ISLAMABAD, July 10: The Asian Development Bank has stopped loan for a Rs8 billion flood protection plan because of inefficient management and poor performance of the project.

According to a letter sent by ADB Country Director Marshuk Ali to the economic affairs division, the loan stood closed on June 30.

The government had sought one-year extension in the loan. The ADB’s share in the project was of $100 million.

As a result of the cancellation of the loan, about 100 flood protection associations had been dissolved, leaving over 150 schemes incomplete and causing considerable loss during the ongoing flood season, sources in the ministry of water and power said.

Sources said the bank had asked the government to make certain changes in “implementation arrangements based on the consistent performance of the project, in order for the ADB to consider the extension”.

The government did not change the implementation arrangements but proposed to strengthen project monitoring.

In a letter to the government, the ADB said the poor performance of the project was because of inefficient management by the executing agency, the Federal Flood Commission. Unless that was rectified, there was little scope for completion of the project in the extended period, it said.

The ADB had proposed appointment of news staff to support the project, including a project director reporting to the secretary for water and power, and strengthening of the monitoring unit.

It had asked the government to release outstanding payments to consultants and non- government organization Pattan besides submitting a revised implementation and payment schedule.

Sources in the ADB said the government did not respond to the bank’s reminders, which informed it on June 28 that the loan would be closed on June 30 if the demands were not met.

The ministry of water and power informed the ADB on June 30 that the execution of the project had been handed over to the provinces.

“In the wake of current floods in the country and the crucial stage of implementation of important flood works, the ADB’s withdrawal from the project shall neither be in the public interest nor the bank’s interest,” it said.

The ADB, however, said the contents of the letter “lacked substance as no consideration was given to ADB’s proposals and no action was taken. This reiterates our concern over ownership of the project and lack of commitment of the concerned agencies.”

“With this background, the ADB was left with no option but to close the loan on the scheduled date. We regret to inform, the loan, therefore, stands closed on June 30, 2005, as informed to the government of Pakistan in the meeting chaired by the Minister of State for Economic Affairs on June 30, 2005,” it said.

The ADB has asked the executing and implementing agencies, including the Federal Flood Commission and the provincial irrigation and drainage authorities, to submit withdrawal applications to it before July 15.

It has asked the governments of the NWFP, Balochistan and Punjab to submit their liquidation applications for closing their imprest accounts by July 15.

The ADB had also recommended that policy decisions should be taken on review of flood cess recommendation study, implementation of training programme and review of classification of rivers by the federal and provincial governments.

It had also demanded testing of model flood forecasting and early warning system of the Indus basin and installation of radars, high frequency radios and telemetry system, but in vain.