sponsor a wide variety           of
projects      in such areas as transportation,              power, and agricul-
ture.     Also significant       foreign      assistance     funds have been
made available       by consortium       members outside        the framework
of the consortium.         Further,      additional      funds have been
made available       by Communist countries.

       During the first     and second Five Year Plans and the
first   3 years of the Third Five Year Plan (July                  1955 through
June 1968), Pakistan      received     external      assistance       amounting
to about $6.1 billion.        The United      States,      having provided
50.5 percent     of total   consortium      assistance       in the Second
Five Year Plan and 41.5 percent           in the first         3 years of the
Third Five Year Plan, has been the largest                 contributor      of
loans,   grants,   and foot! assistance        to Pakistan.

U.S.   ASSISTANCE TO PAKISTAN

       U.S. assistance      to Pakistan     began on a small scale in
fiscal   year 1951.      An expanded economic and technical       assis-
tance program was initiated          in fiscal   year 1952 and was ex-
panded further      in fiscal   year 1955.

Assistance     objectives

         AID economic assistance      objectives     have been revised
to take into account          the demand for an accelerated         attack
on disparities        in income and on social       problems.      The first
priority     objective,      however, still    is to help Pakistan        main-
tain high priority         for economic development        programs    and to
improve economic policies.

         In August 1969 other AID objectives,               in order    of their
priority,     were stated  as follows:

       1. Encourage    Pakistan   to find an appropriate    balance   in
          policy   attention    and in the allocation    of resources

                                            11
/’




               among programs designed to accelerate   production
               within a short period and programs designed to im-
               prove human resources and to reduce economic dis-
               parities  between the East and West provinces.

          2.   Support Pakistan's  efforts  to allocate        a rising
               share of available  domestic resources         to further
               economic and social growth.

          3. Support Pakistan's  efforts    to expand agricultural
             production  in both provinces by giving particular
             emphasis to rice production      in the East, supported
             by a high level of production      incentives,   and by
             seeking a more market-oriented       approach in the West,
             looking toward diversification       of cropping patterns
             and toward the elimination     of production    incentives
             no longer needed.

          4. Encourage continuation     of efforts to place greater
             reliance  on market forces and on private     initiative
             in the allocation    of resources.

          5. Support new initiatives      to improve the quality   of
             family planning,    education, health services,     and
             employment conditions.

          6. Foster   Pakistan's   strong   export   drive.
           AID has stated that these objectives     are also Pakistan's
     stated policy goals.      AID has stated also that continued
     U.S. aid in the form of material resources,       plus selective
     technical   assistance,    is needed to help Pakistan in its ef-
     forts to realize     these goals with respect to both growth
     and social problems.      At the current level of assistance,
     AID considers program lending and the policy issue associated
     with it to be more important than project      lending.




                                      12
                              CHAPTER2

                        SUMMARY
                              OF FINDINGS

       Our review of nine development projects    in Pakistan,
for which AID has provided the equivalent     of about $289 mil-
lion in dollars   and local currency,   showed that the comple-
tion of the projects    had been delayed and that the achieve-
ment of overall   development goals had been limited,     as in-
dicated below.

     --AID has been unable to persuade the Government of
        West Pakistan to provide the financial,            administra-
        tive, and operational         support necessary for an ef-
        fective     long-range malaria eradication        program.     As
        a result,      the program is about 2 years behind sched-
        ule, the incidence of malaria has reached epidemic
        proportions       in some areas of West Pakistan, and ade-
        quate provision        has not been made to prevent the re-
        currence of the disease once its incidence has been
        controlled.         AID and the other participating      organiza-
        tions are agreed that the objective          of complete erad-
        ication    of malaria in Pakistan by 1975 is not now
        realistic,      and a more modest program of malaria con-
        trol,    as opposed to malaria eradication,          is now
        planned.

     --Three salinity     control and reclamation      projects
        (SGARPs) in West Pakistan,     financed with about
        $81.1 million    of U.S. funds, have not fully attained
        their objectives.      Large numbers of tube wells con-
        structed under the projects      have remained unused for
        long periods of time, and completed facilities           have
        not been fully utilized     because the Government of
        Pakistan has not established      an effective     capability
        for operating and maintaining      the projects.

     --Because of delays in completing three AID-financed
        power projects,  increased costs of about $1.9 mil-
        lion have been incurred and the availability  of much
        needed power has been deferred.




                                     13
      --The planned completion date of a highway project       in      *
         East Pakistan has been set back almost 5 years, pri-
         marily because of prolonged administrative    indecision
         on the part of AID and the Government of East Paki-
         stan concerning the scope and financing    of the proj-
         ect.

      --Construction    work on a coastal embankment project   in
         East Pakistan,   which has received about $82.2 mil-
         lion in U.S. funds, constantly    has been behind sched-
         ule because the Government of East Pakistan has not
         provided adequate support for the project.      Some of
         the embankments were damaged severely during the
         November 1970 cyclone that struck East Pakistan,     and
         the need for extensive repairs undoubtedly will fur-
         ther delay the completion of the project.
       There is no question that these projects,     despite the
problems described above, have made significant       contribu-
 tions to the economic and social development of Pakistan.
For example, the malaria eradication     program has spared
hundreds of thousands of persons from the misery of that
disease; SCARPshave resulted in the recovery of several
hundred thousand acres of previously    nonproductive     land and
increased agricultural    production; the AID-financed      power
projects   have provided Pakistan with much needed electric
power; and the coastal embankment project,      when completed,
is expected to increase agricultural    production    in East
Pakistan by an estimated $58 million    annually.

       Although these accomplishments are impressive,         the
benefits    derived from these projects would have been even
greater if AID and the Government of Pakistan had devoted
more efforts     to finding  solutions    to problems as they arose.
Some of the delays and shortcomings encountered in carrying
out these projects      were unavoidable.     Cur review indicated,
however, that most of the difficulties         were of such a na-
ture that they could have been resolved or at least mini-
mized if AID and the Government of Pakistan had taken timely
action to correct      them.

      In commenting on a draft of this report in February
1971, AID did not disagree with our findings    and conclusions
and stated that, in most instances,   the report clearly


                                  14
recognized the problems that had been encountered in carry-
ing out these projects,  as well as AID's efforts   to over-
come them. AID stated, however, that, in its view, the re-
port did not adequately recognize the relationship    that
existed between AID and the borrower in the implementation
of capital  assistances projects or the limitations   imposed
by that relationship.   In this respect AID stated, in part:
     "One problem which the report does not bring out
     is the fact that AID does not directly    manage the
     projects   it finances.   The GOP [Government of Pak-
     istan] and its agencies are, under all existing
     loan agreements, responsible    for the execution of
     projects.    AID must do its best to ensure that the
     GOP does so, promptly and efficiently,    but its
     powers to persuade are not always sufficient      to
     avoid delays of the kind the GAO criticizes.        For
     this reason, we have included in our comments an
     outline   of our approach to project administration."

The outline  referred to by AID includes a discussion     of the
various options that are available    to AID in attempting   to
correct project problems.   It is included in appendix I.

      We are aware of the responsibilities       of AID and the
borrower in the implementation   of capital      assistance    proj-
ects, and these responsibilities    are set forth on pages 7
and 8. We also recognize that, in view of these divided
responsibilitieb,  there are practical     limitations     regarding
the actions that AID can take to correct project weaknesses
and deficiencies.

       In the projects    covered by our review, we noted in-
stances in which, in our opinion,        AID had done all that it
reasonably could have been expected to do to keep the proj-
ects moving forward on a timely and efficient        basis.   We
believe,   however, that, in other cases, AID did not ade-
quately pursue the courses of action that were open to it
or was reluctant     to take appropriate    measures when it be-
came evident that corrective      action was needed.

       For example, as early as 1967, it was evident that the
malaria eradication   program in West Pakistan was in serious
trouble due to inadequate funding-and    other problems.  It


                                   15
was not until the summer of 1970, however, that an overall
evaluation   of the program was made and that a shift in pro-
gram objectives     was proposed.   Also the construction     of a
third AID-financed     SCARPwas undertaken although the various
phases of the work were not properly       coordinated   under the
first   two projects.    Under these circumstances     it seems
that AID, prior to undertaking      the third project,    should
have obtained adequate assurance that the earlier         problems
would not be repeated.

        AID also pointed out that it viewed the financing            of
capital     assistance      projects  not only as a method of trans-
ferring     resources but also as a means of improving the in-
stitutional       structure     and operating efficiency     of the re-
cipient     country.      To accomplish the latter      objective,  the
borrower is given the responsibility           for all the contract-
ing necessary to carry out the project,              subject to certain
approvals by AID.
      AID stated that, although this method of operation          was
not always as efficient     as would have been the case if AID
handled the contracting      function,    it did provide the
greatest  opportunity    for the recipient      government to ac-
quire the technical     and administrative      skills which it
lacked and which it would need if it was to succeed.            The
borrower was responsible       for carrying   out the project,   and
AID's role was to see that it did and that its capabilities
were improved in the process.

       We agree with AID's comments concerning its approach
to the financing        and implementation     of capital   projects.
Obviously the long-range objective            of bringing   about insti-
tutional    improvements would not be adequately served if AID
assumed full responsibility           for planning,    completing,    and
operating     projects.      We believe,   however, that, if institu-
tion building       is to be achieved, AID must assure itself           that
the recipient       is carrying out its assigned functions          in a
competent manner and that the recipient             must demonstrate a
willingness      to accept the counsel and advice that AID prof-
fers.     This requires a degree of cooperation           and mutual un-
derstanding      that has not always been evident in connection
with the projects        that we reviewed.




                                    16
                             CHAPTER3

         OBSERVATIONSON MALARIA ERADICATIONPROGRAM

       AID has been unable to persuade the Government of West
Pakistan to provide the financial,     administrative,     and op-
erational   support necessary to successfully      carry out the
malaria eradication    program.  The reluctance     of that Govern-
ment to fully   support the program has created a wide range
of problems that have hampered various aspects of the pro-
gram, which is about 2 years behind schedule.          Moreover in
recent years the incidence of malaria has reached epidemic
proportions   in some areas of West Pakistan.       Not only has
the Government failed to fully     support the eradication     phase
of the program, but it has failed also to make adequate pro-
vision to prevent the recurrence of malaria once the disease
has been eradicated.

       In view of these problems and of other factors,        all
parties concerned with the malaria eradication         program in
West Pakistan have concluded that the program objective           of
complete eradication       of the disease by 1975 is not realistic.
As a result a program of malaria control,        as opposed to ma-
laria eradication,      is now planned, with the objective     of
ultimately    reducing the incidence of the disease to a level
where it will no longer be considered a serious public
health problem.       Present estimates indicate   that this more
modest objective      can be attained within the next 10 years.

      In contrast   to the results  of the program in West     Pak-
istan, the malaria eradication     program in East Pakistan
generally  was on schedule and the incidence of malaria        gen-
erally was within program criteria.       The success of the    pro-
gram can be attributed    to a large extent to the support      fur-
nished by the Government of East Pakistan.

BACKGROUND
         AND ORGANIZATIONOF PROGRAM

      When the malaria eradication program started in Paki-
stan in 1961, millions  of people were infected with the
disease and thousands died from malaria each year.      At that
time a program of malaria control,  as opposed to eradica-
tion, was being carried out in some areas.     The objective


                                   17
of the control  program was to reduce the incidence of the
disease below the level considered a major public health
problem, rather than to eliminate malaria entirely.

      From 195'2 through 1957 the United States provided
about $1 million    in support of malaria control activities
in Pakistan.     In 1957 this assistance was terminated as a
result of the U.S. position    that programs related to ma-
laria should have as their objective     the eradication   of the
disease and not merely its control.

       In 1958 the World Health Organization    and the Govern-
ment of Pakistan began developing a program for the eradi-
cation of malaria in Pakistan.      In 1960 they approved a
plan of operation   for eradicating   malaria over a 14-year
period, and the program was initiated      in 1961. The World
Health Organization    supports the program by supplying ma-
laria advisory personnel who provide training      and opera-
tional   support and by preparing annual plans of action
which supplement the 14-year plan of operation.

       The program for Pakistan is part of a worldwide effort
being carried out in most of the malarious countries           of the
world under the leadership,      coordination,     and guidance of
the World Health Organization,         In Pakistan and many other
countries,   AID has provided substantial       financial   support
for malaria eradication    activities.
       Since 1962 AID has provided about $25 million          in as-
sistance to the malaria eradication        program in Pakistan,
consisting     of five loans totaling    about $24 million,     and
about $1 million      in grant funds.    In addition   to this dol-
lar assistance,      AID has provided the equivalent     of about
$27 million     in local currency loans and grants in support
of the program.       U.S. dollars have been used to finance the
foreign-exchange      cost of commodities required for the pro-
gram, such as insecticides,       spraying equipment, and vehi-
cles.    U.S.-owned local currency has been used to assist in
financing    the local currency costs of the program.          The
Government of Pakistan has contributed         the equivalent    of
about $24 million       in local currency for the program.
     The objective of the program is to eliminate          malaria
from East and West Pakistan over a 14-year period          and to

                                   18
.
    prevent its reintroduction  into the country.   The activities
    necessary to accomplish this objective  are grouped into four
    separate phases as follows:
          1. Tile preparatory phase, during which time areas are
             mapped for future program operations.
          2. The attack phase, which consists         of spraying    malar-
             ious areas with DDT and starting         surveillance    activ-
             ities.

          3. The consolidation     phase, during which time intensi-
             fied surveillance     is carried out to identify  and
             treat all malaria     cases.

          4. The    maintenance phase, during which the reintroduc-
             tion    of malaria into the country is to be prevented.
             This    is to be accomplished essentially   through nor-
             mal    activities  of the public health service,
                                                                                I$$!
           For administrative     and management purposesI the areas
    of East and West Pakistan were divided into regions and sub-
    ordinate    zones.   These zones were phased into the program
    over a period of years on a planned basis.             According to
    World Health Organization       criteria,     the basic elements for
    success in a malaria eradication          program are (1) total cov-
    erage of the area where malaria transmission             takes place,
    (2) provision     of staff and commodities on a timely basis,
    (3) dynamic administrative       and professional      leadership,    and
    (4) priority    support by the local government.            The success
    of the program largely       depends upon firm adherence to the
    plan of operations      approved by the World Health Organization
    and the Government of Pakistan,

    INCREASEIN MALARIA IN WEST PAKISTAN
            Although the incidence of malaria in West Pakistan was
    still    below the 1960-61 level,    it began to rise in many
    zones after 1967. As of December 1969, 11 of 17 zones in
    the consolidation     phase, or almost one third of all the
    zones in West Pakistan,      reported malaria incidence of epi-
    demic proportions.       The outbreak was such that program of-
    ficials     concluded that most of the 17 zones in the consoli-
    dation phase would have to be resprayed.        Consequently,


                                        19
12 zones that had been in the consolidation         phase reverted        '
to the attack phase in 1970. The following          schedule illus-
trates the magnitude of the problem,

                                Number of cases detected
            Zone              1966    -1967  -1968     1969
      5 and 6 (note     a)        101    127      460       9,824
      8 "   9 (note     a)        103     34       56       4,089
     14 " 15 (note      a)     1,555     153      816       4,229
         Total                 1,759    314     1,332    18,142

aZones were combined in 1968 for        economy purposes.
      We believe that the increase in the incidence of ma-
laria in West Pakistan can be attributed          to a number of fac-
tors,  such  as  (1)  funding   difficulties   that  resulted    in the
premature advancement of some zones from one phase of the
program to another,      (2) lack of proper supervision       through-
out the malaria eradication        program, (3) inadequate develop-
ment of the surveillance       phase of the program, and (4) trans-
mission of the disease from the city of Karachi which, to-
gether with other major urban areas, had not been included
in the program.      These matters are discussed in more detail
in this chapter.




                                  20
FUNDINGPROBLEMSIN WEST PAKISTAN

        The Government of West Pakistan financial      support for
the malaria eradication      program has not been adequate, and
funds have not always been released on a timely basis.           In
some instances economy measures, instituted        by Pakistani
officials     to overcome financial  difficulties,   required de-
viations    from planned operations   that hindered the progress
of the program.

      During the early years of the program, schedules gen-
erally were met and the incidence of malaria declined rap-
idly.    Although some difficulties      were encountered,   the pro-
gram was small enough to function        adequately with minor ad-
justments.     By 1964, however, program costs were exceeding
the amount of local currency that was available,           During
fiscal year 1964 a local currency deficit          was met by post-
poning payment for locally       procured DDT and import and sales
taxes, and by reducing administrative,        supervisory,   and
other personnel.     The phasing of several areas into the pro-
gram in 1964 was delayed because of the shortage of funds,

       As a result of funding difficulties, AID has insisted
that the Government of Pakistan provide assurance that ade-
quate local currency will be supplied to carry out the pro-
gram. The Government's late submission of this assurance
for the third and fourth AID loans delayed the procurement
of insecticides,    As a consequence of the late arrival   of
DDT in 1965, many zones received only one round of spraying
rather than the normal two, and also in 1968 spraying op-
erations were not completed.,

      Pakistan's   third 5-year plan included a proposed bud-
get of $86 million      for the malaria eradication     program.
The war with India, which began in September 1965, caused a
general revision    of program priorities,    and the Government
of Pakistan proposed that the $86 million         budget for the
malaria program be reduced by about 80 percent.            AID in-
formed Pakistani    officials   that the proposed level of funds
for the malaria eradication      program would only be wasted,
because the program could not be successfully         carried out
with such limited financing,

      In August 1966 the Government of West Pakistan decided
to terminate the entire malaria eradication  program,

                                 21
  .-*                                                                  .   *

because the funds available     for the program were insuffi-                  *
cient to complete the program,       After discussions with AID,
an appraisal    committee of the Government of Pakistan re-
considered the matter and decided to continue the program.
It was stipulated,     however, that economy measures be con-
tinued in the implementation      of the program.

        Since 1967 it has been necessary for AID to provide
virtually     all the local currency requirements     of the pro-
gram, because the Government of West Pakistan has been un-
able or unwilling      to meet its commitments to the program.
During fiscal     years 1967-69, AID provided the equivalent      of
about $12.2 million      in local currency for the program while
the West Pakistanis      provided only about $200,000.      The West
Pakistan program budget for this 3-year period amounted to
about $20.8 million.        The Government of West Pakistan has
failed    to provide all the budgeted funds, and the Mission
has not always been able to get that Government to release
funds when needed,       West Pakistan was to provide funds for
the program as needed, after which AID would release Public
Law 480 local currency to the Government of West Pakistan
through the Pakistani       Government.   West Pakistan delayed the
release of rupee funds needed for the malaria eradication
program in fiscal      year 1968 until  informed by the Mission
that local currency funds for all AID programs would be
withheld unless these funds were released.          Because of fund-
ing difficulties      at the time, spraying operations    were cur-
tailed    in a number of areas before the incidence of malaria
was reduced to an acceptable level.

      AID planned to provide the equivalent  of about $4.2 mil-
lion in local currency support for the program during fis-
cal year 1969. Due to an unexpected decrease in the level
of local currency funds generated by Public Law 480 sales,
however, AID was able to provide the equivalent   of only
about $2.1 million.
       The Mission informed us that it agreed that inadequate
financing   on the part of West Pakistan had delayed the pro-
gram. The Mission stated that the financing       difficulties
arose primarily    from the basic problem facing West Pakistan-
attempting   to allocate   available resources among the many
projects   and programs being carried out.     The Mission stated,
in part, that:


                                 22
        .
-   .

                  "The report recognizes that the program has been
                  relatively   successful  in controlling      malaria in
                  both East and West Pakistan and we would like to
                  emphasize that indeed it is this very success
                  that has compounded the financial        problem.     With
                  malaria reduced to relatively      controllable      propor-
                  tions, even in West Pakistan *Jc* the need for in-
                  tensive financial    support to achieve eradication
                  just could not compete with other more obvious
                  programs **,k we have concentrated       our efforts     in
                  every available   way to combat this lethargic          at-
                  titude on the part of the GOWP[Government of
                  West Pakistan],   however, with our own level of
                  support to the program being reduced and the
                  costs of the program constantly       increasing,     our
                  success has been marginal."'
            ADMINISTRATIVE AND OPERATIONALPROGRAM
            DIFFICULTIES IN WEST PAKISTAN

                    AID records show that program officers    have not spent
            sufficient     time in the field to effectively    supervise field
            activities.       Poor supervision is considered to be one of
            the major causes of defective      spraying techniques,     inade-
            quate coverage, and inadequate education of the population
            about the malaria problem.

                    West Pakistan has not developed the necessary surveil-
            lance activities     directed   toward the identification        and
            treatment of all cases of malaria.           Our review of AID and
            World Health Organization      reports indicate      that surveillance
            coverage generally      has been infrequent,     irregular,    and inade-
            quate in scope.      The problems noted on field trips often
            have not been followed up adequately,           Although program
            standards call for examining 10 percent of the population
            for malaria in areas where spraying has been completed, AID
            records show that surveillance        teams are reaching less than
            8 percent.     Area borders have been neglected,and         program of-
            ficials   have noted instances where entire villages           have been
            omitted from the surveillance       activities,
                 Another cause of the increase of malaria in recent
            years has been the transmission    of the disease from the
            city of Karachi, and possibly   from other uncontrolled  ur-
            ban areas not included in the program, into rural areas

                                              23
that were in an advanced stage of the eradication  program.
By 1967 malaria in Karachi had reached epidemic proportions,            '
and the incidence rate had increased in other major urban
areas.
       Subsequent to our review the Mission informed us that
increased attention   had been given to the increase in malaria
cases in the urban areas of West Pakistan.     The Mission
stated that spray coverage had been given to more than one
third of the city of Karachi and that an intensive      program
of case detection   was being carried out with gratifying     re-
sults*    According to the Mission, steps were also being
taken to include all urban areas of West Pakistan under the
malaria program.

EAST PAKISTAN MALARIA ERADICATION PROGRAM

       The malaria eradication   program in East Pakistan gen-
erally   is on schedule, although some relatively    minor prob-
lems have arisen,     Mission records for 1969 show, in con-
trast to the situation     in West Pakistan,  that only three of
the 14 zones in the consolidation      phase of the program in
East Pakistan have failed to meet the program criteria,        We
were informed that these three zones were located near a
country with an ineffective     malaria program and were subject
to reinfection    from migratory workers and others.

       Mission officials   attribute    the general success of the
program in East Pakistan to such factors as (1) greater pro-
gram support from the provincial        government than that accorded
the program in West Pakistan,        (2) good program management,
(3) better f' lnancial   support from the Government, and (4)
mosquitoes in East Pakistan that are less resistant         to the
insecticide    used for spraying.




                                24
.   .

        PROVISIONS FOR MAINTENANCE
        OF MALARIA-FREE AREAS

               In 1960 AID and the Pakistani   Government agreed on a
        plan for the Government to establish     a nationwide    system of
        health services capable of preventing     the reintroduction     of
        malaria after the disease had been eradicated,         The Pakistan
        rural health program was to provide the required facilities
        and organization.     Rural health centers were to be built
        throughout   the country and staffed by professional       and semi-
        professional   workers,   Although this organization     had been
        scheduled to be in operation by 1968, only nominal efforts
        had been made, and there was no overall     capability     for
        carrying out the maintenance function when the program
        reached that stage of development,

               As early as 1964 some concern was expressed by Mission
        personnel that the rural health program would not have at-
        tained the capability   to carry out the maintenance function
        when the program reached that stage of development.      Never-
        theless in 1964 AID decided to leave the development of the
        required health services to the Pakistani    Government and
        other donors and terminated    its support of the program,

              The fifth     AID dollar loan agreement for the malaria
        eradication     program, signed in June 1968, required that the
        Government of Pakistan submit a plan for implementing the
        maintenance phase of the program,        In January 1969 the Gov-
        ernment furnished      its plan, and, at the time of our review,
        both the West and East Pakistani       Governments were in the
        process of establishing       programs to carry out the mainte-
        nance function.
           Due to delays in implementing     the malaria eradication
    program, the lack of an adequate malaria maintenance organi-
    zation has not yet materially   affected    the program.    In one
    zone in East Pakistan,   where the eradication     phase has been
    completed, the maintenance function      is being carried out as
    part of the regular program.    If the program continues       to
    progress,  an additional  nine zones in East Pakistan will be
    ready for the maintenance phase by the end of 1972.

              As stated previously it has been necessary to respray
        a large area in West Pakistan as a result of the outbreak of

                                         25
malaria in that province,      and consequently    there is no im-
mediate need for a maintenance capability        in West Pakistan.
In both provinces,     however, the organizational      structure
that is presently    carrying    out the malaria program will have
to assume responsibility      for the maintenance function until
an adequate health service structure       is created.

        Subsequent to our review the Mission informed us that
the Government of Pakistan had been giving increased atten-
tion to the infrastructure    for health services which even-
tually would be responsible     for carrying out the maintenance
function   of the malaria program.    The Mission stated that:

       "Currently   a Government Commission is undertaking
       a complete review of all health services for the
       purpose of arriving    at a final design for the
       health infrastructure.      Obviously this action is
       not the entire answer since the perennial        prob-
       lems of budgets, facilities      and staff training
       must also be faced.     However, with an acceptable
       plan in hand, attention     can be focused on the
       solution   to the problems."

PLANNEDCHANGEIN SCOPEOF PROGRAM
       Late in 1969 AID officials     were in general agreement
that, in view of the problems described above, a general
reevaluation   of the malaria eradication      program in West
Pakistan was in order.     In the summer of 1970, a joint
strategy review team, composed of representatives        of AID,
the Government of Pakistan,       and the World Health Organiza-
tion, was appointed to review the status of the program and
to make appropriate   recommendations as to its future course,
        In September 1970 the review team completed its work
and issued a report on the results      of its review.     The re-
view team concludedthat,although       the program had been of
great value, because of the financial        problems and other
factors   it was doubtful    that the objective    of complete erad-
ication   of malaria by 1975 could be attained.

          The review team suggested that the present strategy of
the program be changed to a more moderate and economically
realistic     strategy  in line with the resources that Pakistan


                                 26
was able to provide.            The team suggested       also that the new
strategy    have as its objective           the eventual     eradication       of
malaria   but without        time limit.       The team expressed        the
opinion   that the incidence          of malaria could be reduced
within 10 years, to a level where it will no longer be con-
sidered   a serious public health problem, if some of the more
important    administrative,        operational,      and technical        prob-
lems facing     the program are eliminated.

        AID, the Government of Pakistan,       and the World Health
Organization    are in general    agreement   with the recommenda-
tions of the joint     review  team, and it is now contemplated
that the suggested     revised   program will    be placed into ef-
fect.     Under the revised program the immediate objective
will   be the control    of malaria, as opposed to its eradica-
tion.

CONCLUSIONS

          The problems    encountered     in carrying         out the malaria
eradication     program    in Pakistan        have resulted      from   insuffi-
cient governmental program support, particularly            its failure
to provide financial,     administrative,  and operational          sup-
port as agreed.     This lack of governmental      support,      in turn,
undoubtedly   stems from both the limited     financial       resources
of the country and its somewhat lukewarm interest             in the
program.    Any successful malaria eradication        program must
have the unqualified     support of the local government.

        The most serious defects in the program for Pakistan
have been    the neglect of urban areas, the inadequate sur-
veillance   of the sprayed rural areas, and the very slow de-
velopment   of rural health organizations         to maintain eradi-
cated conditions.         In recent years the incidence of malaria
has risen alarmingly        in treated   areas, and, in the absence
of a maintenance     structure,      it may be expected to rise in
other areas.

          Until  about 1967 the objectives    of the program gener-
ally     had been attained,   although   at a slower rate than hoped
for.      The program has saved many thousands      of lives and
spared hundreds of thousands of people the misery of ma-
laria.  Viewed in these very humane terms, the program has
produced immeasurable benefits.  In the future,  however, the

                                         27
question must be faced of whether the substantial     reduction
of malaria in Pakistan can be maintained over a long period
or whether the high rate of malaria will return because of
inadequate eradication   coverage and maintenance facilities.
The answer depends primarily    on whether Pakistan is able and
willing   to provide the resources necessary for the success-
ful completion of the program.

        After a period of postponing confrontation         with these
basic issues, by attempting        to correct the deficiencies       in
financial    and organizational      support, AID recognized    that
 the malaria eradication      program was at a critical     stage.
In a recent evaluation       of the program, AID and the other par-
ticipants    concluded that, in view of the problems facing the
program, the objective       of complete eradication    of malaria by
1975 was unrealistic.
        The evaluation    team suggested that the program be
brought more nearly      into line with the limited resources
that Pakistan was able to provide and proposed that a pro-
gram strategy of malaria control,        as opposed to malaria
eradication,    be adopted.    All parties are now agreed that
this more modest objective      is the best that can be attained
under present conditions,      and steps are being taken to im-
plement the new strategy.

        We believe that the recent evaluation      of the program
was long overdue and that under the circumstances        the pro-
posed approach to the malaria problem is a realistic         one.
We believe,    however, that it is essential     that the extent
and direction     of future U.S. assistance    to the malaria pro-
gram be based on a realistic      appraisal  of the Government of
Pakistan's    intentions   and capabilities  to provide support
for the program.




                                 28
                               CHAPTER4

                          IMPLEMENTATIONOF

           SALINITY CONTROLAND RECLAMATIONPROJECTS

       AID has provided the equivalent     of about $81.1 million
in assistance    to SCARPs in Pakistan which, although suc-
cessful in many respects,     have not fully attained     their ob-
jectives.     Delays in the implementation    of the projects     and
the lack of a more effective     operation and maintenance pro-
gram have been the major causes for reduced benefits          from
these projects.      Many of the problems were originally       ex-
perienced during the early stages of the program and, in
our opinion,    could have been eliminated    or minimized in
subsequent projects.
PURPOSEOF SCARPPROGRAM
       In earlier    times land in West Pakistan was irrigated
by canals which carried water only during periods of high
discharge from the rivers.           The British    built artificial
dams on the rivers to provide water for most of the year
through tens of thousands of miles of canals.                This system
eventually    resulted    in raising    the water table and water-
logging the land and concentrating            salt deposits in the up-
per layers of the soil through evaporation.
       The objectives     of the SCARPprogram are to correct
this condition,      by lowering the water table and leaching
the high salt content of the soil, and to provide additional
water for irrigation       purposes.      The reclaimed land and the
additional    water for irrigation       provided by the SCARPpro-
gr=,    in conjunction     with improved agricultural          practices,
have resulted     in increased agricultural         production     in West
Pakistan.
        The basic components of a SCAM?are the tube wells--
drilled    wells, cased and screened and usually gravel
packed-- and a water distribution      system.   Tube wells are
drilled    some 200 to 450 feet deep to provide pumped water
to increase the intensity     of irrigation    and to support the
leaching process needed to reclaim land already affected
by salination.     When the groundwater is salty and suffi-
cient surface water is available,        they are pumped into the


                                   29
                                                                               .
canal at a rate     calculated     to provide     a mix acceptable      for
irrigation.
        As early as 1954 AID had provided limited           grant as-
sistance to Pakistan for comprehensive investigations               of
groundwater.       AID's principal     assistance    to the reclamation
program has been four loans, totaling            about $39.2 million,
which are directly       related to three individual        SCARPs.
AID also has furnished         $6.4 million    in grant funds in sup-
port of the SCARPs.
        In addition    to this dollar assistance,        AID has pro-
vided the equivalent        of about $35.5 million       in local cur-
rency in support of the first          two SCARPs. A $10.7 million
AID loan for a fourth SCARPwas cancelled in June 1969 at
the request of the Pakistani         Government.       Because of higher
priorities,      the Government apparently       did not have the
local currency funds necessary to carry out the proposed
project.
      Other countries     have assisted in financing     SCARPs.
SCARP III was financed by Yugoslavia and Germany, and, al-
though the proposed AID project        in the SCARPIV area has
been cancelled,     Yugoslavia is financing    a project   in the
area.    The following    table shows the number of tube wells
constructed    or under way and the source of financing.

                                             Source of financing
                        Number
                        of tube      Paki-      United    Yugo-
      Project            wells       stan       States   slavia      Germany

SCAFP I                   2,043       248        1,795       -          -
SCAIW II (note    a)      2,448        -         1,934      514         -
SCARPIII                  1,585       520                   542        523
SCAFP IV                  -- 935       -                    935         -

    Total                 7,011      768         3.729   --1.991       $23
aAID assistance  in the SCARPII area is provided                   to SCARP
 IIA and SCAPP IIB.
       Since the inception   of the SCARPprogram in 1959, sig-
nificant    progress has been achieved in the recovery of non-
productive     land and in agricultural      productivity.   The
success of SCARP I in providing         water for irrigation
stimulated     the development of privately     owned tube wells,
which in turn provided additional        water for irrigation.
       The contribution    of the increase in productive        land
and irrigation     water-- together with the additional       input of
other resources,      such as improved farming techniques,         bet-
ter seeds, and increased fertilizer        use--has generated a
major breakthrough      in food production    in West Pakistan.
       Recent statistics,     compiled by the Government of Paki-
stan, relating     to the achievements of SCARP I showed that
(1) of the 425,000 acres planned for reclamation           in the
SCARPI area, 259,000 acres had been reclaimed by the 1967-
68 crop year, (21 the water table level had been reduced
below the critical       stage for most of the land in the area,
(3) the cropping intensity        had increased from the 1959-60
figure of 76 percent to 103 percent (planned intensity             is
110 percent),    and (4) the monetary return of major crops
had increased about 230 percent after the SCARP I program
started.
       These are impressive achievements.        Nevertheless    the
dimension of growth attributable         to the SCARPscould have
been somewhat greater if the problems described in the fol-
lowing sections had been surmounted.




                                  31
PROJECT IMPLEMENTATIONDELAYS

       Large numbers of the tube wells constructed      under the
AID-financed   SCARPshave been idle for long periods of time.
These delays in utilizing    completed wells resulted primarily
from the failure   to fully  coordinate the electrification      and
connection   of the tube wells with the completion of construc-
tion.    Damage to tube wells from vandalism and deterioration
has occurred during the long periods of inactivity.

SCARPI

        Since February 1959 AID has provided about $15 million
in development loan funds and the equivalent         of about
$10.6 million      in local currency for the installation     and
electrification      of about 1,800 tube wells in the SCARPI
area of West Pakistan.         The project was not fully operative
until     about 2-l/2 years after the scheduled availability
date, because neither       electricity   nor water courses were
completed on schedule.

      The original      target date for the completion of SCARPI
was January 1962. All tube wells, originally          scheduled for
completion in June 1961, were constructed        by November 1962,
but the electrification        work was not completed until   June
1964. As a consequence a large number of the tube wells
remained idle for as long as 18 months and others were oper-
ated with temporary power connections until         permanent power
lines were completed.
        The delay in the completion of the project was caused
primarily      by the fact that the construction   work and the
electrification      work were undertaken separately    and that the
two phases were not properly coordinated by the government
agency responsible       for implementing the project,    The non-
availability      of power to the grid system which served the
project area also delayed the full utilization         of the proj-
ect.
       Inadequate watercourses were also a problem under
SCARPI.      The failure   of water users to improve the water-
courses promptly contributed         to the operating difficulties.
The Pakistani     Government found it necessary to take over the
construction     of the distribution     works that connect the

                                 32
-   .

        tube wells to the watercourses,  although it had been expected
        that the water users would perform this work.

        SCAR-PII

              In March 1963 AID and the Pakistani    Government signed
        a loan agreement under which AID provided about $9.5 million
        to assist in financing  the construction    and electrification
        of 884 tube wells in the SCARPIIA area.       AID provided also
        the equivalent  of about $24.9 million    in local currency for
        this project.
               This project  experienced implementation    delays similar
        to those encountered in SCARPI. Although the tube wells
        were scheduled to be completed in April 1966, they were not
        actually   completed until    1 year later.  The electrification
        of the tube wells was not completed until       September 1968,
        and, at that time, only about 375 of the 884 tube wells
        could be utilized    since the watercourses   for the remaining
        wells had not been completed.

              As a result of these delays, many of the tube wells
        constructed  under the project remained idle for as long as
        28 months.    According to AID about 175 tube wells in the
        SCARPIIA area still    were not being fully utilized as of
        September 1970.

              As in the case of SCARPI, the delay in completing
        SCARP1I.A on schedule resulted primarilyfromthe         failure    to
        fully coordinate  the construction  and electrification         work.
        Also, as in the case of SCARPI, some of the watercourses
        for SCARPIIA were not completed at the time the tube wells
        were electrified  because the water users had not performed
        this work.

                In December 1966 AID made a $14.1 million     loan to Paki-
        stan to assist in financing      the installation  and electrifi-
        cation of about 1,050 tube wells in the SCARPIIB area of
        West Pakistan.     The Government of Pakistan was to provide
        all the local currency required for the project.          The proj-
        ect is currently    under construction    and the estimated com-
        pletion    date is late in 1971.

             Under SCARPIIB,     AID took steps to prevent      the recur-
        rence of the problems    that had been encountered      under the
                                          33
two previous SCARPs. Nevertheless         our review showed that
delays and difficulties  similar to those experienced on the
two previous SCARPswere being encountered in the tube well
construction  and in the electrification       work.      After the in-
ception of the project,  the construction        starting     date for
tube wells was delayed about 10 months, and the estimated
completion date of the electrification        work was set back up
to 18 months beyond the original       target date.

      The construction     delay was due partly to the delay in
the award of the construction       contract.    The electrification
setback was caused primarily       by a 6-month delay in signing
the engineering    services contract,      a 6-month delay in decid-
ing the number of circuits       to be installed    on the transmis-
sion lines, and a 6-month delay for the necessary resubmis-
sion of tenders for transmissions        lines.
NEED FOR A MOREEFFECTIVE
OPERATIONAND MAINTENANCEPROGRAM
        Although the SCARPprogram has been in existence since
1959, AID has not been able to persuade the Government of
Pakistan to establish      an effective    program for the operation
and maintenance of completed SCARPs. AID has continued to
provide funds for the construction         of SCARPs, although AID
officials     have doubted that the Government would have trained
personnel and sufficient      funds to effectively     operate and
maintain the projects     after their completion.       The lack of
an adequate program for carrying out this function           has re-
sulted in the failure      to fully utilize     the completed proj-
ects.
     When the AID loan for the construction    of SCARPI was
made in 1959, Pakistan did not have an organization     equipped
to carry out the operation   and maintenance function   and no
plans were made for establishing   such an organization   when
the project was completed.
      According to AID the problem was further     complicated
by shifting    the responsibility   for operation and mainte-
nance of the project     among several agencies of the Govern-
ment, with the result that no one agency had the proper
budget support or the trained personnel to carry out the
operation   and maintenance function for SCARPI.      Subsequent

                                  34
shifting    of operating   responsibility   for   SCARPIIA produced
similar    results.

      Operating problems have been encountered since the
tube wells for both SCARPI and SCARF'IIA were placed in
operation and have continued up to the present time.      For
example,  there have  been significant  numbers of motor  burn-
outs as the result of unstable power and of improper opera-
tion of the tube wells in SCARPI. During the period from
January 1966 through June 1969, over 2,200 motor burnouts
were reported by the SCARF'I operating agency.     Although we
were unable to ascertain   the cost involved in repairing   this
number of motors, we did note that late in 1967 the esti-
mated cost of rewinding motors had ranged from $150 to $200
each.
       The motors that have been acquired for SCARPIIA and
SCARPIIB are equipped with internal      protective    devices de-
signed to prevent the tube wells from operating when the
power is defective.    AID records indicated,      however, that
motor burnouts were still   occurring  because farmers and un-
trained operators were circumventing     these controls     to keep
the wells operating,

      The lack of a sufficient    number of vehicles    also has
been a problem,    Both Government and Mission officials        have
stated that the lack of motor vehicles has contributed          to
the operation   and maintenance problems of the completed
SCARPS. Although AID has authorized      a $3.3 million     loan that
will finance vehicles    for operation  and maintenance purposes,
the loan agreement has not been signed.

       In an effort    to correct the operation   and maintenance
problems of completed SCARPs,both AID and the Government
have provided funds.        In January 1964 AID made a $750,000
loan to Pakistan for the acquisition       of materials   and ser-
vices required for the operation       and maintenance of the AID-
financed tube wells in the SCARPI area.          AID also provided
the equivalent      of about $126,000 in local currency for the
operation   and maintenance of the SCARPI project.

     In June 1970 AID authorized   an additional loan of
$3.3 million for the operation   and maintenance of SCARPs.
The proposed loan was to be used to provide consulting

                                    35
                                                                        ,
services,  participant training, and operating and mainte-
nance equipment for the SCARPs, As of March 1971, however,
the loan agreement had not been signed.

CONCLUSION

      The success of the three AID-financed        SCARPshas been
hampered by delays in completing the projects        and by the
lack of an effective     program for operating and maintaining
the projects    after they have been completed.      We believe
that, although some of the problems encountered with SCARPI
may have been unavoidable,      these difficulties   could have
been eliminated     or minimized on SCARPIIA and SCAPPIIB.

      AID and the Pakistani   Government, however, did not take
the necessary actions to properly coordinate     the various
phases of the construction    work and to provide an adequate
capability    for operating and maintaining  the completed proj-
ects.     As a result the same problems that were encountered
on SCARPI have recurred to varying degrees on the two sub-
sequent SCARPs.

     It    appears that AID has somewhat belatedly       taken mea-
sures designed to correct these problems.          The loan agree-
ment for the proposed SCARPIV, which was canceled at the
request of the Government of Pakistan, provided that the
loan funds not be made available        until the Government gave
assurance that the various phases of construction          work would
be completed promptly and developed an effective          plan for
operating    and maintaining    the project after it had been com-
pleted.     AID also recognized the need to resolve the opera-
tion and maintenance problems for the completed SCARPs, and
authorized    an additional   loan of $3.3 million    for this pur-
pose.
       We believe that, if Pakistan is going to satisfactorily
overcome the operation    and maintenance problem, additional
effort   should be given to developing within the Government
of Pakistan the managerial and technical     skills needed to
carry out an effective    operation and maintenance program.




                                 36
                                   CHAPTER5

            CONSTRUCTIONOF ELECTRIC POWERFACILITIES

        Our review of three electric         power projects       in Paki-
stan,    for which AID provided       the equivalent       of about
$60.2 million       in assistance,    showed that the projects           had
not been completed        on schedule    and thereby     the availability
of urgently      needed power had been delayed          and project      costs
had been increased.          Many of the difficulties        impeding
progress     on these projects      were administrative        and, in our
opinion,     could have been avoided       or minimized      if greater
efforts     had been made by AID and the Government             of Pakistan
to resolve      the problems     more promptly.

        The delays       in the completion         of these projects       resulted
in costly     restrictions        on both industrial         and agricultural
production,      including      the deferment        of electrical      service
to the AID-financed           SCARPs.      (See ch. 4.)        During    1967,
1968, and 1969, the generating                capacity    of the West Pakistan
main grid system failed             to meet the requirements           by about
15, 10, and 4 percent,            respectively.         These deficits       could
have been reduced substantially                 if the construction        of the
projects    discussed       below had been completed            on schedule,

        Increased        costs of about $1.7 million            were incurred
because the contracts              of consulting      engineers     had to be
extended.          Also it was necessary          to ship by air spare parts
urgently        needed for the project           at a cost of about $170,000.
Further        a greater     amount of more expensive           steam-generated
power is being used than would -be the case if the transmis-
sion facilities           provided      for in one project       were completed
and if available            hydroelectric      generating     units   could be
fully     utilized.

POWER DEVELOPMENT IN WEST PAKISTAN

      The United     States  has participated       in Pakistan's     ef-
forts  to increase      its generating     capacity   through     a number
of development     loans for the power program in West Pakistan.
AID and its predecessor        agencies    have made the following
loans to West Pakistan       for the development        of power.



                                          37
                                                    Amount
                                                  (millions)
          Main grid transmission     lines          $11.8
          Secondary transmission      lines          21.1
          Quetta thermal power station                6.0
          Lyallpur   thermal plant                   18.1
          West Pakistan power distribu-
            tion system                               12.5
          Gas turbines                                 2.8
          Mangla transmission    lines I               8,2
          Mangla transmission    lines II              3.7
               Total

       The United States also has pledged a contribution           of
$417 million     to the Indus Basin Development Fund which         is
managed by the World Bank. The fund is being used for              the
development of power and water resources for industry             and
agriculture    in West Pakistan.

       We have reviewed three of the above projects--the            Man-
gla transmission    lines,     the Lyallpur    thermal   plant,  and the
West Pakistan power distribution          system--for    which AID has
approved four dollar       loans totaling     about $42.5 million.
AID has provided,     in addition    to this dollar assistance,
the equivalent    of about $20.1 million         in local currency
support for two of these projects.            The results    of our re-
view of these three projects        are set forth in the following
sections of this chapter.

MANGU DAM TRANSMISSIONLINES

      AID has made two loans totaling       about $11.9 million
to finance the construction       of transmission      lines and asso-
ciated substations      and equipment necessary to connect the
first   four generating    units of the Mangla Dam to the West
Pakistan main power transmission        and distribution      system.
The first   AID loan amounting to $8.2 million           was made in
January 1966, and a second loan for $3.7 million             was made
in February 1968.

       The Mangla Dam is the principal    component of the
multipurpose   hydroelectric, irrigation,    and flood control

                                  38
project   in West Pakistan       that is being financed                     by the Indus
Basin Development    Fund at an estimated        cost of                   $400 million.
The Mangla Dam project      does not provide      for the                   construc-
tion of transmission     facilities      to connect   the                  generating
units   at the dam to the West Pakistan         main grid                   system.

          In February       1965 Pakistan         submitted       a loan application
to AID that requested              financing       for all the transmission
facilities        required      for the first          four generating          units     at
the Mangla Dam.             During     its   review      of  the   loan    application,
AID decided         to finance       only that portion            pertaining        to the
first       three generating         units     and postponed         consideration          of
the portion         applicable       to the fourth          unit until       financing
for that generating             unit had been arranged.                 Financing       for
the fourth        unit    subsequently         was arranged        under Japanese
credits,        and, in February           1968, AID made a $3.7 million
loan to finance           the transmission           lines     for the fourth         unit.

      So that the transmission      facilities     would be ready when
the Mangla generating      units became operational,          the facili-
ties   for the first   two units  at Mangla were scheduled             to be
completed    by March 1967 and the transmission          lines     for the
third    and fourth  generating  units      were scheduled      for comple-
tion by March 1968 and December 1969, respectively.

        In carrying  out the project,    AID considered         it neces-
sary that every effort      be made to meet the scheduled             comple-
tion dates to provide      for the projected      maximum power de-
mands for 1967, 1968, and 1969.         The project        schedules    were
not met, however,     and the transmission      facilities        were not
available    when the Mangla generating      units      became opera-
tional.

       The first      two generating     units       at the Mangla Dam were
commissioned      for commercial       operation        in July 1967, the
third   generating      unit  in March 1968, and the fourth            unit in
June 1969.       Because of delays        in the construction        of the
transmission      lines    and related      facilities:

        1. The transmission    facilities                  for the first    two Mangla
           generating    units were not                completed   until   January
           1968, about 6 months after                    the two generating     units
           became operational.



                                               39
       2. The transmission    lines    for the third   Mangla               unit
          were not completed     until    about 2 years after                the
          generating    unit was completed.

       3. The transmission       facilities     for the fourth    Mangla
          unit  could not be utilized          until March 1970 although
          the fourth    generating        unit became operational    about
          9 months earlier.         All work relating     to the lines
          for the fourth     Mangla unit was to be completed           by
          the end of fiscal       year 1971.

        During the period         of time between the completion                 of the
generating       units    and their    related   transmission        facilities,
power from the Mangla Dam could be utilized                   only to the
extent     that existing       transmission    lines    could be used.             Ac-
cording      to AID, during       the last 6 months of 1969, Mangla
was operating          at only about 70 percent       of its generating
capacity       because of the lack of transmission             facilities.

        The delay in completing       these transmission    lines has
resulted    in increased     costs of about $640,000.       We estimate
that the dollar      costs applicable       to that part of the project
financed    by the first     AID loan have been increased        by about
$550,000    because of the necessity          for extending the consult-
ing engineer's      contract   until    the work was completed.

         The Mission     has estimated    that difficulties         encountered
in part of the project          financed    by the second AID loan have
resulted     in a delay of 8 months in the completion                of the
project     and an increase       of about $90,000       in the cost of the
project.       About $70,000 of the increased            cost was caused by
the necessity        for extending     the consultant's       contract.

       Although    part of the delay in completing       this project
could be attributed       to the 1965 conflict    between India       and
Pakistan,     other problems    under the administrative      control
of AID and/or      the Pakistan   Government were the major causes
for the delay.

       For example,   the first    AID loan was authorized     in June
1965.    The loan agreement was not signed,        however,   until
January   1966, primarily     because of the war with India which
began in September      1965, and the initial    letters    of commit-
ment for engineering      services    and for the purchase    of

                                          40
material    were not issued until        September    1966.  Consequently,
approximately     9 months elapsed       from the time the loan agree-
ment was signed until       arrangements      could be started     for
acquiring     the necessary    technical     services   and material.

        The completion       of the work financed          by the first       AID
loan was delayed        further    when the Government             of West Paki-
stan decided       to terminate       the contract       of one of the con-
struction     contractors.        AID had approved         the award of this
contract    in November 1967 even though it was aware that
the contractor        was experiencing        financial      difficulties       and
that the consultant          engineer    retained       by the Government        of
West Pakistan        had recommended that the contract                  be awarded
to another     firm.

      According to the consulting      engineer,      the contractor
was unable or unwilling    to properly     perform      the work, and,
in November 1968, the responsible       Government        agency directed
the contractor  to stop work.     In March 1969 a contract            for
the work was awarded to the construction          firm originally
recommended by the consulting     engineer.

        When the second AID loan was authorized          in June 1967,
AID anticipated        that the loan agreement would be signed in
July 1967,      that   all  procurement    in connection  with the
project     would be completed       by the end of 1968, that all
construction       would be completed      by the end of 1969.

       The loan agreement was not signed until              February        1968,
however,     and, at the time of our review,            the estimated
construction      completion     date had been extended.          The major
reason for the delay centered            around the procurement         proce-
dures to be followed         in connection      with the loan.        Until
late   in 1969 these procedures          required    AID/Washington         ap-
proval     of each purchase      order prior      to the issuing      of a
letter     of commitment     covering    the applicable     material.

        The Pakistani       agency responsible         for implementing           this
project    originally       submitted   a request        for a blanket        letter
of commitment         for the transmission        lines     and substation         ma-
terials     in September       1968.  AID/Washington          ultimately        took
the position       that a separate      letter      of commitment        would be
issued for each procurement           contract        or purchase       order
after    copies were made available            for incorporation           in the
letter    of commitment.
                                          41
                                                                    .
      After a considerable    amount of correspondence    among
the Mission, AID/Washington,     and Pakistan in regard to this
matter, AID/Washington,     in October 1969, revised its proce-
dures so that blanket letters      of commitment could be issued.
In November 1969 one letter     of commitment was issued to
cover the purchase of material      as originally  requested in
September 1968. At the time of our review, a firm terminal
disbursement date for this loan had not been established.
The Mission indicated,     however, that December 1971 might
be a realistic  date.




                                42
        .   *

    .
            LYALLPUR THERMALPLANT

                   In July 1964 AID entered into a $18.1 million           loan
            agreement with the Government of Pakistan to assist              in fi-
            nancing the construction      of a 132,000-kilowatt      gas-fired
            steam generating    power plant and ancillary       facilities      at
            Lyallpur,   West Pakistan.     The plant was to be equipped wit1
            two 66,000-kilowatt    gas-fired   steam turbine units.
,
                   The local currency costs of the project were to be
            funded by the Government of Pakistan in an amount equivalent
            to about $9 million,     of w'hich AID had directly  provided
            about $5 million    through Public Law 480 local currency
            loans.    The purpose of the project was to meet the antici-
            pated demands prior to the availability       of power from the
            Mangla Dam.

                   Although the first   generating unit was scheduled to be
            operational    by September 1966 and the second unit by the
            end of December 1966, the units were not completed until
            November 1967 and December 1967, respectively.          These de-
            lays have caused, in addition       to the loss of urgently    needed
            power, additional    project costs of about $620,000 as a re-
            sult of having to extend the consultant's       contract    for the
            additional    period of time required to complete the work.
            Costs of about $170,000 also were incurred for the air ship-
            ment of spare parts needed to keep the plant in operation.

                   In a report dated October 1966, the engineering        con-
            sultants    stated that the principal     reason for the delay in
            construction     was late procurement of equipment and supplies,
            caused by letters      of credit and ammendments to them not hav-
            ing been issued on a timely basis.         The report indicated
            that many weeks had been lost in the shipment of materials
            because the supplier would not ship before the establish-
            ment of acceptable      letters  of credit by the bank involved.
            The project also was delayed to some extent by the 1965 war
            with India and extensive damage to one of the turbines that
            occurred during shipment.

                  The operation of the plant also has been impaired by
            the lack of a formal training   program for Pakistani   employ-
            ees , although the project  consultant provided some training
            in accordance with the terms of his contract,      In April 1968

                                              43
                                                                              .
the Mission reported       that the Government agency operating
the plant lacked the       maintenance personnel with the skills
necessary for repairs       requiring   only normal maintenance pro-
cedures.    Although a     formal training   program had been con-
sidered for some time       and although funding had been pro-
vided, formal training        had not been started at the time of
our review.

      The cost of operating  the plant was increased by the
need to ship spare parts by air because stocks on 'hand were
inadequate.    In October 1969 AID employees reported that
only about 35 percent of the required spare parts stocks
had arrived at the plant.    During our review the Mission ad-
vised us that all spare parts would be delivered     shortly.

      AID records indicated      that these difficulties        had been
caused, in part, by the failure        of the project      consultant
to consider his contract       responsibilities      to include the
coordination    of all operations     for the successful       completion
of the project,     We noted that the responsible          Government
agency had expressed dissatisfaction            with the consultant      in
regard to the provision      of spare parts.        Also, in a Mission
audit report issued in June 1968, it was stated that a rea-
sonably definitive     contract possibly could have avoided or
minimized the difficulties       encountered in the training          pro-
gram.

WEST PAKISTAN POWERDISTRIBUTION SYSTEM

       In December 1964 AID entered into a $12.5 million          loan
agreement with the Government of Pakistan to assist in fi-
nancing the dollar     costs of rehabilitating       and expanding the
West Pakistan main power distribution          system to serve an ad-
ditional   200,000 customers.      The local currency costs were
to be provided by Pakistan in an amount equivalent           to about
$15.4 million,     of w'hic'h AID had directly    provided about
$15.1 million    in Public Law 480 local currency loans.

       This project has undergone a number of implementation
delays and difficulties,    and completion of the project is
currently   about 4 years behind schedule,     AID originally  es-
timated that all deliveries    of AID-financed   commodities un-
der this loan would be completed by the end of 1965, The
Mission informed us, however, that the delivery       of all suc'h

                                    44
commodities would not be completed until early in 1970. As
a result of these delays, the cost of the project has in-
creased by about $435,000 because of the necessity     for ex-
tending the consultant's  contract and the objective     of pro-
viding an improved and needed power distribution     system has
been delayed,

       AID records showed that the earlier      delays were due
primarily   to the reluctance     of the Pakistani   Government to
provide as much detail     in its implementation     plan for this
project as AID wanted.      There was an extensive exchange of
correspondence    among the Mission, AID/TVashington, the Gov-
ernment, and the consultant       before this matter was resolved
when AID reduced the amount of detail that the Government
was required to furnish      in its plan.

        Some of the more recent administrative    problems related
to the procurement of equipment.      Mission files     showed that
much time was lost in correspondence      among Pakistan,    the
Mission, and AID/Washington regarding       the extension of the
loan, the amendment of letters    of commitment, and the pub-
lication   of bid invitations.
       To reduce procurement time and to terminate          loans more
promptly,     efforts  have been made to limit the period of time
extensions.       The responsible  parties disagree,      however, on
the time required for procurement,           Furthermore,   AID records
indicate    that short extensions,     particularly     when the ap-
proval of the extension is delayed, do not allow enough time
to carry out the procurement tasks.           This causes even more
delays.
       In August 1969 the Government reported that 90 percent
of all AID-financed     equipment for the project had been or-
dered, that 85 percent had arrived,      and that a major share
of the material   and equipment would soon be installed.     All
deliveries   have now been made and the loan has been fully
disbursed.    (Additional    agency comments may be seen on pp.
76 and 77 of this report.)

CONCLUSION

     The recurring pattern      of difficulties      encountered on
these three power projects      resulted     in increased project

                                  45
                                                                     .
costs and delays in the availability       of urgently    needed
power.    Both AID and the Government of Pakistan considered
it essential     to complete these projects    on schedule to meet
the expanding power requirements     of Pakistan.      Since most
of the difficulties     were of an administrative     nature, we
believe that many of them could have been avoided or mini-
mized if AID and the Government had placed greater emphasis
on resolving     these problems on a timely basis.




                               46                  I
                              CHAPTER6

       IMPLEMENTATIONOF THE DACCA-ARICHA
                                       ---ROADPROJECT
      In June 1964 AID authorized       a $14 million   loan to as-
sist in financing     the construction    of a %-mile highway be-
tween Dacca, the capital      of East Pakistan,     and Aricha, a
port on the Brahmaputra River,         The loan agreement was
signed in January 1965; AID estimated in 1970 that the proj-
ect would not be completed until June 1974, almost 5 years
later than originally     planned.                          ,

       After the loan agreement was signed, the scope of the
project was reduced substantially     because the amount of
funds provided by AID and the Government of East Pakistan
was insufficient     to complete the project as originally  plan-
ned. As a result it was necessary for East Pakistan to as-
surne responsibility    for certain construction work that was
not included in the revised project      plan.

       Our review showed that some of the difficulties        encoun-
tered in connection with the Dacca-Aricha road project were
unavoidable.      For example, the hostilities     between India
and Pakistan, which began in September 1965, caused a gen-
eral reallocation     of Pakistan's resources and the subse-
quent reduction     in scope of the project    required additional
time to obtain Pakistan Government approval for the revised
project.

       We believe,    however, that AID could have avoided or
minimized other problems that were encountered,              such as (1)
insufficient     financing     for the project,     which resulted pri-
marily from inadequate estimates of the cost of the project,
 (2) the necessity      for revising    the scope of the project      once
it became evident that the available            funds were insufficient
to complete the project as originally            planned, and (3) solic-
iting bids for construction          work although adequate funds
were not available        to finance the proposed work.

BACKGROUND
         OF PROJECT

     In 1963 the Government of East Pakistan retained three
U.S. engineering firms to conduct economic and engineering


                                    47
feasibility    studies of about 1,500 miles of roads in East
Pakistan,   including     the Dacca-Aricha road.     After the stud-
ies were completed, the World Bank agreed to finance the
highest priority      highway project    included in the studies (a
road between Dacca and the port city of Chittagong)           and AID
agreed to finance the Dacca-Aricha road project which was
considered the second highest priority          road project.

      AID, in its j,ustification      for the project,      acknowledged
that it was difficult      to quantify    the benefits    that would
be derived from the construction         of the road because of the
lack of accurate data relating        to traffic    volume and pat-
terns, vehicle    operating    Costs, population     trends,, and other
matters,    AID concluded, however, that the construction             of a
modern highway would reduce road transportationcosts,              stimu-
late agricultural     production,    and contribute     to the indus-
trial   and commercial development of East Pakistan.

INADEQUATECOST ESTIMATES

        When the AID loan for the Dacca-Aricha road project was
made in January 1965, the estimated cost of the project was
$26.6 million,       based on data contained in the 1963 highway
feasibility      studies,   The AID loan provided $14 million   for
foreign exchange costs of the project,        and the Government of
Pakistan was to provide the remaining $12.6 million--$2,1
million     in foreign exchange and the equivalent    of $10.5 mil-
lion in local currency.

        The cost estimate of $26,6 million      contained several
deficiencies    which resulted   in a substantial    understatement
of the total estimated cost of the project.          For example,
although the project    was not expected to be completed ,until
1969, the cost estimate was based on fiscal        year 1963 prices
and contained no provision     for price increases.       Price in-
creases are a normal occurrence in developing countries,            and
the general wholesale price index in East Pakistan (fiscal
year 1960 being used as a base of 100) increased from 106 in
fiscal   year 1963 to 141 in fiscal year 1969.         In addition,
the cost estimate was based on world market prices,           whereas
the AID loan funds were required to be spent in the United
States where prices generally      are higher,



                                    48
      Although the largest bridge to be constructed  in con-
nection with the project was estimated to cost about $15 a
square foot, the project   consultant retained by the Govern-
ment of East Pakistan later pointed out that the cost of
bridges of this magnitude in the United States would be
about $45 a square foot and that a cost of about $55 a
square foot could be expected in Pakistan.
       In August 1966 the project      consultant   completed his
final cost estimate for the project,         which indicated   that
the total cost of the project would be about S49.S million,
or about 87 percent more than the original          estimate of $26.6
million.    As a result,    the scope of the project had to be
reduced to keep the cost of the project within the amount of
the available     funds.   The process of reducing the scope of
the project     and of obtaining   AID/Washington and Government
of Pakistan approval for the revised project resulted            in a
delay of about a year, and the project          consultant  was not
authorized    to proceed with design work for the revised proj-
ect until   September 1967.

       In April 1968 AID/Washington reviewed the project          con-
sultant's    cost estimate for the revised project       and noted
serveral deficiencies     in the estimate,     including   the use of
1966 prices with no provision       for price increases and the
omission of about $1 million      of material     costs.   The
AID/Washington review indicated        that the consultant     had un-
derestimated    the local currency cost of the project         by the
equivalent    of about $5.6 million.

       The Government of East Pakistan,    however, was not re-
quested to provide additional     local currency funds for the
project   because the time required to obtain approval of such
an increase would have delayed the solicitation      of bids,
which was scheduled for June 1968. The decision to request
bids without adequate funds resulted     in further  delay since
it became necessary to engage in prolonged negotiations       with
the low bidder in an effort    to obtain a lower price.
(See pa 51.)




                                  49
PROJECTREVISIONS

       The Dacca-Aricha road project originally          was justified
on the basis that the existing          road was mainly single lane
with inadequate shoulders and was subject to annual flooding
over a substantial       part of its length.      In addition,    it was
contended that bridges were needed along the 58-mile road to
replace either ferries        or existing   bridges.   Under the proj-
ect plan, the existing        road was to be raised to prevent an-
nual flooding     and was to be widened to accommodate two lanes
and a total of 15 bridges and other structures             were to be
constructed.
       Our review showed that by August 1965 AID was aware that
the project     consultant's     estimate of the cost of the project
would substantially        exceed the original    cost estimate.       The
original    estimate had been used to determine the amount of
funds to be provided by AID and the Government of Pakistan.
AID, however, was not able to take any formal action to ef-
fect a revision      of the project until      a year later when the
consultant     submitted his final cost estimate.          As stated on
page49,another       year'elapsed     before the consultant    was au-
thorized    to proceed with the design work for the revised
project.
       The revised project   provides only for the construction
of bridges and other structures.         The deletion    of the im-
provements to the existing     road was justified      by AID on the
basis that the road was subject only to minimal flooding             and
that the proposed improvements could be made later by the
East Pakistan Government.      According to the Mission, the
original   justification   was prepared after a record flood in
1962 caused extensive damage to the existing          road and the
benefits   to be derived from improvements to the road were
overemphasized in the original      justification.       The Mission
also stated that, during an average year, the road would be
closed only about 2 weeks.

      When the Dacca-Aricha road project was initiated,      it
was planned that a U.S. contractor   would perform all the
construction  work because the Government of East Pakistan,
according to AID, did not have the capability     for carrying
out the work.   Under the revised project   plan, however, the
Government of East Pakistan is to perform all the road im-
provement work originally   planned for a U.S. construction
firm.
      According to the Mission this change was possible be-
cause the performance of the Government agency responsible
for road construction   had improved to the extent that it was
then capable of carrying     out the proposed work.    The Mission
stated that this increased capability      on the part of the
Government was due primarily     to the training  provided by a
U.S. consulting   firm retained by the Government of East Pak-
istan at AID's insistence.

      It seems that the use of the AID loan funds for the
construction    of bridges and other structures        provides the
maximum benefits     which can be derived under the circumstances.
The construction     of these facilities,      however, will not ac-
complish the original      objective    of providing   an all-weather
road.    This objective   will not be accomplished until         such
time as the Government of East Pakistan is able to make the
necessary improvements to the existing          road.
BIDDING PROCEDURES

       Our review showed that AID was aware that the Dacca-
Aricha road project was not adequately funded when bids for
the construction    contract were initially    solicited     in June
1968. Although AID had determined that the project            consul-
tant's   cost estimate was understated,     the Pakistan Govern-
ment was not requested to increase its local currency com-
mitment because the time required to obtain approval for ad-
ditional   funds would delay the solicitation       of bids.

      Only one bid was submitted on the initial   bid-opening
date in September 1968; it was rejected   because it exceeded
the estimated cost of the work to be performed by 122 per-
cent.   Bids were resolicited,  and, by the second bid-opening
date in November 1968, two bids had been submitted.       One ex-
ceeded the estimated cost of the work by 111 percent,      and
the other exceeded the estimated cost by 61 percent.
      The Government of East Pakistan attempted to obtain a
price reduction  from the low bidder on the grounds that the
prices bid for certain elements of the project were far in
excess of the cost estimate.   The low bidder, however, con-
tended that its bid was the lowest responsive    competitive
bid and that a price reduction   could be achieved only by de-
leting certain elements of the proposed work.


                                  51
      A construction       contract     finally was executed in May
1969 when the low bidder reduced his bid price by about
$3 million,    primarily     because roadway work and other require-
ments had been eliminated           from the work to be performed by
him. As a result,        the Government of East Pakistan assumed
responsibility     for the completion of the deleted work.

AGENCYCOMMENTS
             AND OUR EVALUATION

        In commenting on our draft report,    AID agreed that the
original    cost estimate prepared in connection with the Dacca-
Aricha road project      had been inadequate.   AID pointed out
that, at that time, no cost data were available        for a con-
struction    project  of this type in East Pakistan.      The lack
of such cost data, according to AID, made it difficult          to
prepare an accurate cost estimate and also hampered AID's
review of the cost estimate prior to authorizing        the loan.
AID also noted that the World Bank had encountered similar
problems in connection with the DankIs loan for the Dacca-
Chittagong highway, which is not yet under construction.
       AID pointed out that, although some of the errors in
the project    cost estimate might have been avoidable,    it was
impossible at the time to resolve the basic problem of the
lack of comparable cost data.      AID stated that it had at-
tempted to deal with problems arising      from engineer's   cost
estimates and pointed out also that AID's cost-estimating
methods for capital     projects had been revised recently    to
furnish   improved guidance to host governments, consultants,
and AID employees.

       Although the lack of comparable cost data clearly       made
it difficult    to prepare a reasonably accurate estimate of
the cost of the Dacca-Aricha road project,        we believe that
AID,in its review and analysis of the estimate,         should have
detected such basic deficiencies       as the lack of a provision
for price escalation     and the use of world market prices in-
stead of U.S. prices.      Such obvious deficiencies     should have
alerted AID to the probability      that the cost estimate con-
tained other errors and was not a sound basis for determin-
ing the amount of funds required to carry out the proposed
project.




                                  52
CONCLUSIONS

        We believe that many of the problems associated with
this project      could have been avoided if a realistic       analysis
of the project cost estimate had been made when the loan ap-
plication    was under consideration.       Such an analysis would
have revealed such obvious deficiencies          in the cost estimate
as the lack of a provision      for cost increases and would
have pointed up the need to either reduce the scope of the
project    or arrange for additional     financing.     We believe
that, if this basic issue had been resolved before the proj-
ect was initiated,      many of the difficulties      that subse-
quently were encountered could have been avoided or mini-
mized.

        It also appeared that AID should not have permitted              the
solicitation       of bids for construction     when it was aware that
funds were not available          to complete the construction      work.
Although AID permitted         this action in the interest       of facil-
itating      the implementation     of the project,     this action con-
tributed       to prolonging   the negotiations     with the contractor
and the resultant         delay in getting construction      work started.

       The Dacca-Aricha road project will not accomplish its
objective   until such time as the Government of East Pakistan
is able to complete the work it assumed as a result of re-
visions   in the scope of the project.     In view of the limited
resources of the East Pakistan Government, there seems to be
some question regarding     its financial ability  to carry out
the construction    work it has been required to assume.

       More importantly  the political   turbulence    and civil
strife   in East Pakistan occurring    in the early part of 1971
make the future prospects for this project        quite uncertain.




                                     53
                             CHAPTER7

             CONSTRUCTIONOF COASTALEMBANKMENTS

       Since 1961 AID has provided $4.3 million         in develop-
ment loan funds and the equivalent          of about $77.9 million
in local currency for the coastal embankment project            in
East Pakistan,      The Government of Pakistan has invested
about $2 million      in foreign exchange and the equivalent        of
about $179 million      in local currency for the project.         The
project    is the first   phase of a program designed to in-
crease the agricultural        productivity   of farmlands in the
southern coastal area of East Pakistan by preventing            inun-
dation from saline tidewaters          and monsoon floodwaters.

      In May 1966 we issued a report (B-158163, May 31,
1966), to the Administrator,    AID, which discussed the im-
plementation  of the coastal embankment project    from its in-
ception through fiscal    year 1964. In general,   the report
noted that none of the construction    target dates had been
met because the Government of Pakistan had not provided
adequate personnel and material support.

        Our latest review has shown that these earlier   delays
have continued and that construction      constantly has been
behind schedule.       The project was severely damaged during
the massive cyclone and tidal wave which struck East Paki-
stan in November 1970. Although exact figures are not
available,     AID estimates that it will cost in excess of $10
million    to repair the damaged embankments. It is not known
at this time when the project will be completed.

      We found that the delays encountered in constructing
this project were caused by such factors as inadequate
funding, untimely release of funds, a high proportion      of
inoperative   equipment, failure to acquire land for right-
of-way, and shortages and late deliveries   of construction
materials.
     We found also that progress had been delayed by sev-
eral events that could not be foreseen.   In addition to
being struck by the 1970 cyclone and tidal wave, the proj-
ect area also was struck by cyclones in 1965 and 1966 which
damaged hundreds of miles of embankment. The 1965 war with


                                  54
India caused a reallocation       of Pakistan's   resources and
eliminated     India as a source of the project's       coal require-
ments.     Political    turmoil during the  early  part   of 1969
triggered    numerous labor disputes and caused a reduction           in
the project's       budget.

        Most recently  political turbulence    and civil  strife
early in 1971 have significantly      affected   the project's
future.     Undoubtedly these later events will only aggravate
the situation     and will cloud even further    the outlook for
the project.
       It appears that AID has taken all reasonable measures
to ensure that the project would be adequately and timely
funded.    In view of the magnitude of the assistance  pro-
vided to the project,    however, we believe that AID could
have reduced the impact of the other problems which have
impeded construction   progress by making stronger represen-
tations to the Pakistan Government agency responsible     for
carrying out the project.

EARLY PROJECTACTIVITIES AND CHANGESIN SCOPE

       The southern coastal area of East Pakistan is divided
into individual    units of land and islands by the numerous
rivers and the Bay of Bengal.      The units and islands, which
range in size from 3,000 to 140,000 acres, are encircled
with earthen embankments, designed to prevent flooding.
The areas formed by the embankments, called maintenance
units or polders,     are equipped with drainage sluices which
eliminate   excess rain water and, in some cases, flushing
sluices which provide fresh water for irrigation,
       These polders have been in existence    for many years;
but, after Pakistan attained     its independence in 1947, they
deteriorated    from a lack of maintenance.    When the coastal
embankment project was initiated     in 1961, its objective    was
to protect about 1.6 million    acres of land by rebuilding
the embankments over a -/-year period at an estimated cost
of $55 million.

      The scope of the project was expanded in fiscal   year
1962, on the basis of a plan prepared by a U.S. engineering
firm, to protect  2.4 million  acres of land with 73 polders


                                  55
over a lo-year period at an estimated cost of $127.4 mil-
lion.   In fiscal   year 1966 the scope of the project was
further  revised,   on the basis of more accurate engineering
data, to protect about 2 million     acres of land with about
2,100 miles of embankments. According to present plans the
embankments, when completed, will be about 2,300 miles
long, will enclose about 2 million     acres of land, and will
cost the equivalent     of about $278 million.

       The coastal embankment project is expected to make a
substantial    contribution    to the economy of East Pakistan.
According to estimates prepared by the project       consultant,
agricultural    production   will be increased by about $58 mil-
lion a year when the project        is completed. Other benefits--
such as savings in foreign exchange, reduction       of damage
from cyclones,     and increased employment--are   expected to
amount to about $44 million       annually.

PROJECT FUNDING

       We found that the amounts of local currency provided
by the Government of Pakistan for the project have been
consistently   less than the amounts specified      in the project
agreements.    From fiscal    year 1965 through fiscal    year 1968,
the Government of Pakistan agreed to provide the equivalent
of about $51.7 million     for the project.     The total amount
of local currency it actually      provided during this period,
however, was about $47.3 million.        In fiscal  year 1969 the
Government also failed     to provide all the local currency
funds that it had agreed to provide.        This was partly due,
however, to the political      turmoil in Pakistan during this
period.
        The shortage of local currency was one of the princi-
pal reasons that construction        schedules were not met during
this period.      Also the allocation    of project    funds by the
Government of Pakistan was not made on a timely basis.              For
example, only one third of the funds budgeted for the fis-
cal year ended June 30, 1968, were allocated           by March 1968.
U.S.-owned local currency was not always available            when
needed because of the lengthy periods required by the Gov-
ernmentof Pakistan to approve the project          agreements.     For
example, the Government did not sign the fiscal            year 1967
project    agreement until March 1967.


                                  56
         .
-   .


              To induce the Government of Pakistan to provide ade-
        quate and timely funding for the project,     AID stipulated in
        the project   agreements that (1) certain prior year funding
        shortages would be provided during the period covered by
        the project   agreement and (2) U.S.-owned local currency for
        the project would not be released until Pakistan had pro-
        vided specified    amounts of local currency.

               Another factor which affected       the availability  of
        funds for the project was the East Pakistan Government's
        practice    of deducting interest     charges from the project's
        budget.     Interest  charges by AID are .75 percent for the
        capital    development loan and 3 percent for Public Law 480
        loans.     There are no interest     charges on Public Law 480
        grants.     Although about 46 percent of the planned budget
        for fiscal     years 1965 through 1968 was provided from Pub-
        lic Law 480 loans and grants, the Government of East Paki-
        stan deducted interest       charges from the annual budgets at
        rates ranging from 5 to 6-l/4 percent on the total invest-
        ment in the project      from its inception.     The planned budget
        for fiscal     year 1965, for example, included an interest      de-
        duction of $2.4 million.        Thus, although Pakistan agreed
        to provide $10.8 million       of the budget, the actual amount
        provided was only $8.4 million.

        EQUIPMENT
         .       MAINTENANCE

               We found that a large portion of the equipment used on
        the project was inoperable    from fiscal  year 1965 through
        fiscal  year 1969, as indicated    by the following schedule,

                                               Percent inoperable
        Type of equipment         1965        1966     1967     1968   1969

         Launches                  50          22       26      19       33
         Water pumps               45          25       32      43       44
         Outboard engines          72          54       43      57       66
        This condition   resulted    primarily   from a lack of spare
        parts, trained   mechanics, and repair facilities      and from a
        lack of proper   coordination     between the various organiza-
        tions involved   in carrying     out the project.




                                         57
                                                                       .   .


       The lack of spare parts was the principal       reason that
much of the equipment had not been utilized       fully.     In some
instances East Pakistan Government agencies responsible          for
maintaining    the equipment were unable to purchase spare
parts when needed because of a shortage of foreign ex-
change.     Spare parts were not always available      when needed
because of the long period of time required by the East
Pakistan Government to process requisitions       for spare
parts.
       The maintenance of equipment has been a continuing
problem in connection with this project,        although AID has
provided financial     and technical assistance     to the two East
Pakistan Government agencies responsible        for repairing    the
equipment.     These two agencies, the Mechanical Equipment
Organization    and the Dredger Fleet, have received $3.8 mil-
lion in development loan funds and the equivalent          of about
$2 million    in U.S.-owned local currency,      Notwithstanding
this financial    support, AID apparently    has not been able
to persuade these two organizations       to provide adequate
maintenance service for the equipment used on the coastal
embankment project.

      The lack of spare parts was also the primary cause of
the low utilization      of a helicopter   used in connection with
the project,     as indicated  by the following   schedule.

                                   Hours used
Calendar           On coastal abankment     Other
  year                     project          uses              Total

  1965                        145                 70           215
  1966                        205                120           325
  1967                         30                 33            63
  1968                         20                 91           111
  1969 (first
    10 months)                                     10           10

The helicopter,   which was purchased with AID loan funds for
about $100,000, was placed in operation    early in 1965. Al-
though an additional    $50,000 of AID loan funds subsequently
were used to purchase spare parts for the helicopter,     a
lack of spare parts WPS the major reason for the nonutili-
zation of the aircraft    during 1969. In November 1969 AID


                                 58
authorized  the additional purchase of $25,000 worth        of
spare parts from the loan proceeds,

      In commenting on various aspects of the coastal em-
bankment project,    the Mission acknowledged that the project
had been hampered by poor maintenance of equipment.           The
Mission stated that this was a problem that generally          ex-
isted throughout    East Pakistan,   as well as in other devel-
oping countries.     The Mission stated also that its assis-
tance to the Mechanical Equipment Organization        and the
Dredger Fleet was directed     toward improving this situation.
According to the Mission the performance of these two or-
ganizations    has improved, but additional   assistance    is
still   needed.




                                59
OTHERDIFFICULTIES

       Our review of the coastal embankment project        showed
that (1) the project was being hampered by delays in ac-
quiring land necessary for embankment and structure          right-
of-way, (2) substantial     amounts of funds provided for land
acquisition    were not being utilized     by the Government of
East Pakistan officials     who were responsible     for that func-
tion, and (3) construction     progress was delayed by short-
ages and late deliveries     of construction    materials.

       The following schedule summarizes land acquired for the
project and unused funds during the period covered by our
review.

                                           Local currency
                                             funds held
                                                   bY
        End of                               Government
        fiscal       Acres of land           officials
         year     Required   Obtained        (millions)

         1965      34,800        9,900          $ 2.9
         1966      39,700       13,000            4e9
         1967      51,900       18,000           11.3
         1968      59,900       26,700           15,4
         1969      65,700       39,600           15.7

       The delays in acquiring   land in connection with the
project were caused primarily      by a lack of personnel to
carry out land acquisition     activities   and by public opposi-
tion to the land acquisition     program.
       The large amount of unused funds held by East Pakistan
Government officials      was caused, in part, by an East Paki-
stan Government requirement        that funds must be available
before land acquisition       procedures are started.    The land
owners, however, are paid only 50 percent of the sales price
until the transfer     of title    is effected, a procedure which
usually requires     several years.

       We found that shortages and late deliveries     of con-
struction     materials also delayed construction  progress from
fiscal    year 1965 through fiscal year 1969. The lack of
these materials   was most pronounced during 1967 when work
on the sluices had to be suspended and when the funds pro-
vided for that purpose were used instead for the construc-
tion of embankments.      The shortage of construction          materials
generally  was attributed    to transportation     difficulties       and
the long period of time required by the Government of Paki-
stan to process material     requests.     The supply of coal for
the project was affected     particularly    by the war with India,
which eliminated    that country as a source of supply.

CONCLUSIONS

       The construction      of the coastal embankment project        has
been hindered by difficulties         encountered in such areas as
project   financing,     equipment maintenance,     land acquisition,
and material     supply.    We believe that AID could have re-
duced the impact of these difficulties           if greater efforts
had been made to persuade the Government of Pakistan to
take the necessary actions to correct these problems.

        Although AID has taken certain measures to ensure that
the project would be adequately and timely funded, AID's
efforts     generally    have not achieved the desired results;        we
believe that continued efforts         in this area are necessary.
We found little       indication  that AID had attempted to alle-
viate the land acquisition        problem.    Since the failure     to
acquire the necessary land has delayed the completion of the
project,     we believe that AID should have urged the Govern-
ment of East Pakistan to provide adequate financing             and
staffing     and improved land acquisition      procedures.     We be-
lieve also that AID should have increased its efforts              to
have the Government of Pakistan correct the problem of
shortages and late deliveries         of construction   materials.




                                    61
APPENDIXES




     63
                                                                              APPENDIX I
.   .




                              DEPARTMENT            OF     STATE
                     AGENCY   FOR   INTERNATIONAL            DEVELOPMENT
                                 WASHINGTON,        D.C.   20523




        Mr. Oye V. Stovall
        Director,   International  Division
        U.S. General Accounting    Office
        441 G Street,     N.W.
        Washington,    D, C. 20548


        Dear Mr. Stovall:

        I am pleased to transmit         the enclosed memorandum dated
        February 16, 1971 received from Mr. Donald MacDonald,
        Assistant     Administrator    for the Bureau for Near East
        and South Asia,         This memorandum constitutes   the Agency's
        consolidated     response to the U.S. General Accounting       Office's
        draft   report   entitled,    "Capital   Development Projects  in Pakistan."


                                               Sincerely           yours,



                                               Edward F. Tennant            (.-
                                               Auditor General




        Enclosure:    4s

        GAO note:      The page numbers cited in these comments refer
                       to pages in the draft report submitted for re-
                       view; the page numbers shown in brackets refer
                       to the corresponding  pages of this report.

                                               65
APPENDIX I

                                      DEPARTMENT         OF STATE
                       AGENCY      FOR INTERNATIONAL                   DEVELOPMENT
                                           W-shingfon   25,    D   C
                                                                                       Fb i.        :


MEMORANDUMFOR:             Mr. Edward F. Tennant
                           Auditor General

SuBJE@II:                  GAO Draft Report on Need for Improvement
                           in the Administration  of Capital Development
                           Projects  in Pakistan .

We appreciate    having been given an opportunity          to review the Draft Report
by the GAO on the "Need for Improvement in the Administration                of Capital
Development Projects     in Pakistan."       The GAO clearly     recognizes   many of
the problems we have encountered         and, in most instances,       gives credit     to
AID for taking appropriate       steps to overcome them.         We believe,   however,
that the summary presented       in the first      four pages does not adequately
reflect   GAO's findings   and conclusions        stated in the body of the draft
report,   and that certain    additional     information     is needed for a clearer
understanding    of the projects     reviewed by GAO.

Our suggestions  for changes in the summary are presented  below and,                          in
addition,  we are attaching our more detailed  comments on the report
itself.

Economic     Development         in Pakistan

Page 1, Paragranh                 5
We suggest      this      paragraph        be revised         to read:

      "GAO believes     that the U.S. assistance       has contributed    significantly
      to the economic development of Pakistan.            In GAO's opinion,       however,
      the effectiveness      of this assistance     could have been even greater
      if the Agency's priority       efforts   to find solutions      to problems as
      they developed had resulted         in more timely    remedial action by the
      Government of Pakistan."

Malaria     Eradication         Projects

Page 1, last            paragraph           - suggested                substitition:
      "Since 1962 AID has provided      about $25 million    in dollars       and $28
      million   equivalent   in rupees for malaria eradication       activities     in
      Pakistan.    Approximately    92% of this assistance    was in the form of
      loans.    The program has saved many thousands of lives and spared
      hundreds of thousands of others the misery of malaria.             Viewed in
      those very humane terms, the program has attained         immeasurable
      benefits.     Looking to the future,    however, the hard question must
      be faced of whether the substantial       reduction  of malaria in Pakistan

                                                         66
.    _ .                                                                                 APPENDIX I

           can be maintained        over the long-range.       Although the GGEP has
           provided     vigorous    support for the program, AID has been unable
           to persuade the GOWP to provide the level of financial,
           administrative        and operational     support necessary for an effective
           long-range      program (see USAID Mission comments p.23).             As a re-
           sult,   the malaria eradication         program is about two years behind
           schedule,      and malaria has reached epidemic proportions            in some
           areas of West Pakistan.           GAO found that all parties       concerned
           with the Malaria Eradication          Program are agreed that it is not
           now realistic       to expect complete eradication         of malaria    in
           Pakistan and that a program of control             rather than elimination
           is contemplated.         AID plans to conduct an evaluation          of the
           malaria     eradication    program and to develop recommendations             to
           guide the Government of Pakistan and other participating                   organiza-
           tions on the future         of the program.      We believe   that the AID
           program should be brought into line with the more limited                      [pp. 17-283
           purposes and reduced financial           support of the GOWP. (See pp.13 - 24.)"

    Salinity       Control   and Reclamation      Projects
    bb&'$          pp;;sgp23      and 41
                                 - suggested      substitution      for   the first    sentence:
               3
           "Since the beginning         of Salinity      Control      and Reclamation       Project
           No. 1 (SCARP I) in 1959, AID has provided dollar                     loans amounting
           to approximately        $39 million,     dollar     grants of $6.4 million           and
           $35.5 million equivalent in rupee loans and grants for three
           SCARP projects       in West Pakistan.          Significant     progress has been
           achieved through these SCARP projects                 in terms of recovering
           non-productive       land and increasing         agricultural      productivity.
           In addition,      the success of the SCARP projects              has stimulated
           development of privately-owned             tubewells      which have become a
           very important       factor    in W. Pakistan agriculture.             These develop-
           ments of increased productive            land and irrigation          water from the
           tubewells,     together     with the additional          input of other resources
           such as improved farming techniques,                better    seeds, and increased
           fertilizer     use, have contributed          very significantly         to the major
           break through in food production              in West Pakistan.          In spite of
           these impressive        achievements,      the dimension of growth attributable
           to the SCARP projects          could have been somewhat greater,               if the
           following    implementation        and maintenance problems had been sur-
           mounted---".


    Dacca-Aricha        Road Project

    $!!e2E!   last paragraph           - with   the suggested     addition,     the first     sentence
    would read as follows:




                                                      67
APPENDIX      I

     "The planned completion        date of the Dacca-Aricha       road project      in
     East Pakistan has been set back almost 5 years, due primarily                  to
     administrative      indecision    concerning     the scope and financing      of
     the project     and to delays caused by a general reallocation             of
     Pakistan's     budgeted resources      following    the outbreak of hostilities
     between India and Pakistan in September 1965."

Coastal    Embankments Project

6~!$!~;lb3: !~,!~g~%&?~ph         - suggested    revision:

     "Construction      work on the coastal         embankment project,     which has
     received the equivalent         of $85.8 million       in U.S. assistance       (a
     $4.3 million      loan in dollars      and $81.5 million      equivalent    in local
     currency of which 80% was in loans) has continually                 been behind
     schedule because the GOEP has not provided the level of support
     needed by the magnitude of this project               which, on completion,        would
     comprise about 2300 miles of embankments to protect                 about 2 million
     acres from normal high tides and fresh water flooding                  from the rivers
     in the Ganges delta area.           Although the GOP has invested          $2 million
     of its own foreign       exchange and about $179 million           equivalent      in
     rupees, this has been less support than needed.                 Other factors
     contributing      to slower than planned implementation            were a high
     percentage    of inoperative       equipment, the failure       to acquire land
     for right-of-way       as rapidly     as needed, and shortages        and late
     deliveries     of construction      materials.      In view of the magnitude of
     assistance     provided by AID, GOP and GOEP for this important                 project,
     GAO believes      that AID should vigorously          renew its efforts     to persuade
     the GOEP to correct       the problems which could delay further              construction
     and could be serious deterrents            to rehabilitation      of the embankments
     damaged during the major hurricane              and tidal wave disaster       last
     November 12."

    We believe        that both the summary and the report                should give adequate
    recognition         to the very substantial           accomplishments       and progress made
    thus far in this project,                e.g.:    The U.S. consulting         engineers,
    Leedshill-DeLeuw,            in their     1968 evaluation      report     computed the
    estimated       increase       in agricultural      production     attributable      to the
    project      at $58 million          annually.     The report,     in all fairness,       should
    reflect      the major logistics            problems and serious intermittent            weather
    difficulties          involved     in carrying     out a project      of this magnitude on
    the low-lying           peninsulas     and islands of the Ganges delta. [Sea GAO note.1
Responsibility        for Execution        of Projects

     One problem which the Report does not bring out is the fact that AID
     does not manage directly the projects   it finances.    The GOP and its
     agencies are, under all existing   loan agreements,  responsible  for the
GAO note:         The estimated    increase in production   valued at  $58 million
                  annually   is based on future   increases  after the project   is
                  completed.    It is not known at this time when the project
                  will  be completed.



                                                68
.   .
         .                                                                APPENDIX I


             execution   of projects.    AID must do its best to ensure that the
             GOP does so , promptly and efficiently,      but its powers to persuade
             are not always sufficient      to avoid delays of the kind the GAO
             criticizes.    For this reason, we have included         in our comments
             an outline   of our apprcjach to project    administration.




                                         CGL +    D. G. MacDonald
                                                  Bureau for Near East   and South Asia




        Attachment:    a/s




                                             69
APPENDIX     I


                           COMMENTS
                                  ON DRAFTREPORTEKCITLED

                    "NEED FOR IMPROVEMENT
                                        IN THE ADMINISTRATION

                 OF CAPITAL DEVELOPMEVIPROJECTSIN PAKISTAN"

   I.   Objectives      Pursued and Operating               Principles     Applied by AID in the
        Administration       of Capital         Projects.


        1.   We view the financing              of Capital      Projects     not only as a way to
             transfer      resources       but also as a means to improve the institutional

             structure      and operating         efficiency       of the government agencies

             involved.       In the interest          of completing         the transfer             of resources
             efficiently        and promptly,        we should always choose that                      solution

             to a problem which will              get a given project           completed at the

             earliest      possible     time.      In the interest          of serving             the longer-range
             objective      of bringing         about institutional           improvements,             we favor

             that    solution     to a problem which provides                 the greatest             opportunity
             to transfer        those technical        and administrative             skills         which the

             government agency involved               lacks and will         need if         it     is to succeed.

             Inevitably,        the pursuit       of these two different              goals leads,           on

             occasion,      to compromise solutions               which cannot be explained                  if   one

             focuses only on the prompt completion                       of projects.

        2.   From its      inception       in 1961, AID has recognized                the importance of
             the institution          building     aspects of its          Capital      Assistance          Program,
             and adopted operational              principles       to reflect        that         recognition.

             Foremost among these principles                   is the so-called             "Borrower/Grantee
             Contracting"        system under which the Borrower or Grantee is charged

             with the responsibility              for all      the contracting          necessary to execute

             the project,        subject    to certain         approvals by AID.              That system has




                                                     70
                                                                                                    APPENDIX I
.   .


             led      to delays -which might have been avoided if AID had chosen to

             retain      the responsibility          for contracting.


        3.   Not being a party to the ccntracts                  with       consultants,         suppliers      and

             constructors       means that AID does not directly                      "manage" the projects

             which it      finances.       The Borrower/Grantee              entity     manages the

             projects;       AID's role      is to see that        it   does so, and that             its

             capabilities       are improved in the process.                   In many cases, it would

             be simpler       for AID, and, in the sense of getting                      a project          completed
             on time,      more efficient          to do the entire          job itself.          Having
             decided that it        must also seek to serve the broader objective                              of
             institutional       improvements,         those responsible              for the administration
             of Capital       Projects     in AID must weigh, in each instance                      where

             the objectives        conflict,        which solution          to a given problem would

             strike      the proper balance.           This,     clearly,      is a matter of judgment,

             and reasonable men may differ                in any given case.


        4.   Where delays in the execution                of projects         occur,     whether due to

             slowness in the allocation               of local     currency,          contracting      problems

             or other factors,           AID must consider         first      what it      can do to overcome

             those problems.           Only when there appears to be no reasonable                            chance

             that     those efforts       will     succeed should it          consider      applying         those

             remedies which its           loan or grant agreements provide                       for cases of

             the Borrower's        default       under such agreements.                Suspending disbursements

             is possible       only to the extent that             there remain funds which have

             not been obligated           by the Borrower in the form of contractual
             commitments, normally               backed up by irrevocable              letters      of credit.




                                                        71
APPENDIX I


            In maay cases, therefore,                    refund        claims for funds already               disbursed

            or acceleration            of the loan are the only remedies available,                                 both

            of which would,            in most cases, result                     in further      indefinite       delays
            in executing           the project          since it would then have to be completed

            with the Borrower's               own funds.              Clearly,        either    one of these

            remedies should be applied                    only in the most serious                     circumstances,

            since both,           for practical          purposes,           amount to abandoning the project

            on the part of AID.


       5.   The framework within               which AID administers                      the funds used to finance

            Capital       Projects         thus circumscribes                rather       narrowly     the actions
            AID can take to accelerate                    or improve their                 execution.      Short

            of effectively           withdrawing          its       funds,     it     can attempt to persuade,
            at all       appropriate         levels;      it        can withhold          approvals     of contracts

            or contract           modifications;          it        can withdraw          funds not yet tied         up

            by the Borrower's               firm commitments to contractors.                           It cannot normally

            "take over the work",                i.e.     substitute             itself     for the Borrower in

            contracts           to which it      is not a party.

  The following       comments on specific                statements           in the Report are offered
  with these thoughts             in mind.
       [Chapter     31
 II.   Chapter 2 - Observations                on the Malaria              Eradication         Program.


       Page 20, 3rd paragraph                [page 23, last              paragraph]

       The report        states     that     the GAO auditors              were advised by a Mission
       technician        that     adequate surveillance                 techniques          could detect      the
       disease in infected            migrants          leaving        Karachi (where it              reached epidemic

       proportions        in 1967) before           transmission              to individuals           in rural     areas.




                                                               72
                                                                                        APPENDIX          I


We do not doubt that this         information        was given to the auditors,              but its

accuracy appears rather         dubious.       We are not aware of any practical                    way

in which every person leaving Karachi,                 by air,     rail,      sea or road, could
have been examined to determine whether or not he carried                             the malaria

parasite.       Unless the CA0 has corroborative               evidence that the information

obtained      is accurate,    we, therefore,         believe     that      the statement     should

be omitted.
[pages      25 and 261
Pages 21-23 - Provisions         for the Maintenance of Malaria                   Free Areas
The Mission,      on page 2 of its     memorandumto the GAOTeam dated March 25,

1970, advised the G&Othat:
              "Currently a Government Commission is undertaking a complete
              review of all health services for the purpose of arriving     at
              a final design for the health infrastructure.     Obviously
              this action is not the entire answer since the perennial
              problems of budgets, facilities  and staff training   must also
              be faced. However, with an acceptable plan in hand, atten-
              tion can be focused on the solution to the problem."

We believe      that the addition      of the substance of that paragraph would

round out the picture         presented     in the Report.
~g~e2~~11st       paragraph and Recommendation
The Mission's      record    of continued and forceful             efforts       to induce the

GOWPto provide        adequate support       for this      project         is Atlly    documented.
                                                                              Cpwe 221
GAOrecognizes       these efforts,        in part,     in stating          on page 19 that       "the

Mission informed GOWPthat            it would withhold           rupee funds for all AID

progms        unless these funds For         project      supporg          were released".
We suggest the-first         sentence on page 24 be revised                  to read:
              "AID carried on a long and intense effort to induce GOWP
              to provide the level of support needed from it for each
              element and phase of the malaria eradication  program,
              but without commensurate results;  We found that AID had
              cane to recognize ---'I.

In September 1970, a joint           GOP/WHO/USkIDTeaxn completed a study entitled

"Report of Joint         Stra&egy Review Team Malaria             Eradication         Program,
west F%lkistan".         Advance copies of this         report      are under staff        review


                                              73
APPENDIX I


 in A.I.D.          A similar      study of the East Pakistan program is scheduled to
 begin in January 19Tl..                 This is part of the evaluation                   which the C%O
 recommends and the GAOmay, therefore,                           wish to take note of it:               in its
 Report.
 [Chapter      51
 Chapter 3 - Construction                 of Electrical          Power Facilities

 III.      Mar&a Dam Transmission               Lines

           m            [page      391

           The Report states that the transmission                          facilities      were not available

           when the Mangla generating                  units     became operational          and details

           the delays encountered.                   We have analyzed the actual               "bottle-

           necked" power from the time the first                          generating      unit went into

           production      until       now.    That analysis          shows that         a substantial

            amount of the available             generating          capacity     was not utilized
            only between June and December 1969.                          Our study supporting            this
            conclusion     is attached         as Annex "A".

           Page 2% Last           ml      Paragra??h       [pages     40 and 411
           Tb.e Report states            correctly       that part        of the initial       delay in
            implementing         the project         wit,9 attributable        to the conflict       between
           India     and Pakistan         in the fall          of 1965.      As a result,       the loan

           agreement was not signed until                      January 1966, after          the termination
           of that     conflict.          If the time consumed by contract                   negotiations

           were counted from the loan signature                       date that period          would      be

           nine months rather             than 15 months.           Given the fact          that the

           Borrower needed AID's approval                      of the Request for Proposals                and
           of the contract,            and that the intention               to contract      had to be

           advertised      for     45 days, a period             of nine months for completion

           of contracting          for engineering             services     may be what           longer

           than necessary but not by more than perhaps Z-3 months.



                                                           74
                                                                                              APPENDIX I


      We nevertheless      recognize         that    some delays were avoidable.              An airgram

      circularized      to all      Missions in the NESA Region on June 4, 1968

      attempted to analyze the causes of delays in the implementation                              of

      projects    and suggested steps to keep under constant                        review the phases
      of the implementation           process to permit             early   identification      of problems

      and to minimize delays.               'Since then, the steps which both the Borrower
      and AID must take have been reviewed in considerable                           detail   with the

      GOPbefore the signature               of loan agreements.


      Pages 29 and 30 [page 41-j
      The Report implies           that A.I.D.        should not have approved the award of

      the contract      to the low responsive              bidder     (a Pakistani      firm which
      subsequently      failed)      although the consulting                engineer had recommended that

      the award be made to another firm.                    To award to other than the low

      responsive      bidder would have required              concurrence by AID in the
      consultant's      finding      that      such bidder was not responsible.               We had no
      firm basis to support such a finding                   at the time of award.

IV.   Lyallpur     Thermal Plan%

      Pages 31 and 32 [Pages           43 and 441

      We agree with the GAO assessment of the length                          of delsy in completion
      of the project,          approximate       cost in additional           engineering     services,
      and the results          of the failure         to meet the power demand by not having
      the plant      available      on time.         Most of the delays were caused by slow
      procurement,      late      deliveries        by U.S. suppliers,         and installation      problems.




                                                      75
APPENDIX I


      The 1965 war between India                 and Pakistan was an important                         factor     in

      causing delays end, in one case, major damage to equipment.                                           It    is

      also evident that           all     parties          involved       in the project,            the contractor
      (Westinghouse Electric               International                Co.),     the Consultant        (Commonwealth

      Associates,        Inc.),     and the borrower                   (WAPDA), contributed            to the delay

      in completing        the project.              It     is possible          that     even closer monitoring

      of progress by AID would have helped to avoid these problems.




      We agree with the GAO's comments on the need for formalized                                         training       for

      plant     operations        and maintenance personnel                       at the wallpur         Plant.        This

      problem was clearly               identified          and recognized              by the Mission in 1967 and

      strenuous      efforts      were made by the Mission to assure that adequate                                             I
      training     would be carried             out by WAPDAand the contractor.                           Although
      training      requirements          were included                in the loan agreement with the COP,

      results     fell    short of expectations.                        Training        required     by the WAPDA
      contracts      with WEICO and CAI, although                         carried        out, proved too limited

      in scope.


 V.   West Pakistan         Power Distribution                   System

      Pages 33 and        34 [IJaW 44 and                  453

      As in any electric           utility       operation,              the expansion and improvement of
      WAPDA's distribution               system is a continuous                    activity.         The assistance

      given by AID was, therefore,                        not intended to cover specific,                   defined
      parts of the distribution                network but to provide                      foreign     exchange for

      the purchase of equipment and materials,                                  and of services        to improve




                                                                  76
                                                                                                     APPENDIX I
-   .


              WAPDA's engineering           and operating        capability.         In addition   to the funds

              provided by AID, WAPDAused before,                      during and after      disbursements

              from the AID loan were made, funds provided by the GOP and other
              donors to purchase materials                 and equipment.          Seen in this    context,

              delays in utilizing           AID funds under this            loan did not constitute           a

              delay in building           distribution       lines.       Such delays in disbursements

              merely led to the application                 of the AID financed         equipment and
              services       to a later     phase of system development than had been planned.


        VI.   Chapter 4 - Implementation                 of Salinity      Control    and Reclamation       Projects.


              Project       Implementation       Delays,     SCARP1

              Page     39   [page   321
              The Report states           that    a large number of tubewells            were idle     for long

              periods of time.            Somewhat similar            statements
                                                                             are made on succeeding
                                                                                            [page 321
              pages for each A.I.D.              financed     SCARP. The last paragraph on page 39

              refers     to specific       dates in regard to the schedule for and the actual
              completion       of SCARP1.            These statements       imply that     no electrical
              power was available            until     June 1964.        Although the electrification

              work was not completed until                  1964, most wells were in use much earlier.
              Some wells were provided with temporary                      connections     and were in operation
              early in 1963 although the permanent lines                       to serve them were not

              provided until        a year or more later.                We suggest that     the statement
              be revised       substantially          as follows:




                                                                77
APPENDIX I


         "The original         target     date for the completion             of the

         SCAFZ1 project          was January 1962.            All tubewells,       originally
         scheduled for completion                by June 30, 1961, were completed

         by November 1962 but the electrification                     work was not

         completed until         June 1964.        As a consequence some tubewells
         remained idle         for as long as 12 to 18 months, while others

         were operated with temporary                  connections    until     permanent power

         lines      were completed.         The delay in the completion                of the

         project      was caused primarily             by the fact    that the tubewell
         construction         work and the electrification             work were undertaken

         separately         and the two phases were not properly                 coordinated

         by the SOP agency responsible                  for implementing        the project.       In
         addition,      non-availability           of power to the grid          system which served
         the project         area delayed full          utilization    of the project.
         Nevertheless,         water deliveries          from the wells began during the

         1961-62 crop year and one year later                     a very high pumping rate

         had been achieved.

         The annual reports             on the operation        of SCARP1 yield          the
         following      data on the amounts of water actually                    pumped during
         this     period:

                 1961-62 crop year -- 650,000 acre feet
                 1962-63 crop year -- 2,270,ooo acre feet

                 1963-64 crop year -- 2,510,ooo acre feet
         These records may be compared with the expected long-term                              average
         annual pumping for the area of 1,500,OOO acre feet                            estimated

         in the consultant's            report     of June 1959 which reviewed the

         original      plans for SCARP1.               The above records,        however,




                                                  78
                                                                                          APPENDIX          I
.   .


            reflect      some heavy pumping from completed wells                to obtain
            rapid drainage of water logged areas.                  In other areas the

            wells were uncompleted as of the 1963-64 crop year."

        Project      Implementation    Delays,    SCARP2


        Page 40 [page 331

        The Report discusses          SCARP2-A.     Our review indicates           that    some

        corrections      may be desirable.        On the basis of material           in our files,

        we suggest that        the second paragraph of that           discussion     be revised

        as follows:

             "This project       experienced     implementation       delays similar        to

             those encountered in the SCARP1 project.                   Although the

             tubewells     were scheduled to be completed in April                 1966, they

             were not actually         completed until     early     in 1967.      The

             electrification       of the last     of the tubewells        was not completed

             until     mid-September 1968, and at that             time only about 375 of

             the 884 tubewells         could be utilized     since the connection             channels

             had not been completed from the wells                 to the irrigation         distribution

             system.       By March 1969, two years after            the last    tubewell        was

             completed and six months after            the electrification          was completed,

             about 840 wells were usable and had been transferred                         to the
             operating      agency.     At the time of our review          in late        1969, most

             of the tubewells         in the SCARP2-A project           area were being utilized.
             However, as a result         of the delays described          above, some of the
             tubewells      constructed    under the project         remained idle         for as long
             as 28 months."




                                                  79
APPENDIX I
                                                                                                                   c   -




   We do not have available                  the detailed         data to determine how long
   individual         wells     remained unused.           It     is conceivable,       but improbable,

   that     some individual          wells     might have been unusable for as much as
   three years.             The attached       graph, Annex "B", presents               the overall

   situation.          It     shows that      the period         from the installation           of the

   well equipment until              the time when power was available                   tended to vary

   from 9 to 24 months.                   The time from electrification               to transfer     to

   the operating            agency reflects        some additional          delay in completing            the
   water channels but it                  also reflects         administrative       convenience and
   the desirability             of transferring           operable groups of wells,              not individual

   units.       It    is significant,           however, that         the time between the curves

   for wells         drilled     (first      work on a well)          and for transfer       to the

   operating         agency is consistently               under three years.

   Need for a More Effective                   Operation        and Maintenance Program

   Page 43           [page 351

   The Report discusses the problem of motor burn-outs.                                 WAPDA,their

   consultants          and our predecessor              agency, the Development Loan Fund,

   did not foresee the unusual operating                          conditions       and practices     which

   led to this         very serious          problem.       Therefore      the well installations            for

   SCARP1 contained only normal electrical                            protection      equipment.

   As indicated             in the Draft       Report,     internal     protective      devices were
   specified         for the SCARP2-A motors,the                    specifications      for which

   provided:

          "Each motor shall               be equipped with three thermal               devices

          embedded and symmetrically                 spaced in the stator             winding.




                                                           80
                                                                                                    APPENDIX I
-   .


                 These devices shall          operate on temperature            rise     to de-energize

                 the control       circuit    of the motor thus disconnecting                it     from the

                 power source0         The thermal        devices shall be so located               in the

                 winding and so constructed               that they till       prevent motor damage
                 due to over-heating          resulting      from overload,        lack of ventilation,
                 single phasing,         stalling,     high ambient temperature             or voltage
                 unbalance."

        The specifications          for SCA.RP2-B          have similar       provisions.         As the
        motors of SCARP1 are rebuilt,                 similar    protective       devices are normally

        incorporated.       Ihe protective           motor devices described             above are con-

        nected in series          in the circuits         of the push-button           type magnetic
        switch controls        which are now being installed.                  At the suggestion           of
        the Mission,the        GWP operating          agency has taken steps to lock the newer

        type motor control          panels,     thereby prohibiting           manual access by opera-

        tors to the magnetic coils             and thus eliminating            motor damage from this

        cause.     Protective       devices can not entirely           eliminate         motor burnouts,

        but they should help to reduce the abnormal rate that was encountered

        early    in the SCARP1 operations.
        Page 44 [page 361
        The reference      to SCAPP4 might be improved by noting                        that this     loan WELS

        authorized      and its     terms defined         in June   1967, a     time at which the
        seriousness      of the electrifkation             delays on SC!XRP2-A was just               becoming

        evident and construction              on SGARP2-B had not yet begun.                 A.I.D.     had,

        however, discussed these delays with WPDA on numerous occasions ever

        since    1963, and     had been assured by the GOPthat                  the problems encountered

        with SCARP1 would not recur.




                                                           81
APPENDIX I

          Page 42 [?WP 341

          The Report points              out that A.I.D.           financed      SCARPconstruction

          aithough      it     doubted that Pakistan had trained                    personnel        in numbers
          sufficient          to operate     and maintain           the facilities.          This was the
          first      development of its             type in Pakistan          and AID believed             that    it

          would be easier to create an effective                         operation       and maintenance

          organization          closer     to the time when the facilities                   would be ready

          for operation          than before         the project        was started.         Although the
          full    potential       benefit     of the SCARPscannot be obtained without                              better

          operation          and maintenance practices,               the benefits        obtained         even with

          current      management practices              justify      the investment.           The accomplishments

          of SCARP1 are cited               on page 38.            A study by economists of WAPDA

          in February 1970 estimated                  that,    under current           conditions,         the project
          is producing benefits              that amount to 3.5 times the annual costs,                                 using

          a 10 per cent interest               rate in computing the amortization                      of the
          investment.           Efforts     to improve the operation                  and maintenance of the
          project      continue.
          [Chapter     63
   VII.   Chapter 5 - Implementation                  of the Dacca-Aricha              Road Project


          Pages 47 through 4+J
          The comments with respect                  to this       project    relate     largely      to

          inadequate          cost estimating         and the resulting            problems:       delays,        rebidding

          and reduction          in project         scope.     The cost estimate             prepared in connection
          with the original           project        feasibility        study (in 1963) by a U.S.

          consulting         engineering      firm was indeed inadequate.                    At that time,               cost

          data for a project              of this     type to be constructed              by a U.S. firm in

          East Pakistan were not available.                         Similarly,      A.I.D.     was seriously




                                                          82
                                                                                                   APPENDIX I

        hampered in its         review of the estimates             prior      to authorizing           the

        loan by the lack of comparable experience with construction                                 costs in

        East Pakistan.       (The IBRD ran into           similar      problems with a loan for the

        construction      of a highway from Dacca to Chittagong;                        that    project

        is not yet under construction.)               Some of th e errors              in estimating          the

        cost of the Dacca-Aricha            project    may have been avoidable,                  but it was

        impossible      to resolve       the basic problem, the lack of comparable cost
        data.      Whether it would have been better                 to make attempts             to refine         the

        estimates      under these circumstances            instead         of inviting        bids is
        debatable,      since it       is very unlikely      that      such re-estimates            would

        have demonstrated the magnitude of the differences                             (brought     out by

        taking bids)      between the views taken by consulting                        engineers and contractors

        on the likely       cost of constructing           this     project.

        More generally,         however, AID has attempted                 to deal with problems arising

        from engineer's         cost estimates.        Thus M.O. 1223.1--Cost                  Estimating

        Methods for A.I.D.-financed             Capital     Projects         has recently         been revised

        to furnish      improved guidance to host government,                        consultants        and

        A.I.D.     personnel.
        [Chapter 71
VIII.   Chapter 6 - Construction            of Coastal Embankments



        The Report states         that the value of increase                 in agricultural

        production      attributable       to the project          after     its    completion      is
        estimated      at the equivalent       of $44.2 million.                   Other sources show
        a higher     estimate,     such as $58 @illion             computed by the U.S. consulting
        engineers      (Leedshill-DeLeuw)        in their         1968evaluation          report        (p. 249,

        Vol. 1).      We are in no position           to argue for or against                  either     figure




                                                      83
APPENDIX I


    but     suggest         that    a range         of estimates            be shown in the Report.


    Page     60
    The Report         deals        with     the problem              of land      acquisition           for   the    project

    by the Government                of East          Pakistan.           While      the figures           cited     vary

    somewhat from those                    provided       in the          consulting      engineers'           report       for

    June 1970,         it      is   clear      that      land        was not      acquired       on schedule.


    The only      noteworthy               differences           between       the     two sets         of figures       are

    in the      column         headed,       "Acres       of Land Obtained";                 the       engineers'       figures

    show a progression                from      18,000          in    1967 to 26,700          in       1968 and 39,600
    estimated         for      1969,       rather      than      a constant          26,000      for     each of those

    three     years.




                                                                     84
            .                                                                                APPENDIX I
    .   .
.   .
                                                                                          ANNEX "A"



                                      Study     of' Mangl:r Dam Generatic'n

                                    and Transmission        Line     Capability


                'The following      table     shows the degree to which transmission  line
                availability      limited      generating output from Mangla Hydro Electric
                Plant.

                Explanation      of Table:

                Column No. 1 (Available           Generation)

                Each unit has a capability      of about 130 MW when the reservoir         is
                full   and only about 40 MW at low reservoir.     Therefore,       this column
                indicates   the capability    of the units for the periods      indicated.     The
                large figure    indicates  high head and the smaller    figures      low head.
                Thty vary during the year.

                Column No. 2 (Potential           System   Capacity)

                This column indicates    the capacity             of the generators   or the transmjssion
                system whichever   was the limiting              factor.

                During the period from July to October 1967, the generation                   system
                limited the output to 160 MW due to reservoir  water level.                   From
                October 1967to February 1968the generation    and transmission                   systems
                were equal in capacity.

                Column No. 3 (Bottle-Necked            Power)

                Column No. 1 minus          Column No. 2.




                                                                85
APPENDIX       I
                                                                                         ,   .
                                               Output (Mw)                                   * .
                                  *Available        Potential System     Bottle-Necked
   Date                           Generation            Capacity              Power
                                     (1)                    (2)                  (3)



    July-September                160                     160               0
    October-December              200                     200               0

    1968

    January-February              200                     200
    March-November                300                     240
    December                      300-276                 280~              O-20



    January                       264-246                 280               0
    February                      237-174                 280               0
    March                         192-234                 280               0
    April                         264-279                 280               0
    May                           282-300                 280               2-20
    June-November                 400                     280              120
    December                      400-376                 280             120-96
    1970
    January                       368-328                 300-             68-28
    February                      312-256                 300              12-o
    March                         248-216                 3oo               0
    April                         206-240                 300               0
    May                           270-308                 3oo               o-8
    June                          308-312                 300               8-12



    * This schedule does not take into consideration   the time required for
      yearly maintenance (on which reliable data is not available).     It
      takes about one month to complete the yearly maintenance for each unit;
      therefore,  the available power is less than that shown in Column (1) by
      about 100 MWfor at least one month for each unit during the year.       If
      the maintenance were done during the periods when there was insufficient
      transmission capacity, then the bottle-necked   power would have been
      considerably less.    Little power would have been bottle-necked  during
      1967 and 1968. There would have been considerable power bottle-necked
      from June through December 1969, but none thereafter.

  ** Dine jumpers were replaced   to increase    line   capacity   to 280 Mw.

  X-E+Mangla-Gujranwala Section energized at l32-KV to increase system capacity
      to 300 Mw. Prior to this, system capacity consisted only of existing
      132 KV and 66 KV lines.




                                        86
                                                                                    APPENDIX I
    .           4

         NUMBER                                 SCARP       - 2A
*       OF      WELLS                           TIIRCWCI        I C
        900      l-




        800




                                                I I                                 I I
                                                                                                   LAST      WE
                                                                                              TO    OPERA’
                                                                                                    AGENC’




        700




        600




        500 /-




        400 I-




                                        I   I
        300 I-                                                                           WELLS
                                                                                    TRANSFERRED
                                                                                    TO   OPERATING
                                                                                         AGENCY




        200 l-




        1OC I-        -




              a,-

                          1964   1965       1966                      1967   1968                             1969




                                                           87
APPENDIX II

                 PRINCIPAL OFFICIALS RESPONSIBLE

              FOR THE ADMINISTRATION OF ACTIVITIES

                    DISCUSSEDIN THIS REPORT


                                                     Appointed
                       DEPARTMENTOF STATE
                              ---1---
SECRETARYOF STATE:
   William P. Rogers                                 Jan.    1969
   Dean Rusk                                         Jan.,   1961
UNDERSECRETARYOF STATE (note a):
   John N, Irwin                                     Sept.   1970
   Elliot  L. Richardson                             Jan.    1969
   Nicholas deB. Katzenbach                          Ott e   1966
   George W. Ball                                    Feb.    1961
UNITED STATES AMBASSADOR  TO PAKISTAN:
    Joseph S. Farland                                Nov.    1969
    James W, Spain (Charge d"Affairs)                July    1969
    Benjamin H. Oehlert                              Aug.,   1967
    Eugene M. Locke                                  June    1966
    Walter P. McConaughy                             Mar.    1962
    William P. Roundtree                             Aug.    1959


              AGENCYFOR INTERNATIONAL DEVELOPMENT
ADMINISTRATOR:
    John A. Hannah                                   Apr.    1969
    Rutherford M. Poats (acting>                     Jan.    1969
   William S. Gaud                                   Aug.    1966
    David E. Bell                                    Dee;    1962
    Fowler Hamilton                                  Septo   1961
ASSISTANT ADMINISTRATOR, BUREAUFOR NEAR
  EAST AND SOUTHASIA (note b):
    Donald G. MacDonald                              Sept.   1970
    Maurice J. Williams                              Apr.    1967
    William B, Macomber, Jr,                         Feb.    1964
    William S. Gaud                                  Nov,    1961
                                88
                                                                           APPENDIX II
    .        4



.       .
                                                                           Appointed

                                      AGENCYFOR INTERNATIONAL DEVELOPMENT
                                                                        (continued)

            DIRECTOR, MISSION TO PAKISTAN:
                Joseph C. Wheeler                                          Aug.   1969
                C, William Kontos                                          July   1967
                Charles M, Elkinton (acting)                               Mar.   1967
                Maurice J. Williams                                        Aug.   1965
                Donald G. MacDonald                                        Oct.   1963
                John Heilman                                               Mar.   1962
                Frederick  Bunting                                         Aug.   1961

            "Has the authority,  as delegated by the Secretary of State,
             for the overall direction   and coordination of the mutual
             security program.

            bBureau established                   in November 1961.




            U.S.   GAO.   Vash.,   D.C.
                                             L‘            89
Copies  of this report are available      from the
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Copies     are provided     without        charge      to Mem-
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