Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 4000

PROJECT PERFORMANCE AUDIT REPORT

INDIA - GODAVARI BARRAGE PROJECT(CREDIT 532-IN)

June 21, 1982

Operations Evaluation Department

This 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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ABBREVIATIONS AND ACRONYMS

GOAP - Government of Andhra Pradesh

GOI - Government of India

ICB - International Competitive Bidding

IDA - International Development Association

LCB - Local Competitive Bidding

FOR OFFICIAL USE ONLY

PROJECT PERFORMANCE AUDIT REPORT

INDIA - GODAVARI BARRAGE PROJECT(CREDIT 532-IN)

TABLE OF CONTENTS

Page No.

Preface ............................................................ i.....Basic Data Sheet ....................................................... iiHighlights ..... ................................................... iv

PROJECT PERFORMANCE AUDIT MEMORANDUM

I. SUMMARY ................................................... 1

II. ISSUES ................................................... 2

A. International Competitive Bidding (ICB)for Civil Works .................................. 3

B. Supervision ...................................... 5

Attachment I: Borrower's Comments .................................... 6Attachment II: Borrower's Comments .................................... 8

PROJECT COMPLETION REPORT

I. SECTOR SETTING ....................................... 17

II. FORMULATION .......................................... 17

The Existing Weir........................... ............... 17Preparation, Appraisal and Agreement......... ........... 18The Project............................... ............... 19Project Design ........................... ............ 19Engineering Design........................... .......... 20Implementation Schedule............................ ...... 20Cost Estimates............................. . ........... 20Engineering Implications of Failure

(as visualized at appraisal) ........ ......... .21

Agricultural Implications with Failure(as visualized at appraisal) ........................ 22

Pre-Appraisal Construction Progress ............... ...... 22

This 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.

TABLE OF CONTENTS (Continued)

Page No.

III. IMPLEMENTATION ..................................... 23

The Issues at Negotiations ................................... 23

Conditions of Effectiveness .................................. 24

Start-Up .................................................... 24

Bidding Experience on Civil Works Procurement ........... 25

Bidding Experience on the Gates .............................. 27

Construction Problems ....................................... 28

Failure of Dowlaiswaram Anicut ........................... 28

Pumping Water into the Eastern Canal .................. 30

Quarry Channel ........................................... 30

Collapse of Cofferdam ..................................... 30Construction Progress ....................................... 30

Appointment of a Negotiating Committee .................. 34

Failure to Allow for Local Competitive Bidding .......... 34

Implications of the Delay in Completion of Project ...... 35

Quality of Construction ...................................... 35

Project Coordination ........................................ 36

Construction Costs .......................................... 36

Disbursements .............................................. 36

Compliance with Credit Covenants ........................... 37

The Bank's Performance ...................................... 40

Project Benefits and Economic Analysis ................... 40

SUPPORTING TABLES

Table 1 - Maximum Flood Discharge at Godavari Barrage - 1975 to 1980

Table 2 - Project Cost Estimates and ExpendituresTable 3 - Quantities of Materials Used in Construction

Table 4 - Disbursements during Project PeriodTable 5 - Cost and Benefit Streams for Economic Analysis

LIST OF ANNEXES

Annex 1 - Constitution of a Negotiating Committee to Consider the

Claims of M/S National Projects Construction Corporation,Limited

- 1 -

PROJECT PERFORMANCE AUDIT REPORT

INDIA - GODAVARI BARRAGE PROJECT(CREDIT 532-IN)

PREFACE

This is a performance audit of the Godavari Barrage Project inIndia for which Credit 532-IN in the amount of US$45.0 million was approved on

February 11, 1975. The credit was fully disbursed and closed on June 30,1981, with a delay of one year.

The audit consists of a memorandum prepared by the OperationsEvaluation Department (OED) and a project completion report (PCR) datedMay 28, 1982. The completion report was prepared by the South Asia Regionaloffice, partly on the basis of a visit to India in April 1981. The audit isbased on a review of the Appraisal Report (525-IN) dated January 10, 1975, the

President's Report (P-1561-IN) of January 23, 1975, the Development Credit and

Project Agreements dated March 7, 1975, and the PCR together with a review ofcorrespondence with the Borrower and internal Bank memoranda on project issuesas contained in Bank files and interviews with Bank staff who have beenassociated with the project.

A copy of the draft report was sent to the Borrower on January 6,1982. Comments received from the Government of India have been taken intoaccount and are reproduced in Attachment I and Attachment II of the PPAM.

On the basis of this abbreviated procedure, the audit agrees withthe major findings of the PCR. The audit memorandum elaborates on two issues

which are important to this project as well as future irrigation projectsto be financed by IDA.

- ii -

PROJECT PERFORMANCE AUDIT BASIC DATA SHEET

INDIA - GODAVARI BARRAGE PROJECT(CREDIT 532-IN)

KEY PROJECT DATA

Appraisal Actual or

Item Estimate Current Estimate

Total Project Cost (US$ million) 69.9 87.5

Overrun (%) - 25Credit Amount (US$ million) 45.0 45.0

Disbursed ) - 45.0

Cancelled as of March 31, 1982 0.0Repaid )- 0.0Outstanding) - 45.0

Date Physical Components Completed 06/79 06/83Time Overrun (%) - 92

Economic Rate of Return (%) 44 60

Financial Performance GoodInstitutional Performance Good

Cumulative and Actual Disbursements(US$ 000,000)(FY Ending)

1975 1976 1977 1978 1979 1980 1981

Appraisal Estimate 3.0 16.0 32.0 40.0 44.0 45.0 -Actual 5.7 15.5 19.4 25.7 30.4 37.8 45.0Actual as % of Estimate 190 97 61 64 69 76 100

OTHER PROJECT DATA

Original Actual or

Item Plan Estimated Actual

Government's Application 01/ /69

Negotiations 12/-/74Board Approval 02/11/75Credit Agreement Date 03/07/75

Effective Date 06/09/75

Closing Date 06/30/80 06/30/81Borrower Government of India

Executing Agency Government of Andhra Pradesh

Fiscal Year of Borrower April 1 through March 31Follow-On Project None

- iii -

MISSION DATA

Month/ No. of No. of Man- Date ofYear Persons Days ays Report

Identification 01/69 2 45 90 03/69Preparation 06/74 - - Unknown -Pre-appraisal None

Appraisal 06/74 4 - 80 06/74

Total 170

Supervision I 07/75 1 12 12 07/75Supervision II 02/76 1 4 4 02/76Supervision III 12/76 1 12 12 01/77Supervision IV 2-3/78 3 5 15 04/78Supervision V 10/78 1 3 3 01/79Supervision VI 04/81 2 3 6 05/81

Total 52

Completion 04/81 1 3 3 08/81

COUNTRY EXCHANGE RATE

Name of Currency (Abbreviation) Rupees (Rs)

Years: Exchange Rate:

Appraisal Year Average - 1974 US$1 = Rs 7.976

Intervening Years Average - 1975-80 US$1 = Rs 8.400Completion Year (January - June) 1981 US$1 = Rs 8.500

- iv -

PROJECT PERFORMANCE AUDIT REPORT

INDIA - GODAVARI BARRAGE PROJECT(CREDIT 532-IN)

HIGHLIGHTS

The objective of the project was to ensure a continued supply ofperennial irrigation water to 400,000 hectares in the delta of the GodavariRiver by constructing three barrages and completing another one across thefour branches of that river. An old existing weir at the project site wasin imminent danger of collapse and if this were to happen an estimated 3.4million tons of crops would however be lost annually.

The project was identified by a Bank irrigation reconnissancemission in 1969 but it was not appraised until June 1974, when the Borrowerfirst agreed to use ICB for civil works construction following a change inBank group policy to permit a seven and one-half percent preference for localcontractors. The project was estimated to cost almost US$70 million of whichUS$45 million would be financed by Credit 532-IN and the remainder by thegovernments of India and Andhra Pradesh.

The project was expected to be completed in June 1979, but the fullproject likely will not be completed until June 1983. One reason for thisdelay was the collapse of an old weir in July 1976 during a high flow, monsoonseason. With commendable foresight, the Bank had insisted at negotiations onincorporating into the project plan emergency preparations at the weir site.As a result, the Irrigation Department succeeded in containing the damage tothe old weir and to the river bed and in minimizing agricultural losses in the

delta. Other reasons for delay were: very difficult construction conditions,slow mobilization and financial problems of the civil works contractor,

nonadaptable construction methods, and government rules that imposed con-

straints on management.

The estimated final cost of the project is US$87.5 million which

represents an overrun of about 25%. The objectives of the project have beenlargely attained despite delays in completion. The incomes of about 150,000

farm families involving almost a million people, have been protected (except

during the collapse of the old weir) and will continue to be protected for along time in the future. Rural employment in the command area has also

benefitted. Mainly as a result of higher commodity prices (real) and lower

operations and maintenance cost than assumed at appraisal, the re-estimated

economic rate of return is 60% compared with 44% estimated at appraisal. Onelesson to be learned from this project is that some of the effects of a

disaster can be avoided by good planning based on past experience and in-formation at hand (PCR paras. 2.06, 3.26-3.28).

- v -

Other points that may be of special interest are:

- project appraisal was delayed by four to five years due toBorrower's reluctance to use ICB for construction of civil works;however, little interest in contracts was shown by foreign firmsand none submitted bids (PPAM paras. 1 and 8);

- uncertainty about local conditions may have reduced contractors'

interest in bidding on civil works (PPAM para. 12);

- the adherence to of ICB procedures improved the quality of civilworks design specifications and tender documents, according toBank/IDA staff (PPAM para. 15); and

- on site assistance (supervision) likely would have improvedimplementation performance of the project (PPAM para. 16).

PROJECT PERFORMANCE AUDIT MEMORANDUM

INDIA - GODAVARI BARRAGE PROJECT

(CREDIT 532-IN)

I. SUMMARY-V

1. The Godavari Barrage was one of eight projects identified by a Bank

irrigation reconnaissance mission which visited India in January 1969. Two of

the identified projects--the Kadana Irrigation Project (Credit 176-IN, 1970)and the Pochampad Irrigation Project (Credit 268-IN, 1971)--were financed

quite quickly, but preparation of the Godavari Barrage Project was soon halted

due to the issue that arose over the requirement of international competitive

bidding (ICB) for the civil works. Although the old existing structure (weir)

was in imminent danger of collapse and had been flagged by a high-level

Government of India (GOI) committee in 1965 for immediate replacement, it was

not until April 1974 that the Government of India agreed to the use of ICB for

civil works following a change in Bank group policy to permit a seven andone-half percent preference for local contractors and asked for IDA assistance

in financing the project. The project then was appraised in June 1974 andapproved in February 1975.

2. The objectives of the project were to ensure continued supply

of perennial irrigation water to 400,000 hectares, to protect the incomes of160,000 farms, involving almost one million people and to protect employ-ment of the area's agricultural labor force.

3. The project was the first IDA-supported operation in India's irriga-

tion sector under which GOI had agreed to international competitive biddingfor both civil works and the mechanical engineering component. ICB tenders

were floated separately for civil works and for manufacture, supply and

installation of gates, etc. Contracts were awarded to two Indian firms (both

Government of India undertakings). Although there was some interest fromforeign firms during the pre-bidding stages, no foreign firm submitted a bidfor civil works and only one firm (in joint venture) bid for the water control

equipment contract. Considerable time was required to award the contracts due

to non-responsiveness to tender specifications which resulted in a call forrebidding and finally, negotiations to resolve some persistent differences inthe bids.

4. Work on the barrage commenced in December 1975. The appraisal

report contemplated project completion in June 1979 and a credit closing dateone year later. However, the project as planned had not yet been fullycompleted by the closing date. Barrage construction and installation ofradial crest gates were completed shortly after that date and the highway

1/ Adapted from PCR.

-2-

bridge over the piers is planned for completion about Jung 1982. The projectcompletion, therefore, will be about three years late.1 These delays canbe attributed to: breaching of the existing weir, very difficult constructionconditions, slow mobilization and financial problems of the civil workscontractor, non-adaptable construction methods, and constraints imposed onmanagement by government rules and regulations. It is also likely thatsupervision and implementation assistance by the Bank were spread too thinunder the prevailing circumstances. Only four supervision reports are onrecord for January 1977 to May 1981 (average interval: 17 months).

5. In retrospect, the Bank's role in expediting construction could havebeen more effective if it had stressed the speedy construction of the basesection (raft) of the new barrage only, instead of broadening priorities toinclude gates as well. The construction of the base section was urgentlyneeded to protected the old weir from collapsing and from a catastrophicer osion of the river bed at the site in event of weir failure. Whereas, the

gates provided a water supply improvement which will not be fully realizeduntil the follow-on system modernization program is undertaken and completed.In insisting on an implementation target of four years for the new barrage asa whole, the Bank overestimated the implementation capacity of the IrrigationDepartment. As it turned out, see para. 4, one section of the old weircollapsed during the construction period before the base section of the newbarrage had been completed, and the resulting erosion of the river bed loweredwater levels in some of the diversion canals upstream of the barrage, causingconsiderable losses to agriculture in the delta. With commendable foresight,the Bank insisted at negotiations on appropriate emergency preparations at theweir site to minimize damage in case of failure of the existing weir duringthe construction period. Sufficient barges and stones were stockpiled at theconstruction site, and, as a result, the Irrigation Department succeeded incontaining the damage to the old weir and to the river bed and in minimizingagricultural losses in the delta.

6. The estimated final cost at completion in June 1983 is estimated tobe Rs700.O million compared with an estimated cost at appraisal of Rs559.0million. At about 25%, this is a rather modest overrun compared with similarBank/IDA projects implemented during the last half of the 1970's. Most of thecost overrun was a consequence of the breach in the old weir, which occurredin July 1976.

7. The objectives of the project have been largely achieved despite thecollapse of the old weir during implementation and some uncompleted minoritems. GOAP and the contractor are to be complemented for the excellentquality of works constructed. The incomes of about 150,000 farm families

1/ The Borrower has noted that some minor works will not be completed untilJune 1983 (see Attachement I, page 1).

- 3 -

involving almost a million people have been protected (except during thecollapse of the weir), and rural employment in the command area has ben-efitted. The economic rate of return at completion has been estimated at 60%,compared with 44% estimated at appraisal. The increase in the rate of returnis mainly the result of higher commodity prices (real) and lower operationsand maintenance cost than assumed at appraisal.

II. ISSUES

A. International Competitive Bidding (ICB) for Civil Works

8. The Godavari Barrage Project, together with seven others!', wasidentified in 1969 as a result of an irrigation reconnaissance mission.However, it was not until 1974 that the Godavari Project was appraised due tothe requirement of IDA that civil works would be subject to ICB. Two otherprojects, Kanada and Pochampad as already noted (para. 1), were approvedbetween 1969 and 1971. Neither project was required to employ ICB for civilworks. In one case, Kadana, it was noted in the appraisal report that theproject was designed for low cost, labor intensive construction methods and,therefore, foreign firms likely would not be interested in bidding; in theother case, Pochampad, it was stated that a large part of the major civilworks contracts had already been awarded by local competitive bidding and thatIDA would make an exception for the remainder. In January 1974, the executivedirectors approved a new policy which would grant a 7-1/2% preference to localcontractors in countries where per capita income was less than US$200. Withthis change in policy, the Borrower requested financing of the GodavariProject with the provision that ICB would be used for civil works. Two of theother five projects identified by the reconnaissance mission in 1969 were alsoapproved subsequently. One, Maharashtra, required ICB for civil works but theother, Gujarat, did not. However, both of the second phases of these twoprojects were required to use ICB for civil works. Further, five other largescale irrigation projects2/ in India which stipulated ICB for civil workscontracts have subsequently been approved by IDA. In addition, four mediumand small irrigation projects were approved for support by IDA but ICB forcivil works was not required.

9. As noted in the PCR (para. 3.13), a total of 28 organizationspurchased tender documents for the civil works contract of the GodavariProject. Twenty-five of these were Indian construction firms. None of the

1/ Mahi-Kadana (Gujarat); Pochampad (Andhra Pradesh), Cauvery Delta (TamilNadu), Jayakwadi-Stage 1 (Maharashtra), Tawa (Madhya Pradesh); KrishnaGodavari Delta (Andhra Pradesh), and Upper Krishna (Mysore).

2/ Chambal Command Area Development, Periyar Vaigai, Karnataka, Punjab andUttar Pradesh Public Tubewells.

three foreign firms that purchased tender documents submitted a bid and onlyseven Indian firms submitted bids. None of the bids were in full compliancewith the tender documents, mainly due to numerous exceptions to the tenderconditions. New price quotations were solicited from all the bidders with thestipulation that all qualifying conditions would be withdrawn. Only two firmswithdrew all conditions for two arms of the barrage, and three others withdrewall conditions for another arm. In order not to delay construction foranother full production season, the Government of Andhra Pradesh (GOAP)decided, with IDA's approval, to negotiate with the lowest bidders. The awardwas then made to a local contractor, and work commenced on the barrage inDecember 1975.

10. More interest was shown by foreign firms in bidding on contractsfor the water control equipment. Seven bids were received including one by ajoint venture which included a foreign firm. After problems similar to thoseencountered with bid documents for the civil works had been resolved, thecontract was awarded to a local firm.

11. Of the eight irrigation projects noted in para. 8 which required ICBfor civil works, foreign firms received none of the contracts.

12. Friction, misunderstanding, delays and significant resource cost arefrequently involved in the Bank's procurement requirements stipulated inloan and credit agreements, especially those involving IC1 . ICB has itsbenefits and costs; where the benefits mainly are due to increased quality andlower unit cost resulting from mass competition and costs mainly are due totime delays and document preparation that may be associated with ICB. In areview of Project Performance Audit Reports for 19 projects that cited ICB asan issue! , eight failed to attract foreign bidding; six of these projectsinvolved civil works. The primary reason cited for lack of interest was thatdomestic competition was too keen. Other reasons were domestic price policyand lack of knowledge of internal country conditions. In one project, theBank requested that the tender documents include information on foreignexchange restrictions, taxes, etc., in order to reduce the uncertainty aboutlocal conditions and thus increase foreign competition. It is possible thatuncertainties about local conditions and legal constraints reduced the parti-cipation of foreign firms in the bidding on civil works for the GodavariProject.

1/ For a more general discussion of this subject see OED Report No. 3557 AnInterim Report on Procurement Issues in Bank-financed Projects. July 15,1981.

2/ Source: OED's Project Performance Information System.

- 5 -

13. The firm that received the contract for civil works in the GodavariProject had start-up and financial problems which contributed to the delay incompletion of the project. This does not imply that a foreign firm would nothave had similar problems. Such a conclusion would need to be based, atleast, on a comparison of performance by local and foreign firms under similarcontracts, information that is not available. By all accounts, the quality ofconstruction in the project is excellent.

14. In the Godavari project, the provision of information on speciallocal conditions such as taxes and foreign exchange conversion conditionsmight have improved foreign competition. However, if there are specialconditions that are set to discourage foreign competition in a country, thesemay need to be reviewed with respect to the 7.5% preference granted to localfirms-V.

15. Despite the fact that there were no foreign bids for civil works,some Bank staff feel that following the ICB procedures had the effect ofimproving the quality of the civil works design specifications and the

tender documents, which in turn improved implementation performance. Thequality of design and tender documents is improved because the engineers whoprepare them know that they will be reviewed more closely and widely.

B. Supervision

16. It appears that increased supervision, especially in the earlypart of the project, could have improved performance and reduced the eventualdelay in project completion. The intervals of the four supervisions under-taken during the first three years were 8, 10 and 14 months. The firstmission, as a matter of necessity, dealt only with procurement of civil works

1/ The Borrower does not agree that the project [may have] experienced lackof interest from foreign firms for civil works on account of constraints

such as higher income taxes, legal constraints and uncertain localconditions, citing local competition and labor intensive methods ofconstruction as the reasons, see Attachment I. The Borrower alsopoints out that it is the Bank's uniform policy to allow a 7.5 percentpreference in cost to local firms in those member countries where percapita income is below US$265 [the current figure is US$370].

- 6 -

and water control equipment. The second mission took place two months afterwork commenced on the barrage, which is reasonable. But the third missiontook place several months after commencement of the construction season, andthe following mission was not in the field until about six months after thestart of the season. It was during this last period that the supervisionmission observed that the civil works contractor was having mobilizationdifficulties and financial problems. More frequent supervision might haveameliorated these difficulties. Some projects staff believe that continuouson site implementation assistance (supervision) during the start-up periodwould have improved project performance.

7 - Attachment IPage 1

BORROWER'S COMMENTS

INDEMBASSY, WASHINGTON

FROM G.K. ARORA, ECOFAIRS

TO: DR.REDDY, ADVISOR TO ED, BANK

No.127. REGARDING PPAR ON GODAVARI BARRAGE PROJECT, CREDIT 532-IN.

AS INTIMATED EARLIER, WE ARE STILL AWAITING COMMENTS FROM GOAP. WE

HAD REQUESTED YOU FOR SEEKING EXTENSION OF TIME FOR FURNISHING OUR

COMMENTS TILL APRIL 16 WHICH MIGHT HAVE SINCE BEEN ALLOWED BY THE BANK.

HOWEVER, TO ENSURE THAT OUR CASE DOES NOT GO BY DEFAULT, ON THE BASIS

OF OBSERVATIONS MADE BY THE MINISTRY OF IRRIGATION AND THE PLANNING

COMMISSION, WE ARE COMMUNICATING OUR PART COMMENTS AS FOLLOWS: QUOTE.

GODAVARI BARRAGE PROJECT HAS BOTH COST AND TIME OVERRUNS. IT IS EXPECTED

TO COST APPROXIMATELY RUPEES SEVEN HUNDRED MILLION AND NOT RUPEES SIX

HUNDRED TEN POINT SIX MILLION AS INDICATED IN THE PPAR. ALTHOUGH THE

MAJOR WORKS ARE LIKELY TO BE COMPLETED BY JUNE 1982, SOME MINOR (FINISHING)

WORKS WOULD PROBABLY CONTINUE BEFORE14HIS DATE AND BE COMPLETED BY JUNE

19821 PARA. WE DO NOT AGREE WITH THE PPAR WHEN IT SAYS THAT THE PROJECT

EXPERIENCED LACK OF INTEREST FROM FOREIGN FIRMS FOR CIVIL WORKS ON ACCOUNT

OF CONSTRAINTS SUCH AS HIGHER RATES OF INCOME TAX, LEGAL CONSTRAINTS

AND UNCERTAIN LOCAL CONDITIONS. IF INCOME TAX RATES AND LEGAL CONSTRAINTS

WERE THERE, WHICH HAVE UNIFORM APPLICABILITY, HOW IS IT THAT FOREIGN

FIRMS HAVE BEEN TAKING VERY KEEN INTEREST AND ALSO WINNING MANY CONTRACTS

EVEN UNDER WORLD BANK ASSISTED PROJECTS IN AREAS OTHER THAN CIVIL WORKS.

EVEN IN GODAVARI PROJECT, ALTHOUGH SOME FOREIGN FIRMS SHOWED INTEREST

IN THE WATER CONTROL EQUIPMENT CONTRACTS, THE FACT IS THAT THE PECULIAR

LOCAL CONDITIONSIN INDIA WHICH ARE EMINENTLY CONDUCIVE TO LABOUR INTENSIVE

WORK WOULD NORMALLY NOT ATTRACT ANY FOREIGN FIRMS. IT SHOULD BE EASILY

RECOGNIZED THAT VERY FEW FOREIGN FIRMS WOULD BE INTERESTED IN AND USED TO

THE EXECUTION OF CIVIL WORKS BY LABOR INTENSIVE METHODS ESPECIALLY WHEN

1/ It has been determined by the Indian Executive Director's Office that the wordbefore should read beyond and 1982 should read 1983.

Attachment I

Fage 2

- 8 -

THE EQUIPMENT WAS TO BE BROUGHT INTO INDIA WITH ATTENDANT DISADVANTAGES

INCLUDING THE PROBLEMS IN MAINTENANCE OF SOPHISTICATED EQUIPMENT. IN

THIS CONTEXT ,WE ALSO DO NOT AGREE WITH BANK'S SUGGESTION THAT THE 7.5

PER CENT PREFERENCE IN COST MADE AVAILABLE TO THE LOCAL CONTRACTORS IS

UNWARRANTED. APART FROM THE FACT THAT IT IS THE BANK'S UNIFORM POLICY

TO ALLOW A 7.5 PER CENT PREFERENCE IN COST TO LOCAL FIRMS IN THOSE MEMBER

COUNTRIES WHERE PER CAPITA INCOME IS BELOW DOLLAR 265 IT IS EVIDENT THAT

IN THE CASE OF THE GODAVARI BARRAGE PROJECT THE PRIMARY REASON FOR LACK

OF INTEREST BY FOREIGN FIRMS WAS THE VERY KEEN DOMESTIC COMPETITION.

THIS HAS BEEN RECOGNIZED BY THE BANK ITSELF IN ITS PPAR. PARA. THE

PPAR ALSO MENTIONS THAT COST RECOVERY UNDER THE BETTERMENT LEVY AS

MEASURED BY FUNDS RECEIVED IN THE STATE TREASURY IS NOT VERY SATISFACTORY

IN INDIA. WHETHER THIS METHOD OF ASSESSING COSTS AND CONSEQUENT COST

RECOVERY COMPLIES WITH CONDITIONS OF COVENANT WOULD BE SUBJECT TO LEGAL

lMTEPPRu TrON. WE HAVE NOT SO FIR LIEN II GONSULT WITH GOVERN-ut

OF ANDHRA PRADESH ON THIS COMMENT MADE IN THE PPAR AND THEREFORE RESERVE

OUR OBSERVATIONS. UNQUOTE. WE SHALL TELEX OUR FURTHER COMMENTS,IF ANY,

AFTER RECEIPT OF GOAP'S COMMENTS. REGARDS.

FOREIGN

-9-

ETAT MOST IMMEDIATE * Attachment IIPage 1

SHRI H N RAY, E.D.(BANK), CARE INDEMBASSY, WASHINGTON

FROA: G.K. ARORA, JOINT SECRETARY ECOFAIRS

NO. (.) REFER MY TELEX TO REDDY ON APRIL 8,1982, COMMUNICATING

COMMENTS ON OED'S PPAR ON GCDAVARI BARRAGE PROJECT CREDIT

532-IN (.) E HAVE SINCE RECEIVED COMNENTS FROM GOAP wHICH ARE

REPRODUCED BELO;i (.) THESE MAY KINDLY BE COMMUNICATED TO THE OED

FOR INCORPORATION IN THEIR FINAL PPAR (.) 4UOTE (.) AAA PAGE 2 PARA ft

OF THE SUMMARY: "THESE DELAYS CAN BE ATTRIBUTED TO ........

A DEFECTIVE CONSTRUCTION METHOD AND MANAGEMENT INFLEXIBILITY

(.) COMMENTS OF THE STATE GOVERNMENT (.) THE GODAVARI BARRAGE

PROJECT DEPARTMENT HAS TO FOLLOw THE TERMS AND CONDITIO'NS OF THE

AGREEMENT AND DISCHARGE ITS FUNCTIONS WITHIN THE FRA-iE.4CRK OF

THE RULES AND REGULATIONS OF THE STATE GOVERNMENT (.) THIS

BE ING A GOVERNMENT ORGANISATION, IT CANNOT FUNCTION AS FLEXIBLY

AS ANY PRIVATE ORGANISATION (.) CERTAIN RULES AND REGULATIONS

ARE TO BE FOLLOWjED (.) ON THE OTHER HAND, THE CONTRACTORS SEEK

RELIEF BEYOND THE SCOPE OF THE CONTRACT (.) AS REGARDS DEFECTIVE

CONSTRUCTION iETHOD, THE CC1STRUCTION PROBLEMS AND PROGRESS

E HAD BEEN DISCUSSED AT THE PROJECT SITE eITH THE WORLD BANK MISSIONS P

++DURING THEIR VISITS (.) THESE ASrECTS wERE ALSO DISCUSSED IN

S THE VAR.OUS TECHNICAL CONSULTATIVE COM'iITTEE mEETINGS AD THE

DEPARTMENT HAS lDOPTED A COURSE OF ACTIO; WHICH vAS CONSIDERED

PRACTICABLE (.)

Attachment II

-10- Page 2

PARA (.) 83B PARA 3..0 ON PAGE 16 (.) COMMENTS OF THE STATE

GOVT. (.) THE SUGGESTION MIGHT BE POSSIBLE FOR IMPLEMENTATIO

WHERE THE RIVERS ARE COMPARATIVELY SMALL BUT DO NOT APPLY WELL FCR

A MIGHTY RIVER LIKE THE GODAVARI (.) FURTHER, THE THREE IRRIGATION

CANALS HAVE ONLY A LIMITED'DISCHARGING CAPACITY AND ARE NOT MEANT

FOR CONVEYING SURPLUS HIGH FLOOD DISCHARGES CF THE RIVER (.)

FOR EXAMPLE. THE UNEXPECTED DISCHARGE IN THE RIVER DUPING

. *4%OVEMBER 1977, WHEN IT WASHED AWAY THE COFFER DKvS, ;dAS OF THE

ORDER OF 2 LAKH CUSECS WHICH BY NO MEANS COULD BE DIVERTED THROUGH

THE CANALS, THE CARRYING CAPACITY OF WHICH, ALL PUT TOGETHER, DOES

NOT EXCEED 15000 CUSECS AT THE MOST (.) MOREOVER, THE EXISTING

SYSTEM IS ONLY AN ANICUT SYSTEM wHERE THE CANALS CAN TAKE WATER

THAT COMES NATURALLY TO THEP ,AS DISTINCT FROM A RESERVOIR SYSTEM,

'4HERE THE FLOOD WATER COULD BE IMPOUNDED ON THE UPSTREAM SIDE

AND, IF NEED BE, RELEASED THROUGH THE CANALS TO ARREST SPILLING

OVEP TWE Qa0 I T MY, H' O4EVER, EE POSSIBLE 'C(C H

THE 3-FOOT SHUTTERS OVER THE ANICUT TO ARREST THE FLOW OVER THE

ANICUT (.) DIVERTING SURPLUS 'ATER THROUGH CANALS IS NOT A PRACTICABL

+PRACTICABLE SOLUTION IN THIS CASE AS THE CANALS HAVE ONLY A

LIMITED CARRYING CAPACITY (.)

- _1 Attachment IIPage 3

PARA (..) ZCC PARA 3.41 PAGE 16 "THERE IS EVIDENCE THAT

THE CONSTRUCTION ACCESS PROBLEM TO THE PROJECT SITES..... WAS

NOT FULLY APPRECIATED' AND PARA 3.42 "AN EARLIER AND ACCELERATED

SCHEDULE FOR CONSTRUCTION OF THE SLUICES WOULD HAVE ASSISTED IN

THIS PROBLEM " (.) COMMENTS OF THE STATE GOVERNMENT (.) THE

ARRESTING OF FLOW OVER THE ANICUT IS POSSIBLE ONLY FOR FLOODS

OF A STAGE OF NOT MORE THAN 3 FEET OVER THE ANICUT, BUT THERE

AGRIN THE PROBLEM TO BE FACED IS THAT THE WORK AREAS ON THE BAR

UNDER CONSTRUCTION HAVETO PUT UP wITH HIGHER WATER LEVELS, CAUSING

E FURTHER HARDSHIP TO THE CONSTRUCTIO:4 IN PROGRESS (.) HENCE,

EVEN AT THE TIME OF FLOODS BELOW THE 3-FOOT DEPTH, A BALANCE HAS

TO BE STRUCK BETWEEN HOLDING UP THE WATER BY RAS+ RAISING THE

3-F%OT S.HUTTERS OF THE ANICUT TO CREATE DRY CONDITIONS ON THE

OWNSTREEDOWNSTREAM OF THE ANICUT, OR ALLOW THE SHUTTERS TO DE

FLAT TO FACILITATE LOW WATER LEVELS AT THE MAIN BARRAGE WCRK

AREAS, DEPENDING UPON THE INPORTANCE OF THE WORK IN PROGRESS

(.) AS SUCH THE READYNADE SOLUTION FOR LAYING GOOD ACCESS ROADS

ON THE DOv4ST.REAM OF THE WEIR LIES NEITHER IN UTILISING THE

SURP4USSING CAPACITY OF THE

- 12 - Attachment IIPage 4

IRRIGATION CANALS NOR IN EARLY CCNSTRUCTION OF THE SLUICES (.)

A PRACTICAL SOLUTION WOULD LIE IN GREATER RESOURCEFULNESS ON THE

PART OF CONTRACTORS IN ADAPTING qUICKLY TO THE TIME-TO-TIME

CHANGES BY KEEPING IN READI;*ESS DIFFERENT MODES OF ACCESS TO BE

PUT TO USE ACCORDING TO THE DENMADS CF THE SITUATION , AS WAS

DEMONSTRATED BY M/S H.C.C. DURING THEIR 4ORKI,G ON DC4LAISHIARAN

ARM IN THE YEAR 1976-77

PARA (.) DDD PARA 3.43 "THERE IS ALSO EVIDENCE THAT THE

INCLUSION OF THE PERT CHART IN THE TENDER DOCUMENTS IMPEDED RATHER

THAN AIDED THE CONSTRUCTION EFFORT'' .... "WHILE THESE FAILINGS

WERE RECOGNIZED BY PROJECT MANAGEMENT AND CONTRACTOR, THERE

WAS ALMOST A BLIND ACCEPTANCE OF THE ORIGINAL CO;STRUCTION PERT

E CHART AND UNWILLINGNESS TO CONSILER MODIFICATION IN CONSTRUCTIO;i

APPROACH AND MANAGEMENT" (.) COMMENT OF THE STATE GOVER!iEiENT

(.) WHEN IT HAD BEEN RECOGNIZED E THE DEPARTMENT THAT THE PERT

CHART PROGRAMME COULD NOT BE ADHERED TO AND WAS TOTALLY INADAPTABLE,

THE DEPARTMENT HAD EXERCISED CLOSE MC,ITORING OF THE DAILY PROGRAMME/

PROGRESS WITH A SET-UP OF A SPECIAL MONITORIN.G DIVISION UNDER

THE DIRECT CONTROL CF THE CHIEF ENGINEER, GO-DAVARI BARRAGE PROJECT

AND HENCE MUCH SIGNIFICANCE WAS NOT ATTACHED TO SUZH A PERT

$1 (.) HENCE THE NEED FOR MODIFICATION TO THE PERT WAS NOT FELT (.)

- 13 - Attachment II

Page 5

PARA (.) EEE PARA 3.44 PAGE 17 (.) COMNENTS OF THE STATE

GOVT. (.) IN BIG CONTRACTS AS IN THE CASE OF GODAVARI BARRAGE

PROJECT, IT IS ALWAYS POSSIBLE THAT THERE ARE CERTAIN DIFFICULTIES

E IN INTERPRETING THE CONDITIONS OF CONTRACT BY DEPARTENT AD THE

CONTRACTORS, THOUGH BCTH THE AGENCIES ARE -ORKING FOR THE SAi'E

PURPOSE VIZ. EARLY COMPLETION OF THE PROJECT (.) AS POINTED OUT

EARLIER, THE DEPARTMENT HAS TO WORK WITHIN THE FRAME.WORK OF CERTAIN

RULES AND REGULATIONS AND THE ISSUES CF DISAGREENENT wITH THE

CONTRACTORS HAVE TO BE SOLVED .WITHIN THE FRAf';EWORK OF THE

..END OF THREE PAGE ....ps - - "-- .- - 9

P-4::

DEPARTMENTAL RULES (.)

PARA (.) FFF PARA 3.L15 OF PAGE 17 'ONE MAJOR SOL CE OF DELAY IN

THE COMPLETION OF CONSTRUCTION WAS GOAP'S SLOWNESS IN APPROVING

A DESIGN CHANGE FOR THE BRIDGE OVER THE BARRAGE ' (.) COMMENT

OF THE STATE GOVT. (.) .

OF THE STATE GOV ORK OF BRIDGE OF THE PROJECT IS ALMOST

THE LAST ITEM OF THE BARRAGE ,'ORK (.) ON ACCOUNT OF PRACTICAL

CONSIDERATIONS, THE DESIGN OF THE BRIDGE HAS BEEN CHANGED OVER

FROM R.C.C. TO P.S.C. (.) THE SUBSTRUCTURE AND PIERS OF THE EA+

BARRAGE COULD NOT BE CCNPLETED WITHIN THE ORIGINAL STIPULATED

PERIOD DUE TO VARIOUS REASONS INCLUDING THE BREACH OF OLD ANICUT, CON

+CONSTRUCTIONAL DELAYS ETC. (.) CONSE,UENTLY, THE WORK ON THE

Attachment IIPage 6

P.S.C. BRIDGE WAS ALSO DELAYED (.) THERE WAS SOME TIME LAG IN

FINALISING THE DECI*DESIGN CF THE BRIDGE AS CERTAIN DESIGN ISSUES

WERE UNDER CORRESPONDENCE WITH THE CONTRACTORS AND THE CONTRACTORS

COULD ACT FURNISH THE RE,4UIRED INFORMATION IN TIME (.)

PARA (.) dGG PARA 2.01 PAGE 1 "AS IRRIGATION DEMAND IN THE

COMMAND AREA INCREASED , THE WEIR CREST WAS RAISED AND STEEL

SHUTTERS ADDED , RAISING THE POND LEVEL BY 1.19 M OVER THE ORIGINAL

DESIGN LEVEL " (.) COMMENT OF THE STATE GOVT. (.) AS SEEN FROM

THE REPORT OF THE GODAVARI HEAD dORKS DIVISION. THE CREST OF

THE ANICUT WAS PLUS 39 FEET PRIOR TO THE YEAR 1866 AND THIS LEVEL

WAS RAISED BY 0.75 FEET DURI4G THE YEAR 1998 AND 3-FGOT SHUTTERS

WERE ADDED SUESE4UENTLY, BRINGING THE PO4KG) LEVEL TO PLUS 41.75

FEET (.) THUS THE RISE IN POND LEVEL IS (41.75 MINUS 38.00 ) EWUAL TC

3.75 FEET THAT IS 1.14 M. AND NOT 1.19 M. AS MENTIONED IN THE

REPC7 .)

PARA (.) HHH PARA 3.14 OF PAGE 9 "NATICNAL PROJECTS CCrSTRuCTIO

E -N SUBMITTED THE LO EST SINGLE BID .... WHICH WAS 190 ABOVE THE

ENGINEERS' ESTIMATE ... " AND FOOTNOTE 1/ON PAGE 10 (.) COMM-ENT

OF THE STATE GOVT. (.)

... END OF PAGE FOUR a::::

- 15 - Attachment IIPage 7

P-5.

THIS POSITION IS NOT CORRECT (.) THE ESTIMATES WITH WHICH THE

BIDS 'ERE COMPARED WERE CURREiiT AT THE TIME OF PREPARATION OF

TENDER SCHEDULES AAD INVITING TENDERS AND ARE NOT OUT-DATED

BY 3 OR 4 YEARS (.) UNqUOTE (.) REGARDS (.)

FOREIT+ --FOREIGI

COLLS:- Z-A99 13n' 152035

MEA/JK/11125

CORRECTIC1 IN N-256.PAGE /Z-1P9

PAGE FOUR .. LINE AFTER COMMENT OF THE STATE GOVT.(.)THE WORK OF BRIDGE OF THE PROJECT IS ALMOST THE LAST ITEM OF

THE BARRAGE WORK (.) ON ACCOUNT OF PRACTICAL CONSIDERATIONS,THEDESIGN OF THE.BRIj,E HAS BEE4 ..... ETC.PL CRT TKS ....

- 16 -

INDIA

CREDIT 532-IN

GODAVARI BARRAGE PROJECT

PROJECT COMPLETION REPORT

May 28, 1982

- 17 -

INDIA

GODAVARI BARRAGE

PROJECT COMPLETION REPORT

I. SECTOR SETTING

1.01 The project was the third irrigation project in Andhra Pradeshfinanced by IDA - the two preceding ones being the Andhra Pradesh Agricul-tural Credit Project (Cr 226-IN, 1970) and the Pochampad Irrigation Project(Cr 268-IN, 1971).

1.02 Andhra Pradesh, with an area of 27.5 million hectares and a (1981)

population of 53.4 million, is one of the largest States in India. In terms

of size and population it compares with Italy. It is a predominantly agricul-tural State, 82 percent of its population being rural. About 40 percent of

the total area of the State is cultivated. Rice, millet, pulses, and ground-

nuts are the major crops. A quarter of the total cultivated area is under

irrigation. The rest depends upon rainfall, which ranges from 500 mm annually

in the southwest to 1,100 mm in the northeast.

1.03 The main source of irrigaI- in Cne State are two major rivers,the Godavari and the Krishna, and their tribLtaries. Numerous irri''ation

canals branch from these rivers. The upland areas ube rainfed tanks andgroundwater for irrigation.

II. FORMULATION

The Existing Weir

2.01 The project was to construct a new barrage (weir) across the lower

Godavari River to replace an existing weir which was in imminent danger of

collapsing. The existing Godavari weir, built entirely of bricks and masonry,was constructed during the years 1847-1852. As irrigation demand in the

command area increased, the weir crest was raised and steel shutters added,raising the pond level by 1.14 m over the original design level. As the

weir is founded on sand and as flood flows are large, erosion immediately

downstream from the structure was a continuing problem and constant mainten-

ance was necessary. In spite of the maintenance efforts, however, the

condition of the structure steadily deteriorated.

2.02 By 1965 deterioration of the Godavari weir had progressed to such

a degree that a high-level committee was set up by the Ministry of Irrigation

and Power, GOI, to advise on immediate remedial measures and on the desirabil-

ity of reconstruction. The committee recommended immediate construction of

a new barrage and provided outline designs and cost estimates for the work.

However, due to a shortage of development funds, work was only started in 1971and less than 5% of the construction had been completed by appraisal time.

- 18 -

2.03 The primary cause of deterioration was erosion on the downstreamside of the weir, due in part to flows across the weir but also :n some areasto strong lateral flows along the toe of the weir. The secondar, cause ofdeterioration was piping 1/, aggravated by erosion of the downstieam apron.Severe piping of fill from beneath the weir caused concentration of load ontothe cylindrical brick caissons which partially support it. This in turncontributed to structural failure of the foundations.

2.04 Preparation, Appraisal and Agreement. In January 1969. a BankIrrigation Reconnaissance Mission visited India at the request or the Govern-ment of India. It identified eight irrigation projects for Bank Group assis-tance including the Pochampad Project and the reconstruction of the GodavariBarrage in Andhra Pradesh. For the latter, preparatory work soon came to ahalt due to the issue that arose over the Bank's requirement of internationalcompetitive bidding for the civil works included in the project. In April1974, on the basis of the new Bank group policy regarding preferences forlocal contractors, the Government of India asked for IDA assistance in imple-menting the project. The project was appraised in June 1974 after a shortperiod of preparatory work by the FAO/IBRD Cooperative Program.

2.05 A report entitled "India - Appraisal of the Godavari Barrage Project"was completed in September 1974 and circulated as a basis for negotiations.Negotiations were held in Washington in December 1974. Draft developmentcredit and project agreements were finalized March 7, 1975. July 7, 1975 wasspecified as the effective date. Board presentation was on February 11, 1975.

2.06 The project was novel in a number of respects: Firstly, it was thefirst project for India with a large civil works component suitable for inter-national competitive bidding, where the 7-1/2 percent preference for localcontractors applied. This new policy was expected to expose Indian contractorsto foreign competition, which was believed would strengthen the Indian contract-ing industry. A special effort was made during negotiations to assist theproject authority in preparing tender documents in order to make them conformto international practice. Secondly, the reconstruction of the Godavari Barragewould not create any significant additional benefits to the economy or to thebeneficiaries. It rather was to ensure that benefits, which have been derivedfor more than a century from the Godavari waters and which were in jeopardy,would continue to be available to the 160,000 farmers in the command area.And thirdly, the project was not entirely free from risk. It was correctlyfeared that the old weir, or one section of it, could fail in a flood, whilethe new barrage was being constructed. The cost estimate for the new barragecontained a contingency allowance should failure occur during the constructionperiod. It was recognized that a breach of the weir would result in greatlosses to the farmers and the economy and in fact the economic viability wasanalyzed on the basis of losses that could occur in agricultural productionif failure were to happen. In order to keep this risk as low as possible, anagreement with the Government of Andhra Pradesh and with the Central Governmentwas negotiated for the new barrage to be constructed in the shortest period of

1/ Piping is the movement of soil particles by percolating water throughthe body of the dam, leading to the development of gradually wideningseepage channels.

- 19 -

time possible and to provide adequate arrangements for emergency repairs tothe old weir in the event of failure. Failure did actually occur a year afterproject effectiveness with a major crop loss in the area served by one of thethree irrigation canals that divert at the barrage site.

The Project

2.07 The project involved the construction of a barrage across the lowerGodavari river at Dowlaiswaram to secure irrigation water for a command areaof about 400,000 ha in the districts of West Godavari and East Godavari. Thebarrage replaced an existing weir, which was in danger of collapse.

2.08 The new barrage is located 24 meters upstream from the old weir anduses the existing structure as its downstream protective apron. The barrage is3,600 meters long and consists of four sections, separated by small islands.It is divided into 175 bays, each of which are equipped with a crest gate.The gates raise the pond level one meter higher than the level of the exist-ing weir. Three main canals serve the command area in the Godavari delta.Some 160,000 holdings, with an average farm size of 2.5 ha, are supplied withwater from the weir. About 65 percent of the farms are owner-cultivated.Average annual farm income at time of appraisal was about Rs 7,500 as aresult of intensive cultivation of the command area, most of it under peren-nial irrigation.

2.09 The Godavari delta is one of the most productive agricultural areasof eastern India. The most important crop is paddy, which covers more than90 percent of the area in the wet season (kharif) and about one third of thearea in the dry season (rabi). About one half of the kharif crop and 80%of the rabi crop are high-yielding varieties of rice. Average paddy produc-tion in the area during the five years preceding appraisal was about 1.4million tons. Other crops in the command area are sugarcane (perennial) andpulses, edible oilseeds and chillies. Cropping intensity is approximately150%. Total net value of production in the area at that time was estimatedat Rs 900 million. The proposed new barrage was to help safeguard thisproduction.

2.10 The project included also the execution of a technical study forpreparation of a second-phase project that would concentrate on command areadevelopment in the Godavari delta, particularly modernization of irrigationand drainage, groundwater development and on-farm works. In addition, itincluded assistance to GOI for the preparation of command area developmentprojects in other States of India.

Project Design

2.11 Water Demand and Supply. The water conveyance system from the weiris designed for gross water duty of 1.0 lit/sec/ha and a yearly diversionof some 5,000 Mm . Except for the land preparation and transplanting periodin May and June, the duty is sufficient to meet irrigation demand in the kharifseason. During the transplanting period the required water duty is consider-ably higher. Owing to reduced river flow during May and June, and the lack ofcanal conveyance capacities, the land preparation and transplanting seasonhas to be staggered from May 15 to August 15. Paddy transplanted later in the

- 20 -

season produces lower yields and is more susceptible to flood damage. FromMay 15 to July 15 the flow in the Godavari is subject to rapid fluctuations.By properly operating the gates in the new ba rage, some of the flows, which

in the past spilled over the weir (some 50 Mm ), can be stored and utilizedto increase the supply to the delta during this peak period. The increase inthe diversion head, from + 12.64 m with the old weir to + 13.64 m on the newbarrage, will increase conveyance capacity through the main canal network by

25%, from 1.0 lit/sec/ha to 1.25 lit/sec/ha. To carry these increased flows,the freeboard in some stretches of the main canals will need to be encroachedupon until modernization work on the canal systems is undertaken.

2.12 Supply to the rabi (dry) season crop is limited by the availabilityof water in the river, rather than by canal capacities. A dry season cropcan be supplied on some 150,000 ha during January, F5bruary and early March

in three years out of four. A deficit of some 50 Mm that occurred in thesecond half of March and in the past April can now be made up from creststorage provided in the new barrage.

2.13 Engineering Design. Site exploration for the whole barrage,hydraulic model studies and detailed designs for the civil engineering worksof the Ralli section were complete at the time of appraisal. As all foursections are similar in design, the Ralli section design was used for tender-

ing for the remaining civil works. Design work was carried out by the CentralWater and Power Commission (CWPC). Responsibility for the preparation of

working drawings, construction specifications, negotiations of contract andsupervision of construction, rested with the COAP Public Works Department(PWD).

2.14 Implementation Schedule. Project implementation for all civil

engineering works, including most of the road bridge over the barrage wasexpected to take three and a half years and was to be completed by June 1978.The manufacture of all 175 gates and hoists and the erection of at least 130gates was to be completed by June 1978 with the balance of the gates erectedby June 1979. The first construction season, from February to June 1975, wasto be used for the construction of six bays of the Dowlaiswaram section. Theconstruction seasons, from November 1975 to June 1978, were to be used to

complete all civil works construction except for portions of the road bridge

on the Dowlaiswaram and Vizzeswaram sections. During this period the powerconnection to operate the hoists was also to be completed and 75% of the crestgates and hoists installed. From November 1978 to June 1979 the road bridgewas to be completed and the remaining gates and hoist arrangements installed.

Cost Estimates

2.15 A cost estimate of Rs 265.9 m for the replacement of the existingbarrage was approved by GOAP in December 1969 and was cleared by the Planning

Commission in December 1971. This was revised upward in March 1975 to Rs 373.2to provide for reinforced concrete monolitic sill slabs instead of a massconcrete raft provided in the earlier estimate.

- 21 -

2.16 The estimated total cost of the project at the time of appraisalwas US$70.0 million (Rs 559M) including US$20.0 million (29%) in foreignexchange. The foreign exchange requirements were based on the assumptionthat all works would be carried out by local contractors. If the works werecontracted to foreign contractors the foreign exchange requirements waslikely to be US$32 million. Estimated costs were based on price levels pre-vailing in January 1974 and included expected price increases, beginning at17% in the first year and tapering to 11% in the fourth year. Overallprice increases were estimated at 26% of the total cost of the project.Physical contingencies of 15% for the mechanical engineering works and 25%for the civil works were included. The relatively large physical contingen-cies for fairly simple civil engineering construction works was included toallow for risks arising from a possible failure of one of the weir sectionsduring the four-year implementation period. Such a failure could involve anincrease in the cost of the barrage in the affected section.

2.17 A breakdown of project costs as shown in the appraisal report issummarized as follows:

Local Foreign Total Total------ Rs Million--------- US$ Million

Civil Works 163.8 44.6 208.4 26.05Mechanical Engineering Works 32.0 52.0 84.0 10.50Engineering and Supervision 42.2 4.7 46.9 5.86Technical Assistance to GOI forPreparing CAD Projects 4.8 2.4 7.2 0.90

Preparation of Second Phase Project 2.6 0.6 3.2 0.40

Sub-Total 245.4 104.3 349.7 43.71

Physical Contingencies 45.8 18.9 64.7 8.09Estimated Price Increases 107.8 36.7 144.5 18.06

Sub-Total 153.6 55.6 209.2 26.15

Total Project Costs 399.0 159.9 558.9 69.86Rounded to 70.00

The Engineering Implications of Failure (as visualized at appraisal)

2.18 Failure was considered most likely to occur in the form of a suddensettlement of a portion of the weir during a period of maximum hydraulic gra-dient followed by the formation of open shear cracks on either side of thesettlement area. Flow concentration through the cracks and over the col-lapsed portion of the weir would cause rapid widening of the breach by lateralerosion and an undermining of the weir foundations. By the time repairscould be effected, at low flows, the break could be a major one, probablyseveral hundred meters wide and of considerable depth.

2.19 Assuming that a weir failure did occur early in the flood season(July), it was believed that the recurring floods would wash away most of the

- 22 -

affected section and deeply scour the riverbed in the breached area, and thatthe scouring would gradually move upstream into the reservoir. It was anti-cipated that the resulting bed erosion would necessitate a design change inthe new barrage which could result in a significant increase in the cost ofthe affected section. It was expected that there would also be a delay inthe construction schedule because of the need for additional hydraulic modelstudies and the preparation of new designs.

2.20 It was hoped that through emergency repairs, similar to those under-taken following the breach of the weir on the Krishna river some 15 yearsearlier, a breach might be plugged before it had a major effect either on theriverbed or on the irrigation water supply to the command area. The successof such repairs would depend upon the initial width of the breach and onthe stages of the river following the breach. To avail of such favorablecircumstances, should they occur, it was agreed at appraisal that materialsneeded for emergency repairs were to be stockpiled and equipment was to bekept ready at the weir site during the construction of the new barrage.

Agricultural Implications with Failure (as visualized at appraisal)

2.21 It was expected that a breaching of the weir would lower the pondlevel at the canal inlet structures such that during the monsoon season waterlevels in the river would be only marginally if at all higher than the canalbeds thus severely restricting the irrigation water that could be diverted.This would result in the loss of a major part of the kharif crop. During thedry season no diversion would be possible and there would be no rabi ricecrop as rice can only be grown with irrigation. Areas under rabi crops otherthan rice, would also be considerably reduced. If water supplies remaininterrupted for more than one year, it was anticipated that farmers wouldfollow the pattern of rainfed agriculture, practiced in the surrounding non-irrigated areas. The expected loss in net value of production following aweir failure was estimated at Rs 800 million (US$100 million).

Pre-Appraisal Construction Progress

2.22 Subsidence in the Dowlaiswaram Arm had been observed following thefloods in 1970 and it continued in 1971 and 1972 even though repairs werepromptly made. A Consultative Committee set up by GOAP/GOI, therefore,strongly pointed out in February 1974 that any further postponement ofbarrage construction "was fraught with grave risk to the weir".

2.23 A contract had already been let in 1970 to Pioneer EngineeringSyndicate for construction work on the Ralli section. Funds were limitedand progress slow. By March 1975 only Rs 55.9 M had been expended againsta December 1969 sanctioned estimate of Rs 265.9 M.

2.24 In March 1975, GOAP approved plans for laying downstream and upstreamaprons, construction of right abutment and driving sheet piles for 12 bays (59to 70) of the Dowlaiswaram Arm and entrusted the work in the 12 bays (contractvalue: Rs 3.05 M) to six contractors to be completed before June 15, 1975.The contractors, however, were not able to complete the work in any of thebays in the limited time available and the work was abruptly stopped by flash

floods on June 28, 1975. As no protective measures could be taken for

- 23 -

safeguarding the works already executed an essentially new start was made bythe department in the next working season (1975-76) to rectify the damagescaused by floods and to re-excavate the pits for foundations which were notcovered before the onset of floods. Certain items of tools and plants suchas cranes (2), air compressors (1) and pile driving equipment (1) which hadbeen given to the contractors on hire were also damaged in the flash floods.

III. IMPLEMENTATION

The Issues at Negotiation

3.01 During negotiations GOAP was asked to provide assurances that:

(a) for the construction of the barrage, GOAP would employ con-tractors acceptable to the Association on terms and conditionssatisfactory to the Association;

(b) it would, under arrangements satisfactory to the Association,cause the barrage to be inspected at least once every fiveyears for deficiencies or potential deficiencies, which mayendanger its safety;

(c) it would, during the execution of the project, stockpilematerials and maintain equipment at the project site foremergency repairs of the existing weir;

(d) it would, not later than December 31, 1975, make arrange-ments to levy and collect, within not more than ten years,from beneficiaries of the barrage all investment costs ofthe project; and

(e) it would furnish to the Association, not later than sixmonths after the end of each fiscal year, certified copiesof audited financial statements for the project (except forthe part of the project that is to be implemented by GOI).

3.02 GOI and GOAP were also asked to provide assurances, through anexchange of Side Letters, that the project would be executed in accordancewith a detailed time schedule that would ensure a construction period notexceeding four years for the completion of the barrage, with civil workscompleted and 130 gates installed by June 30, 1978.

3.03 The appraisal mission found that the existing barrage was in gravedanger of collapsing and consequently proposed that every effort be made tocomplete the new barrage within the technically feasible minimum period offour years. The Bank took the position that it would have to insist on afour-year construction period if it were to associate itself with the project.It developed in the negotiations that GOI and GOAP were willing (or at leastso stated a willingness) to complete the barrage within a four year period.However, as the urgency to proceed with this project had not been properlyappreciated, adequate budget provisions had not been made by GOAP to financeconstruction over the four year period.

- 24 -

3.04 The State Government agreed to provide US$20 million but felt itwas unable to contribute more in view of the difficulty of mobilizing addi-tional resources and of making readjustments in the budget at a time of budgetstringency and drought problems. The Government of India (GOI) was, therefore,asked to contribute US$50 million, which was an unusually large proportion ofproject costs.

3.05 G0I, itself, was in an extraordinarily difficult budgetary positionat that time on account of energy problems, the desperate food situation andthe need to reduce the budget deficit in an effort to curb inflation. AsIDA had been insistent on a construction period of four years and in view ofIndia's present economic circumstances, IDA management decided to increase itspercentage contribution from the normal 50% to 60% so as to ensure adequatefunding over the initial period of the project.

Conditions of Effectiveness

3.06 The requirements set forth in the Development Credit Agreement foreffectiveness were standard and caused no problems in startup.

Start-Up

3.07 Discussions were held in Washington, D.C. at time of negotiationson the revisions to be made in tender documents for the main civil workscontract. Tender opening had been scheduled for April 15, 1975. Ratherextensive revisions were recommended and it was agreed that a revised versionwould be submitted for IDA review by the end of January 1975.

3.08 GOAP followed with a revised typed copy of tender conditions whichwere received by IDA in early February. Their proposal was to distribute thetender documents to prospective bidders before IDA review and then to issuesupplementary notice to purchasers of the documents setting forth IDA'srecommended changes. This was not accepted by IDA as it would be unfair topotential bidders to be kept in suspense over the final version of the tender.The date for receipt of tender was, therefore, extended to May 15, 1975.

3.09 The balance of the draft tender documents were accordingly mailedfrom India on March 6. They consisted of Section II of Volume I: Schedules,Tender and Technical Specifications and Section III of Volume I: A.P.D.S.S.(Preliminary specifications and additional conditions).

3.10 The ensuing reviews and exchanges of correspondence narrowed themajor points of issue down to two which were major points of principle and twothat seem to be misunderstandings because of continuing ambiguities in language.The first two were:

(a) GOAP's firm position that it would not accept any provisionpermitting the Contractor to claim and be reimbursed foradditional costs resulting from delays in delivery ofGovernment furnished materials and work sites.

- 25 -

(b) GOAP's firm position that disputes or differences betweenthe parties should be decided by a Chief Engineer of GOAPas the sole arbitrator. Bank recommended arbitration inaccordance with the rules of the International Chamber ofCommerce, Paris, and which was accepted by GOI for Credits242-IN, 377-IN and Bombay Water Supply Credit.

The other two issues were:

(a) The restrictive provision permitting foreign contractorsto use Indian sub-contractors on "up to 50% of the work"only.

(b) The restrictive provision permitting the successful bidderto import only specialized items of equipment that are notavailable in India, thus forcing foreign contractor toacquire all other equipment locally even though he mayalready own same.

3.11 GOAP's position on the four points above was considered to bein conflict with sound criteria for International Competitive Bidding.Without GOAP's acquiescence on the two points of principle and acceptableclarification of language on the other two points, it was concluded thatinternational competition would not be forthcoming on the project.

3.12 To resolve the problems a two-man IDA mission visited Andhra Pradeshfrom April 1 through 18, 1975 to review and discuss the civil works procure-ment documents. As a result approximately 50% of the 300 pages of documentswere changed. All revisions were finalized during this period and the missionconcurred in the issuance of the bidding documents as of April 18 with bidopening July 2 and award of contract scheduled for October 1, 1975. Themission's critical scrutiny and edification of the procurement documents fordefinitive and clear stipulations and fair and equitable requirements was ofspecial importance, since the Godavari Barrage Project constituted the firstBank/IDA operation involving international competitive bidding on civil worksin India.

Bidding Experience on Civil Works Procurement

3.13 A total of 28 organizations purchased the documents. Twenty-fiveof the organizations were Indian construction firms. One was a Japanese firm.One was the Korean Embassy, and the other a manufacturer of specialized con-struction equipment and machinery in the United States.

3.14 Bids were opened on July 2. Seven firms (all domestic) submittedbids. All of the bidders were well known and all were considered (by GOAP)qualified to perform the work. One bidder quoted on only part of the work.Another bidder quoted on only two sections of the weir. However, the otherfive bidders quoted for all four sections. Three of the firms (NationalProjects Construction, Continental Construction, and Hindustan Construction)quoted on the condition that they receive an award for all of the sections.National Projects Construction submitted the lowest single bid (Rs 178,,942,610)

- 26 -

for the complete weir (civil works), which was 19% above the engineers' esti-mate of Rs 149,872,906. 1/ The lowest combination of bids for the entire jobwas as follows:

Section Contractor Amount (Rs)

Dowlaiswaram & Ralli Andhra Pradesh CivilConstruction Co. 95,265,100

Maddur Pioneer Engineering Syndicate 28,378,800Vizzeswaram Pioneer Engineering Syndicate 51,579,616

175,223,516

3.15 None of the bids were in full compliance with the tender documentsand all had numerous exceptions. 2/ In view of the very tight implementationschedule and the critical need for starting the work, the Bank recommendedthat GOAP review the qualifying conditions of the lowest combination biddersand negotiate acceptable terms. GOAP did not agree and in the ensuing dia-logue it was decided to solicit new price quotations from all seven bidderson the basis of full compliance with all the terms and conditions of theoriginal tender documents (except the liquidated damages provision) and witha specific firm stipulation that failure to withdraw all qualifying conditionswould automatically disqualify the tender.

3.16 By September 30 new bids had been quoted. Only two firms (NationalProjects Construction Corporation and Continental Construction Company) withdrewall conditions for the Dowlaiswaram and the Vizzeswaram arms and only threefirms (National, Continental and V. Shubba Rao & Co.) withdrew all conditionsfor the Maddur arm. GOAP was ready to award contracts to National,Continental and Hindustan Construction Corporations as a combination, butit appeared there was some doubt that the instructions to the biddersclearly stated that failure to withdraw all qualifying conditions wouldautomatically disqualify the tender.

3.17 Since to reject all bids, revise the terms, conditions, and otherrequirements, and re-advertise would have resulted in a prohibitive delay,it was decided to try and negotiate mutually acceptable terms and conditionswith the lowest bidders. It was recognized that any further delay in final-izing the contract could result in the loss of a full construction season, aswell as serious delays in the gates procurement. Therefore, the negotiationroute was followed and an award was ultimately made to National Project Con-struction (a GOI sponsored company) for an amount of Rs 191 M net of pricecontingencies but including additional quantities. Work on the new weir wascommenced by them in December 1975.

1/ Although it is common practice in some States in India to index unitrates upward from detailed rate schedules that are several years old,GOAP states that "the estimates with which the bids were compared werecurrent at the time of preparation of tender schedules and invitingtenders."

2/ An exception is one specifying terms, conditions, and/or specificationsdifferent from those set forth in the bid documents.

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Bidding Experience on the Gates

3.18 It was decided that for the supply and installation of the gatespotential bidders would be subjected to a prequalification scrutiny. Somethirty organizations submitted requests for prequalification. In its initialreview, the Public Works Departmnt eliminated 10 organizations (all domestic).After discussions and further review, two more were eliminated as they weregovernment workshops. The 18 organizations remaining were considered quali-fied. Of these, 11 were foreign firms or representatives thereof, 6 wereIndian firms, and one was a joint enterprise (domestic and foreign). Althoughknown to be qualified, several of the 18 firms failed to submit some of thedata requested for prequalification purposes so telegraphic requests wereinitiated for the missing data and the issuance of tender documents to thosefirms were withheld pending their response.

3.19 IDA in its review of the tender documents suggested including aliquidated damages provision similar to the revised one for civil works, anda provision for price increases caused by inflation for those gates scheduledfor delivery after November 1, 1976, which GOAP agreed to.

3.20 The schedule was to have the documents printed and ready forissuance by August 1, 1975. The bidding period was set at 75 days, subjectto the understanding that it would be extended if bidders asked for such anextension. The time for evaluation of bids and award of contract would thenbe reduced accordingly.

3.21 hidL were opened November 5, 1C976. There were seven bids rangingfrom a low of Rs 91.7 M to a high of Rs '02 M (Nissho Iwai, a joint ventureby a foreign firm).

3.22 Central India Machinery's low bid of Rs 91.7 M was found incompleteand also found non-responsive otherwise. The lowest responsive bidder at Rs115.5 M had quite a few exceptions whereas the second low responsive bidder(Jessops) at Rs 124.6 M and the third low (Rs 128.3 M) had only a few excep-tions. The Bank's initial position was that all bidders be given 48 hours toamend their bids (upward only) to compensate for conditions attached to theiroriginal bid. It was proposed also, to disqualify rebids which remained withany conditions. GOAP considered this proposed procedure unacceptable as thelow bidder would have an opportunity through the process of withdrawing andcompensating on exceptions to end up just under Jessop's initial bid.

3.23 GOAP went through a process of assigning values to the exceptionsstated in the bids which came up showing Jessop to be the lowest. On thebasis of these reevaluations GOAP proposed to negotiate with Jessop

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only. 1/ This was unacceptable as there was too much latitude in selecting

the quantities and unit prices to apply. In some instances they were con-

tractor supplied and in other cases GOAP engineers supplied the figures.

3.24 The resulting impasse was resolved by rejecting all bids and

inviting all seven original bidders to resubmit on the following basis:

AAA - Fourteen days for quotations

BBB - No alternative designsCCC - Site fabrication permitted

DDD - GOAP specific clarification of remote control systemswhich are acceptable and those which are not acceptable

EEE - Embedded parts identified in the retender documents as

required during the first construction season are tobe provided by GOAP and not by contractor

FFF - Special GOAP formal notice that only those bids which arefully responsive and without any exceptions will be

considered and that all others will be rejected outright

GGC - GOAP will identify the latest basic rates and indices

applicable to the escalation provisions

3.25 In the rebidding Jessop was low with a bid of Rs 109.7 M and the

bid was accordingly awarded to them in January 1976.

Construction Problems

3.26 Failure of Dowlaiswaram Anicut. As feared, a breach did occur inthe Dowlaiswaram arm on the night of July 8, 1976. The river was flowing

about 70,000 cusecs at that time. The lowering of the water level above the

barrage immeditely reduced irrigation supplies in the Central Delta and the

West Delta canals. The Eastern Delta canal head sluices were unable to draw

any water.

3.27 Protection arrangements to prevent widening of the breach (490 feetinitially) were commenced on the afternoon of the 10th. The width of breach

was contained by dumping heavy stones at both ends of the breach. GOAP fully

mobilized to meet the emergency and spared no funds in attempting to save the

1/ To avoid the obvious problems that arise in attempting to cost exception

items after bids have been opened, some states in India (Gujarat for one)

ask that all proposed exceptions be submitted one week ahead of the bidopening date. An evaluation is made by a committee and their determin-

ation of the associated cost is available for prior scrutiny on theofficial bid opening date. The adjustments are then added or subtractedto each firm's bid as opened. The low bidder at bid opening is then

discernible immediately after all bids have been opened and adjusted.The other alternative approach is to hold a pre-bid conference where all

questions and problems can be ironed out before firms complete their

bids and amendments made if necessary to the tender documents. Of course,the ideal situation is to have bids without qualifications or to be in a

position to reject all bids which have qualifications. This procurement

objective has not been realized in India.

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situation. By July 22 some 60 trucks were conveying stone and concrete blocksto the breach. However, it was soon obvious that the breach could not beclosed until flood waters subsided sufficiently in September.

3.28 The breach section scoured both upstream and downstream for one milelength and to a maximum depth of 45 feet. To complete the permanent repairs,GOAP invited Hindustan Construction Corporation to enter into a joint venturewith National Projects Construction Corporation to complete by June 1977 thefollowing items at the costs shown:

Joint Venture (Rs. million)

1. Completion of 61 spans Dowlaiswaram sub-structure 59.0

2. Breach closure and restoration of old weir topre-breach condition 23.0

3. Additional upstream coffer dam to stop flow inDowlaiswaram arm 5.8

Sub-total 87.8

Additional Extra Costs

4. Extra de-watering foundations expected due todeep scour, disturbed soil conditions and hightail water 1.4

5. Acquiring additional quarries because of twofoldincrease of stone required 2.0

6. Bailey Bridge across Eastern Canal for improvedwork access (excludes hire cost from Army) 2.0

7. Cost of supply and installation of new shutterslost in breach 1.0

8. Pontoon bridge over Eastern Canal also forimproved access 1.0

9. Scour treatment of river and miscellaneous 5.6

10. Capital cost of pumpsets for irrigation andoperating cost 10.0

TOTAL 110.8 1/

1/ Some Rs 53.4 M of this amount would be directly assignable to extrawork caused by the breach.

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3.29 Pumping Water into the Eastern Canal. In order to save the standingkharif crops in the 100,000 acres served by the Eastern Canal of the Godavarisystem, a proposal to pump 1,000 cusecs of water from the river from eightplaces for a period of 90 days was approved by the Government in July 1976.The Superintending Engineer placed orders between July 19 and July 31, 1976for the supply of 39 pump sets at a cost of Rs 5.77 M. The supply andinstallation of the pumpsets were to be completed within three weeks from thedate of purchase orders. No pump sets were supplied and installed within thestipulated period, however, and the resulting delays ranged from 9 to 94 days.

3.30 Twenty-two pumpsets were received in August 1976. The totalexpenditure incurred till May 1977 on the purchase and installation of thesesixty-one sets was Rs 10.24 M.

3.31 The supply of water from pumps ranged between 90 and 412 cusecs

only upto October 20, 1976 and no water could be pumped thereafter. Thus,the object of supplying 1,000 cusecs of water for 90 days during kharif

did not materialize fully. The shortfall in pumping was attributed by theDepartment to insufficient depth of water at the pumping sites.

3.32 Quarry Channel. In order to provide drinking water to the villages

and towns dependent on the Eastern Canal, the Government approved in September1976 a scheme to pump 400 cusecs of water from the upstream coffer dam into achannel (called the Quarry channel), which joined the Eastern Canal downstream

of the weir. The pumping was proposed to be done from January 1, 1977 to the

end of June 1977, by which time repairs were expected to have been completed

so that water could be sent through the head sluices as in the past.

3.33 The work involved installation of 30 pump sets and electrical

transformers and excavations of the channel. Pending sanction the work was

awarded to two contractors on a "nomination" basis in January 1977. Although

work commenced immediately, it was not completed until March 1977 as the

embankment of the channel slipped and there was heaving of soil in the bed ofthe canal in certain reaches. Diversions through the quarry channel started

only from 7th April 1977. The quantity supplied in April and May ranged from

105 to 305 cusecs.

3.34 Collapse of Cofferdam. In November 1977 the Godavari River peaked

at 180,000 cusecs compared to a normal expected flow of 15,000 cusecs in

November. The flood collapsed a cofferdam and generally raised havoc with

construction activities. It is conservatively estimated that one month's

working period was lost. Maximum flood discharges during the flood season

for the years 1975 through 1980 are given in Table 1.

Construction Progress

3.35 Although everything possible was done during appraisal, negotiation

and at start-up to meet the desired June 1979 completion target, actual

completion of construction will be in June 1982 or three years later than

scheduled. The project authorities expect to complete the barrage construc-

tion by the end of calendar year 1981 and the highway bridge over the piers

by June 1982.

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3.36 Construction progress following award of contract on the civil worksin 1975 was considerably less than scheduled. NPCC was to complete construc-tion of 24 bays (47 to 70) up to pier level in the Dowlaiswaram arm by June1976 but could complete only 9 bays even though the work was continued till 8thJuly 1976. A coffer dam was formed by the Department in April 1976 to enablethe Corporation to complete work on the 24 bays (47 to 70) by June 1976. Asthe corporation completed the work on only 9 bays in full and in 3 more baysonly partly, the coffer dam formed at a cost of Rs 0.6 M for enclosing theworking area beyond the 12 bays proved wasteful as it had to be relaid in thenext working season. Work on the Vizzeswaram arm was, also, entrusted to theNPCC in December, 1975 with 10 bays to be completed in the 1975-76 season and10 more bays in the 1976-77 season. A coffer dam formed by the Department inMarch 1976 for a length of 200 metres to cover ten bays (1 to 10) at a cost ofRs 0.44 M was, also, wasted as no bay was taken up for construction in thisconstruction season. Only a portion of the work relating to the left abutmentwas done (value of work done was Rs 1.35 M against a total of Rs 9.66 M ofwork to be done). In the 1976-77 season, work on 5 bays only was done.

3.37 The extra work caused by the failure of the old weir in July 1976monopolized construction activities during the working season from November1976 to June 1977 and the breached coffer dam and flooding in November 1977resulted in vital lost time in that next construction season. Unfortunatelynone of this lost time could be made up. Outside of 1976 and 1977 eventswhich can be attributed to "force majeure", there were several contributingfactors which could have received more or different attention.

3.38 First: the unhealthy financial condition of the prime civil workscontractor: National Projects Construction Company (NPCC). Their operationson the project were from the beginning seriously hampered by insufficientcapitalization and NPCC "being faced with unit costs under their contractthat did not adequately reflect escalation since the time their bid wasprepared. The Government of Andhra Pradesh (GOAP) was quite sympathetic tothese difficulties as witnessed by the machinery advances of some Rs 14.43 Mand mobilization advances to NPCC of Rs 16.0 M and about Rs 4.5 M to AndhraPradesh's State Construction Company (APSCC)." 1/ 2/

1/ Quote from April 11, 1978 Supervision Report. It has not been determinedwhether the difficulty referred to on unit rates is because NPCC quotedunrealistically low values in their bid or if there are deficiencies inthe escalation clause which does not adequately compensate for increasesin fuel, materials, labor, etc. It is safe to assume that essentiallyall contractors in India would be undercapitalized by Western standardsand the only way this problem could be minimized would be by strictpre-qualification of potential bidders and/or by providing a mobiliza-tion advance under the tender proposal. Since a mobilization advancecan be as much as 10% of the contract amount the advance of Rs 6.0 M in1977-78, 5.0 M in 1979 and 5.0 M in 1979-80 is a modest sum. Althoughthere was no pre-qualification screening or pre-bid conference in thecivil works tendering through bidding process, the record shows that allseven firms who submitted bids "were well known and all were consideredqualified to perform the work".

2/ Andhra Pradesh State Construction Corporation (ASPCC) later entered theconstruction picture as a subcontractor to the prime contractor NPCC.

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3.39 The second difficulty was "the inability of the construction manage-ment to adopt preventive measures to minimize flood dangers and damage arisingfrom seasonal or flash floods particularly in November at the beginning of theconstruction season." Construction activities were fully dependent on coffer-dams and the work access road constructed annually below the existing weir.The loss of either did cause additional costs and delays. A proposal was madeseveral times by IDA in the supervision missions that surplus capacity in thethree canals be used to convey river flows around the construction site towasteways downstream from the access road. It was felt that this would speedup the rebuilding of the coffer dams, which had to be done at the beginning ofeach construction season, plus reduce the flood threat to some extent. GOAPengineers, however, did not review the diversion of surplus water through thecanals as a practical solution as the carrying capacity of the three canalswould not exceed 15,000 cusecs at the most. While normal dry season flowswere less, the unexpected flood discharges could be considerably more. TheNovember 1977 flood for example which washed away the coffer dams was in theorder of 200,000 cusecs.

3.40 The reason given for the negative action was that it would requirenotification to landowners and farmers along the waterways whose lands mightbe inundated, a warning and policing effort by district police and associatedsocial inconveniences. The matter seemed to be taken lightly by Projectofficials who viewed it as the contractor's problem.

3.41 There is evidence that the construction access problem to theProject sites (work in the 4 branches was ongoing simultaneously) was notfully appreciated. "The contract document stipulates that the contractorwould have access over the old weir or via excess roads to be constructedby him just downstream of the weir." This seems to imply that there would beno spilling over the weir and that this presumably would take place throughthe scour sluices. It had also been assumed that the dry season flow wouldbe much smaller than actually experienced. The Maddur branch was spillingin both the 1975/76 and 1976/77 seasons and the Dowlaiswaram branch spilledin the 1977/78 season. The contractor was, therefore, forced to make useof bridges located many miles downstream and upstream of the work site." 1/

1/ GOAP's retort to this comment from the April 11, 1978 Supervision Reportwas that: "the arresting of flow over the anicut is possible only forfloods of a stage of not more than 3 feet over the anicut, but thereagain the problem to be faced is that the work areas on the bar underconstruction have to put up with higher water levels, causing furtherhardship to the construction in progress. Hence, even at the time offloods below the 3-foot depth, a balance has to be struck betweenholding up the water by raising the 3-foot shutters of the anicut tocreate dry conditions on the downstream of the anicut, or allow theshutters to be flat to facilitate low water levels at the main barragework areas, depending upon the importance of the work in progress. Assuch the readymade solution for laying good access roads on the down-stream of the weir lies neither in utilizing the surplussing capacityof the irrigation canals nor in early construction of the sluices. Apractical solution would lie in greater resourcefulness on the part ofcontractors in adapting quickly to the time-to-time changes by keepingin readiness different modes of access to be put to use according tothe demands of the situation, as was demonstrated by M/S H.C.C. duringtheir working on Dowlaishwaran arm in the year 1976-77.

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3.42 An earlier and accelerated schedule for construction of the sluiceswould have assisted in this problem. As it is the sluice gates at each ofthe head regulators to the three irrigation canals are some of the lastconstruction items to be taken up. This reflects, also, a constructionconcept of working from the middle outward whereas access would have beenfacilitated by working on the ends first and working towards the middle andmore difficult bays.

3.43 The inclusion of the PERT chart in the tender documents appears tohave locked the contractors into an inferior construction approach. Followingthe monsoon rains, four separate arms have had to be cofferdammed, both up-stream and downstream. Access to the worksites has been by means of a roadbelow the existing barrage which was constructed each season after the highflow period had passed. Thus, the first and significant part of each annualconstruction season involved the construction of cofferdams and access roads,seriously affecting the time available for progress of the main works." Inhindsight, it appears that this method of construction was defective, causingforeshortening of the productive construction period, repetitive and costlyconstruction and failure to facilitate construction progress in the ensuingyear. While these failings were recognized by Project management and Contrac-tor, there was somewhat of a blind acceptance of the original construction PERTchart and unwillingness to consider modification in construction approach andmanagement. 1/

3.44 Uncooperative relationships between Contractor and Governmentofficials appeared to be a contributing factor. "Even with the difficultconstruction conditions, the technical engineering problems are resolvablegiven sound and cooperative organization and management on the parts ofthe project and contractor officials. Unfortunately, the organizationand management appears divisive rather than cooperative, with project andcontractor officials 'stonewalling' each other. At the time of the mission,the crux of the confrontation was the contractor's firm belief that it hasbeen taken in by a bad contract, and the project officials' adamant position

1/ GOAP's retort to this quote from the April 11, 1978 Supervision Reportis that: "when it was recognized that the PERT ChartProgramme couldnot be adhered to and was totally inadaptable, the department set-up

a special monitoring division under the direct control of the chiefengineer, Go-Davari Barrage Project to exercise close monitoring of thedaily programme/progress." The Pert chart, therefore, had no significancein the monitoring progress but whether or not an inefficient constructionapproach working on four arms concurrently was unduly imposed wouldrequire further scrutiny.

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that the contractor had entered willingly and knowingly and had to sufferthe consequences." 1/

3.45 One major source of delay in the completion of construction wasGOAP's slowness in approving a design change for the bridge over the barrage.NPCC proposed in November 1976 that prestressed girders be accepted insteadof fabricated in-situ RCC girders. The alternative was accepted in principlebut PWD was some two years or so in approving. The new design required a30 cm cantilever on both sides of the piers but PWD was reluctant to permitthat reduction in net opening under the bridge. 2/

Appointment of a Negotiating Committee

3.46 A committee was appointed on December 22, 1978 to consider claimsfrom NPCC for relief under unit rates assigned under the contract. A copyof the order is appended.

Failure to Allow for Local Competitive Bidding

3.47 It appears that nothing was contained in the Credit and ProjectAgreement to provide for Local Competitive Bidding (LCB) procedures on thesmaller civil works contracts. It apparently was intended that all civilworks including the head regulators and sluice gates for the 3 separateirrigation canals be contracted following ICB tendering. It was concluded,however, in March 1979 that ICB was not a reasonable approach and IDAaccepted that it was prudent to allow LCB under the terms and conditions setforth in paras E(2)(b) and (c) and E(3) of the Project Agreement. The LCB

1/ GOAP's comment to this quote from the April 11, 1978 Supervision Reportis that "in big contracts, as in the case of Godavari Barrage Project, itis always possible that there are certain difficulties in interpretingthe conditions of contract by Department and the contractors, thoughboth the agencies are working for the same purpose viz. early completionof the project. The department has to work within the framework ofcertain rules and regulations and the issues of disagreement with thecontractors have to be solved within the framework of the rules andregulations of the State Government. As a government organization, ittherefore cannot function as flexibly as a private organization. On theother hand, contractors tend to seek relief beyond the scope of thecontract.01

2/ With regard to the reported delay in approval of the design change GOAPpoints out that: "work of bridge of the project is almost the last itemof the barrage work. On account of practical considerations, the designof the bridge has been changed over from R.C.C. to P.S.C. The substruc-ture and piers of the barrage could not be completed within the originalstipulated period due to various reasons including the breach of oldanicut, constructional delays, etc. Consequently, the work on the P.S.C.bridge was also delayed. There was some time lag in finalizing thedesign of the bridge as certain design issues were under correspondencewith the contractors and the contractors could not furnish the requiredinformation in time."

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procedure for remaining work items was followed up to April 1981 when GOAPdecided, without IDA's prior concurrence, to procure, manufacture, supply anderect radial gates for the 3 head regulators without tendering. A tendernotice had been approved by IDA on December 31, 1980 but GOAP later decided,in the interest of time and ease of control, to proceed departmentally.Since the remaining IDA funds were fully disbursed in the 1980-81 construc-tion season, the eligibility of this last remaining construction item forreimbursement under the credit did not become an issue.

Implications of the Delay in Completion of Project

3.48 As recognized in the appraisal report and the economic evaluationfor the appraisal, the prime objective was to ward off a failure in the oldexisting diversion structure. Work had been started on the Ralli Arm, priorto IDA's involvement, in anticipation of the danger of failure. Unfortunately,the breach did not occur here but in the Dowlaiswaram arm, the largest ofthe 4 arms (70 bays versus 43, 39 and 23 in the Ralli, Vizzeswaram and MaddurBranches respectively). Once failure occurred the damage was done and thepriority in the construction effort was of necessity to repair the breach bythe next irrigation season. The urgency for completing entirely the new bar-rage was relieved somewhat since the risk that failures could occur on the otherarm was lessened. The new barrage will provide a one meter higher water levelthan the old structure for diverting more flow into the existing canals.There will also be more positive control regulation with the new structure asthe old type shutter gates cannot be reset until flows drop to a low level.The new gates are expected to store 50 M cum which can mature rabi crops inlate March when river flow deficiencies now occur at a critical time in theplant's growth. The full impact of these benefits, however, may not berealized until the second phase work--the modernization of the Godavari Deltairrigation system is taken up. In summary, the most important benefit fromthe project was to establish as quickly as possible the integrity of the weirbase so that rapid drops in diversion elevations into the three Godavaridelta canals, such as occurred in 1976 would not be repeated. Having accom-plished this, there has been no great urgency on GOAP's part to complete thecrest gates, scour sluices, head regulators and highway bridge across thestructure.

3.49 At one time in the progress of the project, it was suggested thatthe disbursement percentages in Schedule 1 of the Development Credit Agree-ment be reduced so as to prolong IDA's involvement with the project untilall construction work is essentially completed. This idea was dropped,however, and the June 1981 completion date for the credit was retained.

Quality of Construction

3.50 From all visual appearances the quality of construction work hasbeen outstanding. Each shipment of cement was given the 7-day strength testand the design mix was adjusted accordingly. Quality was consistently givena high rating in all supervision reports and GOAP engineers and contractorsare to be commended for excellent work.

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Project Coordination

3.51 A project engineer assigned by the Chief Engineer, Major IrrigationWorks, was given overall responsibility for the project during implementationwith two Superintending Engineers assisting. Design adequacy and qualitycontrol were the responsibility of CWPC (now CWC) of GOI. There has onlybeen one change in Chief Engineer on the project since effectiveness andthere was no change in Secretary at the State level up until December 1978.

Construction Costs

3.52 As given in Table 2, the anticipated final costs of constructionare Rs 610.6 M compared to estimated costs at appraisal of Rs 559.0 M. Thisis a very nominal overrun and at least Rs 53 M can be contributed to therepairs and other emergency costs brought about by the breach in 1976.Quantities of materials used in construction are given in Table 3.

Disbursements

3.53 Disbursements were ahead of appraisal estimates at the beginningof project implementation but dropped behind in 1976 when the break occurredand from then on. The disbursement schedule was adjusted in April 1978 andrevised periodically thereafter at each supervision mission. The record ofdisbursement against appraisal estimates is given in Table 3. Disbursementby credit categories was as follows:

Disbursement by Credit Categories is as follows:

AmountAllocation Disbursed

at Reallocation As ofAppraisal Dec. 1980 6/30/81-------------US$ million-------------

1. Civil Works1-a let on contract 23.4 30.0 32.5311-b by force account 4.9 1.0 1.214

2. Equipment and Materials 13.7 13.0 11.255

3. Engineering and Supervision 0.6 0.6 0.00

4. Second Phase Project Preparation 0.1 0.1 0.00

5. Technical Assistance for CAD projects 0.3 0.3 0.00

6. Unallocated 2.0 0.0 0.00

Total 45.0 45.0 45.000

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3.54 Category 1(b) was provided to cover works carried out betweenFebruary and June 1975 before the main civil works contract "was awarded" andadditionally for the dismantling of the crest of the old weir after completionof the new barrage (para 5.09 of SAR).

3.55 Category 4 was set up to finance the foreign exchange cost of prepar-ing a Command Area Development project for the Godavari Delta. The project wasexpected to be based on conjunctive use of groundwater and surface water flowsso the US$100,000 was earmarked for the procurement of drilling equipment forgroundwater exploration and for other sophisticated groundwater research tools.No requests for disbursement were received for this category although projectengineers have prepared a proposal for a Second Phase Development Project.The proposed project, reportedly costing in excess of Rs 600 M, is underreview at the State Level.

3.56 Category 5 was earmarked to finance technical assistance to GOIspecifically in the preparation of aerial photographic maps of potentialcommand areas to enable a better preparation of future CAD projects. Noapplications were submitted for reimbursement under this category.

3.57 Category 3 earmarked US$600,000 for financing monitoring equipmentto be built into the barrage, for survey, drawing and calculating equipmentfor the project design office and for inspection and transport vehicles tobe used on the project. No applications for reimbursement were made in thiscategory.

Compliance with Credit Covenants

3.58 The Project Agreement has three Financial Covenants:

Section 4.01. Andhra Pradesh shall maintain records adequateto reflect in accordance with consistently maintained appro-priate accounting practices the operations and financial con-dition of PWD with respect to Part A and the Command AreaDevelopment Department of Andhra Pradesh with respect toPart B of the Project.

Section 4.02. Andhra Pradesh shall: (i) have the accountsand financial statements (balance sheets, statements ofincome and expenses and related statements) of PWD withrespect to Part A and the Command Area Development Depart-ment of Andhra Pradesh with respect to Part B of theProject for each fiscal year audited, in accordance withsound auditing principles consistently applied, by theAccountant General of Andhra Pradesh; (ii) furnish to theAssociation as soon as available, but in any case not laterthan six months after the end of each such year, (A) cer-tified copies of the said financial statements for suchyear as so audited and (B) the report of such audit bysaid auditors, of such scope and in such detail as the

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Association shall have reasonably requested; and (iii)furnish to the Association such other information concern-ing the accounts and financial statements of PWD with res-pect to Part A and the Command Area Development Departmentof Andhra Pradesh with respect to Part B of the Projectand the audit thereof as the Association shall from timeto time reasonably request.

Section 4.03. Andhra Pradesh undertakes to make sucharrangements as shall be necessary to levy and collectfrom beneficiaries of the facilities constructed underPart A of the Project all investment costs of the Projectincluding interest of not less than 5% per annum thereonover a period of not more than fifteen years.

3.59 Section 4.01 required the maintenance of accounting records toappropriately reflect the operations and financial conditions of PWD. GOAPdid an excellent job in this respect. All payments relating to the Projectwere centralized in the Project Authority's Pay and Accounts Office and allwere pre-checked. Thus the Organization serves as the Chief Internal Auditor.As internal checking authority, it conducts cent percent check of all theclaims including establishment bills arising in the project to ensure thatpayments are made in accordance with the rules and orders issued by competentauthority and also to ensure that the expenditure is incurred only on esti-mates sanctioned by the competent authority.

3.60 Section 4.02 covers the customary audit requirements. The Pay andAccounts Officer for the Project forwarded all claims after payment, to bepost audited by the Resident Audit Officer, Dowlaiswaram, who is the repre-sentative of the Accountant General, Andhra Pradesh. As responsibility forthe statutory audit of the transactions rests with the Accountant General,the Resident Audit Officer sends monthly and other consolidated accounts onthe project as may be required to the Accountant General and Government onbehalf of the Chief Engineer who is the chief accounting officer.

3.61 The audits were regularly received from GOAP. In addition, theComptroller and Auditor General of India prepared an audit report in August1977 which was based on preliminary findings in the year 1971/72. The GOIaudit report pointed out numerous faults, mistakes and inefficiencies manyof which can be discounted to a large extent by the urgencies caused by thebreach and the complexities of the task. Things appear much clearer inretrospect than at the time the actions are taken. GOAP had a Resident Auditofficer who conducted audits on the project on a current basis. In generalGOAP's accounts and audit set up were well organized and disbursement claimswell prepared. The identification of irregularities in the audit process neednot be interpreted that GOAP's performance was bad but more likely that theauditing process is working as intended.

3.62 Under Section 4.03 GOAP undertook to levy and collect all projectinvestment costs including interest at not less than 5% per annum over aperiod of not more than fifteen years. This is an unusually high cost

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recovery compared to other irrigation projects in India. Apparently, anamount of Rs 41.8 million has been assessed as a betterment levy in February1981 and legislation is being introduced for the collection of a second por-tion, which will reportedly amount to Rs 100 million. Cost recovery underthe betterment levy as measured by funds received in the State Treasury isnot very satisfactory in India, Whether this method of assessing costs andsecuring cost recovery complies with the conditions of the covenant would besubject to legal interpretation.

3.63 Article III of the Project Agreement covers Management and Opera-tions of Project Facilities:

Section 3.01. (a) Andhra Pradesh shall cause all worksand facilities included in the Project or necessary tothe proper and efficient operation thereof to be operated,maintained and repaired in accordance with sound engineer-ing practices and standards and shall provide, or cause tobe provided, promptly as needed, the funds, facilities,services and other resources required for that purpose.

(b) Without limiting the generality of the preceding paragraph,Andhra Pradesh shall, under arrangements satisfactory tothe Association, cause the barrage constructed under ther oject Lt be periodically inspected not less frequentlythan once every five years, in accordance with soundengineering practices and standards in order to determinewhether there are any deficiencies or potential defici-encies in the condition of such structures and earthworks,or in the quality and adequacy of maintenance or methodsof operation of such structures and earthworkds which mayendanger the safety of such structures and earthworks.

Section 3.02. Andhra Pradesh shall at all times duringthe execution of the Project stockpile such materials,and maintain such equipment, at the site of the existingweir, as shall be necessary to make emergency repairs tosuch weir.

3.64 With respect to Section 3.02, the new weir upstream of the oldbarrage should effectively safeguard against the emergency situation. Thereis however, a continuing maintenance need after each flood season to replaceriprap that is washed away downstream of the old barrage. The provisions ofSection 3.02 would, therefore, equally apply following completion of the pro-ject. With the new weir in place, there should be opportunities to utilizegabions, wire baskets or other means of reducing the annual requirement forreplacing stones washed away from the downstream apron.

3.65 Since construction is continuing, the provisions of Section 3.01are not yet applicable. In more recent project agreements, generally re-lating to dams, the States are being covenanted to: cause the structuresconstructed under the Project to be periodically inspected in accordance

- 40 -

with sound engineering practice in order to determine whether there are any

deficiencies in the condition of such structures, or in the quality andadequacy of maintenance of methods of operations of the same, which mayendanger their safety. To this end, (the State) shall propose to the Asso-ciation appropriate arrangements for the Association's review not laterthan one year before the expected completion of such structures.

3.66 The sections under Article II for execution of the project, with

the possible exception of the issue in the 1980/81 construction season ofcontracting versus departmental construction on the one head regulator,were complied with in a commendable fashion. Cooperation between GOAP,Project and Bank officials was excellent throughout the execution of the

project. A good working relationship developed and was maintained.

The Bank's Performance

3.67 A total of 6 missions aggregating 40 man-days in the field were

mounted. There was in addition a special IDA mission in August 1975 to

assist in evaluating the bids for civil works construction, a mission in July

and August 1976 to projects in Andhra Pradesh including Godavari Barrage

to assist government agencies in establishing appropriate financial manage-

ment, reporting and auditing procedures, and a number of emergency visits

in 1976 when the breach occurred. None of the supervision missions were by

Bank staff involved in the appraisal. Supervision of procurement matters was

essentially continuous at the beginning and through the first two years of

the project implementation. There was not much IDA could do to assist after

construction got underway and the various problems developed. Supervision

missions were more than a year apart but there is no definite evidence to

show that more frequent visits would have eliminated or alleviated the

problems. The problems which arose during construction were generally of an

administrative, organizational or at least a non-technical nature and of a

non-repetitive character which could not profit from external supervision.

The April 6, 1978 letter to GOAP, which is appended, is exemplatory of the

problems faced.

Project Benefits and Economic Analysis

3.68 The economic feasibility of the project as actually implemented has

been reassessed. All inputs and outputs of agricultural production have been

valued in constant 1980 World Market Prices with due adjustments for ship-

ping, local transport, handling and processing. Actual project expenditure

and estimated cost to completion from 1975/76 to 1981/82 were used to derive

economic project cost in 1980 rupees.

3.69 The damage that occurred to agricultural production following the

break in June 1976 has been fully documented. The "ex post" internal rate of

return is estimated at 60% (Table 5) compared to the 44% in the SAR, mainly

due to higher real prices andlower O&M cost. The appraisal analysis used the

O&M cost of the full system instead of incremental cost. See Table 5 for

details.

Table 1

INDIA

GODAVARI BARRAGE PROJECT

Maximum Flood Discharge at Godavari Barrage - 1975 to 1980

Flood Level Riverover Dowlaiswaram Discharge

Year Date Anicut in cusecs

Feet Metres+ 38.75

1975 11.9.75 51.65 15.75 1,186,575

1976 23.7.76 55.05 16.79 1,961,140

1977 25.8.77 49.85 15.20 920,092

1978 18.8.78 52.75 16.08 1,422,550

1979 7.8.79 50.80 15.49 1,082,349

1980 5.8.80 49.00 14.95 814,242

-42 Tuaft 2

INDIA

GODAVARI BARRAGE PROJECT

Project Cost Estimates and Eenditures(Rs in millions)

Estimated Cost Amount proration ofAs Per Anticipated Spent Balance Increased Cost Overrun

Appraisal Estims d up to to I/ Apr 1981 Estimate 2 /Total orDescription of Item Report Cost- 12/80 Coplt to Apr 1982 Estimate Cost Underrun

Civil Works

Dowlaiswaram Arm 85.80 132.36 118.46 14.40 18.6 151.5 65.7

Ralli Arm 38.50 16.05 47.11 (-) 31.05 19.7 35.7 (-) 2.8

Maddur Arm 29.00 36.44 38.93 (-) 2.50 10.1 46.5 17.5Vizzeswaram Arm 55.10 107.39 51.59 55.81 28.3 135.7 80.6

Total Civil Works: 208.40 292.75 256.09 36.66 76.7 369.4 161.0

Mechanical Engineering Works 84.00 173.59 110.06 63.53 12.7 186.3 102.3

Engineering and Supervision 46.90 71.30 46.94 24.36 71.3 24.4

Technical Assistance to GOI for preparingCAD projects 7.20 - - - (-) 7.2

Preparation of II Phase Project 3.20 - - - (-

Sub-Total 349.70 537.63 413.09 124.55 89.4 627.0 277.3

Physical Contingencies 64.70 35.82 28.87 6.95 35.8 (-)28.9

Estimated Price Increase 144.50 37.15 26.80 10.36 37.2 (-)107.3

Sub-Total 209.20 72.97 55.66 17.30 73.0 (-)136.2

Total Project Costs 558.90 610.60 468.75 141.85 89.4 700.0 141.1

1/ As given by Project authorities in April 19812/ Based on advice from GOT CECOPAIRS April 1982. Actual Cost is estimted to be Rs 700 M. As of April 8, 1981 the work remaining to be completed

was as followsoRiver Arms

Dowlaishwaram Ralli Maddur Vizzeshwaram Total

Major work items remaining

Piers to be completed - - - 7 7Barrage gates to be installed 13 - - - 13-

(No. 26-38)Scour sluice gates to be installed 4 2 - 4 10Head regulators (completion of contract awarded January 1981) - 3 - - 3Abutments - - - 4 4aBridge bays not yet spanned 36 45 23 39 143-

(no. 35-70) (No. 1-43 (No. 1-23) (No. 1-39)plus 2scoursluicebays)

a/ Out of a total of 175 barrage gatesb/ Out of a total of 201 bays

Tim added cost of Rs 90M has been distributed by indexing costs shown in balance to complete column by 207. (assuming the project authorities'estimate was December 1979 price levels and by pro-rating the balance of the overrun on the basis of bridge spans remaining to be completed.

- 43 -

Table 3

INDIA

GODAVARI BARRAGE PROJECT

Quantities of Materials Used in Construction

Work DoneTotal Up To

Description of Item Requirements 31.3.81 Balance

Sheet piles (in M.T.) 6,800 6,530 270

RCC for sub-structure (in cum) 188,200 177,700 10,500

RCC for superstructure ( " ) 93,200 79,000 14,200

Jeddy stone ( " ) 91,000 84,900 6,100

Rough stone dry packing ( " ) 14,800 1,600 13,200

Aggregates ( " ) 423,800 374,700 39,100

Steel (in MT ) 18,350 15,726 2,624

Steel for gates ( " ) 14,000 12,000 2,000

Cement ( " ) 121,000 106,800 14,200

Embankments (in cum) 477,000 131,200

- 44 -

Table 4

INDIA

GODAVARI BARRAGE PROJECT

Disbursements during Project Period

ActualDisbtrsements

As APercentage

Accumulated Disbursement ofIBRD Fiscal Year Actual Appraisal Appraisal Disbursementand Semester Accumulated Estimate Estimate Profile

19752nd 5.7 3.0 190 12.7

19761st 6.9 6.0 115 15.32nd 15.5 16.0 97 34.4

19771st 19.4 23.0 84 43.12nd 32.0

1978ist 36.02nd 25.7 40.0 64 57.1

19791st 26.6 43.0 62 59.12nd 30.4 44.0 69 67.6

19801st 34.2 45.0 76 76.02nd 37.8 84.0

1981Jan 31 40.2Feb 2~41.0march 42.0April 30 42.4May 31 43.0June 30 45.0 100.0

- 45 -

Table 5

INDIA

GODAVARI BARRAGE PROJECT

Economic Costs and Benefits

Capital Incremental2/ Expected3/ NetYear Costs 0 & M Costs- Benefits- Benefits- - - - - - - -------------- Rs M i- - - - - - - -- - - - - - - - -

1 78.60 0 0 - 78.60

2 127.80 0 0 -127.80

3 114.30 0 0 -114.30

4 68.90 0 0 - 68.90

5 78.90 0 0 - 78.90

6 56.00 5.7 741.18 679.48

7 48.10 5.7 841.37 787.57

8 0 5.7 912.48 906.78

9 0 5.7 1,083.17 1,077.47

10 0 5.7 1,165.57 1,159.87

11 0 5.7 1,217.36 1,211.66

12 0 5.7 1,269.18 1,263.48

13 0 5.7 2,590.16 2,584.46

14 0 5.7 2,590.16 2,584.46

15 0 5.7 2,590.16 2,584.46

16-50 0 5.7 2,590.16 2,584.46

Economic rate of return = 60%

1/ In constant 1980 Economic Prices.2/ It has been assumed that after probability of failure reaches 50%,

agricultural production in the project area would adjust to rainfedconditions.

3/ Incremental benefits due to prevention of expected losses of agri-cultural production in case of barrage failure.

- 46 -

ANNEX 1

GOVERNMENT OF ANDHRA PRADESH

ABSTRACT

COMMITTEES - Constitution of Negotiating Committee to consider the claims ofM/s National Projects Construction Corporation Limited, amounting to aboutRs. 2.4 crores and also for revision of rates of contract for balance portionof civil works to be done by them in Godavari Barrage Project - Orders - Issued.

IRRIGATION & POWER (PROJECTS WING) DEPARTMENT

G.O.Ms.No.388 Dated: 22.12.1978

0 R D E R:

The civil works of Godavari Barrage Project were entrusted to M/sNational Projects Construction Corporation Limited, a Government of Indiaundertaking, for a contract value of Rs. 18.218 crores. The work was com-menced by the said firm during December 1975 and as per the terms of thecontract the work has to be completed by June 1979. M/s National ProjectsConstruction Corporation Limited were putting forth several claims for thework already executed by them.

2. At the meeting held on 21.8.1978 by the Secretary, Irrigation &Power Department with the officials of the Government of India, Governmentof Andhra Pradesh and M/s National Projects Construction Corporation Limited,a suggestion was considered whether a Negotiation Committee consisting ofSarvasri A.P. Ranganatha Swamy, K.V. Subba Rao, former Chief Engineers ofGovernment of Andhra Pradesh and Sri Parthasarathy, presently Member (Accounts),Andhra Pradesh State Electricity Board, be formed to consider the claims ofM/s National Projects Construction Corporation Limited, amounting to aboutRs 2.4 crores as well as their request for revision in the rates of contractfor the balance portion of work to be done by them, as in their view, condi-tions have changed warranting such change and these conditions were notanticipated when the contract was concluded.

3. The Government after careful consideration have decided to appointa negotiating committee as detailed below to examine the claims of M/sNational Projects Construction Corporation Limited, amounting to about Rs 2.4crores and also their request for revision in the rates of contract for thebalance portion of civil works to be done by them in Godavari Barrage Project:

(i) COMPOSITION OF THE NEGOTIATING COMMITTEE

(1) Sri A.P. Ranganatha Swamy, Chief Engineer (Retired) Chairman(2) Sri K.V. Subba Rao, Chief Engineer (Retired) Member(3) Sri Parthasarathy, Member (Accounts),

A.P.S. Electricity Board Member

- 47 -

(ii) TERMS OF REFERENCE:

(a) To examine in detail and recommend to the Government of AndhraPradesh all the claims of M/s National Projects ConstructionLimited amounting to about Rs 2.4 crores in respect of AgreementNo. 2SE/76-77 entered into with M/s National Projects ConstructionCorporation by the Superintending Engineer, Godavari BarrageConstruction Circle No. I for executing the civil works of GodavariBarrage Project;

(b) To examine in depth whether the present rates of the Agreementreferred to in item (a) above are not really workable in view ofthe changed conditions, as contended by M/s National ProjectsConstruction Corporation Limited; and

(c) If so, to recommend to the Government the reasonable and realisticrates which could be paid to M/s National Projects ConstructionCorporation Limited for the balance of work to be done by themunder the contract and also to indicate the specific date fromwhich the enhanced rates could be paid.

(iii) HEADQUARTERS OF THE COMMITTEE:

The headquarters of the Committee shall be at Hyderabad.

(iv) REMUNERATION TO THE NON-OFFICIAL MEMBERS OF THE COMMITTEE:

The non-official Members of the Committee shall be paid as indicatedbelow, as was done in respect of similar Committees constituted by the Govern-ment of Andhra Pradesh in Irrigation and Power (Projects Wing) Department:

(a) Rs 100/- (Rupees hundred) per day for each sitting;

(b) Actual fare by plane or by Air-conditioned Rail travel for toand from journevs from the place of residence to the workspotat Dowlaiswaram and back to the residence, in relaxation ofrule 13(I) of the Rules in Annexure VIII of the A.P.T.A. Rules;

(c) Payment of T.A. & D.A. as is admissible to the highest class ofofficers in the State of Andhra Pradesh while on tour;

(d) The official Member, who is in Goverment service will be eligiblefor T.A. & D.A. which were admissible under the Rules applicableto him.

The Chief Engineer, Godavari Barrage Project shall be the counter-signing officer for the T.A. bills for the non-official Members of theCommittee.

- 48 -

(v) TIME LIMIT FOR SUBMISSION OF THE REPORT OF THE COM4ITTEE:

The Committee should submit its report within three months from the

date of issue of these orders.

4. The expenditure is debitable to "533 - Capital Outlay on Irrigation,

Navigation, Drainage and Flood Control Projects - A - Irrigation Projects

(Commercial) Schemes included in the Fifth Five-Year Plan. M.H.45 - Godavari

Barrage - S.H. (01) Direction and Administration.

5. This order is issued with the concurrence of Financial Adviser

(Projects) vide his U.O.No.1056/F.VII(I)/78-1, dated 21.12.78.

(BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH)

C.N. SASTRYSECRETARY TO GOVERNMENT

ToThe Members of the Negotiating Committee.

The Chief Engineer, Godavari Barrage Project, Dowlaiswaram

The Accountant General, Andhra Pradesh-II, Hyderabad.The Director of Accounts, G.B. Project, Dowlaiswaram

The Deputy Accountant General (Projects), Vijayapuri North.The Financial Adviser (Projects), Hyderabad.

The Finance & Planning (Fin.Wing) Department, hyderabad.

Copy to:

The Director, Department of Economic Affairs, Ministry of Finance,Government of India, North Block Secretariat, New Delhi - 110 011.

The Chairman & Managing Director, M/s National Projects ConstructionCorporation Limited, Raja House, 30-31, Nehru Place, New Delhi -110 024.

FORWARDED BY ORDER

ss

SECTION OFFICER:

Vp/81227

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