PAKISTAN has been bestowed with a large irrigation infrastructure, commanding a land area of around 14.3 million hectares, and yet hardly any attempt is being made to curtail and rationalise the difference between operational costs and water rate.
A lifeline for the livelihoods of a majority of rural population, the infrastructure comprises of three large reservoirs — Tarbela, Mangla and Chashma — 23 barrages and 12 river-linking canals. At least 45 distributing canals spread over 60,800km serve water at farm gate through 140,000 watercourses.
Some studies suggest the estimated replacement cost of the irrigation system to be up to $70 billion. But being decades old and coupled with official neglect, most of the infrastructure is in a shambles.
The gap between water tax and the operation and maintenance cost in Punjab has now increased to 96pc says the irrigation minister
Its poor state not only puts the wellbeing of millions of people at risk but also fails to produce the desired efficient delivery services. A World Bank report states that the Indus delta is degrading at an annual rate of $2bn.
Public investment in the irrigation sector is on a decline the world over and Pakistan is no exception. The reasons are a falling economic rate of return on irrigation projects, — when there are better investment options at hand for limited resources — rising construction costs and poor cost recovery.
The Punjab government allocated Rs16bn for the irrigation department last year. Of this Rs8.8bn was consumed on payment of salaries to the staff, leaving just Rs7.2bn for operation and maintenance of the large irrigation network. As per estimates of the department’s officials, they need at least Rs50bn annually to keep the canal system operational.
To meet operational costs farmers around the world are charged accordingly. But here too, Pakistan lags behind as water rates are kept low for fear of political backlash and rulers lack the will to make a decision in this respect.
The situation is worse in Punjab compared to other federating units as the water rate there was fixed in 2002-03 at a flat rate of Rs85 per acre for Kharif crops, which consume more water, and Rs50 for Rabi crops with low water needs. The rates have not been revised since.
In Balochistan, the water rates for Kharif crops were Rs378 per acre for cotton, Rs726 for sugar cane, and Rs210 for wheat, Rabi crop, in 2008-09. In Khyber Pakhtunkhwa during the same year, the rate for cotton was Rs250 and Rs200 per acre for wheat, while in Sindh these were Rs93.07 per acre for cotton, Rs181 for sugar cane and Rs53 for wheat.
The gap between water tax and the operation and maintenance cost in Punjab, which was 44 per cent in 1992 has now increased to 96pc as the province recovers only Rs2bn per annum as water tax against the operational cost of Rs50bn, says Irrigation Minister Mohsin Khan Leghari.
An attempt is being made to somehow curtail and rationalise the difference between operational costs and water rate, says the minister and adds that the department is working on three proposals for the purpose.
One is to impose a flat tax of Rs900 per acre — Rs566 per acre for Kharif and Rs334 per acre for Rabi crops — to achieve the target of recovering the total operational and maintenance cost.
Another is to increase the water tax at 6pc per annum since a moratorium was imposed on it in 2003 — that totals 90pc for the last 15 years. And yet another is to take into account the rise in crop price and enhance the tax accordingly. For example, if wheat procurement price was Rs280 per 40kg in 2003, it has increased to Rs1,300 per 40kg since. The water tax may be raised proportionally, Mr Leghari says.
Punjab had been increasing water rate in the 1970s, 80s and 90s to offset some of the impact of the increasing operational and maintenance costs. For example, it had made a 25pc increase in 1978, 1981, 1982 and 1993. A 10pc raise was introduced in two following years, 1994 and 1995, while a 30pc increase was made in 1996 and then 10pc each in 1997 and 1998.
Mr Leghari says the three proposals for rate increase will be placed before the provincial cabinet shortly, though he is not sure if and when any one of them will be adopted by the cabinet, despite the financial crunch the province in general and the irrigation department in particular is facing these days.
Published in Dawn, The Business and Finance Weekly, February 11th, 2019