ISLAMABAD, April 27: The federal government is preparing a Rs200 billion 'contingency plan' outside the normal budgetary funding to kick-start a couple of mega water projects over the next five years.

A senior government official told Dawn that the concept of preparing a contingency plan had emerged after recent debates and exercises on issues of large dams, like Kalabagh and Bhasha, and other irrigation projects.

The plan would be kept sufficiently flexible so that it could respond to more favourable funding circumstances. The objective is to increase funding to the water sector beyond the targeted 0.5 per cent of the GDP to be outside of the Public Sector Development Programme (PSDP), but not off-budget.

Official estimates suggest that the water sector investment programmes, which are already part of a medium-term investment plan, a 10-year perspective plan and Wapda's 'Vision 2025', would require up to Rs600 billion.

The decision to commit a major chunk of funding to the water sector, in addition to the normal PSDP, would still be made within the broader budget and fiscal framework established by the finance ministry.

Given the cost of mega-projects, these projects may be considered outside of PSDP until their full funding is committed. By holding them separate, the government does not require to squeeze out good, high-priority projects in the overall system while waiting to see if financing for these projects materializes.

The government is faced with a situation, said the official, where there was still no provision for scaling up investment in inter-provincial drainage infrastructure to control waterlogging and salinity, through canal modernization, if carried out as an integrated system.

The World Bank estimates that 72 per cent of the incremental expenditure over the period 2005-07 projected by the ministry of water and power is allocated to projects started in fiscal 2003 and 2004, but the throw-forward is only reduced by 38 per cent, leaving a commitment of about Rs214 billion for the next five years.