India - Wheat Storage Project

Document of The World Bank FOR OFFICIAL USE ONLY F C PM Report No. 3751 PROJECT PERFORMANCE AUDIT REPORT INDIA WHEAT STORAGE PROJECT (CREDIT 267-IN) December 31, 1981 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS ERR - Economic Rate of Return FCI - Food Corporation of India GOI - Government of India ICB - International Competitive Bidding IDA - International Development Association JFA - Joint Financing Agreement OED - Operations Evaluation Department PCR - Project Completion Report SIDA - Swedish International Development Association FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT INDIA WHEAT STORAGE PROJECT (CREDIT 267-IN) TABLE OF CONTENTS Page No. Preface .......................................................... i Basic Data Sheet ...................................................... iii Highlights ....................................................... v PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY ........................................... 1 II. MAIN ISSUES ....................................... 2 A. Land Acquisition. ................................... 2 B. Selection of Consultant..... . ..................... 4 C. Use of International Competitive Bidding and Other Procurement Problems...................5 D. Silos and Choice of Storage Technology............6 E. Benefits of the Project. ............................ 7 F. Lessons Learned ............................. 9 PROJECT COMPLETION REPORT I. Introduction ...................... . 10 II. Project Identification, Preparation and Appraisal ...... 10 III. Project Implementation .......................... 12 A. Delays in Effectiveness ................................ 12 B. Delays in Project Implementation ........................ 14 C. Causes of Delay in the Implementation of the Silo Component ................................... 15 - Land Acquisition .. . . ...... . o.. .......... 15 - Consultants Performance ..-....................... 15 - Construction Delays .................................. 17 - Cement Shortage .................................. ..18 - Steel .. .. ............................. .......18 - Technical Problems, Staff and Machinery ..........18 D. Silo Equipment, Training, Grain Storage Study ...... 18 This document has a restricted distribution and may be used by recipients only in the performance of their official duties Its contents may not otherwise be dislosed without World Bank authorization. TABLE OF CONTENTS (continued) Page No. IV. Special Issues ........................................... 19 Single Invitation to Bid ................................. 19 Silo Technology ............. ...... ............... 20 V. Economic Evaluation ...................................... 20 VI. IDA Performance .......................................... 21 VII. Conclusion and Lessons Learned .................... 22 Annexes/a I. Project Completion Report Prepared by FCI ................ 24 II. Cost Details ........................ ....... 39 III. Reasons for Cost Overruns .......................... 40 IV. Reasons for Time Overrun in the Execution of Piling and Foundation Works ................................... 43 V. Reasons for Time Overrun in the Execution of Superstructure Works ................................... 45 VI. Terms of Reference of Project Study ********************** 46 VII. Project Study - Supporting Studies ....................... 49 VIII. Storage Centers - Contract Start and Completion Dates***** 50 IX. Utilization of Project Godowns ....... ......******* 51 X. Year-Wise Average Utilization of Project Godowns ......... 56 XI. Project Silo Costs * *******.............. ........ 57 XII. Basic Data Sheet .....**................................ 58 XIII. Bar Chart for Silo Construction .......................... 59 Map /a The Annexes have been prepared by FCI. - 1 - PROJECT PERFORMANCE AUDIT REPORT INDIA WHEAT STORAGE PROJECT (CREDIT 267-IN) PREFACE This is a performance audit of the Wheat Storage Project in India for which Credit 267-IN in the amount of US$5.0 million was approved in July 1971. The Swedish International Development Association (SIDA) cofinanced the equivalent of US$5.0 million. The credit was closed on September 30, 1979, after a delay of four years. Construction of grain silos, however, was not completed until March 1980. The credit was fully disbursed with the final disbursement being made on October 5, 1979. This audit consists of a memorandum prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) dated June 30, 1981. The PCR was prepared by the South Asia Regional Office fol- lowing a visit to India in September 1979 and is based in part on a project completion report which was prepared by the Food Corporation of India (FCI), and is included as an Annex to the Region's PCR. The audit memorandum is based on a review of the Appraisal Report (PA-64a) dated June 15, 1971, the President's Report (P-968) of June 30, 1971, the Credit Agreement dated August 23, 1971, and the PCR together with information obtained from a review of project issues as contained in relevant Bank files and interviews with Bank staff who have been associated with the project. An OED mission visited India in July 1980.1/ The audit mission held discussions with officials of the Government of India, FCI, the consul- tant and a major contractor and visited several project sites. Visits to project sites were restricted by the heavy monsoons of that year. On the basis of this review process the audit finds that the PCRs prepared by the Region and the FCI provide a generally complete and accurate account of the Project's achievements and shortcomings. However, in the audit's view, a more thorough treatment of problems related to land acquisi- tion, international competitive bidding, design and technology of storage and the measurement of the economic benefit of storage.are warranted. The audit presents additional information and analysis of these issues. A copy of the report was sent to the Borrower on October 19, 1981 for comment; however, none has been received. 1/ The preparation of the PCR and issuance of this audit report was delayed awaiting essential information and data which were to be supplied by the FCI. - ii - OED wishes to express its appreciation for the valuable assistance and information provided during the audit's mission to India by officials of the Government and FCI and other personnel who have been associated with the project including FCI's consultant and silo contractor, which contributed significantly to the preparation of this report. - iii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET INDIA WHEAT STORAGE PROJECT (CREDIT 267-IN) KEY PROJECT DATA Appraisal Actual or Item Expectation Current Estimate Total Project Cost (US$ million) 15.9 20.2 Overrun (%) - 27.1/a Credit Amount (US$ million) 5.0 Disbursed )- 5.0 Cancelled )- 0 Repaid to ) June 30, 1981 - 0.03 Outstanding to ) - 4.98 Cofinancing: Kingdom of Sweden KR 26 million Kr 26 million Date Physical Components.Completed 12/74 03/80/1 Proportion Completed by Above Date (%) 47/c 100 Proportion of Time Overrun (%) 158 Economic Rate of Return (%) 25 (20 for godowns 15 (26 for godowns & 28 for silos) & 9 for silos)/d CumuLative Estimated and Actual Disbursements (US$'000) FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Estimated 0.3 2.0 2.6 5.0 - - - - - Actual - - - 1.2 1.2 1.3 1.8 4.4 5.0 Actual/ Estimate (%) 0 0 0 24 - - - - - OTHER PROJECT DATA Original Actual or Item Plan Revisions Current Estimate First Mention in FiLes or Timetable - - 03/03/66 Government's Application - - 09/22/69 Negotiations - - 11/23/70 Board Approval - - 07/20/71 Loan/Credit Agreement Date - - 08/23/71 Effectiveness Date 11/15/71 5 extensions/e 11/15/72 Closing Date 09/30/75 09/30/79 09/30/79 Borrower Government of India Executing Agency Food Corporation of India Fiscal Year of Borrower April 1 - March 31 Follow-on Project Name Second Foodgrain Storage Project Loan/Credit Number Cr. 747-IN Amount (US$ million) US$107 M Loan/Credit Agreement Date January 6, 1978 /a Storage capacicy (bag and bulk) completed under the project as revised was 63% of appraisal estimate, in static terms (see PCR para. 22). /b 190,000 tons siorage capacity. See footnote a. /c Bag warehouse component (90,000 tons storage capacity). /d See PPAM para. 29, footnote 3 and para. 30, footnote 1. /e March 31, 1972; May 15, 1972; June 15, 1972; September 15, 1972; November 15, 1972.  - iv - MISSION DATA Month/ No. of No. of Staff Date of Field Mission Year Days Persons Weeks Report Identification 06/69 5 4 2.9 08/07/69 Preappraisal 12/69 10 1 1.4 01/26/70 Appraisal 03/70 26 6 22.3 06/05/71 Total 41 26.6 Supervision I 10/71 2 4 1.1 10/21/71 Supervision II 06/72 2 2 0.6 07/20/72 Supervision III 01/73 2 1 0.3 02/08/73 Supervision IV 09/73 5 1 0.7 12/12/73 Supervision VLa 10/74 19 3 8.1 01/13/75 Supervision VI 05/75 3 1 0.4 06/02/75 Supervision VII 10/75 5 1 0.7 02/11/75 Supervision VIII 06/76 7 1 1.0 06/30/76 Supervision IX 02/77 5 2 1.4 04/01/77 Supervision X 10/77 8 2 2.3 11/21/77 Supervision XI 02/78 7 2 ELO 04/07/78 Supervision XII 07/78 7 3 3.0 08/29/78 Supervision XIII 01/79 7 1 1.0 04/24/79 Supervision XIV 09/79 4 2 1.1 10/12/79 Total 83 23.7 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Rupee (Rs) Year: Exchange Rate: Appraisal Year Average US$1 = 7.50 Intervening Years Average (floating) US$1 = 8.16 Completion Year Average US$1 = 8.10 /a Reappraisal.  - v - PROJECT PERFORMANCE AUDIT REPORT INDIA WHEAT STORAGE PROJECT (CREDIT 267-IN) HIGHLIGHTS The objective of the Wheat Storage Project was to help reduce waste and spoilage of foodgrains and relieve the strain on transportation in India's Wheat belt in the Northwest . Sweden and IDA together provided US$10 million on concessionary terms to assist in the construction of modern wheat storage and handling facilities in the region. The total project was expected to cost about US$16.0 million and to include the construction of ten, 20,000 ton, silos and ten, 10,000 ton, godowns or a total storage capacity of 300,000 tons. This improved storage was expected to reduce annual wheat losses by 59,000 tons. In addition to the construction of storage facilities, the project included funds for training personnel in the operations of modern silos and for a study of India's foodgrain storage and distribution system. Completion of the project took twice as long as forecast at appraisal and despite the,fact that the number of silos constructed was one-half of the number planned, total cost exceeded the appraisal estimate by 15 percent. The silo component was scaled down because of the imminence of cost overruns due to construction delays in a period of high inflation. A number of problems arose during implementation that delayed com- pletion. Slowness in the appointment of consulting engineers and acquisition of sites for storage buildings (both conditions of effectiveness) delayed project implementation by about a year. Other problems were: non-suitability of building sites acquired, requiring the search for and acquisition of replacements; the inexperience of the contractor, Food Corporation of India's (FCI) consultant and FCI itself in silo construction; national shortages of steel and cement; labor problems; and adverse weather. The godowns (reduced from 10 to 9 because of land acquisition prob- lems) were completed ahead of schedule and some have been in full operation since 1972/73. The five silos have been used much below their capacity; partly because they were recently completed when a short crop occurred, and partly because land acquisition problems have held up completion of railroad spurs. Recent experience of FCI has shown that losses prevented through storage in godowns and silos are less than expected at appraisal -- 3% for godowns and 4-1/2% for' silos compared with respective estimates of 17% and 21%. The annual grain losses prevented by the project as completed is now - vi - estimated at 9,000 tons at average utilization compared with 59,000 tons estimated at appraisal. On the other hand, recent experience has shown that operating cost (handling, etc.) are less than assumed at appraisal. The re-estimated economic rate of return for the project is 15% compared with 25% estimated at appraisal. The re-estimated economic return to the silos is marginal at 9% and compares with 28% estimated at appraisal. However, the re-estimated rate of return for godowns is higher at 26% in contrast with the appraisal estimate of 20%. There are some lessons to be learned from this project: A high technology construction method led to delays and likely was neither an optimum technology nor an optimum storage alternative (PPAM paras. 24 - 27 and PCR para. 40). Land aquisition is a complex matter in India and requires close attention during project preparation and appraisal; if suitable sites for storage facilities had been acquired before credit approval, some of the costly implementation delays would have been avoided. (PPAM paras. 7 - 12 and PCR para. 51). Other points which may be of particular interest are: - selection of consultants took a long time due to conflict between Borrower's preferred procedure and IDA-s guidelines; recently IDA's guidelines have been changed to include an alternative closer to the Borrowers preferred procedure at that time (PPAM, paras. 13-15); - conflict between Borrower and IDA over use of ICB to secure contrac- tor for silos was resolved when SIDA agreed to assist in their financing without benefit of ICB (PPAM, para. 17 and PCR, paras. 11-13); and - benefits of storage projects are difficult to estimate because of problems of measuring storage losses (PPAM, paras. 30-31 and PCR, para. 5). - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM INDIA WHEAT STORAGE PROJECT (CREDIT 267-IN) I. SUMMARY 1. The Wheat Storage Project was a small undertaking relative to total grain storage in India at conception and appraisal and still smaller at com- pletion. Total cost was estimated at about US$16.0 million with US$10.0 million being financed by IDA and the Swedish International Development Association, US$5.0 million each. These funds were expected to assist in financing 200,000 tons of silo and 100,000 tons of flat (godown) storage, which was expected to reduce annual losses of wheat by 59,000 tons. 2. The project was expected to meet part of the urgent storage needs of Northwest India resulting from recent (1971) sharp increases in wheat produc- tion following the introduction of high-yielding varieties and improved pro- duction techniques, providing the basis for developing a more effective system of grain storage and distribution throughout India. In addition to planning, designing and constructing 10 grain silos and godowns, the project was to provide for training personnel in the complex tasks of silo operation and for conducting a study of India's food grain storage and distribution system. The project was to be implemented and managed by FCI, which at that time owned about 2.8 million tons of grain storage capacity. 3. The project took more than twice the expected time to complete after approval, (July 1971) and followed an extended period of project preparation and negotiations which began in mid-1969. Delays in preparation were due mostly to Bank insistence that civil works for silos be subject to ICB, which the Borrower rejected on the grounds that there were sufficient Indian firms capable of carrying out the work. The Bank insisted on ICB because of its general operating procedures for procurement and because a relatively new (slip-form) method of silo construction was to be used. The conflict was resolved by SIDA agreeing to finance civil works for silos without ICB. The Borrower agreed that equipment and machinery required to complete the silos would be procured through ICB. 4. Long delays also occurred in making the credit effective and imple- menting the silo component of the project.!/ Nonfulfilment of two conditions of effectiveness, (a) appointment of consulting engineers and (b) acquisition of sites for storage buildings, necessitated that the deadline be extended 1/ Due to long delays in the implementation of this project, it became the subject of an earlier OED review. See "Operational Policy Review, Delays in Project Implementation, the Supplement: Selected Case Studies", OED Report No. 2946, April 11, 1980. - 2 - five times. Delays in implementation can also be attributed to a number of factors: non-suitability of some of the originally selected storage sites, disagreements between the Bank and the Borrower concerning methods of hiring consultants, mate-rial shortages, labor problems, adverse weather and the inexperience of a contractor, FCI's consultant and FCI itself in silo construction. The most important of these problems will be analyzed in a following section. 5. Because of the implementation delays, a large cost overrun became imminent in a period of high inflation. The project was scaled down consider- ably, especially the silo component. The number of godowns was reduced by just one, from 10 to 9, but only half of the planned silos were constructed, five instead of ten. The nine godowns were completed ahead of schedule in contrast to the last silo, which was only completed in March 1980, over five years after the target date. The all-Indian Grain Storage and Distribution Study was completed after some delay. Although it did not provide all the information expected, it proved useful for FCI's planning and provided support data for the Second Foodgrain Storage Project. Total cost of the project at completion was US$20.2 million compared with US$15.9 million estimated at appraisal, representing a 27% cost overrun. All of this overrun, and more, was due to the much higher than estimated unit cost of constructing the silos. The average unit cost of constructing the nine godowns was about two-thirds of that estimated at appraisal; on the other hand, the average cost of con- structing a silo was 200% above the appraisal estimate. 6. The godowns were completed ahead of schedule, but some of them were not fully utilized in earlier years. At project completion, the silos had been used much below capacity. Some were not completely operational due to lack of necessary railroad spurs, another consequence of the land acquisition problems. The economic rate of return is re-estimated at 15% compared to 21% estimated at appraisal. The re-estimated rates of return for godowns is 26% and that for silos is 9%; these rates were estimated at appraisal at 20% and 28%, respectively. Because of the uncertainty and tenuous character of grain loss savings achieved through modern grain storage, the issue of measuring benefits of storage is examined in the following section. II. MAIN ISSUES A. Land Acquisitionl 7. The problem of acquiring land for public and quasi-public use stems largely from India's high ratio of population to limited arable land.!/ it was especially difficult to acquire land for the silos because project speci- fications stipulated that sites should have easy access to a main railroad 1/ OED's special study, op. cit., gives land acquisition problems as a major cause of delay for the project. 2/ Other projects that have had land acquisition problems in India included Bihar Agricultural Markets (Credit 294-IN), and Mysore Agricultural Wholesale Markets (Credit 378-IN). - 3 - through a railroad siding. (Few problems were encountered in acquiring land for godown construction). 8. The appraisal failed to anticipate the problems that would be encountered in site acquisition. The appraisal report stated that nearly all of the selected sites were owned by FCI and that aquisition of the remaining sites would not take longer than three months because identified sites are single owner holdings and are located in rural areas. In hindsight, this view turned out to have been based on unsound information. Some of these sites (mainly silo sites) were unsuitable due to soil structure, and others lacked the required size or access to railroad lines. 9. In October 1971, the Bank concluded that site acquisition was well in hand. But it seems that there was some misunderstanding about the actual status of site acquisition. In March 1972, the Bank was informed that three of the ten silo sites had not been acquired. In Septemer 1972, it was reported that acquisition of one had encountered legal problems and a site at an alternative location would be selected. However, in September 1973, a year later, the true picture emerged when a Bank mission reported, "Site (silo) selection (acquisition) is a serious problem and is holding up progress. Out of 10 sites, only four are completely assured and in every way suitable to date". However, one of these four silos was not built at the time of project completion. In early 1974, due to difficulties in site acquisition and to cost escalation, the consultant recommended that the number of silo complexes be reduced from ten to five and at the same time the capacity be increased from 20 thousand to 40 thousand metric tons. This recommendation was not accepted. Five silos of 20 thousand tons were eventually built. 10. In retrospect, FCI appears not to have understood the basic project requirements or to have exercised due care in selecting silo sites to meet project specifications as to size of site, soil conditions and railroad accessibility. It is unclear why FCI informed the Bank that sites had been acquired when in fact they had only been selected, as they were owned by another government agency. It is possible that more rigorous verifications of acquisition by the Bank would have speeded up the process. But at the time sites were to be acquired the Bank and the executing agency were involved in an extended discussion on the consultant selection process, which may have compounded site acquisition problems. 11. Land scarcity, though not as acute in the States involved in the project as in other States in India, did pose some problems in acquiring con- tiguous sites of sufficient size and land for rail spurs. At the time of the audit mission's visit in July 1980, land for rail access to one silo complex still had not been acquired. 12. In discussing the land problems, a high government official sug- gested that projects not be approved until all necessary land had been acquired. The audit agrees with the suggestion. As noted above, another alternative existed. The Bank should have been better informed about the actual status of site acquisition by more rigorous verification of land ownership. The FCI, however, must accept responsibility for most of the delay that occurred in land acquisition process. -4- B. Selection of Consultant 13. Selection of consultants to advise FCI in implementing the project (especially the silo component) took an inordinate amount of time, too. The Bank leaned toward appointing an expatriate consultant, or at least a local consultant with ties to an expatriate firm, due to the experience required to oversee construction of silos by the slip-form1/ method. The Borrower and FCI felt that sufficient local expertise was available. Eventually, FCI presented the Bank with a list of five firms which had been prequalified. The Bank had no objection to inviting proposals from those on this list. Further problems developed when FCI insisted that the consultant firm it had selected as best qualified submit a bid together with its proposal. At that time, this procedure was contrary to Bank guidelines for selecting consultants which directed that technical qualifications and the proposal outline were the only criteria to be considered in awarding the contract. Only after a consul- tant was selected should the Borrower begin negotiations on cost of services. If an agreement could not be reached with the best qualified candidate only then should the Borrower begin negotiations with the next best qualified candidate. The Borrower felt that calling for price quotations from all firms submitting proposals would insert an element of competition in the process as well as speed it up. 14. After extended negotiations with the first choice firm, FCI could not obtain an offer that it considered reasonable. Therefore, FCI wished to ask for new proposals from three firms including their price quotations. However, the Bank ruled that this could not be done. Negotiations were then reopened with the first consultant firm, and after prolonged negotiations an agreement was completed on November 10, 1979, almost a year after the target date. The consultant appointed was a local firm associated with an inter- national consultant with a good reputation. However, soon afterwards FCI's relations with its consultant became strained, FCI holding the consultant responsible for many of the problems that developed in the construction of the grain silos. 15. Since then, the Bank has changed its guidelines for use of con- sultants to include the alternative2/ of calling for price offers together with technical proposals at time of proposal. However, the price offer is not to be opened until all firms submitting proposals have been technically evaluated and the best qualified selected. If such guidelines had been approved when the Wheat Project was initiated, considerable delays could have been avoided. 1/ A "continuous" method of pouring concrete until a structure is finished by gradually lifting a fixed form slowly as the concrete sets at about one-half inch an hour. 2/ Guidelines for use of consultants by World Bank Borrowers and by the World Bank as Executing Agency August 1981, pp. 13ff. - 5 - 16. In the audit's view it would be useful for the Bank to evaluate the results of using the two alternative selection processes, once sufficient experience has been acquired, to compare advantages or disadvantages of the two systems. C. Use of Internaticnal Competitive Bidding and Other Procurement Problems 17. As mentioned earlier, controversy over the need for International Competitive Bidding (ICB) delayed the eventual approval of the project by about one year. The conflict was eventually resolved when the Bank agreed to finance the godowns construction without ICB and SIDA agreed to assist in financing the construction of the grain silos. 18. As it turned out local contractors were eventually engaged to construct the silos, one firm the foundations and another the silo structure itself. The latter had experience in constructing silos by the slip-form method and also was engaged in international construction activities. 19. Numerous problems were encountered by the contractor for the silos partly because of the rigorous schedule that had to be followed and the specialized equipment required by the slip-form method. This method requires continuous operation on a 24 hour day basis until a silo is completed. Thus, usually three labor shifts are required. In the somewhat remote areas where the silos were constructed, this requirement became a major labor mobilization and housing problem. The method also requires the use of large cranes. Only one was available to the contractor, which resulted in considerable delays because construction could not proceed at more than one site at a time. 20. The point of this discussion is not to enumerate the technical problems of the contractor but simply to raise the question of whether a more effective contractor could have been selected by following ICB. Any judgement on this matter without further study is conjectural. A foreign firm with more experience in slip-form construction might not have encountered the same technical problems if it had all the requisite equipment available, but it might have had greater difficulties in dealing with local conditions and in mobilizing local labor if it had no previous experience in the country. Of course, there is no asEurance that a foreign firm would have participated in the tendering. 21. The PCR notes (para. 39) that the Joint Credit Agreement stipulated that a single invitation to bid should be issued for the entire lot of 10 godowns and another single invitation for the silos. This is correct but the paragraph goes on to state, "FCI ignored this covenant and invited separate bids for each godown. IDA repeatedly pointed out the violation, but acquiesed finally and disbursed against godown construction". The Joint Financing Agreement (JFA) states (page 19, para. 4): "A single invitation to bid will be issued for the godowns to be constructed under the Project, which will inter alia specify that a bidder may submit offers in respect to one or more godowns. The Corporation (FCI) will have the option of either awarding one contractor one contract in respect of all the godowns or of awarding separate contracts in respect of one or more godowns to different contractors." - 6 - The violation may have been due to misinterpretation, as was, indeed, indi- cated in Bank correspondence. However, the apparent intent on part of the Bank for the wording of this covenant was to encourage a significant number of contractors, large and small, to bid on the godowns. But strict adherence to this covenant according to the Bank's intent would have led to delay in imple- menting the godown component (PCR, para. 39) because a single invitation to bid would have had to have been delayed until all ten sites had been acquired, one site never was. 22. The same specification for construction of the silos was included in the Joint Financing Agreement, but the Bank agreed to separate invitations to bid in August 1973 after some discussion. FCI has now concluded that multiple contracting for single units was the best alternative for civil works on silos but that contracts for electrical and mechanical installations should have been awarded on a single firm, turnkey basis. 23. If firms are available to provide turnkey services, turnkey opera- tions can reduce the management input of the contracting agency, as a turnkey contract does not require that one firm will do all the work but allows sub- contracting to a number of firms. Thus, many of the contracting and coordi- nating problems are taken out of the hands of the implementing agency. Such a firm could improve efficiency but may be found only in the international market, and domestic skills would not be developed. Therefore, a joint venture of domestic and foreign firms may be the best solution under circum- stances if local firms are given sufficient responsibility to gain necessary experience. This judgement is as valid for consultants as it is for con- tractors. The fact that the engineering consultant to FCI represented a joint venture, however, did not make up for other obstacles in the Wheat Storage Project. D. Silos and Choice of Storage Technology 24. At appraisal, it was believed that bulk handling of grain in modern silos would provide a more efficient storage system than bag storage (godowns). It was estimated that losses in godowns would be about 8% while in silos they would average 4%. On the basis of this assumption and other information, silos were estimated to be less costly per ton of grain saved than godowns. On the basis of delays involved and higher than expected cost in the project as previously noted, the re-estimated rate of return to the godown component is 26% and to the silos it is 9%, compared respectively with 20% and 28% estimated at appraisal. 25. The judgement to include silos in the project is subject to ques- tion. Silo construction cost at appraisal was estimated to be about one-fourth higher per ton of storage than that for godowns. The argument was made that smaller grain losses in the silos would more than offset higher investment and operating costs. In practice, construction cost per ton of storage in godowns was one-third less than expected (partly because they were constructed quickly and slightly ahead of schedule) but cost per ton for silos was three times as high as estimated (mainly because of construction delay in a period of high inflation.) - 7 - 26. One could argue, if the contract had been made with an interna- tional firm with much experience in slip-form construction, that cost would have been less, but, as already noted, this is not certain. The contractor for the silos had had experience with slip-form construction at port sites. Further, during project implementation, the contractor was operating in a difficult environment. There were cement and steel shortages throughout the construction period. All cement and steel sales were controlled by the government, and there were long delays by the Government in responding to requests for cement and steel. Be that as it may, errors in planning were made by the contractor in not insuring that tower cranes necessary for slip- form construction were available on time. The first cranes obtained were too short, and finally only one crane of adequate height was obtained. Construc- tion could only be carried out at one site at a time, and then it took con- siderable time to move the crane from one location to another (see PCR para. 28). 27. The point of the above is that introducing high technology construc- tion was a major cause of the problems encountered in silo construction. Other less sophisticated technical approaches to silo construction could have been and had been used in other locations in India. But more importantly, as has been demonstrated by the project, godowns were the most effective and efficient substitute for silos of any means of construction. This lesson was taken into account in the Second Project, in which silos only were to be constructed at port sites, sites at which bulk handling facilities permit a rapid throughput, which can be important in times of crises. E. Benefits of the Project 28. There are two aspects to consider in measuring project benefits: (1) the need for the storage, i.e., whether there was adequate storage available, and (2) the choice of the type of storage. The record indicates that the need for wheat storage in India was not as pressing as thought at the time of appraisal (see appraisal report paras. 1.01 and 2.17). This conclu- sion is supported by the fact that many of the godowns were not used to capacity in earlier years:l. Others were used at capacity in mid-term but have not been so used in more recent years due to a short crop in 1979-80. Further, some of the reported data may be inaccurate, as FCI was unable to supply inflow-outflow data to the audit mission (see PCR Annex IX). Moreover, use of the silos to date has been very limited. Up to now, silos have been used far below capacity because of low grain production in 1979, a consequence of inadequate monsoon rains. A silo complex visited by the audit mission was storing very little grain, while an adjacent godown was relatively full. Some of the silo's highly complex automated equipment was not working. A railroad siding had not been connected to the main railroad because acquisition of land 1/ Some have been used at or above capacity in recent years; above planned capacity was achieved by stacking bags higher than envisaged. - 8 - was still under litigation. The wheat stored in the complex had been brought in by bags instead of in bulk!'. 29. In calculating the re-estimated economic return to the silo sub- project for the PCR, it was assumed that the rate of utilization for silos would average the same as that experienced for godowns in the years 1976 through 1978, with benefits beginning in 1981. As just noted, these data are weak. Even under these optimistic assumptions, the rate of return to the silo component is only about 9%. Under more modest assumptions about utilization, the return would be much lower.2/ 3/ 30. It is commendable that more realistic values for grain losses avoided due to improved storage were used in recalculating the ERR at comple- tion. For the appraisal report it was estimated that storage losses without the project would be 25% and those for silos and godowns would be 4% and 8%, respectively. The percentages used for the completion report, based on project experience, are 5.5% without the project facilities and 1% and 2.5% for silos and godowns, respectively. The actual losses in alternative facili- ties, those outside the project, are difficult to estimate and in a number of instances are likely to be higher than assumed in the PCR. On the other hand, some project officials informed the audit mission that there were no measurable losses in godown storage and that under Indian conditions there may even be savings because wheat usually accumulates moisture and increases in weight during storage. However, there may be actual losses in nutritional value if not weight. Because of such uncertainties in measuring the true 1/ The Region disagrees with the view expressed here on the need for storage and points out, "(i) The average godown utilization of 75% achieved to date is considerably higher than expected typically of storage projects in the Region, and (ii) the high average utilization over a number of years, in the Region's view, is of greater significance for evaluating the need for the storage capacity than the fact that in some years some of the stores have not been used fully." While this may be true, at appraisal, it was assumed that project storage would be at least used to capacity during part of the season following the harvest. Furthermore, the godowns were not used to capacity following construction and the five silos (one-half of number envisaged) were only recently completed, providing no storage in earlier years of the project when storage facili- ties were expected to be critically lacking. 2/ The re-estimated economic returns for both godowns and silos have bene- fitted from the rise in the economic (real) price of wheat since the project was approved. 3/ Further, the Central Projects Staff notes that an acceptable range for ex post rates of return in the godown component is dependent on PCR assump- tions that lower handling costs projected in the Second Wheat Storage Project can be applied to these investments. No direct evidence has been made available on the validity of these projections in the context of this specific project. - 9 - benefits of the project., the utilization of the facilities should be monitored in the future by FCI and possibly by the Bank1/. F. Lessons Learned 31. This project demonstrates that the Bank must approach high tech- nology projects with caution, even in the more advanced developing countries. With the benefit of hindsight, it can be said that the selected higher tech- nology of the silo component delayed the project and reduced its benefits. Silos are not only highly technical in construction but also in operation. It is also a labor-saving approach, questionable in an economy with high under - or unemployment. The godown component, on the other hand represents a labor intensive technology, especially in the manner in which godowns are operated in India. Some say that labor use to store and withdraw stocks is drudgery. But simple machines are available such as pulleys and trolleys that could reduce the strenuous and possibly debilitating effects of the present methods while at the same time maintaining a high level of labor input. Alternative technologies usually present somewhat of a continuum rather than a set of discrete choices. More alternative technologies need to be evaluated in the preparation of projects in order to maximize economic benefits. 32. In the audit's opinion, detailed guidelines are needed to elucidate, both for the benefit of Bank staff and borrowers, the application of the Bank's procurement policy to particular circumstances, especially with regard to ICB for civil works. In this project, the Bank agreed to support the financing of godowns, which represented relatively large contracts, under local competitive bidding; but refused to do so for silos at the cost of considerable delay, the reason apparently being that silos involved high technology construction methodsi/. 1/ The Central Projects Staff points out that another difficulty in assess- ing the without project situation in projects such as this relates to the impact of government policies. For example, FCI procurement prices did not increase during the season which reduced the incentive for private storage. Further., FCI transport costs were heavily subsidized putting alternative marketing channels for interstate shipments at a competitive disadvantage. The possibility of lower cost on-farm storage or the bene- fits from less reliance on public sector agencies were not examined at appraisal or subsequently. For all of these reasons it appears unreason- able to offer a specific re-calculated economic rate of return in this project. Possible rates would range from 5-15%. 2/ The use of ICB for civil works was a continuous contention between the Borrower and the Bank between about 1969 and 1974. A preference margin of 7 1/2% for domestic civil works contractors was introduced by the Bank in January 1974. Shortly following this action, the Borrower agreed to ICB for civil works as well as equipment for the Godavari Barrage Project (Credit 532-IN). However, little interest in bidding was shown by foreign firms. None received a contract. A more general discussion of the application of policy regarding ICB may be found in OED's "Interim Report on Procurement Issues in Bank-Financed Projects", Report No. 3557, July 15, 1981.  - 10 - INDIA WHEAT STORAGE PROJECT - CR. 267-IN Project Completion Report I. INTRODUCTION 1. The project, financed jointly with Sweden, originally consisted of: (a) constructing and equipping ten silos of 20,000 tons capacity each and ten bag storage facilities of 10,000 tons each to provide a total capacity of 300,000 tons storage capacity; 1/ (b) training silo personnel; and (c) a study of foodgrain storage and distribution in India. It was the first IDA-assisted project in the grain storage subsector and among the early lending activities for agriculture in India. 2. The Food Corporation of India (FCI), a public corporation esta- blished in 1965, was responsible for implementing the major part of the project: donstruction and operation of storage facilities and training of silo personnel. The Credit Agreement was signed in August 1971, but did not become effective until November 1972. After credit effectiveness numerous further delays occurred leading to a reappraisal of the project in 1975 when it became apparent that significant cost overruns would occur in the silo component. In order to contain the total project cost within the original estimate of US$15.9 million, the physical targets were reduced and at project completion, a total of 190,000 tons storage capacity had been installed: nine bag storage facilities of 10,000 tons each and five silos of 20,000 tons each. 3. This report has been prepared by South Asia Regional staff, based on a project completion report prepared by FCI staff (Annexes I through XIII), a desk study of files and a brief field visit. The report also draws upon two previous Operations Evaluation Department case studies of this project prepared as part of broader, Bank-wide studies on delays in project implementation and procurement problems. II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL 4. A project identification mission visited India in June 1969 to dis- cuss preparation of the project. The Food Corporation of India subsequently prepared the project and submitted its report to IDA in August 1969. Pre- appraisal by Bank staff took place in December 1969; appraisal followed in March 1970 carried out by Bank staff, with representation from the Government of Sweden. 5. A central issue revolved around the estimate of foodgrain losses attributable to inadequate handling and storage facilities. The estimated losses according to various studies ranged from less than one percent to over 1/ In terms of static storage capacity. - 11 - 30 percent, depending on type of facility and duration of storage, among other relevant factors. The appraisal report identified a likely range of 7-12 percent of total production but indicated that a much higher proportion of the incremental wheat production reaching the market in Northwest India was probably lost due to the substandard storage facilities found in the main production areas. The four states of Punjab, Haryana, Rajasthan and Uttar Pradesh constituting the wheat belt of India were selected for the project area. 6. The project had been designed in conjunction with an ongoing CO program of foodgrain storage facility construction which from 1969 to 1974 was to add three million tons of new storage capacity for both operational and contingency stock purposes. 7. The project as negotiated consisted of constructing and equipping ten grain silos and ten bag storage facilities, training of staff to operate the silos and a grain storage and distribution study. The anticipated con- struction period was three years. The silo component was a pilot effort to gain experience with silos and bulk grain handling facilities. The bag storage component was added to provide additional storage capacity in the face of an acute shortage of adequate facilities; FCI had developed standard designs and standardized operations for such facilities and had considerable experience in constructing bag storage warehouses. 8. The storage facilities were to be constructed and operated by FCI, the world's largest foodgrain marketing agency. FCI was created with two principal objectives - to assure incentive prices for producers of foodgrains and fair prices to consumers. Procurement prices are set at levels to assure foodgrain producers of a stable and reasonably attractive return; issue prices are concessional, intended to benefit low income consumers. With these overriding policy requirements, a continuous subsidization of FCI operations by GOI is inevitable. The management of FCI is vested in a Board of Directors consisting of a chairman, a managing director, three directors representing ministries of the Government and six others, all appointed by the Central Government. When the project was appraised, FCI had an engineering department, but the staff lacked experience in silo design and construction. Accordingly, provision was made in the project for local engineering consultants to be engaged for providing assistance to the department. Appointment of the consultants was a condition of credit effectiveness. 9. The location of the twenty sites for bag storage and silo facilities had been determined by the time of appraisal, and although the choice was restricted by the need for rail access, and because the land required was small, much of it owned by FCI and in rural areas, it was anticipated that acquisition would be fast. It was a condition of credit effectiveness that all the sites be acquired by FCI. Standard designs were used for the godowns which would be of conventional brick construction. A modern approach to the construction of silos by the use of reinforced concrete poured in slip-forms was agreed. Mechanical equipment was to be installed for grain cleaning, aeration, fumigation and temperature control. For training, superintendents of silos were to be sent abroad; local foremen and supervisors were to be trained in India. The provision for the grain storage study was essentially a contingency provision for a study, the detailed terms of reference and approach to which still had to be agreed between India, Sweden and IDA. - 12 - 10. The project was estimated to cost US$15.9 million (Rs 119.3 million). The Government of Sweden (Swedish International Development Agency) and IDA agreed to provide a credit of US$5 million each, together representing 63% of project cost. The Government of India was to make up the balance and onlend the total to the Corporation. 11. Disagreement over procurement procedures led to a breakdown in negotiations, which were held in November 1970. Initially, IDA proposed ICB for all storage construction. In order to ensure that the work would be large enough to attract foreign firms, IDA also proposed that for the purpose of bidding, the ten bag storage facilities should be grouped together for one bid invitation and the ten silos for another single bid invitation. GOI argued that firms with extensive experience in conventional storage construction existed in India and that there were also Indian firms with experience in the slip-form method of construction. 12. The Loan Committee which had earlier decided that ICB should be required for both silos and conventional storage facilities reconvened to consider the bidding procedures. With the argument that the slip-form method of construction was complicated technically and not particularly labor- intensive, the Committee decided that in accordance with the Bank's operating policy the silos should be put to ICB procedures. The Committee reversed its earlier decision with respect to the conventional storage facilities, however, in view of the relatively small amount involved (US$2 million) and the simple nature of the works. Despite a week of pre-negotiation technical discussion, no agreement could be reached on ICB for the silo component, and negotiations were terminated. 13. The deadlock was resolved six months later when IDA agreed to a financing formula proponed by the Swedish International Development Agency (SIDA). SIDA proposed to finance under its credit the cost of silo construc- tion (tendered locally) while IDA funds would be used for the conventional storage facilities, conultants' services and for the silo equipment. Because much of the IDA credit was intended for silo equipment, most of IDA disburse- ment was to be held up until the civil works being financed by SIDA had been nearly completed. The credit was approved by the Board in July 1971 and signed a month later. III. PROJECT IMPLEMENTATION A. Delays in Effectiveness 14. The target date in the Development Credit Agreement for fulfilling the conditions of effectiveness was specified as November 15, 1971, about three months after the signing of the Agreement. However, it was not until this terminal date had been extended five times and modified compliance with one condition was agreed by IDA that the Agreement was declared effective on November 14, 1972 (about: 15 months after the signing of the Agreement and about 12 months after the target date fixed for effectiveness). The one year delay in initiating the project had major repercussions on implementation. - 13 - 15. Two conditions of effectiveness caused difficulties: (i) that FCI would appoint suitably qualified engineering consultants to assist in the design and supervision of silo construction using the slip form method; and (ii) that FCI would acquire all sites for the storage facilities. 16. The appointment of consultants took about fifteen months because of FCI's slow internal administrative process, protracted negotiations and FCI's unfamiliarity with consultants' engagement procedures. Proposals were invited from five shortlisted consultancy firms in November 1971, three months after credit signing. -Negotiations with the first ranked firm commenced in March 1972 but were prolonged due to difficulty in reaching agreement on financial terms. In the course of these FCI called for price quotations from the second and third ranked firms also (but decided not to open the bids unless negotia- tions failed with the first firm) and in May 1972 considered inviting fresh quotations from all three firms and negotiating with each of them separately. ID& did not concur with FCI's proposals for asking price quotations from the second and third ranked firms and informed FCI that negotiations with the second firm should be taken up only if those with the first firm were unsuc- cessful and after they had been terminated. FCI, therefore, in June 1972 renewed serious negotiations with the first firm, but progress continued to be slow. The process was complicated by the involvement of negotiating and reviewing committees and complex administrative clearance procedures within FCI and the Government. Final agreement between FCI and the consultants was reached only in November 1972. 17. On the question of inviting price quotations from the second and third consultancy firms, IDA could have taken a more liberal view. The Project Department Director's Memorandum No. 8.1 issued on July 3, 1969 permitted under certain circumstances that consultant firms be asked to submit price proposals together with the technical proposals though in separate sealed envelopes. Whether this would have saved time is open to conjecture especially since the first ranked firm strongly opposed asking for price quotations from the competitors after it has already disclosed its own price proposals. 18. The condition of land acquisition for all construction sites was expected to be met within three months of signing the Credit Agreement, by November 1971. All sites had been agreed and land acquisition procedures had been discussed during negotiations in order to permit a reasonable estimate of time required. However, unforeseen difficulties developed in acquiring sites and the supervision mission that visited India in October 1971 found that while nine out of ten sites for silos had been acquired, out of ten sites for godowns three had yet to be acquired. Despite requests and reminders by IDA to expedite site acquisition, it was not until about June 1972 chat FCI had acquired nineteen of the twenty sites required for the project. Reminders and requests for the acquisition of the one remaining site continued until September 1972, when it became apparent that site selection would have to begin anew for the last site. The Government of India, noting it would be unjustified to hold up the implementation of the project because one out of twenty sites had not been acquired, recommended that IDA waive the effective- ness condition in the Agreement with respect to the remaining site. - 14 - 19. Accordingly, when the agreement with the consultants was finalized on November 10, 1972, IDA considered that all conditions precedent to the effec- tiveness had been fulfilled, and declared the credit effective on November 14, 1972, fifteen months after signing. The problem of sites continued, however, as a new site had to be acquired for one of the bag storage facilities; and some of the sites acquired for silos were found to be unsuitable after inves- tigation and had to be changed (para 25). B. Delays in Project Implementation 20. Initial implementation difficulties encountered included a lack of knowledge of the silo component requirements by FCI's key engineering staff due to lack of access to the project appraisal report and related documents. This was quickly remedied. It was then found that some of the sites acquired for the silos were unsuitable, necessitating time-consuming land acquisition procedures at new sites (para 25). Also, preliminary soil surveys made it apparent that civil engineering design and construction could not be identical for all silo sites as had been assumed possible initially. Compliance with the Joint Financing Agreement which stipulated that there should be a single bid invitation for all ten silos would therefore have caused additional delays while appropriate new designs were prepared. FCI requested in December 1973 that this requirement be waived, and IDA agreed. 21. In late 1974/early 1975, a Bank review mission recommended a reduc- tion in the number of silo sites to five silos of 20,000 tons capacity each with a bulk grain receiving station. This was agreed a few months later along with the elimination of one bag storage facility for which land had not been acquired. The modification was mainly occasioned by cost inflation which began to affect the project during the delay in effectiveness and continued in the implementation period. Thus, at appraisal, the cost of the silo component was estimated at US$11 million which included a price contingency of only US$1 million; ten months after effectiveness the costs of the silos were estimated at US$14 million; and 22 months after effectiveness at US$20.5 million. For the same capacity, but on five sites only, the cost would have been US$16 million. 22. The reduced (9 instead of 10 sites) godown component was completed ahead of time and below the appraisal cost. A significant and costly delay occurred in the construction of the silos however. The following table shows the difference between the number of months estimated to be required for constructing the first five silos and the number of months actually spent in implementing the silo ccmponent: - 15 - Time Estimated Time Actually at Appraisal Required months Preparation of tender documents through contract award 13 30 Foundation construction 6 19 Construction of silo superstructures 5.5 37 Machinery procurement and installation 12 35 Electrification 11 33 Overlap (21.5) (69) Total 26 85 23. Implementation of the silo component thus took more than three times longer than estimated at appraisal. In absolute terms the longest delay was in the construction of the silo superstructure, which took over six times the time estimated. The preparation of detailed designs, specifications and tender documents, and tendering and contract approval also were long delayed. The delays experienced in procuring and installing mechanical and electrical equip- ment were mainly the result of the slow progress in civil works construction. 24. In August 1978, the Government requested an extension of the closing date of the credit to September 1979. The credit was closed on September 30, 1979. However, the silo component was not completed until March 1980. C. Causes of Delay in the Imlementation of the Silo Component 25. Land Acquisition. The first major and most critical cause of delay was that of the ten sites initially selected for silos only four were suitable and had sufficient land. For one of the six other sites it was anticipated that the land acquisition would not be a problem because the land belonged to the Forest Department. But for the remaining five sites, surveys carried out by the consultants showed that these sites, identified by FCI, were unsuitable, in part because they could not accommodate adequate railway sidings. FCI and the consultants claim that Indian Railways changed their rate structure to allow considerable rate advantages to 'unit trains" of 60 to 80 wagons, but this required long sidings at the silos. At five of the sites space for such sidings was not available, and FCI finally decided to seek land sufficient for half units for which an intermediate rate would be charged. According to GOI, land acquisition was further delayed by a Supreme Court directive that purchase of land by FCI was not in the public interest. 26. Consultants' Performance. The delays in finding suitable sites in turn delayed the preparation of a project report by the consultants. This report was to include basic design criteria and operating functions for the approval of FCI, and was to be site-specific. - 16 - 27. The consultants' performance has been alleged by FCI to be respon- sible for some of the implementation delays. First, it is said that, instead of preparing a single turnkey contract for each site, the consultants put together a series of individual contracts to cover civil works and equipment, taking six months preparing detailed drawings and making it necessary to follow needlessly time consuming bidding procedures. The consultants argue, however, that given the terms of their consultancy agreement, they had no choice but to prepare individual contracts. FCI claims that by coordinating designs and contracts themselves the consultants have helped FCI save probably up to 15% in cost and have enabled local firms to meet international specifications and supply the equipment, with advantages both in terms of the development of local contractors and savings of foreign exchange. The contractor considered that a turnkey operation wouild have been quicker but costlier, although in his view FCI would have been better off overall because of a shorter gestation period. According to an opinion expressed by FCI officials, the delay caused by the consultants putting together the equipment package would have been more critical, had it not been that there were other delays in civil works. 28. The second area in which the consultants' actions may have been a delaying factor was the mistake made by the consultants in certifying the suitability of some of the equipment to be used by contractors. According to FCI, the silo contractor had mobilized equipment based on silos that were smaller than the project silos, and the consultants overlooked the fact that the tower cranes the contractor was planning to use were too short for the job. Cranes of this nature are not made in India, since the Government policy is not to allow import of such construction machinery (in order to develop local industry). It took eight months to get together the necessary equipment after the error was discovered, and as a consequence, construction ran into another delay with the onset of the monsoon. The consultants have suggested that even if no such mistake were made, the actual delay would have been unavoidable because of the general difficulties encountered in mobiliza- tion. The consultants have also pointed out that they had asked FCI to procure equipment and materials ahead of tenders to have them ready for lease to contractors upon award of contracts. This was particularly important in the case of the specialized equipment for slip-form construction, since most contractors did not have them. According to the consultants, there was a long discussion with FCI on this issue. No equipment was in any event procured by FCI. The consultants argue that not only would their proposal have saved time but it would also have saved costs. 29. A third point made by FCI was that certain specifications were too rigid and were based on unfamiliar Canadian standards. This resulted in delay as most tenderers requested additional information on the specifications adopted. A case in point was proofing against grain-dust explosion. According to FCI it took a considerable amount of time (up to six months) to explain the - 17 - specifications adopted to European suppliers and it also created a difficult task in tender analysis. 1/ 30. Construction Delays. Civil works were carried out by two reputable Indian firms, one the pilings and foundations, and the other the silo super- structures. IDA cleared the award of the contract for silo foundations at two sites in April 1975, i.e., 29 months after effectiveness. In October 1975, foundation work was reported to be under way and expected to be completed within six months with the first two silos expected to receive wheat for storage in April-May 1977. A supervision mission recorded that critical path network records were being maintained for each item of procurement and installation and steps were being taken to avoid delays. But by June 1976, the foundation work at the two sites was still not completed and the latest estimate was August-September 1976, i.e., work had slipped another five months. Piling and foundation work at three other sites had been started and was expected to take a year, three to four months more than anticipated earlier. One factor in this slow performance was the slow mobilization of equipment by the contractor because of flooding in the monsoons, which made it difficult to get machinery to the sites. A penalty clause existed but was not imposed as the heavy rains were considered force majeure. 2/ 31. Labor disputes were additional delaying factors. Labor was initially inadequate for the three shifts needed for continuous operations (see para 35). Also, according to the consultants, the piling contractor encountered labor problems through strikes and these, along with periodic failures in electricity supply, delayed progress until it was further interrupted by the next monsoon. In the end, a task expected to be completed in six months took nineteen. 32. The contract for the superstructure contract was awarded in September 1976 and signed the following month. The contract allowed for mine months. The contractor maintained this was insufficient: he expected to complete it in about 23 months; the consultants estimated 25. Pressed to indicate what would have been a reasonable schedule, one of the contractor's senior staff suggested that 15-18 months would have been a more realistic construction period assuming no shortage of materials. This implies that about half of the delay may be attributable to materials shortages and another half to other problems, e.g., heavy rains and technical difficulties. 1/ The consultants point out that the Indian Standards Institution does not have a "fire proof" specification for electrical equipment, which would have been familiar to European tenderers, but only a "flame proof" standard, a more stringent requirement usually applied to refineries and coal mines. Their use of Canadian standards was therefore less rigid and they argue that manufacturers are expected to be familiar with international standards. 2/ FCI has stated that liquidated damages were levied on the piling con- tractor for unjustified delay in foundation work. 18 - 33. The Cement Shortage. A cause of delay most frequently mentioned was the shortage of cement. In 1971, when the project was approved, cement was in surplus, and it was not foreseen that the situation was to change drastically. A shortage did occur, however, around 1973 but by 1976 there was a surplus again and cement was being exported. Then towards the end of 1977, continuing through the following summer, cement was in critically short supply and came to be rationed by the Central Government's cement commissioner. 34. Whatever the reasons for these changes in thi cement supply position, the cement shortages were caused by factors outside the project. Although the project was always given a priority, status, it was difficult to secure enough cement. In silo construction, fresh cement had to be poured non-stop for 15 days and, therefore, the complete 900-tons of cement had to be available at the site before pouring could commence. The contractors assert that they had to accumulate several installments of cement allocation before they could start pouring, making advance planning very difficult and causing further delays. Mobilization problems, combined with the cement shortage, delayed civil works construction on silos at all five locations into the monsoons, which in 1977 were, for the second year running, exceptionally heavy. 35. Steel. A shortage of steel supplies for the silos also was a cause of delay. The design called for a particular type of rolled section, which was not being rolled because of insufficient demand. As a consequence, the contractors were forced to weld lighter sections to produce substitute beams. 36. Technical Problems, Staff and Machinery. Technical problems hit the contractors on two sites. In one, the cement set too quickly in high tempera- tures, and lifted as the slip-form moved up. A meter of set concrete had to be removed causing a delay of two months. On the other site, a somewhat shorter delay was caused by a defect in the shuttering of the slip-form and failure of one of the hydraulic jacks used to lift the slip-form. FCI adds that the use of low-strength concrete caused considerable delay at one of the sites. 37. The contractors also point to the exodus of workers to the highly profitable Middle East market. FCI suggests that part of the contractors' staffing problems arise from this cause. D. Silo Equipment, Training, Grain Storage Study 38. The implementation of three other components must be mentioned. First, the machinery for the silos.was ordered in a series of contracts after lengthy tendering procedures and was delivered years behind the original schedule. This has turned out to be a blessing, tor at least some of the machinery could now be installed and tested within the manufacturers' warranty period. Second, the training of silo managers and staff remained unimplemented until silo construction was well underway. Finally, the All-Indian Grain Storage and Distribution Study was the first comprehensive analysis of food- grain supply and demand in India, grain storage and transport requirements, and the costs and benefits of different storage designs. The study also provided useful data for planning public sector grain distribution and stock holding, and it was valuable in formulating the proposal for the Second Foodgrain Storage Project which was appraised in February/March 1977 and approved by the Board on November 15, 1977. - 19 - E. Project Costs 39. Following is a comparison of appraisal cost estimates with the actual costs of the project as completed: Appraisal C?st lb Estimates- Actual Costs- Project Component Rs (000) US$ (000) /c Rs (000) US$ (000) /c Godowns /d 32,775 4,370 21,801 2,672 Silos /d 83,099 11,080 138,064 16,920 Training and Study 3,467 462 5,125 628 Tottal 119,341 15,912 164,990 20,220 a Physical and price contingencies have been allocated to the various cost components at the rate of 25% of base costs. /b Costs reported by FCI (see Annexes I through XII) are somewhat different, mainly because the FCI report was prepared in August 1979 before final cost data was available. /c For appraisal cost estimates Rupee amounts have been converted to US Dollars at the rate of Rs 7.5 per US$1.00, the conversion rate used in the appraisal report. For converting actual Rupee costs into US Dollars, the average of the exchange rates in effect during the implementation of the project has been used (Rs 8.16 = US$1.00). /d Includes consultants and supervision costs. Appraisal cost estimates are for 100,000 MT and 200,000 MT godown and silo capacity respectively. Actual costs are for 90,000 MT godown capacity and 100,000 MT silo capacity. IV. SPECIAL ISSUES Single Invitation to Bid 40. The Joint Finance Agreement specified that a single invitation to bid should be issued for the entire ten godowns and another single invitation to bid for the silos. While IDA agreed to waive this requirement for silos following GOI's request to this effect, no such request was made by GOI for the ten godowns. Rather, FCI ignored the covenant and invited separate bids for each godown. IDA repeatedly pointed out the violation, but acquiesced finally and disbursed against the godown construction. It remains a matter of conjecture whether a single bid invitation would have reduced construction costs which turned out to be much lower than estimated at appraisal. Also given the need in practice to prepare an individual design for each site, the single bid procedure could have caused further delays in implementation, because it would not permit procurement until design specifications were prepared for all sites. - 20 - Silo Technology 41. There have been continuing differences of views within GOI and FCI on whether it was appropriate to introduce modern, capital-intensive silo technology into India. While some officials favored traditional warehouse type storage facilities, other saw the silo component as a pilot project- which it was--and were eager to introduce the new technology to determine its suitability under Indian conditions. FCI engineers argued that the volume of grain to be handled by FCI would require bulk facilities and FCI economists argued that savings in excess of Rs 100 per ton of throughput made the development imperative. While the differences persist, the project's silo component which will be complemented by additional bulk storage, handling and transportation facilities provided under the Second Foodgrain Storage Project, is now enabling FCI to gain first-hand experience in bulk storage and handling and is helping GOI, FCI and Indian Railways reach important decisions on whether India should opi: for storing, handling and moving grain in bulk on a large scale. V. ECONOMIC EVALUATION 42. At appraisal, the estimated economic rate of return (ERR) for the entire project was about 25% (20% for the godown component and 28% for the silo component). The main benefit was to accrue from savings in storage losses, since the spoilage of grain in the project stores was estimated to be much less than what it would be without the project (i.e. the only alternative of storing,the grain under cover on plinth-type (CAP) storage). The net benefit was assumea to be equivalent to 17-21% of the stored grain. In the economic analysis prepared for this report, much lower savings have been assumed, viz., about 3% and 4.5% for godowns and silos, respectively. These lower percentages are based on current FCI estimates for storage, handling and transport losses associated with different types of storage facilities. An additional benefit considered in this report, but not at appraisal, was identified in the course of appraising the Second Foodgrain Storage Project and consists of savings in operational costs associated with good quality storage such as instituted under the project compared to CAP facilities. An important but unguantifiable benefit stemming from the project is FCI's ability to implement GOI's price support policies more effectively and thereby encourage increased food production. 43. The new estimated ERR for the entire project is about 15%. For the- godown component it is about 26% and for the silo component 9%. The reduction in the ERR for the silos from the one estimated at appraisal is mainly due to: (i) lower projected storage loss savings; (ii) considerably higher investment costs; and (iii) slow implementation resulting in a delay in benefits. The reduced benefits have been compensated in part by higher economic prices for wheat and reduced godowi construction cost than were projected during appraisal. - 21 - VI. IDA PERFORMANCE 44. IDA performance was satisfactory, despite the numerous problems the project encountered. All concerned in India emphasized that there was little IDA could do about the frustrating delays that took place in the course of project implementation. Supervision missions visited India about every seven to eight months; intervals between supervision missions exceeded eight months only on one occasion. Project authorities considered the missions friendly, constructive, helpful as far as they could be, and good for the morale of the engineers. 45. IDA generally responded quickly to GOI requests as is evidenced by IDA's waiver of the requirement for a single invitation to bid on all silos. The letter requesting the waiver was received by IDA on January 8, 1974. A staff report supporting the request was prepared within three days. The cable to SIDA seeking its concurrence to the waiver was sent on January 15, 1974. SIDA concurrence reached IDA on January 18, and on the very same day, IDA cabled FCI its approval for multiple bid invitations. IDA also showed flexi- bility as demonstrated by its acquiescence to FCI's violation of the procure- ment covenants with respect to the construction of godowns (para 40). 46. In retrospect, it appears that some of the technical difficulties associated with the sophisticated slip-form construction method for silos were overlooked at appraisal. Since India was not familiar with this method it would seem that 20 months completion time for the physical silo construction rather than 14 months should have been provided at appraisal. However, the large number of problems and delays experienced during project implementation (paras 26 to 38) was not foreseeable. With hindsight it seems also that some of the site problems, such as railway siding constraints and the resultant land acquisition difficulties, could have been taken into account more accurately. 47. Claims by FCI (Annex I, page 44) that construction was delayed because price negotiations with the lowest bidder require prior IDA approval (para 3.10 of IDA Procurement Guidelines) appear unjustified. IDA usually responded promptly to any FCI request for approval to negotiate. 48. IDA has taken note of FCI's request to relax requirements for sub- mitting to IDA all supporting documents when claiming disbursements (Annex I, paras 45 and 46), and is reviewing the possibility of reducing documentation requirements under the Second Foodgrain Storage Project (Cr. 747-IN). 'Whether an earlier relaxation would have significantly expedited disbursement claim preparation by FCI is not certain. As was noted by the September 1979 super- vision mission, disbursement claim preparation by FCI has been slow, due largely to high staff turnover in the accounting section of FCI's Project Implementation Division and lack of sufficient accounting staff. - 22 - VII. CONCLUSION AND LESSONS LEARNED 49. The project has made a valuable contribution to the development of India's post-harvest subsector. The project's bag storage component provided urgently required additional grain storage facilities which have helped to reduce storage losses, and continue to be utilized effectively. The All-India Grain Storage Study has provided important information on grain handling and distribution requirements and has been valuable for the preparation of the Second Foodgrain Storage Project. The training provisions have helped FCI management and engineering staff as well as GOI and Indian Railways officers to become acquainted with grain storage, handling and transport facilities and methods in other countries; and training has also provided the skills necessary to operate the project silos effectively. 50. The silo component was plagued by a succession of adverse factors: problems in procuring suitable land, slow action by consultants, slow action by FCI management, slow mobilization by contractors compounded by bad weather and labor difficulties and shortages of critical supplies of cement and steel. In addition, the inflation which took place in the meantime led to the need to reduce the project scope, thus exacerbate the implementation delays. As a result of the numerous delays, benefits for the silo component have only now started to accrue. To increase the benefits to be reaped from the silos, GOI plans to have the silos declared regulated markets. This would permit receipt of grain in bulk from farmers. Also GOI plans to integrate the silos into a larger pilot scheme of bulk handling and transport under the Second Foodgrain Storage Project. A major benefit of the silos may thus be the experience being gained in operating a bulk grain system which will provide the data needed by GOI, FCI and Indian Railways to determine whether and to what extent a bulk system should replace the existing bag storage and handling system. For this purpose the Second Foodgrain Storage Project includes several opera- tions research studies designed to determine costs and benefits of the bag and bulk systems under Indian conditions. 51. The main lesson learned from this project is that land acquisition is a complex matter in India and requires close attention in the project preparation and appraisal. process. In this project, if suitable sites for all project storage facilities had been acquired before credit approval, the project would have been completed more promptly and some of the finan- cially costly implementation delays would have been avoided.  - 23 - INDIA WHEAT STORAGE PROJECT (Cr. 267-IN) PROJECT COMPLETION REPORT Prepared by Food Corporation of India August 1979 - 24 - ANNEX I Page 1 INDIA WHEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT 1/ Background 1. The Goverument of India instituted in 1965 a Price Support Program to keep foodgrain prices at a reasonable level. To enable implementation of this new food policy with an emphasis on incentives and support price to producers and the operation of a contingency stock of foodgrains in the interest of consumers, the Food Corporation of India (FCI) was set up in 1965. The Corporation was entrusted with the basic functions of procurement, storage and distribution of foodgrains all over the country. 2. The years 1965/66 and 1966/67 were drought years in the country and the country had to make imports to the tune of 9 to 10 million tons each year to meet the deficits. Simultaneously, it was also felt necessary to adopt new agricultural strategy. New high-yielding imported varieties of wheat and rice were introduced and research was concentrated on cross-breeding of imported and indigenous varieties. Efforts to further augment the avail- ability of inputs such as water, fertilizers, and improved quality of seeds were strengthened. Due to these efforts the total foodgrain production increased from 72 million tons in 1965/66 to 94 million tons in 1968/69 indi- cating an increase of about 30% in a short span of three years. Remarkable achievement was, however, attained in wheat production particularly due to North-West Zone of the country. Wheat production increased from 10.4 million tons in 1965/66 to 18.7 million tons in 1968/69 showing an increase of 80% over 1966 production. 3. Increase in foodgrain production also resulted in a decrease in foodgrain imports and subsequently imports came down to nearly 3.9 million tons in 1969. For the Fourth Five-Year Plan, i.e., for the period 1969 to 1974 it was envisaged that foodgrain production level from anticipated 82 million tons in 1969 (it actually touched 94 million tons in 1968/69) would shoot up to 110 million tons in 1974 and the country would be able to achieve self-sufficiency. During this period the imports were anticipated to be further reduced. 4. With the anticipation of increase in food production, it became necessary for the Government to plan for adequate storage facilities. With the set up of the Food Corporation of India it was anticipated that it would 1/ This Project Completion Report, dated August 1979, has been prepared by the Food Corporation of India. - 25 - ANNEX I Page 2 be able to procure larger quantity of foodgrains under the support price operations, specially wbeat and it was, therefore, very necessary that ade- quate storage facilities should be provided for operational and contingency stocks. 5. The storage facilities owned by the Food Corporation of India even during 1969 to 1971 were short of its requirements (see Table 1) of a normal harvest year and this deficit was'met by hiring storage capacity from other public/private agencies, much of which was not suitable for grain storage. It was also anticipated that a good harvest year would result in larger procurement and unless storage capacity of adequate standard was created with the Corporation, the losses would be much higher because the grain would be stored in opel or in substandard godowns hired from private agencies. In order to meet the anticipated storage requirement and to reduce grain losses, financial assistance was sought from the International Development Association (IDA) and the Swedish Government for the establishment of modern grain storage facilities in India by the Food Corporation of India. Origin 6. In June 1969, a World Bank Project Identification Mission visited India to discuss preparation of the Project. The Food Corporation of India thereafter submitted its report to the International Development Association (IDA) in August 1969. An Appraisal Mission of IDA comprising the represen- tatives of the IDA, their Consultants and Swedish Government Consultants visited India in March/April 1970 and submitted Project Appraisal Report in June 1971. The Appraisal Report covered various aspects such as foodgrain production, storage, handling and distribution and also made separate recom- mandations for improving the existing system of storage and handling of foodgrains. The report estimated losses of foodgrains between 7% to 12% of total production and observed that with the anticipated increase in produc- tion, particularly of wheat, losses would be greater unless proper storage expanded equivalently. 7. In conclusion, the Mission identified a project, with the objective to help in meeting urgent storage needs and provide the basis for developing a more effective systen for grain storage and distribution. It consisted of: (a) Planning, designing, construction and equipping 10 silos of 20,000 toas each and 10 flat storage units of 10,000 tons each, providing a total capacity of 300,000 tons. (b) Training silo personnel; and (c) Conducting a study of India's foodgrain, storage and distribution system. - 26 - ANNEX I Page 3 The total estimated cost of the project was Rs 119.3 million (US$15.9 mil- lion 1/). Punjab, Haryana, Rajasthan and Uttar Pradesh were the states selected for the project area. This was for the reason that these states at that time constituted India's main wheat belt in which about 70% of total wheat production of the country was being produced. These were also the main states which contributed largely to the Central Pool. 8. Consequent to IDA Appraisal Mission Report, joint financial agree- ments were signed in August 1971 between IDA and the Government of India; and the Government of Sweden and the Government of India to provide credit and assistance in the financing of the project. Joint financing agreement between India and Sweden, FCI and the Association inter alia provided that: (a) In order to assist the Corporation in designing and super- vising the construction of silos, Corporation would usually employ experienced and qualified Engineering Consultants acceptable to the Association upon terms and conditions satisfactory to the Association. (b) All the sites regarding carrying out the Project shall be acceptable to the Association except as the Association may otherwise agree. The Corporation would acquire all such sites within three months from the date of agreement. This was the first Bank Group project for grain facilities in India. The execution of the project was, however, under the supervision of the IDA. Financing of the Project 9. Of the total Rs 119.3 million (US$15.9 million) cost of the project (Break-up shown in Annex II), the Swedish Government and the IDA agreed to provide a total credit of US$10 million, representing about 63% of project cost. 10. The Government of India was to supplement Swedish Government and IDA funds with its own funds and onlend the total to FCI. The credits covered the foreign exchange components of project cost and about 50% of local costs. The borrower was to be the Government of India and onlending to FCI was for 19 years, including 4 years grace to be repaid at 7% interest, on the normal terms for lending to state enterprises. The IDA credit was to help finance the cost of: (i) Electrical and mechanical equipment; (ii) Consultants; (iii) Training of silo personnel; and 1/ US$1.00 = Rs 7.50. - 27 - ANNEX I Page 4 (iv) Conducting a study on India's foodgrain storage and distribution system. The Swedish Government credit was to help finance the construction of silos. The proposed financing of the project cost was as follows: Source Funds (Rs '000) (US$'000 Equiv.) (%) International Development Association 37,500 5,000 31.4 Swedish Government 37,500 5,000 31.4 Government of India 44,341 5,912 37.2 119,341 15,912 100.0 As per the terms of credit, the electrical and mechanical equipment was to be procured under the Lnternational Competitive Bidding and the civil works to be tendered only in In6ia on local bidding on the basis of pre-qualifications of bidders. Implementation 1. Aopointment of Consultants 11. Under the agreement, Consultants were to be appointed who had to provide complete design. services, fabrication, inspection, site supervision and construction stage services covering job management, cost control, opera- tion and maintenance. The guidelines for appointment of Consultants outlined by the Bank were very closely followed. This meant enlisting of consultants and negotiations had to be carried out with the selected firms in the order of merit. The guidelines did not provide for obtaining comparative quotations in respect of remunerations by the Consultants listed. In view of this, negotiations had to be conducted with the first firm to start with and in case agreement was not reached with the first firm, negotiations had to be terminated and started with the second firm and so on until a final selection made. As there was no method of judging the comparative reasonableness of the fee payable, the negotiations were very protracted. It took over 14 months to finalize the agreement, and finally M/s Howe (India) ?vt. Ltd., were appointed as the Consultants on November 10, 1972. If it were possible to open the offer of all the concerned short listed consultants prior to commencing negotiations with the first ranking consulting firm, an idea of the level of remuneration payable to the firms of standing could have been available with the negotiating committee. As per the guidelines the cost bid of only first ranked firm would be available with the negotiating committee. If the committee felt that the offer was on high side (which will be purely an opinion) and the first was rejected, the second ranked firm would be called - 28 - ANNEX I Page 5 upon to submit their offer. It would well happen that this offer could be still higher, the guidelines did not provide for reverting back to the first ranked firm once having been rejected. Hence, even the rejection of the offer could lead to a difficult situation. Therefore, negotiations could not be concluded easily. The slip form method of construction of silos which was specified in the agreement, was new to the Indian contractors. FCI, therefore, had difficulties in engaging consultants familiar with this method of silo construction, and though the credit agreement was signed in August 1971, it became effective only in November 1972. 2. Land Acquisition 12. As per the project terms the Corporation had to select 10 sites for conventional godowns of 10,000 MT each. These were as follows: Name of Center State 1. Hanuman Garh Rajasthan 2. Udaipur Rajasthan 3. Bhogpur Punjab 4. Ajithwal Punjab 5. Mebta Punjab 6. Machiwara Punjab (Alternative Center Sultanpur Lodhi) Punjab 7. Gohana Haryana 8. Moradabad Uttar Pradesh 9. Bulandshahr Uttar Pradesh 10. Kosikalan Uttar Pradesh Two problems were encountered in finalizing the sites and subsequent develop- ment of the project report. It was observed that the land was not readily available and even if available very long and protracted land acquisition formalities were to be followed. Against the initially proposed 10,000 MT capacity conventional godowns each at Ajithwal and Machiwara, the sites had to be shifted to Moga and Sultanpur Lodi where the land was available. Similarly, due to non-availability of land at Bhogpur until 1976, the 10,000 tons capacity conventional godown had to be dropped. 13. The second difficulty regarding land acquisition related to the final clearance by the Railway Authorities in regard to the provision of railway-siding facilities as the detailed layout plan was being developed. The Railways also took into consideration the possibility of unit train operations. The railway sidings already existed at Moga and Udaipur. However, the railway sidings at Bulandshahr was not found feasible after the land had been selected. At Kosikalan and other places, except at Gohana, the railway sidings have not been considered economical for the present. At Gohana, railway-siding has been decided to be provided for which sanction has already been made. - 29 - ANNEX I Page 6 14. Finally, the following sites of 10,000 'LT capacity each were selected for conventional godowns: Location of Site State 1. Moga Punjab 2. Mehta Punjab 3. Sultanpur Lodi Punjab 4. Gohana Haryana 5. Kosikalan Uttar Pradesh 6. Muradabad Uttar Pradesh 7. Bulandshahr Uttar Pradesh 8. Hanumangarh Rajasthan 9. Udaipur Rajasthan Silos Regarding construction of silos originally following 10 sites of 20,000 HT capacity each were proposed: Name of Center State 1. Ajmer Rajasthan 2. Jaipur Rajasthan 3. Moga Punjab 4. Jagraon Punjab 5. Bhatinda Punjab 6. Faridkoe Punjab 7. Gobindgarh Punjab 8. Lucknow Uttar Pradesh 9. Khurja Uttar Pradesh 10. Ghaziabad Uttar Pradesh During the review made in October 1974 and subsequently in May 1975, the factors relating to non-availability of land at all the centers and the cost overruns (reasons given in Annex III) with reference to the preliminary estimates included in :he appraisal report were reviewed. In view of this it became necessary to restrict the scope of work from 10 silo sites to 3 with a total capacity of 0.1 million tons, i.e., each of 20,000 T. The following sites were finally selected for construction of silos of 20,000 -NT capacity each. Name of the Center State 1. Mandi G-bindgarh Punjab 2. Moga Punjab 3. Jagraon Punjab 4. Lucknow Uttar Pradesh 5. Khurja Uttar Pradesh - 30 - ANNEX I Page 7 Procurement Procedures 15. As per the procurement procedure laid down in the Joint Financing Agreement, the civil engineering works were to be awarded to Indian firms after national bidding; the electrical/mechanical works were to be awarded by tender invitation on global basis. Piling and Foundation Works 16. In respect of civil engineering works, the firms were enlisted after pre-qualification bid invitation in India. Since the procurement procedure involved splitting of contracts, it became necessary to develop all the details to the maximum extent possible before inviting the respective tenders. Tenders for piling and foundation works for sites in Uttar Pradesh were invited in February 1975 and for the sites in Punjab in July 1975. The works were awarded in June 1975 and November 1975, respectively. In the case of award of works at the Punjab sites, the date of opening of tenders had to be extended on request from most of the intending bidders. During execution the foundation works at Uttar Pradesh (UP) sites were delayed by about eight months and that at the Punjab sites by about five months. The reasons for this delay are listed in Annex IV. Super Structure Works 17. Super structure works at UP sites were awarded in August 1976 and at the Punjab sites in December 1976. They were contemplated to be completed in June 1977 and October 1977, respectively. The works at UP sites were, however, completed in January 1979 and those at Punjab sites are expected to be completed by December 1979. The reasons for the time overrun are listed in Annex IV. A bar chart showing the progress of construction of silos is shown at Annex III. Ancillary Buildings 18. The ancillary buildings mainly consisted of administrative block, substation building and weigh-bridge housing. These works were of small magnitude and the contractors who were used to carrying out works of this magnitude had not been familiar at all with the form of tendering and speci- fications prepared and put to tender. In addition, some of these centers were fairly out of the way to attract contractors to quote for these minor works. In view of these factors the tender response had been very poor and tenders had to be invited several times before a contracting agency could be fixed resulting in delay in the commencement of works. 19. However, the ancillary buildings at all the centers have substan- tially been completed. - 31 - ANNEX I Page 8 Electrical/Mechanical Works 20. As per the provision of the Joint Financing Agreement, the pro- curement of these items were to be done by invitation of tenders on global basis. In almost all centers, it was noticed that the analysis of tenders received could not be completed in time for lack of details furnished by the firms in their bid submission. Additional information/clarifications had to be obtained from most of the participating parties to complete the evaluation of bids leading to considerable lapse of time in framing recom- mendations. In certain cases, tenders had to be reinvited more than once. 21. The electrical specifications relating to grain handling systems had to conform to dust explosion proof standards. Many of the firms in India and in Europe were not familiar with this classification (which is mainly adopted in USA and Canada) and considerable difficulty was experienced in getting across to the prospective bidders with regard to specific requirement in this connection. This resulted in considerable delay in finalizing tenders on electrical equipment. Training 22. This program was intended to impart training to the officers and staff of the Food Corporation of India in the Management Operation and main- tenance of the silo installations being set up in Northern India. An amount of US$280,000 from the Association Credit was provided towards consultancy services outside India and cost of training staff outside India. As per the consultancy agreement entered into with M/s. Howe (India) Ltd., a sum of US$O.124 million was for meeting the cost of study tours abroad. Similarly, the expenditure on training within India was to be met out of the provisions made in the Joint Financial Agreement. 23. The training under Schedule 2(iii) envisaged a three tier program as follows: Phase 'A': This provided that three officers at the Senior Management level (one from the Department of Food and two from the FCI, including a Sr. Technical Officer) would under- take an observational study tour abroad for a period of three to four weeks. The object of the tour would be to study national policies and procedures employed by countries like USA and Japan to establish and maintain buffer foodgrain stocks. The study would help then in formulating policy in regard to construction of silos as well as modernizing marketing opera- tions with special emphasis on maintenance of buffer stock and bulk movement of grains in the country. - 32 - ANNEX I Page 9 Phase 'B': Middle Management Level Training. The staff directly responsible for the management of the silos (covering officers from Engineering, Storage, Quality Control and Finance) would be included in this phase of training program. The staff from the aforesaid cadres will be deputed abroad for an intensive and thorough training in the theory and practices of grain handling and silo management. The staff for the training will be middle management level officers. Phase 'C': This group would consist of operations level staff, e.g., Shift Supervisor Mechanics, Electricians, etc. on the Engineering side and Assistant on the quality control side and the ministerial staff. The training would be organized by the consultants with the Assistance of the faculty of Central Training Institute of the Corporation. The training under Phase 'A' has already been over, in which three officers, consisting of two from the FCI (Chairman and the Chief Commercial Manager) and one Senior Officer from the Department of Food (Officer of the level of Joint Secretary) had been abroad for training and observational study tour during 1975. The training under Phase 'B' of the above training program is to be receiled by 11 officers, out of these 9 officers would be from FCI and two officers from the Indian Railways. They would visit Australia, Japan, USA and Canada. Eight officers have already undergone training in Australia. After the completion of the training under Phase 'B,' the action will be taken for completion of the training under Phase 'C.' Reappraisal 24. The World Bank team arrived in India on October 7, 1974 and had detailed discussions with heads of the divisions, the Managing Director and Chairman of the FCI and officers in the Ministry of Agriculture. They also visited Administrative Staff College of India, Hyderabad in connection with the All-India Grain Storage Study. The team appreciated the cost over- runs of the project outlay due to phenomenal increase in prices that had taken place during the previous years. As a result, the following amendments were carried out in the Agreement. Amendments in Joint Financing Agreement A. Schedule I - Part A 25. As the FCI could clear only five sites for silos until then, the team felt that in the first phase these installations might be covered within the existing provisions of the Joint Financing Agreement and any savings out of the provisions could be diverted to set up one railhead bulk grain receiv- ing terminal with a small buffer capacity of (say) 5,000 tons. As regards the five silo installations, the FCI had proposed the following centers: - 33 - ANNEX I Page 10 (a) Lucknow (b) Khurja (c) Jagraon (d) Moga (e) Mandi Govindgarh From the statistics of grain arrivals, the team was satisfied about the selec- tion of the first four ,ites but they wanted some further justification for the selection of Mandi Govindgarh in preference to the nearby market Khanna. At Khanna FCI already had some storage capacity and there was no storage capacity at all in Mandi Govindgarh. Finally, Mandi Govindgarh was selected for the construction of silo. 26. As regards godowns, the agreement provided for 10 godowns, with a capacity of 10,000 tons each, this had to be amended to 9 centers with a total godown capacity of 90,000 tons since site at the 10th center could not be made available. B. Schedule II 27. The Swedish and the Association Credits were kept separate to finance specific categories of goods and services. Barring the expenditure already sanctioned untiL then for the construction of godowns, the total Balance Credit available was decided to be utilized on Silo construction without reference to the categories. Study on Foodgrain Storage and Distribution 28. The project co)ntent also included a study on India's foodgrain storage and distribution system. The Government of India (Department of Food) with the approval of the World Bank, appointed the Administrative Staff College of India (ASCI) Hyderabad (India) as the Consultants in November 1974 to conduct the All-India Grain Storage and Distribution Study, which comenced in January 1975. The report was expected to be submitted in a period of 14 unthe from the date of acceptance of the terms and conditions of the study. 29. The principal and the terminal aim of the study was to estimate the region-wise additional atorage capacity required in the next ten years (i.e., up to 1985/86) by the public/state agencies, including FCI, on the basis of anticipated demand and supply projections. It also had to study the various types of storage facilities and the range of alternatives that could be utilized for holding grain for longer periods considering the preservation aspects. 30. Losses could arise due to improper conventional and storage prac- tices and inefficient handling at different stages of movement and storage. In this regard, Food Corporation of India being the largest public agency trading in foodgrains and concerned with procurement, storage, movement and distribution operations, a study on its functional costs and methods became essential. All these aspects were included in the study assigned to ASCI. The sumary terms of reference of the study are given in Annex VI. - 34 - ANNEX I Page 11 31. The study was carried out by ASCI with the active cooperation of the FCI and the Department of Food. The questionnaires were drawn up for collection of field data in consultation with FCI. The FCI field offices were required to furnish the concerned data. Discussions were also held by the ASCI faculty members with the FCI officers at the various levels. 32. The ASCI submitted their main report in October 1976 which was supported by 17 other studies. Each of these studies presented a detailed analysis of the concerned subject which dealt with rainfall, supply, demand, procurement, public distribution, movement of foodgrains, etc. The list of the supporting studies prepared by ASCI is shown in Annex VII. Project Impact 1. Bag Godowns 33. As per the present progress, all nine conventional godowns have been completed and they are under operation. The information relating to the start of construction of these godowns and completion of works is given in Annex VIII. Figures of their month-wise utilization are given in Annex IX. 34. It would be noted from Annex X that the average utilization of the godowns was low during 1973/74 and in some godowns during 1974/75. This was for the reason that there was low procurement and heavy offtake during the two years. However, thereafter the utilization has been consistently increas- ing. In case of a few godowns, the year-wise utilization even exceeded the full rated capacity and a utilization to the extent of 140% was achieved by resorting to higher stacking. This data itself justifies that in case these godowns were not constructed, the stocks would have been stored in hired godowns from private parties or available with other storage agencies. The godowns of the private parties usually are not constructed on scientific lines taking into consideration the storage of foodgrains and, therefore, losses are higher in such godowns as compared to owned godowns. 2. Silos (a) Bulk Storage Estimated Savings in Handling and Operational Costs and Grain Losses 35. Godown construction cost is estimated at Rs 210-225 excluding cost of Rly. sidings while silo construction cost is about Rs 1,400/ton. Exper- ience has shown that grain losses in case of silos are negligible.as against the loss of about 1% in conventional godowns. The grain in silos can be stored for a period up to three years without deterioration in quality as compared to about one year in the case of conventional godowns. (b) Training Experience 36. No doubt, under the current Grain Silos Project, experience will be gained with regard to the facilities used in the inland silos. However, the second project mainly comprises of port silos and flat bulk storage. Therefore, further training of staff may be required for the proper main- tenance and operation of these facilities. - 35 - ANNEX I Page 12 3. Role of Consultants 37. The Indian consultants naturally did not have adequate experience in the construction of grain silos. They had the benefit of their parent organization viz. M/s. Howe International Ltd., Canada, to develop detailed specifications on mode:n lines. During situations where certain complex problems were faced, they could be solved. These have naturally benefited the Indian Engineers both on the consultants side and on the FCI side. 38. Because of the inexperience in this particular line, there have been delays in the finalizai:ion of tender documents and subsequent tender analysis. During this period of construction, the consultants had a very high pressure activity in certain other sectors which diverted their attention to other works. This affected the performance during the last year. Their expedition of fabrication at the works left much to be desired. 4. Lessons for Second All-India Grain Silos Project (a) Availability of Site 39. Certain sites, earmarked for the construction of silos for the ongoing project, were found unsuitable for taking up the work. In respect of certain other centers, the sites had to be changed resulting in consider- able delay. As such, the sites earmarked should be kept ready much earlier, before putting the work to tender. The initial selection may have to be made keeping the Railway si4.ing feasibility into account. (b) Design and Drawings 40. Fairly detailed design and drawings for the second project should be made ready before taking up the foundation work. Tender documents should be prepared for all works well in time so as to avoid the delays due to late invitation of tenders. (c) Construction Material and Planning 41. The consultants need to work more effectively on the construction material programming so that sufficient construction material is arranged in advance, thereby eliminating the delays caused due to non-availability of scarce materials such as steel and cement, etc. (d) Agencies for Execution 42. Major civil works pertaining to silos required a good amount of machinery, equipment, manpower and financial resources. The work can be executed faster by allocing the work to more than one agency. Regarding the electrical/mechanical works, the contract may be awarded on a turnkey basis involving supply, erection and commissioning of at least all the incor- porated electrical/mech. equipment. Though the competition in this way may be Limited, this will definitely speed up the supply and commissioning of - 36 - ANNEX I Page 13 electrical/mechanical equipment. In the ongoing proposal, as many as 30 contracts are being handled which have caused delay due to late finalization of contracts, late supplies of the equipment and delayed erection program. These will be avoided in case it is a turnkey work. 5. World Bank Performance - Where did Bank Constrain and How it Would Have Avoided This (a) Mode of Appointment of Consultants 43. Since this project is an IDA-aided project, approval of World Bank was required at each and every step right from the appointment of consultants to the allotment of any civil and electrical/mechanical work. Regarding the appointment of consultants, the World Bank provides that the price bids of the technically most competent consultancy firm should be opened and negotia- tions carried out only with them, even if it is felt that the price bid is high. Only in case of failure of negotiations, the price bid of the second consultancy firm is allowed to be opened. This procedure has very much delayed the appointment of consultants in our ongoing GSP Project, as number of protracted discussions had to be held with the consultancy firm before finalizing the contract with them. In view of this, it is suggested that World Bank should allow opening of the price bids of first three technically competent consultancy firms so that the price part of the contract with the consultants could be decided expeditiously. (b) Negotiation with Prior Approval 44. Under the present World Bank procurement procedure, the negotiations can only be carried out with the prior approval of che Bank. This obviously causes delay in finalization of the contracts. In case the World Bank agrees to dispense with the condition, it will help timely award of works. (c) Reimbursement Procedure 45. The present system of claiming reimbursements from the World Bank is very cumbersome, as copies of all the supporting payment vouchers, etc. are also to be sent to the Bank along with the claims. Since the copies of these voluminous vouchers are to be prepared by the field offices and col- lected from them, it is a time consuming process and results in considerable delay in submission of claims. 46. In order to expedite these claims, it is suggested that the Bank may agree to a simplified procedure. For the purposes of reimbursement, the Bank may accept summary statements of payments compiled by the various executing field units and exempt the submission of copies of all payment vouchers. The payment vouchers will be available for inspection at the various field unit offices. - 37 - ANNEX I Page 14 Cost Data 47. The total project cost was estimated to be Rs 119.3 million (US$15.9 million). The cost break-up comprised as follows: Project Content Estimated Cost (Rs million) (US$ million) 1. Conventional Godowns 26.22 3.50 2. Silos 65.40 8.72 3. Consultancy & Supervision 1.10 0.15 4. Training 0.50 0.06 5. Storage Study 2.25 0.30 6. Contingencies 23.87 3.18 119.34 15.91 The godowns were expected to be completed within a period of about one year. These were delayed for the reasons already mentioned. Against the originally proposed 10 conventional godowns, only 9 were constructed and 1 was dropped. At some of the sites, minor construction such as boundary walls, etc. are yet to be constructed. The per ton capital cost of construction for 10,000 MT conventional godowns, including the contingencies, was originally estimated to be about Rs 330. The total expenditure incurred on nine godowns so far is around Rs 14.4 million. Out of the nine godowns, the weighbridges have only been planned for the godowns at Moradabrd, Sultanpur Lodhi, Udaipur and Moga. The railway siding at Gohana is yet to be provided. 48. The per ton cost of construction in case of conventional godowns is estimated to be Rs 210 to Rs 225, excluding the cost of railway siding. Silos 49. As against the original plan of 10 silos, only 5 silos have been constructed. It is anticipated that as against the original per ton cost of construction of silos of Rs 410, the expected cost would be around Rs 1,400. The reasons of the same have been earlier indicated. The details of the break-up of the cost of silos may be seen in Annex KI. Trainig 50. So far, only one phase of this has been completed and the expendi- cure is around Rs 0.17 million. The remaining phases of the training are yet to be completed. All-India Grain Storage Study 51. Broad details of data may be seen in the Basic Data Sheet placed at Annex XII. - 38 - ANNEX I Page 15 Table 1 STORAGE CAPACITY WITH FOOD CORPORATION OF INDIA Storage Capacity March 1971 March 1970 March 1969 (100 tons) Owned 3,451 2,813 2,425 Hired 2,799 2,759 2,366 Total 6,250 5,572 4,791 - 39 - ANNEX II INDIA WHEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Break-up of Total Cost of First Foodgrain Storage Project Foreign Item Local Foreign Total Local Foreign Total Exchange - (Ra '000) - - (US$ '000) - (%) 1. Godowns Land 1,610 - 1,610 214 - 214 - Railway Sidings 3,910 690 4,600 522 92 614 15 Buildings 14,490 4,830 19,320 1,932 644 2,576 25 Mechanical Equipment 590 100 690 78 14 92 15 20,600 5,620 26,220 2,746 750 3,496 21 2. Silos Land 644 - 644 86 - 86 - Railway Sidings 3,910 690 4,600 522 92 614 15 Buildings 39,431 3,432 42,863 5,258 456 5,714 8 Mechanical Equipment. 8,611 4,637 13,248 1,148 618 1,766 35 Electrical Equipment. 2834 1,214 4,048 378 162 540 30 55,430 9,973 65,403 7,392 1,328 8,720 15 3. Consultants and Supervision Costs Consultants 350 350 700 47 47 94 50 Supervision of contractors 400 - 400 53 - 53 - 750 350 1,100 100 47 147 32 4. Training 75 425 500 10 57 67 85 5. Storage Study 900 1 350 2,250 120 180 300 60 Subtotal 77,733 17:718 95,473 10,368 2,362 12,730 19 6. Contingencies (25%) Physical (15%) 11,644 2,657 14,321 1,555 354 1,910 Price (10%) 7,775 1,772 9,547 1,037 236 1,273 19 7. Total Project Cost 97,194 22,147 119,341 12,960 2,952 15,912 19 - 40 - ANNEX III Page 1 INDIA WHEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Reasons for Cost Overruns 1. The cost of the project as estimated in the Finance Agreement by the IBRD: The International Bank for Reconstruction and Development submitted a report on "Wheat Storage Project" in India, in October 1970. The alloca- tion made therein towards the construction of silos at 10 centers is given below: Rs million A. Civil Engineering Works such as land, roads, buildings, railway siding, etc., including contingencies 59.9 B. Mechanical equipment, including contingencies 16.5 C. Electric installation, including contingencies 5.1 D. Consultation and supervision cost, including contingencies 1.4 E. Training, including contingencies 0.6 TOTAL 83.5 2. Project Cost as per current estimates: The estimates of cost for silo construction prepared by the con- sultants, M/s. Howe (India) Private Ltd. comes to Rs 167 million showing a variation of Rs 8.35 million. 3. Reasons for variation in cost: The following facts contribute to the variation in cost: (a) Under estimates made by the World Bank. - 41 - ANNEX III Page 2 (b) Price increase in the estimates from 1969/70 up to December 1973. (c) Addition of more facilities. 3.1 The rates adopted by I3RD in their estimate prepared in October 1970 are on the lower side as compared to the actual rates prevailing at that time. Some of the major anomalies in the rates are highlighted below: An Estimate by Actual Prevailing Differences Item of Work IBRD for One Site for One Site per Site (RS) Civil Engineering Works Piling 386,000 1,200,000 814,000 Mechanical Engineering Works Truck Lifts 27,000 85,000 58,000 Cleaners 92,000 140,000 48,000 Aeration System 55,000 200,000 145,000 Temperature Indicating System 69,000 150,000 81,000 Bagging Machines 221,000 300,000 79,000 Dust Control System 69,000 100,000 31,000 Consultancy Services 110,000 560,000 450,000 Training 50,000 100,000 50,000 After accounting for major and minor price variation for all the 10 sites, the difference due to under estimation, as above, works out to: Rs million (i) Civil engineering work, including contingencies 8.4 (ii) Mechanical and electrical works, including contingencies 4.6 (iii) Consultancy services 4.5 (iv) Training, including contingencies 0.6 Total 18.1 The estimated cost of the silos project as of October 1970 should, therefore, read as Rs 83.5 million plus Rs 18.1 million, i.e., Rs 101.6 million. - 42 - ANNEX III Page 3 3.2 The estimate was prepared in October 1970. The escalation in cost between October 1970 and mid-1974 as per Indian Labor Journal has been to the extent of 45%. The silos construction cost after allowing for this escala- tion in prices up to December 1973 will come to Rs 154.4 million. 3.3 Some additional features have been incorporated in the silos to obtain maximum advantage. They are: (i) Railway wagon shunting system has been added for car spotting. (ii) Hydraulic dump pits have been added for big tractor-trailers. (iii) Conveying and elevating system capacity has been enhanced from 110 MT/hr to 250 MT/hr as required. The above factors account for a cost rise of about Rs 10 million bringing the overall cost of construction to Rs 16.5 million (including 6-1/4% consultancy on Rs 10 million). - 43 - ANNEX IV Page 1 INDIA EEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Reasons for Time Overrun in the Execution of Piling and Foundation Works 1. The target dates set for completion turned out to be over optimistic as the organization an.d resources of the construction agency could not match with the targets aimed at. In addition, the progress was hampered due to the following other reasons: (a) Unfavorable site conditions: This was due to practically non-availability of accomodation and ocher facilities such as water, electricity, etc. at the sites. This problem was only at Jagraon and Mandi Gobindgarh sites. (b) Delay in mobilization of construction equipment by the contractor: This delay took place as the equipment to be brought at Jagraon and Mandi Gobindgarh sites were located at cither places and the shifting of these had delayed the mobilization. (c) Availability of site: This problem was again for Jagraon and Mandi Gobindgarh sites. In Jagraon, the working area was changed due to the revision of plan and at Mandi Gobind- garh the contractor had to do additional work for dismantling the plinths thus causing delay. (d) Obstruction in driving of piles: This delay took place due to the projection required of reinforcements above the ground level at Mandi Gobindgarh site. (e) Delay due to non-availability of good quality cement: Some doubts were raised about the quality of cement and for the same, the cement was tested in the laboratories and the work suffered due to this reason at Mandi Gobindgarh site. (f) Delay due to unforeseen breakdown of the plant and machinery: This trouble took place at Moga site. (g) Delay due to abnormal and unvrecedented rainfall: Due to the rainy season from first week of June to middle of September 1976, the work activity was slowed down. - 44 - ANNEX IV Page 2 (h) Non-availability of electricity and power failure: The work suffered due to this reason at Moga and Jagraon sites. (i) Delay due to labor trouble: The labor trouble like go slow tactics, etc. caused the delay at Moga and Jagraon sites. - 45 - ANNEX V INDI.A AEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Reasons for Time Overrun in the Execution of Superstructure Works 1. The target dates set for completion turned out to be over-optimistic as the organization ard resources of the construction agency could not match with the targets aimed. at. In addition, progress was hampered due to the following other reasoLS: (a) Slow Mobilization by the Contractors: The contractors, M/s. Continental Construction Private Ltd., took some time during the initial mobilization stages. This adversely affected the completion schedule to a large extent at a later stage. (b) Electric Power Shortages: The work suffered a setback partly due to power cuts imposed by the State Government thereby restricting the activities at site. (c) Protracted Rains: During the progress of the work prolonged heavy rains slowed down all activities for long periods. The slip form work had to wait for a clear season. (d) Non-availability of certain structural steel sections in the market: The supplies of certain structural steel sections from the standard companies were inadequate and irregular leading to delay in the work. (e) Sporadic periods of shortage of cement: There was a country- wise shortage of cement due to partial working of cement factories owing to power cuts, labor problems, etc. (f) Non-availability of appropriate labor: The work requires skilled labor throughout. But due to heavy demand of labor on attractive wages in the nearby countries, the contractor was faced with non-availability of suitable skilled labor. (g) Delay by consultants: Considerable delay on the part of the consultants in respect of the following has affected the schedule to a large extent. (i) Submission of draft tender documents. (ii) Analys:Ls of tenders and recommendations thereof. (iii) Issue/approval of drawings. - 46 - ANNEX VI Page 1 INDIA WHEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Summary of Terms of Reference Public Distribution of Foodgrains 1. Consultants would make demand and supply projections for foodgrains for 10 years from 1972/73 and describe the Government's objectives. The flow of marketed grains would be analyzed under varying assumptions on: (a) Domestic production; and (b) imports. Minimum storage requirements by 1975 and 1980 would be analyzed under different assumptions on the year-to-year fluctuations in production, imports and the seasonal fluctuations in the grain flow. 2. With regard to FCI's existing operations, consultants would deter- mine: (a) alternative purchasing channels under support buying operations (deliveries directly by farm to storage sites instead of through mandis); (b) the effectiveness of marketing operations to counteract undue rise in prices); (c) possible ways and means of encouraging sale in bulk; and (d) ways and means of ensuring that publicly procured grains would be cleaned after storage and before sale. 3. Consultants would also make a study of Food Corporation of India's proposed operational/contingency stock operation and make recommendations regarding the following points: (a) cost and benefits of operational/contingency stocks, compared to fluctuating requirements; (b) total level of operational/contingency stocks; (c) the presently available facilities that could be used to store operational/contingency stocks; and - 47 - ANNEX VI Page 2 (d) type and location of new facilities for operational/ contingency stock storage. Survey of Existing Storage Facilities and Grain Storage Losses 4. A survey would be made of the existing public storage facilities of the FCI and the State Governments as also other public storage facilities such as Central Warehousing Corporation/State Warehousing Corporation to determine: (a) the total available storage capacity; (b) the degree of obsolescence of the available facilities; (c) the locatioL of the facilities; (d) the type of facilities (godowns, silo, port silo, bins, etc.); and (e) the total required storage capacity for operational purchases. 5. A study would be made to determine the total grain losses during the storage and handling of public foodgrains. Data would be acquired on the following points: (a) amount of total losses (dry weight losses) and quality deterioration (loss in nutritional value) in each type of facility (silo, godown, bin, etc.) attributable to rodents, insects, birds, water damage, the like; losses would be related to length of storage and would be analyzed for each stage of procuremant, storage, transport and distri- bution process; and (b) measures underway to control these losses. 6. Consultants would also survey private storage facilities (represen- tative sample) and grain losses incurred by the private trade and the farmers. This study would take into consideration the preliminary results of the FAO onfarm storage study currently underway and would draw up recommendations for an investment program in onfarm storage. Recommendations to Improve Storage Operations 7. Consultants would make recommendations for improving the effective utilization of existing storage. In particular, attention would be paid to: (a) inventory control; (b) pest and insect control; (c) quality control; and (d) handling practices. - 48 - ANNEX VI Page 3 8. Consultants would make recommendations with regard to the improve- ment of the available storage capacity and the extent and type of the new facilities to be constructed. These recommendations would include: (a) the degree and type of rehabilitation required in existing facilities; (b) amount of replacement of existing facilities. 9. Consultants would draw up a rehabilitation program and make recom- mendations regarding the location and type of the new facilities. These recommendations would be based upon a detailed investigation of investment and operating costs and storage losses of the different types of facilities. 10. Consultants would draw up an investment program for the public and private sector, including farm level covering the next 10 years, including rehabilitation costs (specifying degree and types of rehabilitation) con- struction costs of projected new facilities (specifying types and locations of proposed facilities) and costs of improving existing practices (specifying costs of improving inventory control pest and insect control, etc.). Rice Processing Facilities 11. The consultants would review the studies already made and the existing materials that are available in regard to rice processing facilities. - 49 - ANNEX VII INDIA WELEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT All India Grain Storage and Distribution Study List of Supporting Studies 1. Analysis of Rainfall Distribution 2. Demand for Foodgrains 3. Supply of Foodgrains 4. Food Policy, AdminLstration and Information System 5. Procurement and Puolic Distribution 6. Analysis of Past Foodgrain Movements 7. Optimal Movement Planning 8. Models of Buffer Stocks 9. Bulk Movement and Randling 10. Port Handling 11. Farm Level Storage 12. Post Harvest Grain Losses 13. Quality Control and Preservation 14. Capacity and Utilization of Storage Facilities 15. Engineering and Cost Aspects of Storage 16. Cost Benefit Analysis of Storage Facilities 17. Rice Processing Facilities: A Survey - 50 - ANNEX VIII INDIA WHEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Statement Showing the Centers and the Contract Start and Completion Dates Completion Si. of Operation No. Name of the Site Start of Construction Construction I Mebta (Punjab) 2-1-71 May 1972 2 Kosikalan (UP) 5-4-71 March 1972 3 Gohana (Haryana) 21-11-71 July 1972 4 Bulandshahr (UP) 28-1-72 Oct. 1972 5 Moradabad (UP) 21-7-72 Jan. 1974 6 Hanumangarh (Raj.) 17-11-72 Dec. 1973 7 Moga (Punjab) 5-7-73 July 1974 8 Udaipur (Raj.) Oct. '73 May 1975 9 Sultanpur Lodhi 26-12-73 Aug. 1975 (Punjab) - 51 - ANNEX IX Page 1 INDIA HEEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Utilization of Conventional Godowns Location of the Godowns: Hehta Capacity: 10,000 MT Percentage utilization 1/ since completion of construction Month/Year 1978/79 1977/78 1976/77 1975/76 1974/75 1973/74 1972/73 April 57 82 73 14 1 70 - May 109 85 73 42 17 69 - June - 106 87 81 16 65 106 July - 96 80 80 16 54 115 August - 92 73 80 7 33 79 September - 76 63 68 4 20 99 October - 61 57 76 4 28 99 November - 39 73 97 19 76 81 December - 101 106 95 16 57 90 January - 103 111 96 17 48 80 February - 113 103 96 15 7 79 March - 57 97 96 13 9 71 Location of Godown: Gohana Capacity: 10,000 MT Percentage utilization 1/ since completion of construction Month/Year 1978/79 1977/78 1976/77 1975/76 1974/75 1973/74 1972/73 April 55 69 65 8 21 22 - May - 103 99 17 29 26 - June - 115 99 22 35 33 - July - 112 99 37 29 56 83 August - 118 99 43 30 60 32 September - 109 99 43 26 26 58 October - 103 99 45 26 22 53 November - 106 94 64 26 32 42 December - 108 87 75 26 41 44 January - 108 87 98 26 36 20 February - 102 88 99 9 33 25 March - 94 88 88 9 12 17 1/ With reference to storage capacity. - 52 - ANNEX IX Page 2 Location of Godown: Bulandshahr Capacity: 10,000 MT Percentage utilization 1/ since completion of construction Month/Year 1978/79 1977/78 1976/77 1975/76 1974/75 1973/74 April 19 21 43 17 7 34 May 100 100 100 90 6 100 June - 100 100 55 72 100 July - 100 100 90 77 100 August - 100 100 57 13 100 September - 100 100 35 5 39 October - 100 100 89 8 11 November - 100 100 91 3 10 December - 100 100 96 4 8 January - 100 100 97 4 7 February - 100 100 95 3 5 March - 14 4 62 5 2 Location of Godown: Moradabad Capacity: 10,000 MT Percentage utilization 1/ since completion of construction Month/Year 1978/79 1977/78 1976/77 1975/76 1974/75 April 82 98 67 42 30 May 97 137 75 65 60 June 98 130 102 80 60 July 100 60 144 80 65 August 90 50 147 90 55 September 54 31 147 88 55 October - 32 146 70 45 November - 50 150 50 40 December - 28 134 60 40 January - 74 131 55 35 February - 91 128 60 34 March - 74 124 72 30 1/ With reference to storage capacity. - 53 - ANNEX IX Page 3 Location of Godown.: Hanumangarh Capacity: 10,000 MT Percentage utilization 1/ since completion of construction Month/Year 1978/79 1977/78 1976/77 1975/76 1974/75 April 100 100 100 100 14 May 100 100 100 100 32 June 100 100 100 100 40 July 100 100 100 100 82 August 100 100 100 100 62 September 100 100 100 100 85 October 100 100 100 100 90 November 100 100 100 100 74 December 100 100 100 100 74 January - 100 100 100 100 February - 100 100 100 100 March - 100 100 100 100 Location of Godown: Moga Capacity: 10,000 MT Percentage utilization 1/ since completion of construction Month/Year 1978/79 1977/78 1976/77 1975/76 1974/75 April 138 115 75 63 - May 138 118 83 83 - June - 145 83 96 - July - 143 83 96 - August - 138 83 96 - September - 121 60 96 - October - 111 74 70 - November - 118 87 75 62 December - 148 89 75 62 January - 138 89 75 62 February - 138 89 75 63 March - 138 89 75 68 1/ With reference to storage capacity. - 54 - ANNEX IX Page 4 Location of Godown: Udaipur Capacity: 10,000 MT Percentage utilization 1/ since completion of construction Month/Year 1978/79 1977/78 1976/77 1975/76 April 108 127 133 - May 109 121 137 - June 109 104 137 - July 109 94 137 - August 99 89 137 - September 99 97 137 - October 99 113 137 - November 99 113 137 60 December 83 115 130 79 January - 108 132 86 February - 105 125 74 March - 105 125 137 Location of Godown: Sultanpur Lodhi Capacity: 10,000 MT Percentage utilization 1/ since completion of construction Month/Year 1978/79 1977/78 1976/77 1975/76 April 60 100 100 - May 100 100 100 - June - 100 80 - July - 72 80 - August - 20 72 - September - 20 30 - October - 20 30 40 November - 92 30 68 December - 98 100 68 January - 100 100 68 February - 100 100 80 March - 100 100 100 1/ With reference to storage capacity. - 55 - ANNEX IX Page 5 Location of Godown: Kosikalan Capacity: 10,000 bIT Percentage utilization 1/ since completion of construction Si. No. Month/Year 1978/79 1977/78 1976/77 1975/76 1974/75 1973/74 1972/73 1 April 46 107 110 3 6 3 5 2 May 58 107 113 5 12 13 52 3 June 69 106 113 38 19 33 57 4 July 93 105 107 69 21 39 57 5 August 96 111 93 75 20 42 57 6 September 102 106 107 82 10 34 57 7 October 102 105 107 91 10 33 56 8 November 93 102 107 13 5 30 56 9 December 93 97 107 101 - 20 44 10 January 92 73 107 103 3 4 44 11 February 85 63 107 103 3 4 24 12 March 71 47 107 103 3 4 3 1/ With reference to storage capacity. - 56 - ANNEX X INDIA WHEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Year-wise Average Utilization of Conventional Godowns Name of the Godown 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1/ Moga - - 63 81 82 131 138 Mehta 90 44 12 77 83 84 83 Sultanpur lodhi - - - 71 77 77 80 Bulandshahr - 43 17 73 87 86 60 Moradabad - - 48 68 125 71 87 Udaipur - - - 87 134 108 102 Hanumangarh - - 71 100 100 100 100 Gohana 42 33 20 53 92 104 55 Kosikalan 43 22 9 66 107 94 83 1/ Based on provisional data for a period varying from one month to nine months for various godowns. - 57 - ANNEX XI INDIA BEAT STORAGE PROJECT (CR. 267-IN) PROJECT COMPLETION REPORT Break-up of Total Cost of Silos (Total capacity 0.1 million tons) Local Foreign Total - (Ra 000) 1. Silos Railway Sidings 4,151 4,151 Buildings 69,289 69,289 Mechanical Equipment 25,670 3,778 29,448 Electrical Equipnut 19,374 3,963 23,337 118,484 7,741 126,225 2. Consultants & Supervision Costs Consultants Supervision of Contractors 7,487 1,142 8,629 3. Training 300 700 1,000 126,271 9,583 135,854 4. Contingencies @ 3% 3,788 288 4,076 130,059 9,871 139,930 say Rs 140 million 1/ The contingencies include the cost of land also. - 58 - ANNEX XII INDIA WHEAT STORAGE PROJECT (CR. 267-IN) PROJECT COPLETION REPORT Basic Data Sheet Original Disbursed Cancelled Repaid Outstanding (US$ million) Credit 10 8.7 Nil N.A. 1.3 Project Data Original Plan Revisions Actual 1. Board approval July 1971 - - 2. Credit agreement - Aug. 1971 3. Credit effectiveness Nov. 1971 - Nov. 1972 4. Last disbursement 5. Credit closing Sept. 1975 Sept. 1978 Sept. 1979 Mission Data 1. Pre-appraisal June 1969 2. Appraisal June 1971 3. Reappraisal Oct. 1974 INDIA WHEAT STORAGE PROJECT Progress of Construction of Silos YEARS 1971 19721973 197 1975 1976 1977 1978 1979 QUARTERS 3 4 1 2 3 4 1 2 3 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Agreenent sign.d between World Bank and Government o Ind,a Subnission of inte repor Consultants Appo,nted u sin a projec repor CIVIL WORKS COST Awad of Contrat (Rupmes in Lakhs) (A) PILE FOUNDATION UP SITES 70 Te-der Atds7i- - PILE FOUNDATION PUNJAB SITES 90 T SUPERSTRUCTURE UP SITES 202(A0 Md,gb,,d Ga, SUPERSTRUCTURE PUNJAB SITES 270 TA MECHANICAL WORKS IAl Gro,P.-1 Gfo,ip-2 CONVEYING SYSTEM AND BUCKET ELEVATORS 155 TA- PASSENGER ELEVATOR S UHAIN CLEANERS 27 A TRUCK DUMPERS 10 TA - I - - - - DUST CONTROL AND AERATION SYSTEM 37 WEIGH BRIDGE 12 A (A) BAGGING MACHINES 20 ELECTRICAL WORKS IAJIG roup- I G,oup-2 SUB STATION EQUIPMENT 16 T A MOTOR CONTROL CENTERS RO A_ (Al CONTROLPANELS 25- -- -- - INSTRUMENTATION 24 CONTROL POWER CABLING AND LIGHTING ETC 107 - A IA) TRIAL RUN AND COMMISSIONING U . hf. om A) 7T /Ma d,gobindg Ea Punjab Sil.s e 1Wa Jarao World Bant 22324  IBRD 15121R (PCR) ··. Å--0-~/,»oC o. ·82. AUGuST 1980 ¯7 ( JAMMUandKASHMIR KISTAN BHUTAN ..J INDIA B-1 WHEAT STORAGE PROJECT -[LOCATION OF STORAGE FACILITIES 3. {3- PROJECTSTATE BOUNDARIES l-NATIONAL ITAL o,H/MACHAL PRADESH 1000 TDN (BAG STORAGE) WAREHOUSES 0 SELECTE. 0lOW 200DD TON BULE STORAGEI SlOS WAJO ROADS -RMAO EAT GOWOING AREAS RAILROBAS SECONDARY WHEAT GOCWING AAEAS - -- STATE BOUNDAHIES STENRIVNTERNATSONAL OUNDARIES A t.o TAS>0 INBN TETCoc P TTN Gan anog C H I N A 000 C lN A DEZH/ -.. ~J o aa c U T T R p R D E S H JoBsomer- A u now R A J A S T H N Jda s a B H A R -24-Sa 24- G U J A R A ýM A H Y P R A ý S H