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Document of The World Bank FOR OMCIAL USE ONLY MICROFICHE COPY Report No. 10477 Report No. 10477-NEP Type: (PCR) SARMIENTO,/ X31680 / T9032/ OEDDI PROJECT COMPLETION REPORT NEPAL BHAIRAWA LUMBINI GROUNDWATER II PROJECT (CREDIT 1316-NEP) APRIL 2, 1992 Agriculture Operations Division Country Department I South Asia Regional Office rhis document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

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Document of

The World Bank

FOR OMCIAL USE ONLY

MICROFICHE COPY Report No. 10477

Report No. 10477-NEP Type: (PCR)SARMIENTO,/ X31680 / T9032/ OEDDI

PROJECT COMPLETION REPORT

NEPAL

BHAIRAWA LUMBINI GROUNDWATER II PROJECT(CREDIT 1316-NEP)

APRIL 2, 1992

Agriculture Operations DivisionCountry Department ISouth Asia Regional Office

rhis document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit: Nepalese Rupee (NRs)

1 Nepalese Rupee at project completion - US$0.033

US$1 at Appraisal = NRs 13.20Project Start NRs 15.50Project Completion = NRs 3C.15

WEIGHTS AND MEASURES EQUIVALENTS

1 meter (m) = 3.28 feet (ft)1 kilometer (km) = 0.62 miles (mi)1 hectare (ha) = 2.47 acres (ac)1 kilo volt (kV) = 1000 volts (v)

ABBREVIATIONS AND ACRONYMS

DCA - Development Credit AgreementDTW - deep tubewellERR - Economic Rate of ReturmFCGO - Financial Comptroller General's OfficeGRDB - Groundwater Resources Development BoardHMGN - His Majesty's Government of NepalIDA - International Development AssociationMOF - Ministry of FinanceMOWR - Ministry of Water ResourcesNRs - Nepalese RupeesNZIDB - Narayani Zone Irrigati(n Development BoardO&M - operation and maintenancePCR - Project Completion ReportSA - Special AccountSAR - Staff Appraisal ReportWUG - Water Users' Group

FISCAL YEAR

July 16 - July 15

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THE WORLD BANK FOR OMCIAL USE ONLYWashington. D.C. 20433

U.S.A.

Office of Directot cetalOpn atims Evakation

April 2, 1992

MEMORANDUM TO THE EXECU.TIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Nepal - Bhairawa LumbiniGroundwater II Project (Credit 1316-NEP)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on Nepal - Bhairawa Lumbini Groundwater Project (Credit 1316-NEP)" prepared by the South Asia Regional Office with Part II of the reportcontributed by the Borrower. No audit of this project has been made by theOperations Evaluation Department at this time.

Attachment

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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PROJECT COMPLETION REPORT FOR OMCIuL USE ONLY

NEPAL

BHAIRAWA LUMBINI GROUNDWATER II PROJECT(Cr. 1316-NEP)

TABLE OF CONTENTS

Page No.

PREFACE .......... .. . . . . . . .*.*. .*. .*. . 1

EVALUATION SUMMARY ........ . . . . . . .*........ . iii

PART I - PROJECT REVIEW FROM IDA'S PERSPECTIVEProject Identity . . .. . . . . . . . . . . . . . . 1Background .. .. .. ........... . 1Project Objectives and Description . . . . . . . . . . . . . . . 2Project Design and Organization . . . . . .... . 3Project Implementation ........... . . . . . .... . 3Project Results.. ........... . 6Project Sustainability . . . .. ........ . 7IDA Performance and Lessons . . .. . . .... . 7Borrower's Performance.. . . ....... 8Project Relationship . . . . . . . . . . . . . . . . . . . . . . 8Consulting Services ............. . . . . . .... . 8Project Documentation and Data . . ........... . 9

PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVEIDA's Perfoimance . . . . . . . . . . . . . . . . . . . . . . . 11Borrower's Own Performance ... . . . . . . . ... . .. . . 11Lessons Learned . . . . . . . . . . . . . . . .. . . 12

PART III - STATISTICAL INFORMATIONTable 1: Related IDA Credits .. ....... . . . . . . . . . 13Table 2: Project Timetable. . . 14Table 3: Cumulative Estimated and Actual Disbursement . 15Table 4: Physical Achievements . . . ..... ... . .... . 16Table 5: Project Costs and Financing . . . . . . . . . . . . . 17Table 6: Extension and Training Activities . . . . . . . . 19Table 7s Studies . . .. . . . . . .. . . . . . . . . 20Table 8t Cropping Patterns in the Stage I Areas . .. . . . . 21Table 9: Incremental Crop Yields in Stage I Area ... . . . . 21Table 10: Project Results . . . . . . . . .. . . 22Table ll Cost Recovery Performance . . . . . . . . . . . . . . 24Table 12: Mission Data .... .... 25Table 13: Compliance with Credit Covenants . . . . . . . . . . 26Table 14s Staff Input . . . . . .. . . . . . . . . . . 27

MAP: IBRD 16432R

This document has a restricted distribution and may be used by recipients only in th. performance.of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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PROJECT COMPLETION REPORT

NEPAL

BHAIRAWA LUMBINI GRO'JNDWATER II PROJECT(Cr. 1316-NEP)

PREFACE

This is a project completion report (PCR) for the Bhairawa LumbiniGroundwater Project, Stage Ii, for which a Credit of SDR 15.1 million (US$16.0million equivalent) was extended to His Majesty's Government of Nepal (HMGN)in March 1983. The Credit was closed on October 31, 1990 after two extensionsof the closing date. The Credit was fully disbursed by March 13, 1991.Several implementation constraints encountered under this project are beingaddressed in the follow-on project, Bhairawa Lumbini Groundwater IrrigationIII Project (Credit 2144-NEP).

Information sources used for the preparation of this PCR include: theStaff Appraisal Report (Report No. 4038-NEP), the Development CreditAgreement, supervision reports, quarterly prog.ess reports as submitted by theBorrower, correspondence between IDA and the Borrower and internal memoranda.Parts I and III of this PCR were sent to the Borrower for review and comments.IDA received the Borrower's comments in late-1990 and incorporated them in thePCR. The Borrower contributed Part II of the report.

No specific field trip was made to collect information for the PCR.The PCR was prepared by staff of the Agricultural Division, Asia TechnicalDepartment.

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PROJECT COMPLETION REPORT

NEPAL

BHAIRAWA LUMBINI GROUNDWATER II PROJECT(Cr. 1316-NEP)

EVALUATION SUMMARY

i. Objectives. The Bhairawa I.umbini Groundwater Project (Stage II) wasto: (i) ensure that the existing tubewell systems developed under Stage I(Bhairawa Lumbini Groundwater Project - Cr. 654-NEP) would be properlyoperated and maintained in accordance with sound engineering standards; (ii)introduce improved tubewell irrigation systems on a pilot basis in the StageII area; (iii) promote the participation of farmers in the project; 'iv)ensure the provision of adequate inp.ts and extension services to farmers; and(v) strengthen the instit:'tions responsible for the planning, design,construction, operation and maintenanc' (O&M) of tubewell irrigation systems.

ii. Implementation. The project made k good start and proceeded smoothlywithout major issue in the early stage ot :- lementation. The projectaccomplihhed most of the physical construct.on works specified in the StaffAppraisal Report (SAR). All 64 tubewell irrigation systems developed underStage I are operating satisfactorily and supplying irrigation water reliably.The operation of 16 tubewell irrigation systems developed with new technology

has been delayed due to failure by the contractot to install electricalsystems to the wells. However, it has been proved that the two new tubewellsystems tested for their operation with artisan flow were highly successful.Farmer participation in the project was remarkable following the success ofreliable irrigation water supply under the project. It was evident thatfarmers constructed field channels and drains by themselves, and supervisedthe local contractor during construction of the main delivery systems. Acontinuous devaluation of the Nepalese Rupees (NRs) against the US dollar(from NRa 13.2 at appraisal to NRs 20.0 by mid-1986) resulted in aconsiderable balance of unutilized funds. The project was revised to add theconstruction of 22 new deep tubewell (DTW) systems using the balance of fundsin the Credit. However, delays were caused by: (a) HMGN's inefficientmanagement of the project's Special Account (SA), imposing internalrestrictions on availability of funds; (b) a trade and transit impasse withIndia, restricting crucial supplies (fuels and spare parts) needed forconstruction; and (c) insufficient annual budget allocation by HMGN,restricting timely procurement of goods and services. To allow for completionof the construction works, the Credit closing date was extended twice for a

total of two years to October 31, 1990. The works carried out were of highstandard. Of the 22 DTWs added, 17 have been drilled and tested. Theremaining works will be carried out under the Stage III project(Cr. 2144-NEP).

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4ii. Results. No new DTW systems under Stage II were fully operational atthe Credit closing due to delay in installing electrical systems. However,the power was expected to be connected to all tubewells by the end of February1991 (see para. 8). There are strong indications that the Stage II area willachieve higher benefits than the Stage I area because new DTW systems: (a) aredesigned and constructed for timeliness and reliability of irrigation watersupply with new technology; and (b) have simpler O&M than Stage I irrigationsystems. In the Stage I project area, average cropping intensities increasedby 662, and yields of paddy and wheat increased by 111Z and 145?,respectively, between 1982 (at the time of appraisal) and 1990. Yields ofother cereal and oil crops all exceeded appraisal projections. With areliable water supply, the project farmers started growing high-val: offseason vegetables and potatoes. Programs designed to train farmers ±r op; Icultivation practices (para. 11) were instituted under the project, andcontributed to large increases in agLicultural production (para. 14). Theappraisal estimate of the Economic Rate of Return (ERR) for new tubewells was122. The ERR has been re-estimated at 15?.

iv. Sustainability. The achievements of the project have had asubstantial positive impact on agricultural development in the project area(para. 13). The following factors will contribute to maintaining anacceptable level of benefits throughout the project's economic life: (a) theorganization of effective and functional water users' groups (WUGs) which willfacilitate sustained project O&M under overall public sector management withincreased users involvement (para. 19a); (b) the reliable and timely supply ofirrigation water w'nich will ensure farmers' confidence in farming, promoteincentives to grow high-value crops, and maximize utilization of farm lands(paras. 8 and 13); and (c) the adoption of improved farming technology (para.11). No major risk factors have been identified (para. 12).

v. Findings and Lessons. The project was successful. Except for theconstruction of 22 DTWs added during implementation (para. 10), the projectachieved all physical works envisaged at appraisal (Table 4). It demonstratedthe strong development impact of reliable irrigation supplies, combined withelectrification and access roads which were necessary adjunct components ofthe project. In addition to the project's success, however, there were thefollowing weaknesses that were identified during project implementation:

(a) Considerable delay took place in implementation, especially in timelyprocurement of essential goods and services, because of HMGN'sinefficient operation of the SA, which was often counter-productivi toproject interests (para. 9a);

(b) The Bank insisted, tanrealistically, that HMGN submit accounts andaudit reports within six months after the close of each fiscal year(para. 19b); and

(c) The Development Credit Agreement made an unnecessary stipulation thatforced farmers to construct field channels and drains (para. 19b).

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A lesson learned from the project is that it was difficult to organizeeffective WUGs, and to persuade farmers to become involved in the projectcycle from an early stage. Once a reliable and adequate supply of irrigationwater "eras secured, and the economic incentive of increased production throughirrig.rion was demonstrated, the formation of WUGs and the construction ofiield channels and drains progressed rapidly. The lessons derived from theexperience have been incorporated in the formulation of thie follow-on StageIII ;w-Ject, Bhairawa Lumbini Groundwater Irrigation III (Cr. 2144-NEP).

.

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PROJECT COMPLETION REPORT

NEPAL

BHAIRAWA LU%3INI GROUNDWATER II PROJECT(Credit 1316-NEP)

PART I: PROJECT REVIEW FROM IDA'S PERSPECTIVE

Project Identity

Name B 8hairawa Lumbini Groundwater II ProjectCredit Number s 1316-NEPRVP Unit s Asia RegionCountry s NepalSector s AgricultureSubsector s Irrigation

Background

1. At the time of appraisal in 1982, agriculture accounted for 602 ofNepal's gross domestic product and provided employment to over 902 of thelabor force. Only about one six-.h of the total land area was undercultivation, of which about 15% was irrigated. About 901 of the cropped areawas in foodgrains, with rice accounting for about 501 of the total croppedarea. Other foodgrains which have been grown in substantial amounts includemaize, wheat, other cereals, and pulses. With increases in crop production(1.1? per annum) offset by populdtion growth (2.61 per annum), per capita foodproduction had stagnated.

2. In the late 1970s, the strategy of His Majesty's Government of Nepal(HMGN) was to develop the Terai for generation of domestic and exportablefoodgrain surpluses as a resource to further development. Since possibilitiesfor area expansion are limited in the Terai, emphasis was given to increasingyields, mainly by expansion and upgrading of existing irrigationinfrastructure and inputs. Initial results from the first IDA-assistedirrigation project in Nepal - the Birganj Irrigation Project (Narayani Zone)(Stage I - Cr. 373-NEP) - indicated that substantial yield improvements couldbe expected from improved irrigation water supply combined with increasedagricultural inputs and effective extension services. HMGN's strategystressed diversification into cash crops whose performance had been promisingand whose market prospects were good.

3. The Bank Group's strategy in Nepal placed major emphasis upon thedirectly-productive sectors (particularly agriculture) and the development ofcomplementary infrastructure. Since IDA's first involvement with irrigationin Nepal in 1973, there has been continuous IDA assistance to the irrigationsubsector (Table 1). The main objective of IDA involvement in irrigation inthe Terai was to improve the reliability of water distribution to the farmthrough both technical improvements in the distribution system, betteroperation and maintenance (O&M), and more effective organization of waterusers based on the existing tradition of cooperation.

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4. The project w's the second phase of the expansion of the tubewellfacilities for irrigation in the western region of Nepal. The project wasprepared for IDA financing during late-1981 through early-1982 by aninternational consulting firm. The project was appraised in February/March1982. Tke Staff Appraisal Report (EAR) estimated total project costs atUS$19.4 million equivalent. Negotiations were held in Washington, DC duringthe period November 29 - December 3, 1982. The IT)A Credit (1316-NEP) in theamount of SDR 15.1 million (US$16.0 million equivalent) was approved by theBoard on January 18, 1983. The Development Credit Agreement (DCA) was signedon March 16, 1983 and the Credit became effective on May 25, 1983. Theproject was scheduled to have a five-year implementation period, with acompletion date of October 31, 1987.

ProJect Oblectives and Description

5. Objectives. The objectives of the project were to:

(a) ensure that the existing 64 tubewell systems developed under Stage Iwould be properly operated and maintained;

(b) introduce improved deep tubewell (DTW) irrigation systems on a pilotbasis over an area of 1,900 ha;

(c) promote the participation of farmers in the project from the earlystage;

(d) ensure the provision of production inputs to farmers and intensifyagricultural extension services and training; and

(e) strengthen the institutions responsible for O&M of tubewellirrigation systems,

6. Description. The project components were:

(a) construction of:

(i) distribution networks (280 km) and drainage system (62 km);(ii) about 500 km of field channels to convey irrigation supplies;(iii) 96 of village roads in Stage I area and 25 km in the Stage II

(iv) tt 80 km of power transmission lines in Stage I area and aboutzm with transformers in Stage II area; and

(v) five inputs storages (100-ton capacity each) and housing forextension staff;

(b) planning, design, installation and operation of 16 new DTW schemes withimproved technology and buried pipeline distribution systems;

(c) procurement of materials, equipment and vehicles for construction,extension activities, and project O&M;

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(d) strengthening of agricultural extension and training;

(e) provision of agricultural production inputs to selected farmers;

(f) provision of techniLAl services, including foreign and localconsultants for project implementation, special studies, aerialphotography and mapping, and

(g) provision of funds for repair and improvement of the Birganj tubewellsystems constructed under Credit 373-NEP.

Project Design and Organization.

7. The project was primarily a follc,-on project of Stage I (BhairawaLumbini Groundwater Project - Cr. 654-.iEP) for expanding and improving DTWgroundwater irrigation facilities. The executing L6ency for the project wasthe Groundwater Resources Development Board (GRDB) under the Ministry of WaterResources (MOWR). The major lesson learned from the Stage I project was theneed to promote and include farmer participation as an integral part of theproject. Another important lesson was that efficient management and O&M ofDTWs were essential for their success, and that due to HMGN resourceconstraints, recurrent budget allocations for O&M were likely to beinadequate. These two lessons were emphasized in the Project PerformanceAudit Report for the Stage I project (Report No. 5261). The introduction ofthe new tubewell design, with undergound pipelines for improved waterconveyance from the pumphouse to the outlet, eliminated the delays inimplementation because of land acquisition problems, and improved overallpumping and water delivery performance. The project's conzept was clear,innovative and well understood by relevant parties, and the project was wellprepared. Its timing and scope were appropriate. Institutional adjustmentsproposed in the SAR helped establish a strong project execrting agency.

Project Implementation

8. General. The project made a good start and proceeded smoothlywithout dela~, in the early stag8 of implementation. All 64 DTW irrigationsystems developed under Stage I are functioning satisfactorily and supplyingirrigation rater reliably. Farmer participation in the project area has beenexcellent. The operation of 16 DTW irrigation systems developed with improvedtechnology was delayed due to failure by the contractor to install electricalsyste s to the wells. However, works were resumed and the power was expectedto be connected to all DTWs by the end of February 1991. The role of the O&MDivisioiL was expanded to actively participate in the preparation of waterdelivery schedules and assist farmers in pianni-g and constructing fieldchannels from outlets to the fields. The Agrict,tural Division concentratedon trasining farmers on water management and irrigated farming. By 1986, thedepreciation of the Nepalese rupee vis-a-vis the US$, from N!Rs 13.2 atappraisal to NRs 20.0, and a further decline to NRs 30.15 per dollar at thetime of project closing resulted in a considerable balance of unutilizedfunds. At the request of HMGN, IDA agreed to: (a) revise the project andadded the construction of 22 DTWs to the original scheme by using

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the balance of funds in the Credit; and (b) extend the closing date by a yearand to complete the entire scheme by October 31, 1989. However, due to delayscaused by the trade and transit impasse with India, and to allow for thecompletion of the additional DTWs, the closing date was extended for a secondtime to October 31, 1990. Based on an exchange rate of NRs 13.2/-JS$, theestimated cost of the project was NRs 258.2 million (excluding the Birganjtubewell component). However, as a result of the rupee's depreciaticn, actualexpenditure at the end of the project was NRs 471.1 million (Table 5), withmore than double the original number of DTWs (16 units) financed. Thedevaluation of local currency against the US dollar enabled the project tocover accrued expenditures and the Credit of SDR 15.1 million was fullydisbursed on March 13, 1991 (Tabl3 3).

9. Critical Factors and Procurement. Three criticaS. countrywidesystemic factors were principally responsible for slowness in projectimplementation, namely:

(a) inefficient management of the Special Account (SA) by HMGN whichcaused considerable delays in implementation and procurement of goodsand services. In effect, the Financial Comptroller General's Office(FCGO) of the Ministry of Finance (MOF) allowed the use of SA onlywithin the limits of sanctioned annual budgetary categories, whichwere always short of the budget sought by the project (item (b)below). The opening of the SA in July 1986 was intended to simplifythe small procurements demanded by the nature of the project.However, because the use of the SA was contingent upon the iniclusionof approved authority in the annual project budget, in a number ofoccasions, the procurement invoices expired, and further delay wasadded as the project management often had to request additionalvalidity, thereby lengthening the already long procurement process.The manner in which the SA was operated obstructed the project forprolonged periods. Following repeated IDA intervention on theoperation of the SA, HMGN formed a task force to review the operationof SAs and its constraints and problems, but the task force has yetto report.

(b) insufficient annual budget ''locations for the project by HMGN alsodelayed procurement of essential goods and services. Requestedbudgets for the project were cut arbitrarily without consideration ofthe works planned for the year. Although additional funds wereprovided later in the year as supplementary budget allocationsfollowing numerous supplications, this made it impossible for theproject to follow systematic annual implementation plans. MOF isaware of the seriousness of this issue, and a study is under way tofind a solution.

(c) the trade and transit impasse with India in FY90, which closed allbut two overland entry points to and from India, causing erraticsupply of fuel and crucial construction materials for tubewells. Thefuel shortage, in particular, stopped operation of heavy equipmentfor well drilling and testing. The project virtually remained

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inactive during this period. This was an unforeseen factor in

project implementation.

10. Physical Works. The construction of village roads and installationof power transmission lines for the Stage I area were completed. All physical

targets set at appraisal for the Stage II area were met or exceeded except for

the construction of a few extension staff quarters due to budget cut. Theworks carried out were of high standard. Of the 22 DTWs added duringimplementation, 17 have been drilled and tested with the remaining works to

continue under the Bhairawa Lumbini Groundwater Irrigation III Project(Table 4). Although no Stage II DTWs were fully operable at Credit closing,several were delivering partial water supplies from artesian flows. Funds for

the repair and improvement of the Birganj tubewell systems constructed underCredit 373-NEP were channeled directly to the Narayani Zone IrrigationDev.elopment Board (NZIDB), and the works were carried out by the projectmanagement of Credit 1715-NEP (Narayani Irrigation III Project) withsatisfactory performance. Details of this component will be reported later

under that Credit.

11. Agricultural Extension, Training, Studies and Inputs Supply. Manyfarmers in the project area had inadequate knowledge of water management and

improved irrigated farming technology. Agricultural extension activitiescarried out at two subcenters established under the project played animportant rcle to the success of the project. Intensive farmer training on

optimum cultivation techniques under irrigated conk ions was instituted under

the project. Nearly 19,000 farmers and field extenbion workers have received

training since the inception of the project (Table 6a). They also establishedwell-organized crop demonstration plots on farmers' fields (Table 6b). Thedemonstration plots for seasonal vegetables were especially popular, and

received great attention from the women in the community. The project had toset up over 20 vegetable nurseries to produce sufficient seedlings. As partof the extension activity, provision was made at appraisal that the projectwould procure fertilizers of an estimated value of US$100,000 for distributionto selected farmers. The aim was to provide fertilizer to progressive farmersso that they could demonstrate the effect of its use in their fields toincrease production, anticipating that other farmers would eventually begin

using fertilizer. The plan had some merits at the time of appraisal, but wasnot implemented due to problems in defining a satisfactory method forfertilizer distribution. Four studies specified in the SAR were carried outand submitted to the Bank. They were: (a) a future groundwater developmentstudy; (b) socioecoromic impact study in the Stage I area; (c) farmerparticipation in the project cycle and cost recovery; and (d) updating of thefeasibility study for the Stage III area (Table 7).

12. Project Risks. No major potential risks were identified by the

appraisal mission, although there was some concern with underutilization of

irrigation facilities in the low-lying areas. This concern later diminished,as farmers in low-lying and waterlogged areas converted their fields into fish

ponds and are now realizing good incomes from fish production.

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Project Results

13. There are three primary results from the project: (a) increasedcropping intensities; (b) increased yields; and (c) increased farm incomes.

14. Agricultural Production. Agricultural data collected regularly overthe years in the Stage I area by the Project's Agricultural Division staffindicate a substantial increase in crop intensities and yields. Both haverisen far above appraisal estimates. Between the time of appraisal (1982) andthe final crop season before the Credit closing (1990), yields of high-yielding paddy, wheat, maize, and pulses increased by 111%, 145Z, 93Z, and129%, respectively. The cropping intensity increased from 1212 at appraisal to201% in 1990. These increases are attributable, among other things, tosuccessful implementation of the irrigated farming training program and on-farm water management (para. 11). It is also evident that most of the low-yielding local paddy has been replaced by high-yielding paddy varieties.Furthermore, there has been a sharp increase in high-value vegetable crops.Farmers are increasingly growing seasonal vegetables and marketing themlocally and in neighboring towns. A comparison between the cropping intensityprojected appraisal and that estimated for the PCR is given in Table 8.Yield comp,-isons are shown in Table 9. The agricultural production data fromthe Stage II areas are not yet available as no Stage II DTWs were fullyoperational at the time the project was closed. However, it is expected thatthe cropping intensity and yields in the Stage II area will increase to atleast the levels of Stage I area as the improved design of DTW systems forthe Stage II area should enable even more timely irrigation water deliverycompared to Stage I DTWs.

15. Economic Rate of Return (ERR). The appraisal estimate of the ERR forall Stage II DTWs (33 DTWs with a net area of 4,500 ha) was about 12%,assuming five years for command area build-up and five to seven years of yieldbuild-up. Based on established crop intensities and yields' data from theStage I area, and actual expenditures incurred, the project ERR at PCR timewas estimated at 15Z. This rate of return is impressive, given the status ofthe new technology introduced, and is largely attributable to the high levelsof incremental agricultural production actually achieved because of thereliable DTW irrigation water supply (Table 10). This has created confidenceand motivation for farmers to participate in farmer training conducted by theextension staff and to follow guidance provided by them. Project managementthroughout the project period conscientiously supported all aspects ofproject's agricultural activities.

16. Other Benefits. The combination of reliable irrigation with twoother key project investments, DTW electrification and access roads, hasproduced a significant synergistic impact on economic development in the area.Provision of electricity for pump operation eventually led to widespread ruralelectrification in the project area giving cause to increased private sectoractivity, including rice milling and cold storage. The construction of farmroads, apart from facilitating O&M of the DTWs, was instrumental in achievingthe benefits from irrigation, since they facilitate delivery of inputs tofarmers and marketing of agricultural produce. They also gave additional

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benefits in the form of increased communication, time and cost savings. Thisis already evident from the manyfold increase in vehicle traffic on theproject roads, including regular bus routes. A significant health benefit tothe local population is the year-round availability of safe drinking waterfrom DTWs (water from the wells comes from the deep aquifer at about 120 m -150 m).

Proiect Susthinability

17. Based on the experience of Stage I DTWF, the project will have asignificant positive iripact on agricultural development and farm incomes inthe project area. Institutional strengthening that took place duringimplementation, particularly the establishment of effective water users'groups (WUGs), will facilitate sustained project operation under overallpublic sector management with increased users' involvement. Water chargeswere levied since 1986 in the Stage I area. Although farmer, had beenaccustomed to receiving water free of charge for many years, in the secondyear that water charges were assessed, the collection efficiency was 69Z(Table 11). This level of collection is a satisfactory indication that theproject will be well sustained. With steady improvement in the availabilityof power and the reliability of water supply, farmers will rapidly adoptimproved agricultural practices and gradually diversify their crop mix toinclude higher value crops leading to increased farm productivity.

IDA Performance and Lessons

18. The project introduced improved tubewell technology utilisingunderground piped water distribution systems, avoided chronic problems withland acquisition and assured reliable water supply when needed. IDA missionsprovided assistance in identifying constraints and formulating suitableproject plans to deal with them. The SAR identified the key projectcomponents required to overcome deficiencies in the existing systems. The SARalso outlined a balanced agricultural development plan for overcomingconstraints that could otherwise impede improvement of agriculturalperformance. Twelve supervision missions visited the project at an averageinterval of six months (Table 12). Consistent Bank staff attention to theproject was apparent in the supervision reports, and constructiverecommendations were made by the various missions. Supervision combining bothgroundwater engineering and agricultural expertise had a favorable impact onboth project implementation and agricultural performance.

19. The following lessons may be learnt from the project:

(a) When water from a tubewell is shared by some 100 different farmers,imposing a disciplined O&H system is crucial to project success. Forthis purpose, the formation of an effective Water Users' Group ineach system was mandated under the project. However, it wasdifficult to organize effective WUGs until water was available andthe economic incentive of increased production through irrigation hadbeen demonstrated. Once a reliable and adequate supply of water wassecured, the formation of WUGs and the construction of field channels

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was rapid. Until this economic incentive was demonstrated, farmershad little desire to participate in the project cycle in the earlystages; and

(b) Insistence by IDA that HMGN submit accounts and audit reports withinsix months after the close of each fiscal year did not recognize thatthe government systems did not allow for publishing reports withinthe time specified. Thus, the DCA was later amended to allow forsubmission up to 12 months after the closing of the fiscal year.

(c) Unnecessary stipulations in the DCA that failure by farmers to carryout the construction of field channels would cause the project toundertake this construction and to recover the costs from thebeneficiaries (item (a) above).

Borrower's Performance

20. Overall performance of project management was satisfactory. As thesame project management established for the Stage I project undertookimplementation of the Stage II project, the project needed little adjustmentin the management structures, and implementation started smoothly.Coordination of project management with other institutions was good. Theproject engineers and extension staff worked harmoniously in advising farmerson scheduling rotational water supply and construction of field channels.They were flexible and responsive for accommodating farmer demands on theextension of the lining of main watercourses and construction of additionaldrainage facilities where appropriate. WUGs coordinated with projectmanagement and participated in supervising minor construction works carriedout by local contractors.

21. Performance and management of the Special Account by the FCGO,however, was generally poor. Although HMGN assured IDA that this matter wouldbe studied and corrective measures taken (para. 9a), no satisfactory solutionswere reported at the time this PCR was prepared. Except for delays insubmitting accounts and audit reports, and, occasionally, quarterly projectprogress reports, the Borrower's compliance with the Credit covenants wassatisfactory (Table 13).

Project Relationship

22. IDA relationships with HHGN and the project management were good andthe positive working relationship played an important role in the succeesfulimplementation of the project.

Consulting Services

23. The project consultant (international firm) employed by the projectprovided training, advice and guidance to project engineering staff in allstages of project implementation, as well as preparation of bid documents andevaluation. Consultant performance was satisfactory, particularly inengineering supervision and developing O&M manuals for tubewells. It is also

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noteworthy that the consenltant assisted in developing a well-staffedmechanical workshop which is the only one in Nepal equipped with adequatespare parts and appropriate equipment. The consultant has maintained a goodworking relationship with the project authority and has also worked closelywith the beneficiaries.

Proiect Documentation and Data

24. Preparation and appraisal concentrated on the appropriate issuesbased on the experience and lessons learned during implementation of the StageI project. The SAR provided a useful framework for the project authority toimplement the project and for IDA's review of project progress. Submission ofhalf yearly project progress reports was frequently delayed; however, althoughsubmission of the project accounts and audits within six months after the endof each fiscal year was difficult for HMGN to comply with (para. 20), the datarelevant to the preparation of the PCR were readily available.

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PROJECT COMPLETION REPORT

NEPAL

BHAIRAWA LUMBINI GROUNDWATER II PROJECT(Credit 1316-NEP)

PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

IDA's Performance

25. Successful completion of the project was only possible because of thecontinued support and critical guidance of the International DevelopmentAssociation (IDA). Earlier misgivings of the farmers toward the project havefaded as they have now seen the benefits from the project. The project deeplyappreciates the understanding shown by IDA in solving the problems encounteredduring implementation of the project. One of many such instances is thesolution of the problem created by the introduction of the Special Account(SA) of the project.

26. IDA personnel conducting direct dialogues with farmers was alsohelpful in strengthening the farmer's confidence and collaboration with theproject. It served well for IDA staff to obtain a first-hand understanding ofthe project's environment and needs.

Borrower's Own Performance

27. Overall performance of the organization participating in the projectwas satisfactory. The project organization developed into a cohesive body,although the works involved required coordination of many differentdisciplines. The project staff has gained experience and confidence that theycould tackle any technical problems of tubewells. The project staff and theProject Consultant have worked together in a coordinated manner. TheAgricultural Divisior. of the project should be complemented for its continuedeffort and hara labor in convincing the farmers to change cropping patterns,use high yielding varieties of seeds, etc., and thus the impact of the projectis highly visible. Some high value agricultural produce such as vegetable andbanana are abundantly grown in the project area. The farmers themselvesdistribute the water in rotation. They also help to maintain the irrigationsystem. Some of the drainage systems in the Stage I of the project have beenconstructed after receipt of continued request for such construction from thefarmers, whereas the construction of drains was discontinued in face of stiffresistance from the farmers ln the initial period. The collection of watercharges is reasonable, since water for irrigation is available wheneverneeded. However, more improvement in collection of water charges isdesirable. A vetiver grass nursery, established in the project area followingthe advice of IDA, performed well. By the request of many small projects inNepal, vetiver grass slips were distributed to them for soil and waterconservation works.

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Lessons Learned

28. Some tubewell systems have been constructed in the lowland. Aslowland areas minimize the use of irrigation water, the selection of areas forconstruction of tubewell irrigation systems should be carefully done.Improvement of existing drainage and construction of new drainage system mayhelp in upgrading some of these lands.

29. SA was introduced for providing sufficient funds in hand to theproject for smooth implementation. However, experience has shown that localrules and regulations sometimes cause the SA to work to the contrary. The useof SA should be avoided in future if HMGN's rules cannot be simplified.

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PART III. STATISTICAL INFORMATION

TIbtl 1% RELATED IDA CREDITS

Credit No. Year ofProject Title Approval Status Purpose

373-lEP 1973 Completed. Followed by To complete and upgrade 28,700 ha5irganl Irrigation Stage II of the Nepal Eastern Canal command(Narayani Zone) area and to provide tubewells

north of the canal.

617-NEP 1976 Completed. One component provided for firstRural Davelopment improvements to small-scale

irrigation schemes in the hills.

654-NEP 1976 Completed. Followed by Development of tubewells andBhairawa-Lumbini Stage II strengthening of agriculturalStage I support services in the western

Terai.

:12-NEP 1978 Completed. Followed by Improvement of Chatra CanalSunsari-Norang Stage II command area, including drainage,Stage I river training and sediment

control works covering 12,000 ha.

806-NEP 1978 Completed. Followed by Follow-on to Birganj Project,Narayeni Stage II Stage III completion of deferred work.

939-lEP 1979 Completed. Included a component for improvingSecond Rural hill irrigation in the MahakaliDevelopment Zone.

1055-NEP 1980 Completed. Improve and extend existingNahak li irrigation system on the farStage I western Terai.

S715-NEP 1986 In progress. To be Rehabilitation of early blocks forNaraynni Stage III completed in 1994. improved water management capacity

and dry season agriculturalproduction.

1727-NEP 1986 In progress. To be Includes construction of 32 ThirdRural Developm ent completed in 1993. schemes and rehabilitation of 18

existing schemes in the hills.

1814-NEP 1987 In progress. To be Follow-on to Stage I, continuingSimeari-Morang cpmpleted in 1994. work on 23,000 ha.

1924-NEP 1988 In progress. To be Follow-on to Mahakali 1, to extendMahakali Stage II completed in 1995 the command area.

2144-NEP 1990 In progress. To be Construction of 73 DTm1,Uhairaa Lumbini completed in 1998. completion of Stage II DTWs, andStage III modification of system to

accommodate farmer management.

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Table 2: PROJECT TIMETABLE

Date Date Datestem Planned Revised Actual

Identification 9/81 9/81

Preparation 9/81-2/82 9/81-2/82

Appraisal Mission 2/21/82-3/6/82 2/21/82-3/6/82

Credit Negotiations 11/29/82-12/3/82 11/29/82-3/6/82

Board Approval 1/18/83 1/18/83

Credit Signature 3/16/83 3/16/83

Credit Effectiveness 3/31/83 5/25/83 5/25/83

Credit Closing 10/31/88 10/31/90 10/31/90

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Table 3: CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTLA(US$ million)

IDA Accumulated disbursement Actual disbursementfiscal year Appraisal Actual total as X of SAR& semester estimate disbursement estimate

2nd 1.0 0.3 30

1st 2.5 0.9 362nd 4.2 1.1 26

lst 6.0 3.0 502nd 8.1 3.8 47

12a8lst 10.3 5.0 542nd 12.3 5.2 42

12E2lst 13.9 6.5 47

2nd 15.3 6.8 44

12fllst 16.0 9.0 562nd 9.8 61

19891st 11.9 742nd 13.4 84

1st 15.4 962nd 16.3 102

1st 18.3 /b 108

La Closing date at appraisal was October 31, 1988. Actual closing date wasOctober 31, 1990. Final disbursement was made on March 13, 1991.

2 Equivalent to cumulative expenditures of SDR 15.1 million, the amount of

the IDA Credit.

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Tabtl 4: PHYSICAL ACHIEVEMENTS

Appraisal Actual LI Achievement asProject Works Unit target achievement X of appraisal

Coinletion of Stage I ProlectOperation tub well systems no. 64 64 100Construction of distribution system km 280 284 01Construction of drainage system km 62 62 100Lining of channels km 100 106 106Power transmission lines km 80 92 115Construction of roads km 96 96 100Construction of project buildings

Input Godown no. 8 9 113Subcenter no. 5 5 100Junior Technical Assistant quarters no. 22 22 100

;M3truction of Field Channelsin.Jtae I frgea km 500 480 La 96

Stace 11 iubswell Systen

Well construction no. 16 16 100Wtll testing no. 16 16 100Distribution system no. 16 16 100Puaphouses and elevated tanks no. 16 16 100Power lines km 35 38 109Access roads km 25 27 108Construction of project buildings

Input Godown no. 5 4 80Subcenter no. 1 1 100Junior Technical Assistant quarters no. 10 4 40

22 Additional Tubewell SvstemsWell construction no. 22Lk 17 Lc 77Well testing no. 22 17 77Distribution system no. 2 0 41Pumphouses and tanks no. 22 0Power lines km 26 0Access roads km 28 28 100

La Most of this construction was carried out by the farmers with project staff and consultant guidance.

Lb Of the 22. 4 wells fiiled and 1 yet to be redrilled; 3 are being redrilled, 1 yet to be redrilled.

LI Carried over to Stage III project.

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Table 5: PROJECT COSTS AND FINANCING

(a) Project Costs(US$ million)

Total ActualAppraisal Estimate TotalAs expressed in As expressed inNRs M US$ H NRs M US$ M

Civil works 50.1 3.8 243.0 /a 4.2

Land acquisition 0.5 0.1 2.6 0.1

Vehicle, equip. & agri. input 16.3 1.2 27.9 5.9 /a

Salaries and O&H 35.0 2.6 73.8 2.8

Technical assist. & training 48.6 3.7 76.0 3.9

Birgani wells 14.5 1.1 - /b 1.9

Completion of Stage Z 29.0 2.2 49.8 2.7

Base cost 194.1 14.7 - -

Contingencies 62.2 4.7 - -

Total 256.2 19.4 471.1 21.4

H - million

/a Supply of materials is included under civil works in NRs, but the costof same supply is included in the vehicle, equipment, and agriculturalinputs category in US dollars.

/b Funds for the Birganj tubewells were directly channeled to NZIDB andexcluded from actual expenditures under this Credit.

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Table 5: PROJECT COSTS AND FINANCING

(b) Project Financing(US$ million)

SAR Actual asSource Estimate Actual Z of SAR

IDA 16.0 18.3 114

HMGN 3.2 3.1 97

Fa mers 0.2 0.1 50

Total 19.4 21.5 111

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Table 6: EXTENSION AND TRAINING ACTIVITIES

(a) TrAining ProgrAMs

ParticipantsActivity Number La Male Female Total

Farmer 1teetfng 8 339 5 344Farmer's Day 4 246 12 258Leader Farmer 560 7,856 77 7,933Field Tour 21 650 25 675Fortnight Training 95 2,958 305 3,2684-H Club Formation 2 43 15 58.unior Technical/Junior TechnicalAssistant Session 35 546 6 552

Panchayat LevelAg Assistant Session 65 2,403 112 2,515

WUG Organization 66 1,707 19 1,726WUGs Follow-Up 46 467 2 469Group Discussions 35 700 70 770Production Group 2 221 221

TOTAL 939 18.784

*I'a These figures are cumulative, and include all activities of the BhairawaLumbini Groundwater II Project from the beginning to March 1, 1990.

(b) Demonstrations in FY 1989/90

Target for Actual Actual as %Type of Demonstration FY 89/90 Achievement La of Target

Result Demonstration 145 128 88Production Demonstration 153 160 105Minikit 60 54 90Kitchen Gardening 240 240 100Vegetable Nursery 21 . 21 100

/A Achievement up to May 30, 1990.

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Table Z: STUDIES

Title Purpose as Defined at Appraisal Status

Groundwater A comprehensive study of past, present, Submitted,Development and projections of future performance 1987.Strategy Study of public and private groundwater

development alternatives.

Socio-Economic Impact study of Stage I area, which Submitted,Impact Study approximates the number of farmers March 1988.

provided with improved or firstirrigation, and the extent to whichthey are benefitted.

Farmer Study on degree of farmer participation Submitted,Participation in the project cycle, their April 1989.Study contribution to construction, cost

sharing, and O&M activities, as well assteps needed to give ownership of StageI tubewells to farmers.

Updated Study which served as a basis for SubmittedFeasibility preparation and appraisal of Stage III April 1989.Study for project.Stage III

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1.,le 8: CROPPING PATTERNS IN THE STAGE I AREAS(Net Area 7,600 ha)

AppraisalAt Appraisal Estimate of Actual X Change

Crop (1982) Future With Project 1990 1982-1990

PaddyeLocal 60 25 2.6 -96HYV 28 60 95.1 240

Pulse 5 14 14.7 194Maize 4 10 6.4 60Wheat 18 50 42.3 135Oilseed 5 10 19.8 296Vegetable- 2 10.5 -Sugrcare 1 2 0.2 -80Potato 4 3.4Other Crops 5.7

TotatCrooinmIntnsoit 121X 177X 200.7K 65.8X

Table 9: INCREMENTAL CROP YIELDS IN STAGE I AREA

Est. Actual PercentAppraisaL Estimate Increment Increment Chanhe

Crop At Appraisal Future Due to Actual Due to 1982 FWOP/Season (1982) Without With Project 1990 Project 1990 1990

(1) (2) (3) M=M(3-M2 M5 WaM(5-M2 M7=(5)+(1) McM(5+(2)POWs -----..-..-..-----..--------..-..-------.---.--.-...- (t/ha)- ..............................................- - * - -

Local 1.25 1.30 2.50 1.20 2.65 1.35 112 103NYV 1.90 2.00 3.50 1.50 4.00 2.00 111 100

Wheat 1.10 1.15 2.90 1.75 2.70 1.55 145 135Naize 1.50 1.60 2.50 0.90 2.90 1.30 93 81Pulce 0.35 0.35 0.70 0.35 0.80 0.55 129 129Oilseed 0.40 0.40 0.70 0.30 0.75 0.35 88 88Sugarcane 17.00 18.00 40.00 22.00 56.00 38.00 229 211Vegetable - - 15.00 15.00 20.00 20.00Potato - 15.00 15.00 25.00 25.00 -

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Table 10: PROJECT RESULTS

(a) Dlrect BenefLts

Item Benefit Estimated Actual Benefitat Appraisal Achieved

No. of Tubewells 64 + 16 - 80 64 + 16 + 17 - 97

Net Cultivable Area (ha) 9,500 12,100

Cropping Intensity (X) 177 201

No. of Farm Families to benefit 4,700 6,120

Increase in Cropped Area (ha) 5,415 (+47X) 12,900 (+113X)

Increase in production:Foodgrains (ton) 27,300 55,300

Increase inFarm Employment (million) 0.76 (+63Z) 0.94 (+78X)

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Table 10: PROJECT RESULTS

(b) ECIOMIC SEIEFIT AD COST STREAMS

Ircreamtel SOneflts 106U 19n4 1965 16 1667 1380 1919 1900 161 1m 0 913 1994 1906 196S

sBnefits with Project 21316 21315 2106 2206 22820 23346 23U61 6M4 0156U 124673 137140 142756 163174 179152Benefits without 21316 21315 2105 2206 22020 23US4 23381 24480 21567 26155 26757 26757 26757 26751

Incrementsl Bene Its 0 0 0 0 0 0 89415 56021 96S16 11G03 115000 142217 152305

Inv estmnt ContsunK cet 14119 17Z31 Zb95O 5 zer5v b5w479 m9R U 1200 nw bow u 4911Z 20W49 g EURO 4oe4Re.eining In. 0 0 0 0 0 0 0 0 0 176641 683 20066 21U23 6961Replacemnt Pu_p/Well 0 0 0 0 0 0 0 0 0 2441 2441 2441 0 0Lno Acquisition 0 0 0 0 0 0 0 0 0 0 0 0 0 16

0oh Costuan Adne * Amun. 0 U Za4 225 15 254 Sw 1u Iwo 195 19 199C =nsul= ten 0 0 0 0 2e47 703 0 0 0 0 0 0 0 0oll Proper 264 o65 0 4790 0 0 0 1290 2678 1970 0 0 0 0A lc. Cr'. 1189 2025 2112 1763 1142 1142 1142 1142 1142 1142 -1567 0 0 00 0 - 0 0 0 0 0 2372 "39 7167 7167 7167 7167 7187 7167

Totsl Costs 16472 19913 20070 812 63762 9160 10000 506657 11507 70133 47430 347 U224 1o4

Net Benfits -15472 -19013 -2W076 -39312 43762 -96160 -100909 -10242 44514 166 62963 6224 100603 138041

Year 1907 19U 1999 2000 2001 2002 2003 2004 2006 2006 2007 2006 2000 2010 2011 2012esnoTits 179152 l79152 1791bZ 113152 175lb2 113b12 1l3152 179lb2 T1112 1795WZ 19715Z 117112 17915! 179l6Z 179115 179152

Be1 fIto 26717 26757 26767 28767 26767 26757 26757 26757 26757 20757 26757 26757 26757 26757 26757 26757

Inc. Den. 152396 162396 152896 152395 152896 162395 162396 162391 163396 162396 1523 162896 152391 162806 16230 152395

Investment Costiep./rump u o 2441 2441 Z441 U 1bl50 J15W0 r350 o U O o U -113mLond Acq. 168 156 16 156 16 158 1U 1 U6 158 1U6 150 16 1C6 156 156 1C8 15U

OU Cost

Manage A Ad. 784 526 196 196 196 264 626 106 196 196 195 195 196 195 196 196Oli Prop. 2617 276 1970 0 0 0 0 1230 2870 1970 0 0 0 0 0 0OUi 7167 7167 7187 7187 7187 7187 7187 7187 7197 7167 7167 7167 7187 7167 7167 7167

Total Cost 10126 10650 11961 m1 098t 7640 42639 43989 17910 9510 7640 7640 7640 7640 7540 -24361

Not. Son. 142269 141846 140444 142414 144856 109768 100408 134486 142886 144866 144865 144866 144666 144966 144866 176768

Economic Rate of Return: 16.05

Assumptione:

- St.te II net area: 4,500 ha- Crops, yields and cropping Intensity assumed for calculating the conoeie rate of return is b on actual data obtained In the

Stag I area (ee Table 6).

1. All cost streams ore expresed in 1988 constnt price.2. The beneIt period extends frm 1962/88 to 2011/12.3. Actual capital coats, Incurred beginning in 1962/88, adjusted with SCF when necesry, are basis for the capital cost strea.4 Operating cost are assumed constont after 11; b fit are as d constnt after 196.5. Limited production increaoe were assumd In the without project scenario.

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Table 11: COST RECOVERY PERFORMANCE

Water Charge CollectionsYear Assessment Rate Area Collection as X of

(NRs) Assessed (NRs) Assessment

1986/87 700,000 200/ha/yr 7,000 322,000 461987/88 800,000 200/ha/yr 4,000 550,000 691988/89 1,000,000 200/ha/yr 6,000 595,000 601989/90 /a 2,800,000 400/ha/yr 7,000 - -

LA Water charges for 1989/90 were under collection durirng PCR preparation.

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Table 12: MISSION DATA

Stage of Month/ Number of Specializations PerformanceProject Cycle Year Persons Represented /A Rating StatusAt

Appraisal Mission 02/82 8 1(A), 1(E), IE(3)l(N), 1(H), 1(P)

Supervision 1: 11/84 3 1(A), 2(IE) 2

s;upervision 2: 06/85 1 1 (IE) 2

Supervision 3: 03/86 3 1(A), 2(IE) 2

Supervision 4: 09/86 2 1(A), 1(IE) 2

Supervision 5: 03/87 2 1(E), 1(E) 1

Supervision 6: 10/87 2 1(E), 1(E) 1

Supervision 7: 02/88 1 1(A) 1

Supervision 8: 11/88 1 1(A) 1

Supervision 9: 04/89 2 2(A) 1

Supervision 10: 11/89 1 1(A) 2

Supervision 11: 03/90 1 1(A) 2

Supervision 12: 11/90 2 1(A), l(IE) I

YA A - Agriculturallst, E - Economist, IE - Irrigation Engineer,H - Hydrologist, N - Environmental Specialtst, P - ProcurementSpecialist.

2k 1 - Problem free or minor problems, 2 - Moderate problems,3 - Major problems.

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Table 13: COMPLIANCE WITH CREDIT COVENANTS

DCA DoceriptionSection of Covonant Status Co mments

J.02(a) Maintain project office under the In compliancedirection of the project mnager.

8.02(b) Establish CROQ and maintain a In complianceproject coordinating comitteeet up In Stage r.

8.08(a) Employ project consultants. In compliance

8.03(b) Arrange for Naraysni project In complianceconsultants to assist In carryingout rehabilitation and 0CA of theBirganJ tubewells.

8.04(c) Establish by 11/01/83 an MAE In complianceunit.

8.05(b) Furnish estimated annual In compliance'inancial requirements.

8.06(c) Maintain record for the progroess In complianceof the project.

8.06(f) Prepare and furnish a PCR within In compliance* months of final disbur se nt.

_.07(a) Ensure that no tubewell will be In compliancodrilled until farmers havo agredto join WIG, and pay watercharge.

8.07(b) Take action as necessary to cause In compliancefarmers to construct fieldchannels and drains.

8.07(c) If field channels and drains are In compliance Field channels wore built bynot constructed by farmers, the farmers with guidance ofproject shall carry out such project staff.works.

3.08 Furnish by 11/01/88 draft 0&M In comp lance Draft submitted 12/88. andmanual and final version by final In 11/84.11/01/84.

8.09(a) NEA shall Inspect and test the In compliancepower supply facilities andsupply power within two monthsafter completion of waterdistribution system.

3.09(b) Operote 83 kV tranmission line In c mpliance Provided from the nationalfrom Gandek West Station. grid through Butwal and

Candek Statlons since12/29/85.

4.01(d; Furnish annual audit reports not In compliancelater than 12 onthu after theend of each fiscal year.

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OCA DoscriptionSection of Covenant Status Commonts

4.02 Ensuro that the tubewell scheeas In complianceare properly maintained andoperated and that adequateprovision of staff and funds Ismde.

4.08(a) Cause Agricultural Inputs In compliance Improved seeds are still notCorporation (AIC) to make fully available.available a supply ofagricultural inputn.

4.04(a) Establiah by 03/31/83 a technical In complinnce Comittee established incommittee chorged with preparing 5/83. Proposal submitted tonew water charge proposal for IDA In 8/84. HMUN thantubewells and submit it to IDA BY approved committee's12/81/88. recom mndations in 3/86.

4.04(b) Introduce by 03/31/84 a new In compliance Introduced now system insystem of water charges. 8/90. Fixed flat rate of

400/ha/yr irrespective ofcrops gr;wn from FY90/91.

4.04(c) Until the now system is In compliance See 4.04(b) above.introduced, collect water chargesat the rates at least In effoctas of 12/82 for public irrigationsystem.

4.04(d) At least three years following In compliance Irrigation law 2045 has beenthe Introduction of the new promulgated since 4/04/89.system, the adequacy of thesystem would be reviewed.

4.05(c) Channel through the Project In complianceManager all budget requests androleasse for the AgriculturalDivision (AD).

4.05(b) Make the AD accountable to the PM In compliancefor Its administrative andfinancial matters.

Table 14: STAFF INPUT

Tosk FY81 FY82 FY88 FY84 FY85 FY8S FY87 FY88 FY89 FY90 FY91 TOTAL

Proappraiael 2.6 0.9 3.Appraisal 50.6 8.6 69.Negotiation 2.7 2..Supervision 0.1 0.4 10.6 9.6 7.2 11.8 13.0 9.2 17.0 4.0 78.Administration 0.2 0.6 0.1 0.Processing 2.5 4.8 7.Review 0.2 0.PCR Preparation 5.0 5.

TOTAL 2.6 64.1 16.6 11.2 9.7 7.4 11.8 13.0 9.2 17.0 9.0 161.6

Source: World Bonk, Auia Disbursements Division.

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