Ceylon - Mahaweli Ganga Development Project

Document of The World Bank FILE y F L ECOPY FOR OFFICIAL USE ONLY Report No. 3730 PROJECT PERFORMANCE AUDIT REPORT SRI LANKA: MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I (CREDIT 174-CE/LOAN 653-CE) December 28, 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. WEIGHTS AND MEASURES 1 mile (mi) = 1.609 kilometers (km) 1 acre (ac) = 0.405 hectare (ha) 1 square mile (sq mile) = 640 ha 1 kilogram (kg) = 2.2046 pounds (lb) 1 metric ton (m ton) = 1.0161 long ton (1 ton) 1 bushel (bu) of paddy = 46 lb 1 hundredweight (cwt) = 112 lb 1 megawatt (MW) = 1 million watts 1,000 kilowatts 1 kilowatt hour (kWh) = 1,000 watt hours 1 Gigawatt hour (GWh) = 1 million kilowatt hours ABBREVIATIONS ADB - Asian Development Bank CEB - Ceylon Electricity Board CECB - Central Engineering Consultancy Bureau ERR - Economic Rate of Return LHG - Low Humic Gley Soils MASL - Mahaweli Authority of Sri Lanka MDB - Mahaweli Development Board MEA - Mahaweli Economic Agency OCC - Opportunity Cost of Capital PW - Present Worth FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT SRI LANKA: MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I (CREDIT 174-CE/LOAN 653-CE) TABLE OF CONTENTS Page No. Preface ....................... ..... ............................ Basic Data Sheet ............... *.................................i Highlights ....................................................... iii PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY . . ......... *................................. 1 Background o..o. .... . ............................... 1 Project Design ....... ..... . ........ 1 Project Implementation ...................... ... . 2 Project Impact ........ . ......................... 2 II. MAIN ISSUES ............................................ 3 Main Reasons for Project Success ..................... 3 The Encroachment Problem ............................. 5 Water Management ... ...... ... ............... ...... 6 Cost Recovery .................. ... ................. 7 PROJECT COMPLETION REPORT I. Sectoral Background .................................... 11 II. Formulation ..................................... 11 III. Implementation ..... ................................. 16 IV. Agricultural Impact .. .............................. 20 V. Electric Power Impact ............. .................. 25 VI. Economic*and Financial Evaluation ........... ...... 29 VII. Institutional Performance and Development Issues ....... 33 VIII. IBRD/IDA Performance . .......... ............ 35 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contenst may not otherwise be disclosed without World Bank authorization.  TABLE OF CONTENTS (Continued) Page No. ANNEXES I. Costs, Expenditures and Disbursement ..................... 37 Table 1: Project Costs in Current Terms ................. 37 Table 2: Allocation of Credit/Loan Proceeds ............. 38 Table 3: Expenditures ................................... 39 Table 4: Cumulative Disbursement Schedule for IDA Credit/IBRD Loan ........................... 40 II. Economic and Financial Evaluation ............. *.......... 41 Table 1: Cuitivable Area Under Stage I................ 41 Table 2: Cropping Patterns, Yields and Production 42 Table 3: ExchangeRates .................. 43 Table 4: Ecdn?mic Investment Costs (Local).............. 44 Table 5: Ecopomic Investment Costs (Foreign)............ 45 Table 6: Prices for Financial and Economic Analyses 46 Table 7: Crop Input Requirements Per Acre............... 47 Table 8: Financial and Economic Costs of Production Per Acre ............................. 48 Table 9: Economic Costs of Operation and Maintenance 49 Tablel1: AgriculturalBengfits .................. 50 Table 11: Economic Value of Power Generated by Ukuwela 51 Table 12: Economic Rate of Return: (a)Prje 1:aW eo ..................54 (bC By Components .r .S e ............... 55 Table 13: Far Budget Estimates - 2.5 Acre Farm.......... 56 Table 14: Farm Budget Estimates - Acre Farm ............. 57 Table 15: Project Area Socio-Economic Data................ 58 Maps  PROJECT PERFORMANCE AUDIT REPORT SRI LANKA: MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I (CREDIT 174-CE/LOAN 653-CE) PREFACE This is a performance audit of the Mahaweli Ganga Development Project for which Credit 174-CE and Loan 653-CE were approved in January 1970 in the sum of US$14.5 million each. The Credit was closed fully disbursed in December 1979 and the Loan was closed on the same date after cancellation of US$491,000. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department and a project completion report (PCR) dated February 1981. The PCR was prepared by the South Asia Regional Office on the basis of a country visit in October-November 1980. The audit memorandum is based on the mission's discussions, on interviews with Bank staff, and on a review of the Apprainal Report (No. PA-29a) dated December 30, 1969, the President's Report (No. P-770) of January 7, 1970, the Credit/Loan Agreements dated January 30, 1970 and amended on April 30, 1971 and the PCR; correspond- ence with the Borrower and internal Bank memoranda on project issues as con- tained in relevant Bank files have been consulted and Bank staff associated with the project have been interviewed. An OED mission visited Sri Lanka in July 1981. Discussions were held with officials of the Ministry of Agriculture, the Mahaweli Authority, the Ceylon Electricity Board and the Sugar Corporation. A field trip to visit participating farmers was undertaken. The information obtained during the mission was used to test the validity of the conclusions of the PCR. A copy of the draft report was sent to the Borrower on October 21, 1981 for comments. None were received. The audit finds that the PCR covers adequately the project's salient features and the PPAM generally agrees with the conclusions. In addition to summarizing the objectives and results of the project, the PPAM expands upon some issues, particularly the main reasons for success, the encroachment problems, and the issues of water management and cost recovery, because of their importance to this as well as other agricultural development projects in the same region. The valuable assistance provided by the Government of Sri Lanka and the project staff mel: during the preparation of this report is gratefully acknowledged.  - ii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET SRI LANKA: MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I (CREDIT 174-CE/LOAN 653-CE) KEY PROJECT DATA Appraisal Actual or Actual as % of Estimate Estimated Actual Appraisal Estimate Project Costs (US$ million) 50.0 83.1 166L Credit Amount (US$ miLlion 14.5 14.5 100 Loan Amount (US$ millLon) 14.5 14.0 96.6 Cancelled ) - 0.5 - Repaid to ) July 31, 1981 - 1.3 - Outstanding to ) - 27.5 - Date Board Approval 10/69 01/30/70 - Date Effectiveness 05/08/70 04/30/71 - Date Physical Components Completed 06/30/75 05/31/78 153.&/- Proportion Then Completed (%) 100 100 Closing Date 06/30/76 12/31/79 154.5L Economic Rate of Retui.n (%) 12 20 166.6 Number of Family Bene:'iciaries - 53,000 - Cumulal:ive Estimated and Actual Disbursements (US$ million) FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Appraisal Estimate 1.5 5.5 12.7 19.7 26.7 29.0 - - - - - Actual - 2.9 5.6 10.4 16.4. 20.4 22.8 24.3 26.2 28.2 28.5 Actual as % of Estimai:e 0 53 44 53 61 70 79 84 90 97 98 Date of Final Disbursement 04/25/80 MISSION DATA Date No. of Manweeks Performance Types of Mission (Month/Year) Persons in field Rating L Tren/d Problema - Identification 01-02/61 4 20 - - - Reconnaissance 02-03/68 4 8 - - - Appraisal 02-03/69 6 22 - - - Review 07/70 2 3 - - - Review '2/70 2 2 - - - Supervision I 03/71 2 4 - - - Supervision II :.0/71 2 3 - - - Supervision III 05/72 2 4 - - - Supervision IV 06/73 2 6 - - - Supervision V 11-12/73 1 2 2 2 T Supervision VI 09/74 1 2 2 2 T Supervision VII 03-04/76 2 4 1 2 T Supervision VIII 03-04/77 2 3 1 2 Completion 10-11/80 2 6 Total 89 OTHER PROJECT DATA Borrower Government of Sri Lanka Executing Agency Mahaweli Development Board Fiscal Year of Borrower January 1 - December 31 Name of Currency Sri Lankan Rupees (Rs) Currency Exchange Rate Appraisal Year (1969) US$1 - Rs 5.95 Intervening Years Average (1971-78) US$1 RB 8.98 Completion Year Average (1979) US$1 R r 16.30 Follow-on Project Name Mahaweli Ganga Development Project, Stage I Credit Number 701-CE Amount (USU million) 19.0 Date Board Approval 06/27/77 /a Including payment for Foreign Exchange Entitlement Certificates (FEECs). If FEECs are excluded, tot.al cost was US$67.7 (135% of appraisal estimate). /b Calculated from date of Board Approval. 7 1 = problem free or minor problems. 2= moderate problems, and 3 = major problems. 7 1 - improving, 2 = stationary and 3 = deteriorating. e T - technical.  - iii - PROJECT PERFORMANCE AUDIT REPORT SRI LANKA: MARAWELI GANGA DEVELOPMENT PROJECT, STAGE I (CREDIT 174-CE/LOAN 653-CE) HIGHLIGHTS The project was the first of the development projects planned under the Mahaweli Ganga Water Master Plan aiming at the development over 30 years of about 900,000 acres of irrigable land in central and northern Sri-Lanka and at the installation of about 500 MW of hydropower. The main objectives of the project were to provide supplemental irrigation water to 126,700 acres of existing irrigated land, full irrigation of 105,000 acres of new land to be developed in subsequent stages, and 40 MW hydropower generating capacity. Although project implementation was delayed by about two years, the project can be termed economically and socially successful. All facilities constructed, including two diversion dams and tunnels, a power plant and irrigation and drainage works, have operated satisfactorily since completion. The agriculture and power benefits of the project turned out to be higher than expected at appraisal. Despite a 66% cost overrun, the project's economic rate of return is estimated at 20%, as against an appraisal estimate of 12%, mostly due to higher value of power, rise of sugar and rice prices and increased cropped area. About 53,000 families or a total population of about 320,000 have benefitted! from the project. The sound design of the project, continued support from Government agencies, and farmers' ability to adapt to more rigorous time frame imposed by double-cropping were the main reasons for the project's success. Certain problems associated with project development remain, such as cost recovery, monitoring and evaluation, effective water management and illegal occupation of land. However, most of these problems are being treated in follow-on Mahaweli Ganga Development Projects Stage II (Cr. 701-CE) and Stage III (appraised in March-April 1980). The following points may be of particular interest: - the decision made at appraisal to reduce project scope proved correct (PPAM, paras. 11-12 and PCR, paras. 2.03-2.06); - although little was planned to improve agricultural services, farming population reacted positively to sound technical package and free marketing of paddy (PPAM, paras. 13-14); - prevention of encroachment is difficult unless preventive measures are provided for during project preparation and appraisal and legal action is taken as soon as encroachment occurs (PPAM, paras. 15-17); - iv - - water management and maintenance of the irrigation system were not properly appreciated at appraisal (PPAY, paras. 18-20 and PCR, para. 7.03); and - farmers are more open to the introduction of fair water charges since the ban on private trading in paddy was removed and price controls abolished (PPAM, para. 23). - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM SRI LANKA: MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I (CREDIT 174-CE/LOAN 653-CE) I. SUMMARYI! Background 1. Sri Lanka comprises a total area of about 65,600 sq. km, with an estimated population of about 14.9 million. About 76% of Sri Lankan inhabi- tants live in rural areas and are principally dependent on agriculture, which accounts for about 28% of total GDP, over 50% of total employment, about 60% of export earnings and about 29% of Government revenues. 2. Annual mean rainfall in Sri Lanka's wet agro-climatic zone located in the southwest of the island is fairly well distributed throughout the year. Padd can be grown in this zone under rainfed conditions, not only in the mahal season, but in some areas in the yala as well. In contrast, annual rainfall in the dry zones, where about 78% of the total irrigated area is located, is concentrated in the maha season and displays considerable year-to- year variation. Irrigation, therefore, is essential for cultivation in the yala season, and some supplemental irrigation is often necessary for the maha crop. 3. In 1965-68, a UNDP/FAO study of the largely untapped water resources of the country's largest river, the Mahaweli Ganga, resulted in the formula- tion of a Master Plant aiming at the development of about 900,000 acres of irrigable land in the dry zone and the installation of about 500 MW of hydro- power. The Plan was divided into three phases, each including several proj- ects for phased implementation over a 30-year period. Project Design 4. The Mahaweli Ganga Development Project, Stage I, is the first of the development projects planned for the dry zone. The main objectives of the project were to provide (i) supplemental irrigation water to 126,700 ac of existing irrigated land, (ii) 40 MW hydropower generating capacity and (iii) full irrigation of 105,000 ac of new land to be developed in subsequent stages. In order to achieve these objectives, the project included the construction of two diversion dams (Polgolla and Bowatenna) and tunnels, a power plant near the outfall of Polgolla tunnel, improvement of the existing water delivery systems and irrigation and drainage works including on-farm 1/ Adapted from the PCR. 2/ Maha is the northeast monsoon season (October-February); Yala is the southwest monsoon season (April-September). - 2 - development work on a 4,000 ac Government-owned sugar estate. The Credit (Cr. 174-CE - US$14.5 M) and the Loan (Ln. 653-CE - US14.5 M) were approved in 1970. The date of Loan/Credit effectiveness was delayed almost one year because of a change in Government and subsequent disagreements on procurement and cost recovery issues, which resulted in re-negotiation of the Credit/Loan Agreements. Project Implementation 5. Project implementation was delayed because of a severe flood, more difficult than expected geologic conditions, power plant foundation problems and delays in awarding some of the construction contracts. The first delivery of water was made in 1976, about two years later than originally scheduled. The power plant was completed in 1976 and interconnected to the national power grid. A second 40 MW power plant at Bowatenna has been completed in 1981 with ADB assistance. The completion of the Bowatenna tunnel was delayed by about a year until 1972 because of the Government's decision to release water through the not fully completed tunnel in 1977 to provide supplemental irriga- tion water to the project command area during a period of severe drought. This decision resulted in considerable project benefits in 1976 and 1977, since crops were saved throughout the project area which otherwise would have been lost. 6. Although project implementation was delayed, the standard of civil works was adequate. All facilities constructed (the Polgolla Complex, Bowa- tenna Complex and the Sudu Ganga and Elahera weir and canals) have operated satisfactorily since completion. Feasibility studies for Stage II (System H) were undertaken by consultants financed under the project. Special project units were established to strengthen agricultural extension as suggested at appraisal, and the Maha-Illuppalama Agricultural Research Station was also strengthened in acoordance with stipulations of the Credit/Loan Agreements. The only component not implemented satisfactorily was on-farm development of the Kantalai Sugar Est.tt. The work was delayed because of labor shortages, lack of machinery and spare parts and weak management. Project Impact 7. The agriculture and power benefits of the project turned out to be niukh I-igher than expected at appraisal, which was undertaken before the 1973 oi! c>1s.s. The then assumed value of the energy produced was low (Rs. Ith 19/O or about Rs. 0.55 at 1980 price levels). The value is now estiwated to be Rs. 1.57/kWh, which significantly increases total value of the electric energy generated from the Ukuwela power plant, now averaging 190 GWh per year. Although generation from the power plant has been somewhat less than the 220 GWh estimated at appraisal (partly due to pressure loss in the tunnel and drought), the plant has been utilized to the fullest extent possible. Without Ukuwela, the Ceylon Electricity Board would not have been able to meet peak demands in 1978 and 1979 without extensively using costly thermal capacity. Currently, the plant is fully utilized and is critical in providing the country-s peak power requirements. - 3 - 8. As a result of the water diverted from the Mahaweli, farmers in the project area have an assured water supply, and the cropping intensity has increased from 151% without the project to about 185% in 1981. Paddy produc- tion increased from 216,200 metric tons (without project) to 350,700 metric tons in 1979/80 and is expected to reach 369,800 tons in 1981 representing a net production value of US$28.3 million. About 53,000 families or a total of about 320,000 people have benefitted from the project. Cropping patterns have also diversified in the yala season from monoculture paddy into crops such as chillies, oilseeds, cowpeas and vegetables. 9. Actual project costs are estimated at Rs. 494.4 M, a 66% increase over the appraisal estimate. However, there was no cost overrun in foreign exchange cost. The major portion of the local cost overrun was attribut- able to the project having to buy Foreign Exchange Entitlement Certificates (FEECs).l/ Excluding the FEECs payment, the actual local cost overrun was about 38%. The economic rate of return (ERR) of the project as a whole is now estimated at 20%, which compares favorably with the appraisal expectation of 12%. The ERRs for the agricultural and power components are estimated at 14% and 26% respectively. The higher project ERR is principally due to the higher value of power, the rise of sugar prices and the increased cropped area, which have more than offset higher capital and recurrent costs. 10. Although implementation was seriously delayed, the project can be termed economically and financially successful. The sound design of the project and continued support from Government agencies directly involved with it, principally the Mahaweli Development Board, greatly contributed to the project's success. Certain problems associated with project development remain, such as cost recovery, monitoring and evaluation, effective water management and encroachment (unauthorized cultivation of state lands set aside for other purposes). However, most of these downstream problems are being treated in follow-on Mahaweli Ganga Development Projects, Stage II (Credit 701-CE approved in June 1977) and Stage III (appraised in 1981). II. MAIN ISSUES Main Reasons for Project Success 11. As proposed by the Government and by UNDP/FAO in 1969, the project was to provide supplemental irrigation to 144,000 acres of partially irrigated lands and full irrigation to 184,000 acres of new lands. At appraisal the mission found that the project in its totality was unacceptable in its scope and form and that there were serious omissions in the feasibility study, 1/ During the 1971-77 period, whenever purchases were made in Sri Lanka from foreign sources, the purchasers were required to buy Foreign Exchange Entitlement Certificates from the Government at an additional cost of about 65% (55% in 1970 and 1971) of the foreign purchase. MDB was required to use the FEECs rate for the foreign component of the facili- ties built under the project. especially on the agricultural side (no acceptable land classification, layout of field irrigation and drainage system not tested in the field and land clearing and levelling not checked). The period suggested for developing the total area was considered impractical and beyond the capabilities of the country. Cost estimates were preliminary and likely to substantially increase when more detailed investigations and studies would be carried out. Therefore two possible alternatives were suggested to the Government by the appraisal mission: either (i) to improve the deficiencies found in the feasibility study, estimated to require 12 to 18 months work after which the project would be re-appraised, or (ii) to carry out the project in three stages; the first would provide only supplemental irrigation water to 126,700 acres of existing irrigated land, while new land would be developed during the subse- quent stages. In order not to lose construction time and to reduce the delay in implementing the project to a minimum, the Government accepted the mis- sion's proposal and decided on a phased development of the area. 12. In retrospect, the decision to reduce project scope and to limit the irrigation component to provision of water to already irrigated land wasl correct since the project's major objectives have been achieved: civil works have been carried out satisfactorily, and agricultural development is success- ful. Despite the reduction of scope, project completion was nevertheless: delayed by about two years, and project cost increased by about 66%. Causes of implementation delays were mostly due to the political problems and civil disburbances in 1971, unanticipated construction problems and disagreements between the Bank and the Government on procurement procedures and cost recovery.!1 Had the Bank accepted the original project scope, with the project including such difficult components as development of new land and settlement of new farmers, delays and cost overruns would probably have been unmanageable. 13. Successful agricultural production comes somewhat as a surprise because the agricultural supporting services were considered weak at appraisal and little was then planned to improve them. As appraised in 1969, the project was a typical Bank irrigation project of the late 60s-early 70s, narrowly focussing on the construction of civil works for developing water resources but with little concern about subsequent on-farm development. No provision was made for improving existing agricultural supporting services except the appointment of a resident manager responsible for coordinating activities of agricultural agencies operating in a defined area and the provi- sion for a study of credit availability and credit needs of the farmers in the project area. The Training and Visit extension system, which was not part of' the project, was introduced at a later stage. No improvement or expansion of agricultural credit took place during project implementation. 1/ Extent and causes of delays were analyzed as a selected case study in the OED Operational Policy Review: "Delays in Project Implementation", Report No. 2946. - 5 - 14. Despite these shortcomings, cropping intensity increased from 150% at appraisal to about 1.85% at completion, introduction of new paddy vari- eties was successful, yields improved by about 25% and the paddy production increased by about 70% in the project area. Some reasons for this success are that (i) the farming population is a rather homogeneous group with a high degree of literacy and quite open to progress, (ii) the project did not fundamentally change the existing cropping system but improved it with proven technical packages, (iii) farmers were experienced irrigators and could easily adapt to increased water availability and to the more rigorous time frame imposed by double-cropping and (iv) the Government's decision, in 1978, to shift from Government marketing channels and fixed price to free markets is now providing adequate incentives in the form of higher rice prices. The Encroachment Problem 15. About 29,000 ha (23% of the project area) of state lands, adjoining the irrigated tracts, which were set aside mainly for reforestation and live- stock, have been occupied by squatters. Encroachment, illegal population inflow, and difficulty to enforce land occupancy laws have been found in a number of Bank-assisted settlement or irrigation projects!! where experience shows that: (i) encroachment often takes place when within or around a project area, cultivable land is not fully utilized; (ii) prevention of encroachment is difficult if no legal action is taken as soon as encroachment occurs. 16. In the absence of any Government reaction, most of the squatters will have (or already have) legal rights to irrigation water.! As a result of uncontrolled settlement the total irrigated area under the Stage I Project is about 23% in excess of the original plan, with the following consequences: (a) project investment resulted in higher agricultural production and higher benefits than expected; but (b) because of limited water resources, subsequent development stages may be adversely affected, and their command area may have to be reduced in line, with reduced water supplies; and (c) in some of the currently irrigated areas, outlets and field canals can no longer serve all the commanded lands and therefore farmers tend to damage structures to increase discharges. 1/ Madagascar Beef Cattle Development Project (OED Report No. 1559), Peru San Lorenzo Irrigation and Land Settlement Project (OED Report No. 1858), Ethiopia Humera Agricultural Development Project (OED. Report No. 2583), Rwanda Mutara Agricultural Development Project (OED Report No. 3520). 2/ Sri Lanka laws stipulate that legal rights to land and water are obtained after five years of occupancy. - 6 - 17. Experience under the Stage I Project suggests that the subsequent stages and phases of the Mahaweli Ganga Water Master Plan might be affected by similar encroachment problems unless appropriate action is planned and taken by the Government and the Bank at an early time. The frequency and extent of encroachment in a number of irrigation and settlement projects also indicates the need to provide for adequate preventive measures during project prepara- tion and appraisal. Water Management 18. The PCR draws attention to the fact that during project implementa- tion "there was no effective water management system to direct utilisation of Mahaweli water" (para. 7.03). The South Asia Projects Department points out that "... this was more or less ... a 'headworks' project" and therefore 'water management was not included as a project component but is being stressed in the Bank's Mahaweli II and Mahaweli III projects". In the mean- time, the weakness of the water allocation system and the poor maintenance of the canals and irrigation networks continue to be a major problem. The main reasons for poor water management are that: (a) responsibility for operation and maintenance (O&M) is shared by various organizations. The Mahaweli Authority takes care of the headworks, the Irrigation Department of the Ministry of Land and Land Development (MOL) is responsible for irrigation canals and distribution channels and the Agrarian Services Department of MOL looks after the field channels. Such a fragmented O&M organization has proven inefficient and coordination, difficult. Under the Stage II and III Projects O&M responsibilities are expected to be amal- gamated under the responsibility of the Mahaweli Authority. Unless a similar decision is made for the Stage I Project, O&M is likely to remain a major problem; (b) the water resource monitoring and control system is poor. Water measurement gauges and communication equipment connecting the various schemes are lacking; (c) Government's budgetary allocation for 0&M remains insufficient. It is estimated that the overall cost required for project O&M now amounts to about Rs 300 per acre per year. The Irrigation Department indicated to the mission that its share of O&M cost is now estimated at about Rs 200 per acre per year but that funding was limited to about Rs 90 for the current fiscal year; and (d) The O&M problem is aggravated by the above-mentioned encroachment problem (paras 16-18) as well as by the low recovery of water charges (paras 22-25). - 7 - 19. The prevailing weakness of water management results in inadequate water allocation between the project's various schemes and in heavy water losses in conveyance and irrigation canals. Water use, including water losses, was expected to be limited to 8 acre-feet but reached 12 acre-feet during the last cropping season. Excessive water use thus far has had limited adverse effects on the Stage I project, because water was plentiful and only the downstream area (Kantalai) suffered from water shortages. However, the problem is now getting more critical with the initiation of subsequent phases of the Master Plan. Increases of the irrigable area will inevitably create harsh competition for scarce and dwindling water resources, unless remedial measures are taken. 20. As in some other Bank-assisted irrigation projects which were appraised in the late 60s/early 70s, the maintenance problem was also not properly appreciated.!/ A covenant was included in the Loan/Credit Agree- ments in order to improve the standard of maintenance, which was found insuf- ficient at the time of appraisal. The wording of the covenant, however, is vague/ and not conducive to initiate appropriate corrective action. With the benefit of experience gained under the project, water management aspects were better dealt with i1n the Stage II and III projects which include provi- sion and financing of O&M eguipment, staffing and operating rules, and water management training courses._ Cost Recovery 21. During negotiations, the Government and the Bank agreed that, until a comprehensive study on water charges would be completed, water charges should be collected at a rate of not less than Rs 40 per acre, pursuant to a schedule of water charges established by the Borrower and agreed to by the Bank. Shortly after the Credit/Loan Agreements were signed, there was a change in the Government and the new administration requested a re-negotiation of the Credit/Loan. The most difficult issue at that stage was to resolve the Bank's requirement for water charges, because the new Government had promised 1/ See OED Report No. 3421, "Water Management in Bank-Supported Irrigation Project Systems: An Analysis of Past Experience" (April 1981). 2/ Section 4.05. "The Borrower shall take all steps required to establish, and thereafter maintain, adequate standards of maintenance of the tanks and canal systems included in, or necessary to, the Project, and shall provide the staff, equipment and funds necessary to strengthen the existing field maintenance organization." 3/ CPS notes that "with the completion of future project stages, emphasis on water management will increase, and it is to be hoped that the measures adopted under Stages II and III would also extend to Stage I. It will be useful to monitor and evaluate the changes in the project impact. This project may, therefore, offer an interesting topic for a future Impact Evaluation Report." - 8 - prior to the elections that all water provided by Government schemes would be free. After lengthy discussions, Section 4.11 of the Credit Agreement was amended as follows: "The Borrower, in the light of the results of the study referred to in Part B of the Project, shall before completion of the Project take appropriate steps after consultation with the Association to ensure the recovery (a) of the operation and maintenance costs of the Project as they are incurred and (b) over a reasonable period of years, of the construction cost of the Project, having due regard to the incentives and capacity to pay of farmers." 22. Between 1970 and 1977, the Government did not collect any water charges. Although a Land Betterment Charges Law was enacted in 1976, it was never enforced. It was only in 1978 that the new Government decided to resume collection of water charges, which were set at an annual rate of Rs 30 per acre in irrigation schemes with cropping intensity of 150% or higher and at Rs 20 in schemes with less than 150% cropping intensity. No recovery of construction costs has ever been contemplated in practice. The comprehensive study on water charges has been submitted by the consultants as per their terms of reference. At project completion, the collection rate of water charges did not exceed an overall average of 8.6%. Since O&M costs are now estimated at Rs 300 per acre per year, the current water charge collection represents less than 1% of actual O&M costs. 23. Although the cost recovery issue has been a subject of misunder- standing and dispute between the Government and the Bank for years, the Bank continued in its attempt to convince the Government of the need to recover a more substantial part of costs incurred, and the Government is now willing to take adequate measures to this effect. During its discussions with Government officials and farmers, the audit mission found that: (a) the need for an adequate cost recovery system and a good collection rate is now perceived by Government officials, who recognize that O&M costs of the project and of subsequent stages and phases of the Mahaweli Ganga Master Plan cannot be sustained by relying on Govern- ment resources alone; (b) the inadequacy of the existing collection procedure for water charges is now a matter of concern for Government officials. It is recognized that recovery of water charges from about 53,000 bene- fitting families is a difficult and costly task which will require a new organization and different approaches. Proposals for improving collection procedures are now debated at all levels;!/ 1/ CPS points out that "from a fiscal revenue point of view, the public sector may decide that it is economically advantageous and easy to enforce the application of a land tax rather than using water charges. On the other hand, from an efficiency view point--particularly with regard to the allocation of water at the farm level--a land tax might not be the best. This needs careful analysis which may not be possible in the context of a PPAR but could profitably be borne in mind when, and if, an Impact Evaluation Report comes to be written on this project". (c) many farmers expressed their willingness to participate in water management at field level and their agreement to pay a reasonable fee, since they can sell paddy on the free market. In the past, farmers had to sell paddy through Government marketing channels at prices fixed by Government well below (about 30%) the price of paddy in the parallel market (and also of the paddy equivalent of imported rice). The farmers' view is that when they delivered their crops to Government stores they made indirect contribution to O&M costs equivalent to about Rs 15 to 20 per bushel of paddy per year (about Rs 1,000 per acre per year). Since the ban on private trading in paddy was removed in 1978 and price controls abolished, farmers are now able to obtain higher prices and are therefore more open to the introduction of fair water charges; and (d) farmers also resent paying water charges at a time when squatters are not required to contribute because they are considered illegal occupants.  - 10 - ATTACHMENT SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT February 1981 - 11 - I. SECTORAL BACKGROUND 1.01 Sri Lanka is a tropical island of a gross area of about 25,000 sq mi, with distinctly divided wet and dry zones. The wet zone encompasses the south- west quadrant of the island, or about 30% of the land area. At the time of project appraisal (1969), the wet zone supported more than three-quarters of the nation's population and accounted for about 82% of the cultivated land. In other words, there existed a large concentration of economic activities in the wet zone, leaving the remaining 70%, the dry zone, relatively undeveloped. 1.02 Estate agriculture producing export crops such as tea, rubber and coconuts was the backbone of the country's economy. Production of food crops was left to small farmers and was far from satisfying the island's needs, necessitating the import of basic foods. In 1968, 45% of the total value of imports was for food: of this expenditure, rice accounted for about 35% and sugar about 10%. Although there was considerable room for increasing agricul- tural yields, the main prospect for attaining self sufficiency in food supply existed in the expansion and intensification of cultivated areas. Since there was a comparative scarcity of land for further cultivation in the wet zone, the expansion needed had to take place in the dry zone. 1.03 Sri Lanka also needed more electric energy. In 1968, the effective generating capacity of the national system was 261 MW, including 191 MW of hydro capacity. The firm capacity was about 220 MW. Since the projected demand for 1973 was 296 MW, there was a need to increase the nation's generat- ing capacity quickly. 1.04 The development of the Mahaweli Ganga, the island's largest and almost unexploited water resource which cuts through the eastern portion of the dry zone, was seen by the Government as the most logical means of providing irrigation water for arable lands in the dry zone, generating more electric power to meet increasing demand, and creating employment opportunities. II. FORMULATION Origin 2.01 The origin of the Mahaweli Ganga Development Project goes back to 1958 when the Irrigation and Survey Department of the Ministry of Land, Irri- gation and Power and the United States Operations Mission undertook a study of the irrigation and power potential of major rivers in Sri Lanka. In 1961, the Bank sent an identification mission, which concluded that of the five major rivers studied, the Mahaweli Ganga was most ready for development and recom- mended a detailed engineering study be undertaken. The Government submitted a request to the Bank in March 1962 for financing construction of a storage dam on Kotmale Oya as a first stage of developing the Mahaweli Ganga. The Bank, however, felt that a more detailed feasibility study was needed and was also concerned about Government's policies and management of the economy. Another problem which kept the Bank from taking immediate action was the dispute between the Government and foreign oil companies over the level of compensation - 12 - due as a result of the Government's action nationalizing oil facilities formerly owned by foreign companies. As all these issues delayed financing by the Bank of the needed study, the Bank meanwhile concluded that the country was not creditworthy (April 1964). As a result, all dealings with the Government regard- ing future lending were suspended for the time being. 2.02 The Government then looked for UNDP/FAO assistance, which resulted in a Master Plan for developing the water and power resources of the Mahaweli Ganga Basin. The study was undertaken during 1965-68. The Plan envisaged development of about 900,000 acres of irrigable land in the dry zone, as well as about 970 MW of hydropower. It was divided into three phases, each includ- ing several stages, for stepwise implementation over a 30 year period. Preparation, Appraisal, Negotiation and Approval 2.03 In November 1968 the Government submitted an official request to the Bank for financing Phase I of the Master Plan. The proposed Phase I consisted of construction of two diversion dams at Polgolla and Bowatenna which would enable supplemental irrigation of 144,000 acres of partially irrigated existing lands, full irrigation of 184,000 acres of newly developed land, and 663 MW of generating capacity with construction of two hydro-power plants. An expatriate consulting firm prepared detailed designs of the Polgolla complex under a contract with the Government. 2.04 A Bank appraisal mission visited Sri Lanka in February/March 1969 and found the project preparation report prepared by the UNDP/FAO team inadequate as presented. The mission felt that there was a serious omission in the feasi- bility study, especially with regard to agricultural aspects, which precluded consideration of the project as a whole for implementation as a single stage development. In order to minimize delay in implementing the project, the mission suggested splitting Phase I into three stages. Although the Govern- ment was much concerned about the delay of the project which was conceived and discussed with the Bank as early as 1961, they accepted the Bank's proposal to implement only Stage I of Phase I to start with. 2.05 During the Credit/Loan negotiations many issues were discussed including organization and management and water charges. The appraisal mission recommended establishment of a full Authority. However, the Government pro- posed to set up a Board which would have only a few permanent staff and that arrangements would be made for the works to be carried out largely by special units in the Irrigation and Agriculture Departments under the direction of senior staff members of the Board. The Government proposal was accepted by the Bank. The Bank proposed and the Government reluctantly accepted the collection of water charges upon completion of the project and thereafter at a rate not less than Rs. 40 per year per acre of cultivated land. 2.06 On January 30, 1970 the Bank's Executive Directors approved the project, to be financed through IDA Credit 174-CE of US$14.5 M and IBRD Loan 653-CE of US$14.5 M. The Credit and Loan Agreements were signed on January 30, 1970. - 13 - Project Description 2.07 The project, Stage I of Phase I of the Mahaweli Ganga Development Program, was to be implemented over a five year period. It included (a) improved water supply to 126,700 ac of existing land; (b) installation of 40 MW of hydropower generating capacity; (c) on-farm development of 4,000 ac of sugarcane; and (d) investigations and designs of a subsequent stage. The project was to have the following major components (see Maps 1 and 2): a dam constructed at Polgolla would divert water from the upper Mahaweli through a five-mile tunnel to a 40 MW hydropower plant at the head of the Sudu Ganga- Amban Ganga watershed. After the power plant, the water would be carried about 25 miles by the Sudu and Amban Ganga Rivers to Bowatenna. At Bowatenna a second diversion dam would be constructed which would divert water to the northwest agricultural areas and control the water usually flowing to the northeast via the Amban Ganga and the Elahera-Minneriya-Kantalai canal. The water diverted to the northwest would be carried through a five-mile tunnel and a one-mile concrete-lined canal to the Dambulla Oya and then to the farm- ing area. 2.08 The project consisted of the following: As Originally Designed As Actually Completed (1) Polgolla Complex: (a) 565 ft long x 55 ft high (a) 512 ft long x 58 ft high diversion dam. diversion dam. (b) 26,450 ft long x 19.5(horseshoe) (b) 26,450 ft long x 19.5 ft tunnel, capacity 2,500 cusecs. (horseshoe) tunnel, capacity 2,000 cusecs (c) 40 MW hydroelectric plant. (c) 38 MW hydroelectric plant. (2) Bowatenna Complex: (a) 880 ft long x 132 ft high (a) 771 ft long x 98 ft high diversion dam. diversion dam. (b) 25,000 ft long x 10 ft tunnel (b) 22,468 ft long x 11 ft tunnel, capacity 1,500 cusecs. capacity 1,000 cusecs. (c) 0.5 mile concrete-lined canal. (c) 0.5 mile concrete-lined canal. (3) Dhun Oya and Sudu Ganga Training Works: Bridges and straightening of natural Nine new foot bridges, one road channels to accommodate increased bridge lowering and straightening flow of water (up to 2,500 cusecs) of channels to accommodate due to Polgolla diversion. increased flow of water (up to 2,000 cusecs). - 14 - (4) Elahera Weir and canal: Remodelling of the existing Elahera Remodelling of the existing Weir and the 38 mile long Ehahera- Elahera Weir and the 38 mile long Minneriya-Kantalai canal to carry Elahera-Minneriya-Kantalai Canal 1,500 cusecs. to carry 1,500 cusecs. (5) Buildings and Camps: Cost: Rs. 4.4 million. 59 permanent and 36 temporary buildings. Cost: Rs.0.7 million. (6) Agricultural Land Development: (a) Provision of improved irriga- (a) Provision of improved irri- tion facilities to 126,700 ac gation facilities to 151,100 of existing paddy land in acres of existing paddyland Stage I. in Stage I. (b) Redesigning of irrigation (b) Redesigning of irrigation system, drainage system and system, drainage system and land levelling of 4,000 ac at land levelling of 7,400 ac 1/ Kantalai Sugar Estate at Kantalai Sugar Estate. (7) Investigations and Extensions: (a) Studies required to develop (a) Studies required to develop 113,100 acres in Stage II 70,000 acres in Stage II. (b) Studies to determine optimum (b) Studies to determine optimum farm size. farm size. (c) Study to determine merits of (c) Study to determine merits of settling farmers on land they settling farmers on land they farm instead of in villages. farm instead of in villages. (d) Additional facility at Maha (d) Additional facility at Maha Illuppalama Agricultural Illuppalama Agricultural Research Station. Research Station. (8) Equipment and Vehicles: Cost: Rs. 11.5 Million. Cost.. Rs. 50.1 Miilion (includ- ing Rs. 38.2 Million for sub- sequent Stages). (9) Engineering a'nd Consulting Service: Cost: Rs. 27.4 Million. Cost: Rs. 46.5 Uillion. 1/ The total area of the Kantalai Sugar Estate is now 11,721 ac, of which 7,400 ac are expected to be under sugarcane by 1981. - 15 - 2.09 It should be noted that the Stage I facilities listed above were intended to benefit not only the Stage I lands but also those of subsequent Stages. Construction of irrigation systems for 70,000 acres in Stage II (Kalawewa area) was commenced in 1975 and is expected to be completed in 1982. Targets and Goals 2.10 The following cropped area, fields and production increases, were expected to result from the project: 1/ Cropped Area Yields Production W W W W W W Increase Crop ---000 ac--- -m tons/ac- -'000 m tons- Paddy Maha Crop /a 119.9 122.7 1.03 1.33 123.5 163.2 32 Yala Crop /b 72.9 111.5 0.93 1.33 67.8 148.3 119 Total 192.8 234.2 0.99 1.33 191.3 311.5 63 Sugarcane 4.0 4.0 11.56 41.62 46.2 166.5 260 Legend: W - without Project; W - with Project. /a Maha: November/March rainy season. /b Yala: May/September rainy season. 2.11 In terms of rice, the increase in production would be 83,000 tons at full development which was about 25% of the country's rice imports and 7% of the country's consumption in 1968. The 10,000 tons of expected increase in sugar production from the project would account for 5% of imports at the time of appraisal. Annual foreign exchange savings were estimated at about Rs 54 M (US$9 M equivalent) 2/ and farm incomes were expected to increase 82%. 2.12 On the power side, the dependable peaking capacity of the Ukuwela Power Plant was estimated to be about 20 MW. Power generation was expected to average 220 GWh annually. The power plant was planned to be commissioned in 1974 and provide 10% of the capacity and 14.5% of the energy requirements of the Ceylon Electricity Board by 1975. 1/ In 1969 Appraisal Report the targets were shown in terms of rice and sugar. Those were converted to paddy and sugarcane at conversion factors of 0.68 and 0.0865 respectively. 2/ At 1970 price levels and the official exchange rate prevailing in that year. At 1980 price levels and exchange rate those would be Rs 248 M and US$15.2 M. - 16 - III. IMPLEMENTATION Credit Effectiveness 3.01 Shortly after the Credit/Loan Agreements were signed, there was a change in the Government in Sri Lanka, which delayed the date of effectiveness by almost a year. At the time of the election in May 1970, the Credit/Loan had not become effective because several members of the Mahaweli Development Board (MDB) had not been appointed and certain staff positions had not been filled as stipulated in the Credit/Loan Agreements as conditions of effectiveness. 3.02 The Bank extended the date of effectiveness several times while waiting for the new Government to decide what action it would take. The new administration first set up committees of inquiry to examine Mahaweli as well as other loan and credit agreements with the Bank. As a result of this inquiry, the Government requested a re-negotiation of the Credit/Loan and the Bank agreed to review all proposals. There ensued very long and drawn-out discus- sions. The most difficult issue to resolve was the Bank's requirement for water charges. During the election campaign the Opposition Party (who won the election) had promised the electorate that all water furnished to them by the Government would be free. It felt it could not back down on this promise. 3.03 The Bank finally agreed to revise the original covenants (see para- graphs 7.4-7.8 for details on the question of cost recovery). New Credit and Loan Agreements were drawn up and the project became effective on April 30, 1971, almost a year after the May 8, 1970 date originally anticipated. During this period, the Bank extended the date of effectiveness, seven times. In addition to water charges, another specific change made in the Credit/Loan Agreement was that appointments to MDB could be made by the Government without approval by the Bank. 3.04 An engineering firm, hired in 1969 by the previous Government to undertake design studies, supervise construction of Polgolla and Bowatenna Complexes and to carry out feasibility studies in the northwest central irriga- tion area was dismissed by the new Government as of October 31, 1970. Another consulting firm was hired in its place in March 1971 under similar terms of reference. Design Changes 3.05 Under the credit agreement, the Government was to carry out studies to determine the optimum capacity of the Polgolla and Bowatenna Tunnels before the construction of such tunnels was initiated. These studies were conducted by the expatriate consulting firm and their report was submitted in May 1970. The consultants recommended that 2,000 cusecs would be sufficient at Polgolla and 1,000 cusecs at Bowatenna instead of the originally designed 2,500 cusecs and 1,500 cusecs respectively. Both the Government and the Bank concurred with the consultants' views and the tunnel capacities were changed accordingly. 3.06 Other changes introduced during project implementation included: (a) raising the Polgolla Dam height by 3 ft for higher degree of safety; (b) more foot bridges on Sudu Ganga, and (c) addition of the Huruluwewa Scheme (6,400 acres in the Northwest area) to the project area. - 17 - Progress of Civil Works 3.07 At the time of the appraisal, the project was expected to be completed in five years by December 1974. However, the implementation of the project was seriously delayed as shown below: Expected to Component be Completed Was Completed Polgolla Complex December 1974 September 1976 Bowatenna Complex June 1974 March 1978 Sudu Ganga Training Works December 1973 March 1976 Elahera Weir and Canal December 1973 June 1977 Sugar Estate October 1973 Incomplete Offices, Housing and Equipment December 1974 1978 3.07 Figure 3-1 shows the planned and actual implementation of the various project components. The project was substantially completed in March 1978 although the closing date was extended to December 1979 in order to accommodate purchase of equipment for operation and maintenance for subsequent stages utilizing the remaining balance of the Loan. 3.08 The long delay between the signing of the Credit/Loan Agreements and effectiveness did not delay the commencement of construction of the Polgolla Complex. According to the appraisal, the contract for Polgolla dam and tunnel was expected to be awarded about March 1, 1970. It was in fact awarded on March 23. The award was made despite a lengthy dispute between the Bank and the borrower over the qualifications of the sub-contractor, the State Engineer- ing Corporation. This timely contract award resulted from early prequalification of contractors and early receipt of tenders in 1969, before the Loan/Credit was signed. Severe floods, civil disturbances in 1971, tunnel geologic conditions and power house foundation problems caused delay in the completion of Polgolla. The fault in the tunnel was known previously but proper borings had not been taken in the powerhouse site. The first issue of water through Polgolla tunnel was made in January 1976. The Ukuwela Power Plant was completed and inter- connected to the national power grid, and power generation started in July 1976. 3.09 The change in Government and subsequent need for Credit/Loan rene- gotiation did cause a delay in construction of the Bowatenna Complex. The contract was expected to be awarded in December 1970 but prequalification of contractors was only started in March 1971 when the Credit/Loan Agreement became effective. Then there was a disagreement between the Bank and MDB over the prequalification of two of the bidders. After a lengthy dispute the Bank finally accepted the MDB position to award the contract to a joint venture of Indian and Sri Lankan firms. The award took place in July 1972. 3.10 The completion of the Bowatenna Complex took 2.5 years longer than expected after the contract award. About one year of the delay was due to the Government's insistence that the Bowatenna tunnel be used to carry water before concreting, shortcreting and grouting were completed to save the crops from the unprecedented drought the country was experiencing. Regarding the premature release of water, the Bank required the consultants to inspect the tunnel and make recommendations. On the basis of these recommendations, the - 18 - Bank agreed that 600-801) cusecs of water could be released through the tunnel from January to October 1976. The release of the water during this period had an immediate beneficial impact on the project, as it provided much needed water to save crops which otherwise would have been lost in the 1976 Yala season. 3.11 The Sudu and Amban ganga training works, Elahera Weir and the Elahera-Minneriya-KantaLai Canal were also delayed but this did not affect the final completion of the project. These components were only needed when Polgolla and Bowatenna were completed and functioning. 3.12 Although the civil works were seriously delayed, the quality was satisfactory. Todate, all facilities constructed under Stage I have been operating satisfactorily. Other Items 3.13 The feasibility study for Stage II was contracted to an European consulting firm and completed in July 1972. The studies served as the base document for construction and development of new lands in the Kalawewa and Anuradhapura areas (System H) under Stage II. Although the consultants carried out the work well, they were asked to change the plan of development to lower the cost per acre to a realistic level. Stage II was financed in April 1977 by the Bank, Canada, UK, USA and the Netherlands (also by EEC in 1978) and the works are scheduled for completion in 1982. 3.14 Special project units 1/ were established to strengthen agricultural extension as suggested at appraisal. Although successful initially, per- formance has deteriorated since 1977. This performance may have contributed to the lack of increases in yields from these units. This may be a transi- tional problem caused by a shift of organizational responsibility from the Land Commissioner's Office to the Mahaweli Authority and the extension systems originally adopted for the special project units to the T & V system advocated under the Credit 931-CE, National Agricultural Extension and Adaptive Research. The Maha Illuppalama Agricultural Research Station was also strengthened satisfactorily in accordance with the Credit/Loan Agreements. 3.15 The only component which was not implemented satisfactorily was the on-farm development of the Kantalai Sugar Estate. The estate suffered prin- cipally from drainage problems and action to improve drainage were hampered because of labor shortages, lack of machinery and spare parts, and weak management. In addition, the estate never received as much water as it required and, coupled with the drainage problem, it never achieved the yield of 41.6 tons cane per acre per year predicted at appraisal. The estate purchased two excavators in early 1980 for use in drainage improvement. This work is expected to be completed by mid-1982. 1/ Units Command Area Elahera 5,950 ac Kagama Kattiyawa 4,056 Minneriya 14,305 Rajangana 13,278 Kandalama 1,965 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Project Implementation Schedule 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1 2 3 4 1 213 4 12 3 4 1 2 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Dam y Cor tract Award (C A.) I a~~J L 4- 4- a a y(C.A.) Tunnel Ft is f at First Issue of Wat y (C.\.) First Issue of Water Power House (C A.a Bowatenna Complex: 4F" yC. A.) Dam y(C.A) I I I IF(C.A.) I First Issue of Water Tunnel V(C.A.) I I (C.A.) First Issue of Wat r Approach and Outlet Canals (C. A.) Dhun Ova Sudu Ganga Improvements a Elahera Weir and Canal Improvements On-farm Development of Kantalai - . a Sugar Estate Agricultural Research and Extension - - - Investigations for Stage II Buildings and camps 1969 Appraisal Estimate S- .Actual W nI Source: Mahaweli Development Board World Bank-22315 - 20 - 3.16 MDB managed the project well. It filled all the necessary posts and now has 157 engineers, 20 agricultural officers, 20 accountants, 10 physical planners, 5 architects, 3 economists, 3 soil chemists, and 5 other profes- sionals in various fields, for a total professional staff of 223. The large support staff increased the total number of MDB staff to approximately 4,000. 3.17 Procurement of equipment proceeded smoothly throughout the project. MDB had no problem following Bank procedures. Costs 3.18 The appraisal estimates and the actual costs are compared in Annex I/Table 1. In terns of Sri Lankan Rupees, the actual total cost of the project amounted to Rs. 494.4 M indicating a 66% increase over the 1969 appraisal estimate. Because of exchange rate changes, it is more meaningful to compare local costs in Rupees and foreign costs in US Dollars. On that basis local costs overran about 111% (from Rs. 124.9 M to Rs. 263.8 M), but foreign costs underran by 2% (from US$29 M to US$28.5 M). If adjusted to 1970 price levels, the total local costs amounted to Rs. 193.6 M. Consequently, of the 111% local cost overrun, 56% was due to inflation and 55% represented physical cost overrun. Furthermore, a major portion of the cost overrun in local costs was attributable to adjustments involving the parity rate of Sri Lankan Rupees. During 1971-77 period, whenever purchases were made in Sri Lanka from foreign sources, the purchasers were required to buy Foreign Exchange Entitlement Certificates (FEECs) from the Government of Sri Lanka at an additional cost of about 65% (55% in 1970 and 1971) of the foreign purchase. MDB was required to use the FEECs rate for the foreign component of the Stage I facilities. In current terms the FEECs payment amounted to Rs. 91.9 million. Excluding the FEECs payment, the actual local costs in current terms amounted to Rs 191.9 M representing an increase of about 38% over the appraisal esti- mate. All the local cost overruns were borne by the Government. In case of the foreign costs when the project was largely completed in 1977, there were still about US$3.0 M left in Loan 174-CE. The Government purchased in concur- rence with the Bank about US$2.5 M worth of equipment and vehicles for opera- tion and maintenance and for further stages of development. The remaining US$0.5 M of the Loan was cancelled. Disbursement 3.19 Annex I/Table 2 shows the allocation of the proceeds of the Credit/Loan. Expenditures are shown in Annex I/Table 3. Annex I/Table 4 shows estimated and actual IDA and IBRD disbursements. Reflecting the imple- mentation delay, these disbursements lagged behind appraisal projections. About 70% of disbursements were made within the original schedule. None of these delays were caused by slow preparation of withdrawal applications. MDB's performance in this respect was satisfactory. IV. AGRICULTURAL IMPACT Benefitted Area 4.01 During the 1969 appraisal it was envisaged that Stage I would provide supplemental irrigation water to 126,700 ac of existing irrigated lands. Sub- sequently it was decided to add a small area (system MH) and to make certain - 21 - adjustments to other areas, increasing the total benefitted area to 131,600 ac. To this must be added unauthorized encroachments of the areas set aside for other purposes. The Irrigation Department, which is responsible for water distribution from tanks to distributories, estimates on the basis of its water distribution data that about 158,500 ac are now benefitted by the Mahaweli water in Stage I area, indicating that encroachments amount to about 26,900 ac (see Annex II/Table 1). The encroachments were caused by (a) a significant population increase which has taken place in the project area during the last 10 years 1/ and resulting increase of the average family size; (b) non-utili- zation of "reserved land" for livestock and reforestation; and (c) lack of adequate land control by responsible authorities. Water Supply 4.02 In accordance with the Credit/Loan Agreements, the Government engaged consultants to carry out studies to determine the optimum capacity of the Polgolla and Bowatenna tunnels before the construction of such tunnels was initiated (see paragraph 3.05). There was general consensus that even with the reduced tunnel capacities, sufficient water would be supplied to meet the requirements of the existing 126,700 ac irrigated land and of an additional 104,000 ac of new land to be developed in later projects, a total of 230,700 ac. 4.03 Table 4.1 below shows Stage I water operations from the 1976 Yala season to 1979-80 Maha season. The three-year (October 1976 to September 1979) average diversion through the Polgolla tunnel was 852,000 acre feet. With the run-off from local streams averaging about 532,000 acre feet during the above 3 years, the average total annual water supply amounted to 1,375,000 acre feet, which is 81% of the total annual water requirement estimated at appraisal. The reduced water supply was, however, quite adequate for the requirements of Stage I and II. Pre-project Cropping Patterns, Yields and Production 4.04 Before the project, paddy was practically the only crop grown on paddyland (predominantly LHG soils) of about 122,700 ac, and sugarcane on 4,000 ac in the Kantalai Sugar Estate. Due to inadequate irrigation supplies for the Maha crop in years when the rains were late or inadequate and chronic shortage of irrigation water in the Yala season, the cropping intensity was relatively low, and due to high costs of labor, the crop was mainly broadcast. The total cropped area was 197,000 ac (Maha 120,000 ac, Yala 73,000 ac and sugarcane 4,000 ac) which on a net cultivated area of 126,700 ac gives a cropping intensity of 155%. Yields of paddy were low being only about 44 bushels (0.92 t) in the Maha season and 42 bushels (0.88 t) in the Yala season. Accordingly, the total production of paddy was only about 8.3 million bushels or 173,000*t. 1/ During 1970-80, the population of the Anuradhapura and Polonnaruwa Districts increased about 40%. The population increase in the project area proper is estimated to be even higher. SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Stage I Water Operations -- 1975-1980 (In 1,000 acre-feet) Bowatenna Reservoir Operation Use of Bowatenna Tunnel Water Year and Polgolla Bowatenna Kalawewa Anuradha- Hurulu- Season Tunnel Catchment Total releases Area 2/ pura wewa Eaha Diversion Flow Bowatenna To To Canal Tunnel River 1975-76 Maha 1/ 40 Yala 287 71 358 179 179 145 29 Nil 165 Total 327 71 358 T79 7 Ti 165 1976-77 Maha 337 280 617 102 515 64 10 28 337 Yala 472 205 677 266 411 257 4 5 362 Total 809 485 1,294 368 926 321 14 33 699 1977-78 Maha 387 348 735 119 616 85 4 30 247 Yala 552 214 766 297 469 267 Nil 30 409 Total 939 562 1,501 416 1,085 352 4 60 656 1978-79 Maha 338 412 749 139 610 123 2 14 222 Yala 471 110 582 232 350 218 14 Nil 301 Total 809 522 1,331 371 960 341 16 14 523 1979-80 Maha 401 292 695 171 524 95 33 43 249 Average for 3 years between 1976/77 and 1978/79 852 523 1,375 385 990 338 11 36 626 Source: Mahaweli Development Board. 1/ Partial season only. 2/ Includes irrigation supply for some Stage II lands. - 23 - 4.05 Without the project, some yield increases would have occurred as a result of improved varieties and support services; paddy yield would probably reach about 51 bushels/ac (1.23 t). However, the cropping pattern would have remained more or less the same. Based on these assumptions, without-project paddy production would have been about 216,200 t (Annex II/Table 2). 4.06 Due to the Government's action to reduce drought damage (see para 3.10) Stage I facilities supplied water starting in the 1976 Yala season before completion of the lining of the Bowatenna tunnel. Since then, changes in cropping patterns have occurred largely in line with and, in some cases, even faster than appraisal expectations. Table 4.2 below shows these changes from 1976/77 to 1980/81. The incremental increase in the total cropped area of paddy was 97% more than appraisal expectations. Other food crops such as chillies and oilseeds, considered at appraisal to be insignificant for the first few years of project completion, are expected to increase from 1,000 ac each in 1967-77 to 7,000 ac each at full development in 1981. The overall cropping intensity at full development is expected to be 185% which is very close to the appraisal expectation of 188%. Yields 4.07 With an assured water supply from the Stage I facilities, farmers became more confident in the use of increased agricultural inputs. Accordingly, the average paddy yield increased from 1.23 t/ac estimated for without the project to 1.36 t/ac in 1978-79, and is expected to reach 1.5 t/ac at full development in 1981. The yields of chillies and oilseeds are expected to increase from 0.6 and 0.75 t/ac respectively in 1976-77 to 0.7 and 0.8 t/ac respectively at full development. Due mostly to lack of drainage, yields of sugar cane remained low at about 18 t/ac. This drawback is now being recti- fied (see paragraph 3.15). This should increase yields to about 22 t/ac by 1980-81. Production 4.08 Based on the yields discussed above and acreage indicated in Table 4.2, 1979-80 paddy production is estimated to be about 350,700 t, a 62% increase over the anticipated without-project case (see Annex II/Table 2). By full development, paddy production is estimated to reach 369,800 t, compared with an appraisal estimate of about 313,000 t. The production of chillies and oilseeds is now estimated to increase from 540 and 680 t respectively in 1976-77 to 4,410 and 5,040 t respectively at full development. The production of sugarcane increased from the 64,800 t expected without the project to 120,900 t in 1979-80 and is estimated to reach 147,400 t in 1981. Appraisal estimate was 166,500 t. The production increase was achieved mainly through expansion of the sugarcane area from 4,OpO to 7,400 ac and only partly through yield increase from 18 to 22 t/ac whereas the forecast made at appraisal had assumed a yield of about 41 t/ac. This appraisal expectation, however, was too optimistic considering the soil and drainage conditions of the estate area. Table 4.2 CHANGES IN CROPPING PATTERN (1,000 ac) Without Project With Project Previous Forecast of situation ------Project Completion Report Estimates ------------ at Full Develop- ment by Nq69 1976-77 1977-78 1978-79 1979-80 1980-81 appraisal addy Maha 121.3 1134- 139.1 146.3 148.7 151.1 122.70 Yala 73.8 104.2 115.4 112.8 116.8 120.8 111.46 Total paddy 195.1 238.8 254.5 259.1 265.5 271.9 234.16 ther Crops Sugarcane 4.0 4.9 5.3 6.3 6.9 7.4 4.00 Chillies - 1.0 2.0 3.5 5.2 7.0 - Oilseeds - 1.0 2.0 3.5 5.2 7.0 - 3tal Cropped area 199.1 245.7 263.80 272.4 282.8 293.3 238.16 at Cultivated Area 131.6 158.5 158.5 158.5 158.5 158.5 126.70 ropping Intensity 151% 155% 166% 172% 178% 185% 188% - 25 - Supporting Agricultural Services 4.09 Supporting agricultural services were provided satisfactorily by the Agricultural Research and Extension Division of the Agricultural Depart- ment and by the Agrarian Services Department as envisaged at appraisal. To accomplish the research needs of Stage I, the Maha Illuppalama Agricultural Research Station has been considerably strengthened. MDB provided about 150 ac of irrigable land, 6 irrigation pumps, about 30 houses for staff, a hostel for 50 students, and vehicles to the research station. In addition it contri- butes about Rs. 1.0 M to 1.5 M annually for operation and maintenance costs. Research work is being done on paddy, vegetables, pulses, chillies and oil- seeds, and on crop rotations, plant/water relationships and water management, among others. A number of high-yielding varieties developed at Batalagoda station have been tried and distributed. The sugarcane research station at Kantalai which was under construction at the time of the 1969 appraisal has been completed. Now that agricultural extension and adaptive agricultural research are being atrengthened further by an IDA Credit 1/, more improvement is expected by 1980-81. Employment 4.10 About 53,000 families or a total population of about 320,000 have benefitted in the Mahaweli I area from the reliable supply of water. On the basis of current forecasts of crop areas and labor requirements, about 5.0 million incremental man-days would be required at full development. This includes about 3.25 million man-days for paddy and 1.75 million man-days for other crops. At present, about two-thirds of the paddy is broadcast and only about one third transplanted. There would be additional labor requirements of about 20 mandays per acre at current rates as the farmers gradually change over from broadcasting to transplanting. No estimates for this were made during appraisal. Although the technique of transplanting is wellknown to the farmers, the transition from broadcasting to transplanting would primarily depend on the availability of labor. V. ELECTRIC POWER IMPACT Ukuwela Power Plant's Contribution to the National System 5.01 It was expected at appraisal that the Ukuwela power plant would add 40 MW of installed capacity to the national system and provide an average of about 220 GWh of energy per annum. The plant was scheduled to be commissioned in 1974 and by 1975 to provide 10% of the capacity and 14.5% of the energy required by the Ceylon Electricity Board (CEB) to meet the electrical power requirements of the national power grid. 5.02 The Ukuwela power plant was actually placed in operation in July 1976, about two years later than the original target. The actual effective 1/ Credit 931-CE, National Agricultural Extension and Adaptive Research. - 26 - capacity turned out to be 38 MW, mainly due to head losses in the tunnel. The relationship of Ukuwela to the CEB system is shown in Tables 5.1 and 5.2 below: Table 5.1 - Relationship of Ukuwela to the National System Generation GWh /a Other Percent of Ukuwela Year Ukuwela Hydro Thermal Total to Total 1975 - 1,077.8 1.3 1,079.1 - 1976 96.8 /b 1,011.7 24.2 1,132.7 8.5% 1977 185.7 1,028.8 2.1 1,216.6 15.3 1978 206.6 1,159.2 19.3 1,184.5 17.4 1979 192.6 1,268.6 64.0 1,525.2 12.6 1980 184.7 1,270.8 177.1 1,632.6 11.3 /a Source: CEB /b Six months. Table 5.2 - Capacity Comparison with Other System Available Capacity in 1979 (MW) /a Hydro Name Plate Capacity Effective Capacity Laksapana 50 50 Inginiyagala 10 0 Uda Walawe 6 2 Wimalasurenda 50 50 Polpitiya 75 75 New Laxapana 100 100 Ukuwela 40 38 Sub-total Hydro 331 315 Thermal Kelanitissa 50 40 Pettah Diesels 6 2 Chunnakam Diesels 14 8 Sub-total Thermal 70 50 Total available capacLty 401 365 /a Source: CEB 5.03 During its first four years of operation, Ukuwela represented about 10 percent of the capacity and about 14 percent of the total generation by CEB. These percentages were close to the expectation at appraisal. 5.04 Ukuwela is essen-tally a run-of-river plant. Therefore, weekly and monthly generation varies with the flow of the river available for diversion. However, the location of the Ukuwela power plant in the CEB system is unique - 27 - in a sense that this is the only major hydro plant which obtains water during both the Northeast and Southwest monsoon seasons. The entire Laksapana hydro complex obtains its water supply mainly during the Southwest monsoon. 5.05 The normal system operating procedure is to generate power at Ukuwela to the fullest extent possible with the water available. This procedure makes maximum use of the available Ukuwela generation and saves water in the power storage reservoirs. Because of this operating proce- dure, full use has been made of the Ukuwela power plant from the beginning of its operation, to the extent water was available. Even in the first two months of operation (July and August 1976), the hydro output of Ukuwela proved valuable in reducing the use of more costly thermal generation. 5.06 The importance of Ukuwela in meeting the capacity requirement of the CEB electrical system is shown in Table 5.2 and Figure 5.1 below: Table 5.2 - Capacity Requirement Peak Demand MW 1973 1974 1975 1976 1977 1978 1979 Appraisal Forecast System Demand 251 276 305 336 Reserve Requirement 45 45 45 45 Total Requirements 296 321 350 381 Actual System Demand 199 215 219 240 261 291 325 /b Reserve Requirement /a 37 50 50 50 50 50 50 Total Requirements 236 265 269 290 311 341 375 Available Hydro Capacity without Ukuwela /c 177 277/d 277 277 277 277 277 Surplus (Deficit) (59) 12 8 (13) (34) (64) (98) Available Total Capacity without Ukuwela /c 237 337 337 327/e 327 327 327 Surplus (Deficit) 1 72, 68 47 16 (14) (48) /a Largest machine on the system without Ukuwela. More reserve may be required for more comfortable safety margin. /b Estimate. 7-c In terms of effective capacity. Td Reflects addition of New Laksapana /e Reflects derating of Kelanitissa steam by 10 MW. -28-Figure 5. 2 - 2 8 - UKUWELA POWER PLANT IN RELATION TO CEYLON ELECTRICITY BOARD SYSTEM MONTHLY SYSTEM PEAK 400 DI ESE L 20 (M-W) S... = MALkL HYDRO 16(M-W) --------------------- KELANITISSA THERMAL 40 (M-W) 200 0 200_______ __ -LAXAPANA COMPLEX 275 (M-W) 100 0- 1976 1977 1978 1979 MONTHLY SYSTEM GENERATION 120 100 0 E THERMAL 80 ALL OTHER HYDRO UKUWELA 20 0 1976 1977 1978 1979 World Bank - 223718 - 29 - 5.07 The actual load growth up to 1976 turned out to be much slower than estimated at the time of appraisal, reflecting the depressed economy of the country during the period. Consequently, the delay in commissioning the Ukuwela Power Plant did not cause any energy shortages. However, since 1977 the economy has picked up momentum and the system demand has increased at 11.5% per annum. The load in 1978 and 1979 could not have been carried without the Ukuwela plant, even assuming the barest safety margin of only one machine out of service. It is also evident that without Ukuwela, CEB would have had to make more extensive use of thermal capacity not only in 1978 and 1979, but also in 1976 and 1977. This would have resulted in increased oil imports. Least Cost Solution 5.08 At appraisal, the project was compared with the cheapest available alternative, namely a 35 MW gas turbine unit located in an extension of the Grandpass Thermal Station, and it was concluded that the project was more economical at discount rates up to 14%. The actual cost of the Ukuwela power plant, estimated at Rs 4,890 (US$545) 1/ per kilowatt installed, was reason- able. The large increases in the price of fuel since 1973 leave no doubt that the hydro station was the least cost solution. Power Value 5.09 At appraisal, the value of energy was estimated to be Rs. 0.12/kWh (about Rs. 0.55 at 1980 price levels). The cost of alternative thermal generation in 1980 is estimated to be about Rs. 1.57/kwh reflecting the higher cost of fuel (see Annex II/Table 11). Assuming average sales of 164 GWh, i.e., the average generation during 1977-80 of 192 GWh minus a loss of 15%, the annual economic value of the Ukuwela energy production would be Rs. 257 M at 1980 price levels. VI. ECONOMIC AND FINANCIAL EVALUATION Economic Analysis 6.01 The economic rate of return (ERR) of the project has been re- estimated. The paragraphs below describe the basic assumptions used for the economic analysis. 6.02 Prices and Exchange Rates: All inputs and outputs have been evaluated in constant 1980 currency values. For the past period, local costs have been adjusted by a domestic price index derived from an implicit deflator for Sri Lanka's construction sector; foreign costs were first adjusted by the IBRD international price index and then converted to Rupees at the prevailing shadow exchange rates (see Annex II/Table 3). Projections of future commodity 1/ At intervening years average exchange rate of US$1 = Rs. 8.98. - 30 - price trends have been based on the World Bank forecasts expressed in 1980 prices. Annex II/Table 6 presents a summary of economic farm gate prices from these forecasts with adjustments for freight, handling, processing and quality differentials. Local costs and locally valued benefits were expressed in border Rupees through application of appropriate conversion factors, the principal one being a standard conversion factor (SCF) of 0.815 1/. The cost of family labor was assumed at prevailing wage rates. 6.03 Project Benefits: Annex II/Table 10 shows the detailed calculation of the agricultural benefits which started materializing in the 1976 Yala season. There are various ways to estimate the economic value of the power generated by the Ukuwela Power Plant. One conventional method is to take tariff revenues. Secondly, the power value could be measured as benefits accruing to final consumers. Thirdly, it could be calculated at an equivalent to the cost of the cheapest available alternative, i.e. an oil fired thermal plant in this case. The tariff revenues which averaged about Rs. 0.30/kWh, however, are subject to government control and cannot be considered to reflect economic values truly. The second method was used in the appraisal of the Sixth Power Project (Staff Appraisal Report dated June 3, 1980). According to the report the value of electricity to consumers is between Rs. 1.29/kWh as a conservative estimate and Rs. 2.31/kWh as the most opti- mistic estimate. In this report, the third method was used as was the case at appraisal. Actual fuel costs were used for years 1976-80; subsequently costs were increased by 3.2% annually through 1990 and kept constant there- after. According to this meithod the power value in 1980, for example, amounted to Rs. 1.57/kWh. Annex II/Table 11 shows details of the power benefit calculation used in This report. 6.04 Capital and 0 & M Costs: The economic investment costs for the project as a whole are shown in Annex II/Table 4 (local) and Table 5 (foreign). FEECs payments were excluded from economic analyses, since they represent transfer payments. In order to evaluate separately the agricultural and power components of the project, the actual capital costs were allocated to the two components. The joint investment costs between the two components were allo- cated at a ratio of the net present values of power benefits to agricultural benefits (65:35). 6.05 Annual economic 0 & M costs are detailed in Annex II/Table 9. 0 & M costs of irrigation were estimated at Rs. 270 per acre per year, and 0 & M costs of power at 1.5% of the construction cost. 6.06 Evaluation Period: The project has been evaluated over a 50-year period, as was the case in the appraisal. Economic Rate of Return 6.07 From the Stage I project investments, the Sri Lanka economy is expected to realize net benefits of about Rs. 832.5 M in present worth (PW) terms, which when annualized over the 50-year project life, would yield about 1/ Official Exchange Rate (OER) = Rs. 16,3 = US$1. Shadow Exchange Rate (SER) = Rs. 20.0 = US$1. SCF = OER/SER = 16.3/20 = 0.815. - 31 - Rs. 100 M per year 1/. The economy of Sri Lanka would realize an ERR of about 20% from the total project investments. This compares favorably with 12% projected at appraisal. The following summarizes ERRs and NPWs of benefits from each project component and from the total project: ERR NPW (Rs. M) /a Agriculture 14% 115.5 Power 26% 717.0 Total Project 20% 832.5 /a Discounted at Opportunity Cost of Capital (0CC) of 12%. Cost and benefit streams used for the economic analysis are shown in Annex II/ Tables 12a and 12b. Supporting data for the agricultural and power components are shown in Annex II/Table 10 and Annex II/Table 11 respectively. The ERR for the project as a whole has been adversely affected by delayed implemen- tation which delayed materialization of project benefits. However, these negative aspects were more than offset by a rise of rice and sugar prices and increased cropped acreage of paddy and in particular, the value of power, which was the main factor contributing to the higher ERR than expected at appraisal. Foreign Exchange Savings 6.08 On the agricultural side, principal foreign exchange savings result from rice and sugar import substitution. These annual savings, estimated at about Rs 596 M at full development (1981) exceed appraisal expectations by about 140%. There would also be some savings from the increased output of chillies and oilseeds. 6.09 On the power side, the Ukuwela power plant has saved substantial costs of imported fuel oil as estimated below: Year Fuel Savings ---Rs M---- 1976 63.9 1977 126.3 1978 144.2 1979 169.5 1980 212.4 Although the Ukuwela was originally expected to start generation in mid 1974, it was actually commissioned in July 1976. However, the delay did not neces- sitate importation of fuel since there was power surplus during the delayed period even without Ukuwela. 1/ Discounted at Opportunity Cost of Capital (OCC) of 12%. - 32 - Sensitivity Analyses 6.10 Sensitivity tests were performed by assessing the impact of varia- tions in incremental cost and benefit streams on the project's ERR: Assumptions ERR (%) (a) Agricultural benefits increased by 20% 23 (b) Agricultural benefits decreased by 20% 16 (c) Power benefits increased by 20% 21 (d) Power benefits decreased by 20% 18 (e) Power benefits calculated on the ,asis of a conservative estimate of consumer benefits (see paragraph 6.03) 19 (f) Power benefits calculated on the basis of an optimistic estimate of consumer benefits (see paragraph 6.03) 24 (g) Project benefits lagged by 1 year 16 (h) Project benefits lagged by 2 years 13 6.11 Switching values 1/ for various individual and total cost and benefit streams are shown below: Switching Value Benefits (OCC of 12% per annum) Agriculture - 37.5 Power - 80.5 Total - 25.6 Costs Agriculture 39.6 Power 262.5 Total 34.4 The switching values demonstrate the large amount of shock the project and its components (particularly the power component) can bear and still retain economic viability. 1/ Switching value is the percentage change in the specified stream that reduces the net present value of the project to zero at a specified discount rate. - 33 - Financial Analysis 6.12 To illustrate the project's impact in financial terms, six model farm budgets have been formulated: each reflects without and with project cropping patterns found in different parts of the project area. Although simplified, the representative budget samples (Annex II/Tables 13 and 14) illustrate the income ranges realized by farmers with different farm sizes and different cropping patterns. 6.13 A cropping pattern of paddy followed by paddy accounts for about 83% of the total project area, and the incremental income after irrigation charges for this pattern ranges from 89% to 93%. Paddy followed by paddy and some chillie and oilseed accounts for 10% of the area and the incremental income for this pattern ranges from 105% to 173%. The incremental income for the third group, paddy-chillies, and oilseed, which accounts for about 7% of the area is the highest, ranging from 222% to 239%. 6.14 The basic change in cropping patterns has been more cultivation of Yala crops and cultivation of other food crops, such as chillies and oilseeds, on paddyland in the Yala season. Previously other food crops were grown only on highlands during the Maha season. However, due to very high costs of cultivation and the difficulty of obtaining agricultural credits for small farmers, the development of these crops has not been so rapid as the incre- mental income percentage might suggest. On the other hand, farm income after irrigation charges and high incremental income suggest that farmers can indeed afford to pay water charges higher than presently imposed. VII. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT ISSUES Institutional Design and Growth 7.01 During the Stage I period, there was a significant evolution of organization governing the Mahaweli Development Program. Originally, the Program was the responsibility of the Ministry of Irrigation, Power and Highways. Following a ministerial restructuring in 1978, the Accelerated Program, which essentially includes subsequent stages, became the responsi- bility of a separate Ministry of Mahaweli Development. The Mahaweli Authority of Sri Lanka (MASL) which was established in April 1979 is charged with overall policy determination and financial control of the Program. MASL now has two principal agencies: the Central Engineering Consultancy Bureau (CECB) responsible for engineering, contract supervision and planning of major head works, and the Mahaweli Development Board (MDB) responsible for all physical planning, downstream engineering and construction works. In addition, a Mahaweli Economic Agency (MEA) is now being proposed to the Cabinet. MEA will be responsible for planning, operation and administration of all other aspects of new rural settlements such as settler selection, agricultural production, credit and marketing. 7.02 The Mahaweli Authority Act of 1979 gives MASL far-reaching power to plan and implement the Mahaweli Development Program including authority to give directives to such organizations as the Ceylon Electricity Board (CEB), - 34 - the River Valleys Development Board (RVDB), The Survey Department and the Irrigation Department, as well as MDB and CECB, when they operate in the area declared as "Special Areas". 1/ 7.03 The major part of the institutional growth mentioned above took place after the bulk of the Stage I works had been completed. Therefore the post settlement activities (water issue, water charge collections, supply of agricultural inputs and credit, extension, operation and maintenance of distribution and field channels, and marketing of agricultural produce), were carried out by various existing departments and agencies, all of which had field level officers receiving directives directly from their respective head offices in Colombo. Consequently, field coordination was sometimes difficult. Water management was a case in point. During the Stage I project implementa- tion period, there was no effective water management system to direct utiliza- tion of Mahaweli water. The lack of water measurement gauges and communica- tion equipment connecting various schemes were partly to blame. However, the main reason seems to have been the cumbersome decision making mechanism regarding water issue involving many different organizations and the lack of a system to monitor and control the water resources in the area in order to optimize their use for the Mahaweli Development Program as a whole. In recognition of this deficiency, the Government has now established a Water Management Panel to regulate the use of Mahaweli water resources. MASL is also engaging consultants to establish a water resources monitoring and con- trol system. Covenants 7.04 The Credit Agreement included 26 particular covenants. The Loan Agreement included 4 more in addition to those referred to in the Credit Agreement. All of the covenants were satisfactorily met by the Government except (a) adequate cost recovery and (b) establishment of an effective monitoring scheme. Reference is made on these subjects in paragraphs below. Cost Recovery 7.05 The revised covenants of the Credit and Loan Agreements for Stage I (see paragraph 3.03) stipulated that a study of water charges be undertaken and, in the light of the results of the study, the Borrower should before completion of the project take appropriate steps to ensure the recovery (a) of the operation and maintenance costs of the Project as they are incurred and (b) over a reasonable period of years,of the construction costs of the project, having due regard to the incentives and capacity of the farmers to pay. 1/ The Minister of Mahaweli Development is empowered by the Mahaweli Authority Act to declare any block of land that can be developed from the water resources of Mahaweli Ganga, or any other major river as a "Special Area". - 35 - 7.06 Between 1970 and 1977, the Government took a decision not to collect water charges specified in the Irrigation Ordinance of 1946 as amended in 1968. Instead, a "Land Betterment Charges Law" was enacted in 1976. This Law, however, was never enforced by the Sri Lanka Freedom Party (SLFP) Govern- ment. In July 1978, the new United National Party (UNP) Government decided to resume collection of the water charges at (a) Rs. 30 per year per acre in Major Irrigation Schemes with 150% cropping intensity or over, and (b) Rs. 20 in Major Irrigation Schemes with less than 150% cropping intensity. 7.07 Major efforts were made by the Government to prepare necessary records before collection. However, the actual collection during 1978-80 was very poor, with an overall average of 7 percent in 1979 and 8.6 percent in 1980. In the Stage I area, the record of collection was even lower. The main reason for poor collection seems to be the lack of any penalty enforced upon defaulters. This was due to the present lack of clarity regarding which court should handle such cases. The matter is with the Attorney General, but it is not known when a decision will be made. 7.08 The Irrigation Ordinance as amended in 1968 refers to such institu- tions as "Cultivation Committees" and "Rural Courts" which no longer exist, and does not refer to new institutions. Consequently, it is unclear who should be responsible for field channel water management. Furthermore, as mentioned above, it is not clear which court has jurisdiction over water disputes. Because of these reasons, a number of water disputes in many parts of the Stage I area are unresolved. 7.09 It is estimated that the cost required for operation and maintenance now amounts to about Rs. 270 per acre per year. The current charges are no way near this amount, and a gradual increase of the charge would be desirable. Financial analysis of Stage I suggests that, at least financially, the benefi- ciaries can afford to pay higher charges. The Government should take early action on amending the Irrigation Ordinance and decide legal jurisdiction over disputes. Monitoring and Evaluation 7.10 Under Stage I, there existed no effective monitoring and evaluation. However, a monitoring program is now included in Stage II and will be included in other projects under the Accelerated Program. Such monitoring and evalua- tion systems should be extended to Stage I areas for effective post-project follow-up. This should be possible without much extra effort on the part of MASL. VIII. IDA/IBRD PERFORMANCE 8.01 In retrospect, it was a correct decision for the Bank to finance the project. Basic soundness of the project concept was obvious from the beginning and proven to be correct at completion of the project. The 1969.appraisal was thorough, although the appraisal mission did not budget the required payment of FEECs. The price contingency of 15% for local costs also turned out to be too small. - 36 - 8.02 The implementation delay of Stage I did cause some concern to the Bank. In fact the project was made an object of special studies twice: once in the Operations Evaluation Department's (0ED) study on Bank Group's lending policy (1975), and the other time in OED's study on delays in project implemen- tation (1978). However, the Bank did not consider that delays in most compo- nents of the project were unreasonable. Only in 1973 and 1974 did letters to the Borrower following supervision missions express concern over delays in construction of the Bowatenna complex. 8.03 During the implementation stage, the Bank sent an average of one supervision mission per year. This apparent light scheduling was adequate since Stage I is only a beginning of a series of Bank assisted Mahaweli projects, and during Stage I implementation a large number of preparation and appraisal missions were sent for Stage II, Stage III and other projects related to the Accelerated Mahaweli Ganga Development Program. All these missions discussed questions and problems relevant to Stage I. 8.04 The Government failed to comply with covenants related to recovery of 0 & M and capital costs of irrigation. From project preparation to com- pletion, the question of water charges was an issue. Much correspondence was exchanged between the Government and the Bank over the years of project implementation, the former expressing political difficulties in this respect and the latter pressing for collection of a reasonable charge. Both sides compromised. By the end of the project, the Government established water charge rates and started collection (see paragraph 7.06). However, the actual collection has been extremely poor and no real cost recovery of 0 & M costs was made during the project implementation period, not to mention the capital costs. What more the Bank could have done is difficult to assess, since effective collection of water charges will be possible only through updating of the Irrigation Ordinance, resolving judicial questions, establishing an effective organization Eor collection as well as penalties for defaulting farmers. All of these require a strong commitment of the Government on a nationwide basis. - 37ANNEX I SRI LANKA Table I MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Project Costs in Current Terms Rupees Million Items 1969 Appraisal Estimates Actual Costs Local Foreign Total Local Foreign Total 1. Polgolla Complex 43.9 65.5 109.4 72.0 106.9 178.9 2. Bowatenna Complex 30.9 27.7 58.6 48.7 33.5 82.2 3. Sudu Ganga Training Works 5.7 5.2 10.9 2.1 - 2.1 4. Elahera Weir and Canal 5.1 1.9 7.0 5.8 0.1 5.9 5. Buildings and Camps 3.1 1.3 4.4 3.1 - 3.1 6. Agricultural Land Development 0.3 0.4 0.7 0.7 - 0.7 7. Investigations and Extensions 2.3 1.0 3.3 7.0 - 7.0 1/ 8. Equipment and Vehicles - 11.5 11.5 2.9 47.2- 50.1 Sub-total 91.3 114.5 205.8 142.3 187.7 330.0 9. Engineering and Consultancy Services (a) Consultancy Services 6.0 13.4 19.4 2.2 16.9 19.1 (b) Engineering and Overheads 6.5 1.5 8.0 27.4 - 27.4 Sub-total 12.5 14.9 27.4 29.6 16.9 46.5 10. Contingencies Physical 15% 15.8 19.2 35.0 - - - Price Increases 5% 5.3 6.4 11.7 - - - Sub-total 21.1 25.6 46.7 - - - Total 124.9 155.0 219.9 171.9 204.6 376.5 11. Interest and Commitment Charges - 17.6 17.6 - 26.0 26.0 12. Payment for Foreign Exchange Entitlement Certificates (FEECs) 2/ - - - 91.9 - 91.9 Grand Total 124.9 172.6 297.5 263.8 230.6 494.4 Source: Mahaweli Development Board 1/ Including Rs. 38.2 million for machinery and equipment purchased for subsequent Stages. 2/ Applied to all exports other than tea, rubber and coconuts and all imports other than food, fertilizer and drugs. FEECs were abolished on November 15, 1977. SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Allocation of Credit/Loan Proceeds (Credit 174-CE/Loan 653-CE) -----------------------------------------Us$------------------------------------------- ------------------Us$------------------ Credit/Loan 1st 2nd 3rd 4th 5th Final Allocation Categories A&rement Revision /1 Revision /2 Revision /3 Revision /4 Revision /5 Cr. 174-CE Ln. 653-CE Total I. Civil Works in Polgolla and Bowatenna Complexes 12,500 12,500 12,500 14,000 14,470 14,470 8,533,895.83 5,437,070.31 13,970,966.14 II. Civil Works in Dhunoya -Sudu Ganga Training Works, Remodelling of Elahera Weir and Canal, and On-farm Deve- 1,750 1,750 1,750 1,000 lopment of Kantalai Sugar Estate III. Machinery, Equipment, Vehicles and Materials 4,750 7,750 8,750 8,000 8,615 8,620 4,037,469.46 4,592,438.48 8,629,907.94 IV. Engineering and Consulting Services 3,000 3,000 3,000 3,000 2,565 2,565 1,928,634.71 634,622.20 2,563,256.91 V, Interest and Other Charges on the Loan Accrued on or 3,000 3,000 3,000 3,000 3,350 3,345 - 3,344,766.85 3,344,766.85 Before January 31, 1975 VT. Unallocated 4,000 1,000 - - - - Total 29,000 29,000 29,000 29,000 29,000 29,000 14,500,000.00 14,008,897.84 28,508,897.84 Cancellation - 491,102.16 491.102.16 Total Credit/Loan Amount 14,500,000.00 14,500,000.00 29,000,000.00 /1 July 10, 1973 /2 Mar. 5, 1974 /3 Jan. 26, 1977 / Oct. 10, 1978 /5 Sep. 21, 1979 - 39 - ANNEX I Table 3 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROGRAM, STAGE I Expenditures (Rs Million) 7/ Appraisal Estimates Actual in-Current Terms Actual in 1970 Price Levelsl Local Foreig Total1/ Local Foreig3/ Total Local Foreign Total 1970 5.2 13.8 19.0 13.6 - 13.6 13.6 - 13.6 1971 13.0 37.0 50.0 14.8 14.2 29.0 13.9 13.1 27.0 1972 26.3 66.0 92.3 19.4 19.6 39.0 17.8 16.6 34.4 1973 36.4 65.1 101.5 50.7 31.1 81.8 42.0 22.2 64.2 1974 34.4 64.2 98.6 57.5 39.8 97.3 40.5 23.6 64.1 1975 9.6 21.4 31.0 63.6 28.5 92.1 40.5 15.0 55.5 1976 - - - 32.9 19.7 52.6 19.4 10.5 29.9 1977 - - - 9.3 12.8 22.1 5.1 6.3 11.4 1978 - - - 2.0 26.8 28.8 0.8 11.0 11.8 1979 - - - - 38. 2 38.2 4/ - 13.7 13.7 Total 124.9 267.5 392.4/ 263.8 230.7 494.4.1/ 6/ 193.6 132.0 325.6 1/ at US$1.00 = Rs.9.23 2/ Total financial requirements of Rs.392.4 million = Rs.364.7 million plus interest and commitment charges of Rs.27.7 million. 3/ At prevailing official exchange rates (see Annex II/Table 3). 4/ For machinery and equipment for subsequent stages. 5/ Total expenditure of Rs. 494.5 million = Rs. 376.6 million plus interest and commitment charges of Rs. 26.0 million and payment for FEECs of Rs. 91.9 million. 6/ Totals do not add up because of rounding. 7/ See Annex II/Tables 4 and 5 for price indices used for adjusting expenditures to 1970 price levels. ANNEX I - 40 - Table 4 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Cummulative Disbursement Schedule for IDA Credit/IBRD Loan (US $ million) Appraisal Estimate Actual Actual as Total of Cr/Ln Cr. 174-CE Ln 653-CE Total % of Est. 1970 1.5 - - - 0 1971 5.5 2.8 0.1 2.9 53 1972 12.7 5.3 0.3 5.6 44 1973 19.7 10.0 0.4 10.4 53 1974 26.7 14.5 1.9 16.4 61 1975 29.0 - 5.9 20.4 70 1976 - - 8.3 22.8 79 1977 - - 9.8 24.3 84 1978 - - 11.7 26.2 90 1979 - - 13.7 28.2 97 1980 - - 14.0 28.5 98 Total 29.0 14.5 14.0 28.5 98 Cancelled* 0.5 0.5 Grand Total 29.0 14.5 14.5 29.0 Source: World Bank * $491,102.16 cancelled on June 19, 1980 ANNEX II - 41 - Table 1 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Cultivable Area Under Stage I I (Acres) PCR Estimates Appraisal Esti- Existing Area New Area Total Area mates 1969 1975 3/ 1980 5/ 1980 4/ I. N.W. Region A. Kalawewa (Area H) 1. Kandalama n.a. 3,300 700 4,000 2. Old Yoda Ela n.a. 14,000 1,000 15,000 3. Rajangana n.a. 16,500 - Sub-total 33,800 i,700 35,500 B. Anuradhapura (Area IH) 1. Nachchaduwa n.a. 5,900 - 5,900 2. Nuwarawewa n.a. 2,400 - 2,400 3. Tissawewa & Basawakkulama n.a. 1,200 - 1,200 4. Halpan Eli Village Works n.a. 500 1,000 1,500 Sub-total 10,0001000 11,000 C. Huruluwewa (Area NH) 1. Huruluwewa Nil 6,4004600 Total N.W. 56,00050,200 7,300 57.500 II. N.E. Region D. Elahera and Angmedilla (DI, D2 & G) 1. Elahera n.a. 5,900 4,700 10,600 2. Giritale n.a. 6,200 2,800 9,000 3. Minneriya n.a. ) 4. Galamuwa n.a. ) 16,700 4,500 21,200 5. Pangurana n.a. 1,500 500 2,000 6. Kawdulla n.a. 10,700 - 10,700 7. Kantalai n.a. 20,800 6/ 1,700 22,500 7/ 8. Parakrama Samudra 19,600 4 25,000 Sub-total 70,500 81,400 19,600 101,000 Grand Total 126,700 131,600 26,900 158,500 Source: 1/ Excludes bunds and ditches which are estimated to be about 10% of the cultivable area. 2/ World Bank Report No. PA - 29(a). 3/ MDB's latest revised command irrigable area of Stage I based on the Irrigation Department's data on "Specification Extent." 4/ Estimates by Irrigation Department and District Land Offices. 5// New Area - Difference between columns 2 & 3 - considered to be the encroached area. 6/ Of which 13,400 for paddy and 7,400 for sugar. 7/ Of which 15,100 for paddy and 7,400 for sugar. SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Cropping Patterns, Yields and Production ------------------------------------------------------------------With Project------------------------------------------------------------ la,- -u rr!z 1976-77 1977 1978-79 1979-80 1 At full develooment in 80-81 Produc- Produc- Produc- Produc- Produc- Produc- 1/ tion 1/ tion 1/ tion 1/ tion 1/ tion 1/ tion Area Yield OO'M. Area Yield 000'M. Area Yield 000'M. Area Yield 000'M. Area Yield ooo'M. Area Yield 000M. Crops 008'ac Ton/ao Tons 000'ac Ton/ac Tons 000'ac Ton/ac Tons 000'ac Toe/ac Tons 000'ac Ton/ac Tons 000'ac Ton/ac Tons Paddy 1. Maha crop 109.2 1.39 151.8 121.1 1.51 182.9 125.2 1.59 199.1 131.7 1.53 201.5 133.8 1.6 214.1 136.0 1.6 217.6 2. Yala crop 66.4 0.97 64.4 93.8 1.15 107.9 103.9 1.20 124.7 101.5 1.15 116.7 105.1 1.3 136.6 108.7 1.4 152.2 Sub-total Paddy 175.6 1.23 216.2 214.9 1.35 290.8 229.1 1.41 323.8 233.2 1.36 318.2 238.9 1.5 350.7 244.7 1.5 369.8 Other Crops 3. Sugar cane 3.6 18.0 64.8 4.4 17.4 76.6 4.8 18.5 88.8 5.7 17.1 97.5 6.2 19.5 120.9 6.7 22.0 147.4 2/ 4. Chillies (dried) 0.9 0.6 0.54 1.8 0.6 1.08 3.20 0.6 1.92 4.7 0.7 3.29 6.3 0.7 4.41 5. Oilseeds 0.9 0.75 0.68 1.8 0.75 1.35 3.2 0.8 2.56 4.7 0.8 3.76 6.3 0.8 5.04 Sub-total Others 3.6 64.8 6.2 8.4 12.1 15.6 19.3 Total Cropped Area 179.2 221.8 238.4 246.5 254.5 264.0 Net Cultivated Area 118.4 142.7 142.7 142.7 142.7 142.7 Cropping ..4/ Intensity 7. 152% 155% 167% 173% 178% 185% !/ Cropped Area is estimated in terms of net area which is gross (see Table 4.2) reduced by 10% to account for bunds and ditches. 2/ Estimates. 3/ Projections. 4/ Slight discrepancies with Table 4.2 are due to rounding. - 43 - ANNEX II Table 3 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Exchange Rates Year Official Shadow 1970 US$1.00 = Rs. 5.95 Rs.9.22 (55% FEEC) 1971 5.95 9.22 (55% FEEC) 1972 6.00 9.30 (55% FEEC) 1973 6.40 10.56 (65% FEEC) 1974 6.65 10.97 (65% FEEC) 1975 7.05 11.63 (65% FEEC) 1976 8.46 13.96 (65% FEEC) 1977 9.15 15.10 (65% FEEC) 1978 15.61 17.00 1979 15.57 18.00 1980 16.30 20.00 1/ For 1970-77, Foreign Exchange Entitlement Certificate (FEEC) Rate were used. This rate applied to all exports other than tea, rubber and coconuts and all imports other than food, fertilizer and drugs. FEECs were abolished in November 15, 1977. - 44 - ANNEX II Table 4 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Ecoinomic Investment Costs (Local) (Rs Millions) Yer ocl 1/ 2/ Year Local Costs- Price Index- Local Costs in 1980 Prices 1970 13.6 4.59 62.4 1971 14.8 4.32 63.9 1972 19.4 4.20 81.5 1973 34.1 3.80 129.6 1974 28.2 3.23 91.1 1975 36.2 2.92 105.7 1976 20.7 2.70 55.9 1977 2.8 2.51 7.0 1978 2.0 1.85 3.7 1979 - 1.37 - 1980 - 1.00 - 171.8 600.8 1/ Source :MDB Local Costs Exclude FEEC payments. 2/ Derived from IBRD Report No. 2955-CE, Implicit Deflator for the Construction Sector, Sri Lanka: Key Development Issues in the 1980's May 20, 1980. ANNEX II - 45 _ Table 5 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Economic Investment Costs (Foreign) 1/ Foreign Costs Shadow Foreign Costs Foreign Costs Price.# in 1980 Prices Exchange in 1980 Prices Year (US $ Million) Index (US $ millions) Rates (Rs. millions) 1970 - 3.13 - 9.22 - 1971 2.39 2.89 6.91 9.22 63.7 1972 3.17 2.65 8.40 9.30 78.1 1973 4.86 2.23 10.84 10.56 114.5 1974 5.96 1.85 11.03 10.97 121.0 1975 4.01 1.65 6.62 11.63 77.0 1976 2.36 1.67 3.94 13.96 55.0 1977 1.50 1.54 2.31 15.10 34.9 1978 1.72 1.28 2.20 17.00 37.4 2/ 1979 0.09- 1.12 0.10 18.00 1.8 1980 - 1.00 - 20.00 26.06 52.35 583.4 1/ Source: MDB 2/ Excluding US$2.45 million (Rs. 38.2 million) paid for purchase of equipment for subsequent stages. 3/ Derived from International Price Index, contained in a World Bank memorandum, Prospects for Real Growth and Inflation in OECD North Countries, 1980-90, Economic Analysis and Projections Department, Nov. 5, 1980. - 46 - ANNEX II Table 6 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Prices for Financial and Economic Analyses (in constant mid-1980 Rs) 1/ 2/ Agricultural Outputs Per Unit Financial Price- Economic Price- 3/ Paddy Bushel 50 73- 3/ Paddy Metric Ton 2,396 3,5121- 4/ Chillies (dried) Metric Ton 20,900 17,033- 3/ Oilseeds (groundnut in shell) Metric Ton 4,950 5,197- Sugarcane (Kantalai Estate) Metric Ton 245 5343/ Sugarcane (Private Sector) Metric Ton 203 Agricultural Inputs Fertilizer 3/ Urea Metric Ton 1,005 4,823= TSP Metric Ton 1,360 4,2403/ MP Metric Ton 1,090 2,8623/ 5/ 4/ Labor Man day 20- 16.3- Farm Power Four wheel tractor Hour 80.05' 6/ 112 5/6/ 4/ Animal pair/per day Animal pair 45.0- / 36.7 Seed - Crop prices + 20% Transport Kilometer 1.00 1.44 Fuel Oil Metric Ton 3,188 1/ Source: Mahaweli Development Board. 2/ Economic prices for internationally traded commodities based on EAPD, Price Prospects for Major Primary Commodities Report No. 814/80, Jan. 1980. 3/ Import based price. 4/ Local price converted into border rupees at estimated Standard Conversion Factor (SCF) of 0.815. 5/ PCR Mission's interviews. 6/ Includes driver. SRI LANKA MARAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Crop Input Requirements Per Acre 1/ PADDY CHILLIES OILSEEDS SUGARCANE-- Uit Broadcapt Transplanted (Groundnut) W W VW w w W w 1. Seed Kg 42 42 21 21 - 4 - 40 1000 10002/ 2. Fertilizer a. Urea Kg 80 110 80 110 - 100 - 30 198 198 b. TSP Kg 30 45 30 45 - 60 - 50 73 73 c. NP Kg 10 15 10 15 - 60 - 50 46 46 3/ 3. Pesticides- Rs 100 140 100 140 - 1330 - 100 163 163 4. Labor Man Day 38 40 58 60 - 220 - 50 54 60 5. Power a. Four wheel tractor Hour 10 10 10 10 - 4 - 12 26 28 b. Animal pair Day 12 12 12 12 - 5 - 12 - - 6. Miscellaneous- 1/ Based on cultivation costs of the Kantalai Sugar Estate which has one-third plant cane and two-thirds ratoon. 2/ Seed requirement for one-third of an acre. 3/ PCR Mission estimates based on interviews with cultivators and cross-checked with Agricultural Economic Study of the Department of Agriculture, Sri Lanka in Sept. 1980 4/ For paddy, chillies and oilseeds, about 20% of costs of inputs other than seed, and labor; for sugarcane, actual "other costs" of cultivation at Kantalai Sugar Estate. Legend: W = Without projectx W = With project - 48 - ANNEX II Table 8 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Financial and Economic Costs of Production Per Acre PADDY1/ CHILLIES OILSEEDS SUGARCANE Financial Economic Financial Economic Financial Economic Financial Economic Rs Rs Rs Rs Ra Rs Rs Rs Without Project Seed 101 148 352 641 Fertilizer Urea 80 386 199 955 TSP 41 127 99 309 MP 11 *29 50 131 Pesticides 1002/ 260 163 424 Labor 540- 734 1075 876 I/ 1/ Power 670- 780- 2103 2944 Miscellaneous 386 531 957 957 Total 1929 2995 4998 7237 With Project Seed 101 148 100 82 198 208 352 641 Fertilizer Urea 110 528 100 482 30 145 199 955 TSP 61 190 82 254 68 212 99 309 MP 16 42 65 172 55 143 50 131 Pesticides 140 364 1330 3458 100 260 163 424 Labor 5402/ 766 3662 3586 700=_ 815 1203 980 Power 6703 780- 273' 3162/ 7503/ 8922' 2213 3098 Miscellaneous 413 602 -1243 1658 443 584 957 957 Total 2051 3420 6853 10008 2344 3259 5236 7495 Irrigation Costs 191 191 Total including Irrigation Charge 5427 7686 1/ Includes two-thirds broadcast and one-third transplanted paddy. 2/ Excluding family labor. 3/ On the basis of 50% 4W tractor and 50% animal pair. ANNEX II - 9 - Table SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Economic Costs of Operation & Maintenance Irrigation Net Per Acre Year Cultivated Acres of O&M1/ O&M Cost Power-' Total (000 ac) (Rs) (Rs. M) 1976 66.4 270 17.9 2.4-2/ 20.3 1977 221.8 270 59.9 4.7 64.6 1978 238.4 270 64.4 4.7 69.1 1979 246.5 270 66.6 4.7 71.3 1980 254.5 270 68.7 4.7 73.4 1981 264.0 270 71.3 4.7 76.0 2019 264.0 270 71.3 4.7 76.0 1/ NEDECO report on Mahaweli Ganga Development Program Implementation Strategy Study estimated the cost of operation, maintenance and replacement costs for reservoir (main canals, minor irrigation works and settlement structure) at Rs. 7.4 million per 20,000 ha, based on personnel and vehicle requirements. This estimate is used for PCR with price adjustments to 1980 prices. 2/ Estimated at 1.5% of the construction cost of the power component. According to the MDB record, the total construction costs of the Polgolla Complex is Rs.181.1 M excluding FEECs payment. Of this amount, Rs.107.9 represents separable costs of the power component and the remainder of Rs.73.2 represents joint costs of power and agriculture.-The joint costs were allocated to the power and agriculture by the ratio of 65: 35according to the ratio of present value-of power and agricultural benefits of the project. Accordingly the construction costs of the Polgolla Complex allocated to power was estimated at Rs. 155 M. The yearly expenditure breakdown of the Rs.155 M was estimated and then converted to 1980 prices. The total of the cost stream in 1980 prices was Rs.310 Y, which was considered to be the construction cost of the power component. 3/ Six months only. SRI LANKA MAHAVELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Agricultural Benefits Without Without With ---------------------- With Project ----------------------- Project Project Project Full Development Per Year 1976 Yala 1976 Yala 1976/77 1977/78 1978/79 1979/80 (1980/81) Paddy_____ ____ 1. Cropped Area (000'ac) 175.6 63.7 63.7 214.9 229.1 233.2 238.9 244.7 2. Average Yield (Ton/ac) 1.23 0.97 1.27 1.35 1.41 1.36 1.5 1.5 3. Total Production (000' M. Tons) 216.2 61.8 80.9 290.8 323.8 318.2 350.7 369.8 4. Price (Rs/M. Ton) 3,512 3,512 3,512 3,512 3,512 3,512 3,512 3,512 5. Gross Production Value (Rs. M) 759 217 284 1,021 1,137 1,118 1,232 1,299 6. Production Costs (Rs./ac) 2,995 2,995 3,420 3,420 3,420 3,420 3,420 3,420 7. Total Cost of Production (Rs. M.) 526 191 218 735 784 798 817 837 8. Net Production Value (Rs. M) 233 26 66 286 353 320 415 462 Sugar Cane 1. Cropped Area (000'ac) 3.6 - - 4.4 4.8 5.7 6.2 6.7 2. Average Yield (Ton/ac) 18.0 - - 17.4 18.5 17.1 19.5 22.0 3. Total Production (ooo' M. Tons) 64.8 - - 76.6 88.8 97.5 120.9 147.4 4. Price (Ra. M/Ton) 534 - - 534 534 534 534 534 5. Gross Production Value (Rs. M) 34.6 - - 40.9 47.4 52.1 64.6 78.7 6. Production Cost (Rs./ac) 7,237 - - 7,495 7,495 7,495 7,495 7,495 7. Total Cost of Production (Rs. M) 26.1 - - 33.0 36.0 42.7 46.5 50.2 8. Net Production Value (Rs. M) 8.5 - - 7.9 11.4 9.4 18.1 28.5 Chillies , 1. Cropped Area (000'ac) - - - 0.9 1.8 3.2 4.7 6.3 2. Average Yield (Ton/ac) - - - 0.6 0.6 0.6 0.7 0.7 3. Total Production (000' M. Tons) - - - 0.54 1.08 1.92 3.29 4.41 4. Price (Rs. M/Ton) - - - 17,033 17,033 17,033 17,033 17,033 5. Gross Production Value (Rs. M) - - - 9.2 18.4 32.7 56.0 75.1 6. Production Cost (Rs./ac) - - - 10,008 10,008 10,008 10,008 10,008 7. Total Cost of Production (Rs. M) - - - 9.0 18.0 32.0 47.0 63.1 8. Net Production Value (Rs. M) - - - 0.2 0.4 0.7 9.0 12.0 Oilseeds (Groundnut in shell) 1. Cropped Area (000'ac) - - - 0.9 1.8 3.2 4.7 6.3 2. Average Yield (Ton/ac) - - - 0.75 0.75 0.8 0.8 0.8 3. Total Production (000'M. Tons) - - - 0.68 1.35 2.56 3.76 5.04 4. Price (Rs./M. Ton) - - - 5,197 5,197 5,197 5,197 5,197 5. Gross Production Value (Rs. M.) - - - 3.5 7.0 13.3 19.5 26.2 6. Production Cost (Rs./ac) - - - 3,259 3,259 3,259 3,259 3,259 7. Total Cost of Production (Rs. M) - - - 2.9 5.9 10.4 15.3 20.5 8. Net Production Value (Rs. M) - - - 0.6 1.1 2.9 4.2 5.7 Total Net Production Value (Rs. M) 241.5 - - 294.7 365.9 333.0 446.3 508.2 Incremental Net Production Value (Rs. M) - - 40 53.2 124.4 91.5 204.8 266.7 SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT. STAGE I PROJECT COMPLETION REPORT a/ Economic Value of Power Generated by Ukuwela (1) (2) (3) (4) (5) (6) 17) (8) (9) (10) (11) (12) Furnace Oil Cost of Furnace Oil CIF Colombo CIF Colombo Furnace Oil CIF Colombo 1980 Price Shadow 1980 Price after Fort & Variable Fixed Production Ukuwela Value of Current US$ Price US$ b/ Exchange Rupees Handling c/ cost per Cost cost per Power Ukuwela Year (per ton) Index (per ton) Rate (per ton) KwH d/ per KwH KwH (Rs. f/ Sale (GWH) Power (Rs.M) 1975 82.1 1.65 135.5 11.63 1,576 1,655 0.51 1,861 0.93 - - 1976 88.0 1.67 147.0 13.96 2,052 2,155 0.66 1.08 82.3 88.9 1977 91.3 1.54 140.6 15.10 2,123 2,229 0.68 1.10 157.8 173.6 1978 99.6 1.28 127.5 17.00 2,168 2,276 0.70 1.12 175.6 196.7 1979 137.9 1.12 154.4 18.00 2,779 2,918 0.88 1.30 163.7 212.8 1980 182.9 1.00 182.9 20.00 3,658 3,840 1.15 1.57 157.0 246.5 1981 188.7 3,774 3,963 1.19 1.61 164.0 264.0 1982 194.7 3,894 4,089 1.23 1.65 270.6 1983 201.0 4,020 4,221 1.27 1.69 277.2 1984 207.4 4,148 4,355 1.30 1.72 282.1 1985 214.1 4,282 4,496 1.36 1.78 291.9 1986 220.9 4,418 4,639 1.40 1.82 298.5 1987 228.0 4,560 4,788 1.44 1.86 305.0 1988 235.3 4,706 4,941 1.49 1.91 313.2 1989 242.8 4,856 5,099 1.53 1.95 319.8 1990 250.6 5,012 5,263 1.59 2.01 329.6 2019 250.6 20.00 5,012 5,263 1.59 1.861 2.01 164.0 329.6 a/ See Footnote A for detailed explanation. f/ 1,861 b/ From 1981 onward increase of 3.2% 8,760 x 0.5 c/ C x 1.05 d/(7) x 12,000 + 0.03 41,000,000 e/ See Footnote A, paragraph 2. - 52 - ANNEX II Table 11 Page 2 Footnote A to Annex II/Table 11 Economic Value of Power Generated by Ukuwela (For 1980) 1. Following a similar methodology used at appraisal, it is considered that the value of power generated by the Ukuwela Hydro Power Plant is equivalent to the cost foregone of the best available alternative. In the case of Sri Lanka at present, such alternative is an oil fired thermal plant. CEB has recently calculated such cost in cooperation with NEDECO for NEDECO's Mahaweli Ganga Development Program Implementation Strategy Study (September 1979). For PCR purposes, their cost figures were used with adjustment to 1980 prices. The outline of the calculation is shown below: 2. Fixed Cost for an oil-fired thermal station with 2 units of 50 MW effective output (Mid-1980 prices): 2.1 Construction Costs Financial Costs Economic Costs- Local Foreigna Total Item Rs. M. Rs. M. Rs. M. Rs. M Land, civil and structural work Boiler-turbine, generator plant 148 538 686 836 Switchyard transformers, misc. electrical equipment 28 96 124 151 Studies, engineering, supervision 9 51 60 74 Contingencies 37 70 107 129 370 806 1.176 1,417 or Rs.14,170/KW 2.2 Cost outlay Year 1 20% (includes pre-construction expense) Year 2 25% Year 3 30% Year 4 25% a/ Foreign exchange component converted Rupees at Rs. 16 to 1 US$. b/ Local financial costs are converted to economic costs by multiplying with the conversion factor for civil construction work, which is about 1.1. The foreign exchange component is converted to economic costs by applying a rate of Rs. 20.0 to 1US$. 53 - ANNEX II Table 11 Page 3 2.3 Annual economic cost per KW effective output (fixed cost) at 10% discount rate for 25 years: 14.170 X 0.110168 = 1.561/KW/year add Operation, Maintenance and Insurance of Rs. 300/MW/year Total Cost: 1,861/KW/year 3. Variable Cost (for 1980) Fuel: Economic Cost of furnace oil is estimated at Rs. 3,840/ton.-/ Assuming 41,000 BTU/kg of Cal. value and 12,000 BTU/KWh of heat rate, the total cost per KWh generated will be: Rs. 3,840 X 12,000 = Rs.1.12/KWh 41,000,000 Adding variable operation and maintenance costs of about Rs.0.03 per KWh the total variable costs are about Rs. 1.15 per KWh. 4. Total Production Cost per KWh Assuming 50% plant factor, the total production cost per KWh will be 1,861 876 + 1.15 = Rs.1.57/KWh 8,7-60 x 0.5 1/ CIF Colombo (Rs. 3,658) plus 5% of port handling and transportation, Rs. 20.0 = US$1. SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Economic Rate of Return (Project as a whole) Incremental Benefits (Rs. M) Incremental Costs (Rs. M) 1/ Agric. O&M O&M Year Agriculture Power- Total Capital Prod. Agric Power Total Net Benefit (Rs. M) 1970 62.4 62.4 -62.4 1971 127.6 127.6 -127.6 1972 159.6 15.6 -159.6 1973 244.1 244.1 -244.1 1974 212.1 212.1 -212.1 1975 182.7 182.7 -182.7 1976 67.0 88.9 155.9 110.9 27.0 17.9 2.4 158.2 - 2.3 1977 281.0 173.6 454.6 41.9 -227.8 59.9 4.7 334.3 120.3 1978 416.2 196.7 612.9 41.1 291.8 64.4 402.0 210.9 1979 422.5 212.8 635.3 1.8 331.0 66.6 404.1 231.2 1 1980 578.5 246.5 825.0 373.7 68.7 447.1 377.9 L 1981 685.4 264.0 949.4 418.7 71.3 494.7 454.7 1982 270.6 956.0 461.3 1983 277.2 962.6 467.9 1984 282.1 967.5 472.8 1985 291.9 977.3 482.6 1986 298.5 983.9 489.2 1987 305.0 990.4 495.7 1988 313.2 998.6 503.9 1989 319.8 1005.2 510.5 1990 329.6 1015.0 520.3 2019 685.4 329.6 1015.0 418.7 71.3 4.7 494.7 520.3 Economic Rate of Return = -20% SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Economic Rates of Return by Components Agricultural Component Power Component Incremental Incremental Costs Net Incremental Incremental Costs Net Year Benefits Capital I/ Ag. Production 0 & M Total Benefits Benefits Capital 1/ 0 & M Total Benefits ------------------------------Rupees M.--- ----------------------------- ------------------Rupees M--------------------------- 1970 33.5 33.5 - 33.5 28.9 28.9 - 28.9 1971 82.2 82.2 - 82.2 45.3 45.3 - 45.3 1972 57.7 57.7 - 57.7 101.8 101.8 -101.8 1973 187.2 187.2 -187.2 56.9 56.9 - 56.9 1974 128.2 128.2 -128.2 83.8 83.8 - 83.8 1975 79.6 79.6 - 79.6 103.2 103.2 -103.2 1976 67.0 62.7 27.0 17.9 107.6 - 40.6 88.9 48.3 2.4 50.7 38.2 1977 281.0 34.5 227.8 59.9 322.2 - 41.2 173.6 7.4 4.7 12.1 161.5 1978 416.2 31.8 291.8 64.4 388.0 28.2 196.7 9.2 13.9 182.8 1979 422.5 1.8 331.0 66.6 399.4 23.1 212.8 4.7 208.1 1980 578.5 373.7 68.7 442.4 136.1 246.5 241.8 1981 685.4 418.7 71.3 490.0 195.4 264.0 259.3 1982 270.6 265.9 1983 277.2 272.5 1984 282.1 277.4 1985 291.9 287.2 1986 298.5 293.8 1987 305.0 300.3 1988 313.2 308.5 1989 319.8 315.1 1[90 329.6 324.9 2019 685.4 418.7 71.3 490.0 195.4 329.6 4.7 4.7 324.9 Economic Rate of Return = 14% Economic Rate of Return = 26% 1/ The total capital costs of the project were allocated to agricultural and power components by "Separable Costs Remaining Benefits Methods". See Footnote 2 of Annex II/Table 9 for the allocation of the joint costs of the Polgolla Complex. - 56 - ANNEX II SRI LANKA Table 13 KAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Farm Budget Estimates 2.5 Acre Farm (About 55% of area) Without With Project Project 1/ 2/ 3/ Example A- Example Br- Example C- Cropping Pattern Paddy Maha ac 2.4 2.5 2.5 2.5 Yala ac 1.4 2.3 1.0 - Sub-total Paddy ac 3.8 4.8 3.5 2.5 Other Crops Chillies4/ ac - - 0.65 0.95 Oilseeds- ac - - 0.65 0.95 Total cropped area ac 3.8 4.8 4.8 4.4 Net cultivated area ac 2.5 2.5 2.5 2.5 Cropping Intensity % 152% 192% 192% 176% Production Paddy MT 4.67 7.20 5.25 3.75 Chillies MT - - 0.46 0.67 Oilseeds MT - - 0.52 0.76 Gross Production Value Paddy Rs 11,189 17,251 12,579 8,985 Chillies Rs - 9,614 14,003 Oilseeds Rs - - 2,574 3,762 Total 11,189 17,251 24,767 26,750 Pioduction Costs Paddy Rs 7,330 9,845 7,178 5,128 Chillies Rs - - 4,454 6,510 Oilseeds Rs - - 1,524 2,227 Total Rs 7,330 9,845 13,156 13,865 Farm Income before Cost of Irrigation 3,859 7,406 11,611 12,885 Cost of Irrigation 75 75 75 75 Farm Income after Cost of Irrigation 3,784 7,331 11,536 12,810 Incremental Income - 3,547 7,752 9,026 % 93 105 239 1/ Paddy -Paddy: Approximately 46% of area 2/ Paddy - Paddy/Chillies/Oilseeds: Approximately 5% of area 3/ Paddy/chillies/oilseeds: Approximately 4% of area 4/ Includes other crops such as vegetables and cowpeas. Estimated in terms of oilseeds(groundnut). -57 - ANNEX II Table 14 SRI LANKA MAlIAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Farm Budget Estimates 5 Acre Farm (About 45% of area) Without With Project Project 2/mle11 3/ Pro t Example D Example E/ Example F- Cropping Pattern Paddy Maha ac 4.75 5.00 5.00 5.00 Yala ac 2.75 4.25 2.25 - Sub-Total Paddy ac 7.50 9.25 7.25 5.00 Other crops Chillies ac4/ - - 1.00 1.75 Oilseeds ac- - - 1.00 1.75 Total cropped area ac 7.50 9.25 9.25 8.50 Net cultivated area ac 5.00 5.00 5.00 5.00 Cropping Intensity 150% 185% 185% 170% Production Paddy MT 9.23 13.88 10.88 7.5 Chillies MT - - 0.7 1.23 Oilseeds MT - - 0.8 1.40 Gross Production Value Paddy Rs 22,115 33,256 26,068 17,970 Chillies Rs - - 14,630 25,707 Oilseeds Rs - - 3,606,3 Total 22,115 33,256 24,658 50,607 Production Costs Paddy Rs 14,468 18,972 14,870 10,255 Chillies Rs - - 6,853 11,993 Oilseeds Rs - - - 2,344 Total Rs 14,468 18,972 24,067 26,350 Farm Income before Costs of Irrigation Rs 7,647 14,284 20,591 24,257 Cost of Irrigation Rs 150 150 150 150 Farm Income after costs of Irrigation Rs 7,497 14,134 20,441 24,107 Incremental Income 6,637 12,944 16,610 % 89 173 222 1/ Paddy - Paddy: Approximately 37% of area 2/ Paddy - Paddy/Chillie/Oilseeds: Approximately 5% of area 3/ Paddy-Chillie/Oilseeds: Approximately 3% of area 4/ Includes other crops such as vegetables and cowpeas. Estimates in terms of oilseeds (groundnut). SRI LANKA MAHAWELI GANGA DEVELOPMENT PROJECT, STAGE I PROJECT COMPLETION REPORT Project Area Socio-Economic Data' Farm Size and Families in the Colonization Scheme DISTRICT FARM ALLO ED AREA AVERAGE ALLOTMENT SIZE NAME OF SCHEME FAMILIES Paddyland- Upland?J Paddyland Upland Ac Ac Ac Ac ANURADHAPURA DISTRICT --- 1. Nachchduwa 2244 6439 1026 2.9 0.5 2. Rajamgane 5982 13278 12541 2,2 2,1 3. Kagamakattiyawa 971 4042 1974 4.2 2.0 4. Huruluwewa 2228 7632 2157 3.4 1.0 POLONNARUWA DISTRICT 00 5. Elahera 1074 4926 2965 4.6 2.8 6. Giritale 1355 4300 1533 3.2 1.1 7. Minneriya 4914 26093 9879 5.3 2.0 8. Galamuna 725 3305 725 4.6 1.0 9. Kanduluwewa 5499 14591 8438 2.6 1.5 10. Piburettawa 1110 3330 1110 3.0 1.0 11. Parakkrama Sumudraya 3213 15910 11448 5.0 3.6 TRICOMALEE DISTRICT 12. Kantalai 2494 7463 4970 3.0 2.0 Total 31809 111309 - 58766 3.5 1.8 Paddyland Medium Farms (4.2 - 5.3 Ac) 10897 54276 26991 5.0 2,5 Small Farms (2.2 - 3.4 Ac) 20912 57033 31775 2.7 1.5 1/ Source - Land Commissioner's Department. 2/ Paddyland is within irrigable command area of Stage I. 3/ Upland is outside the irrigable command area of Stage I. 4/ Total paddy area under colonization schemes in Stage I. Additional 47,000 ac are included in Stage I kn F- outside of colonization schemes.  IBRD 15478(PCR)(PPA) 79 30' 880' 80"30' sr00- v-30. DECEMBER 1981 SRI LANKA THIS MAP IS BASED ON IBRD 15478(PCR), JANUARY 1981. INTERNATIONAL MAHAWELI GANGA DEVELOPMENT PROJECT BOUNDARIES HAVE BEEN AMENDEO. STAGE I AND SUBSEQUENT STAGES OF DEVELOPMENT Jofna fRRIGATION AREAS STAGE I- EXISTING IRRIGATED AREAS BA Y OF STAGE D-AREAS UNDER DEVELOPMENT STAGE U] - PROPOSED AREAS OF DEVELOPMENT B LIV G A L A IRRIGATION SERVICE AREA IDENTIFIERS -9-30 ------- IRRIGATION SERVICE AREA BOUNDARIES 9'3' PROPOSED CANALS CONSTRUCTED UNDER STAGE I - -- - - PROPOSED CANALS EXISTING CANALS I-ROPOSED DAMS AND RESERVOIRS CONSTRUCTI D Mullain vyu UNDER STAGE I PROPOSED DAMS AND RESERVOIRS /:XISTING DAM AND RESERVOIR PROPOSEDWEIRS AND RESERVOIRS EXISTING WEIRS AND RESERVOIRS WEIR IMPROVEMENT UNDER STAGE I .9.00Mn A NDEPROPOSED POWER STATION CONSTRUCTED Ean AI ~l NDER STAGE 1 9-00 © PROPOSED POWER STATIONS / N O A N PROPOSED TUNNELS CONSTRUCTED UNDER STAGE I SFP r- - -- --PROPOSED TUNNELS VovuniO i A PROPOSED INTAKES CONSTRUCTED UNDER STAGE I PROPOSED GUTLET PORTAL CONSTRUCIED UNDER STAGE I - PROPOSED PUMPING STATIONS OcEAN ROAS RAILlROADS fsepl Tr,ncomnalel---~ RIVERS H rupoo -8*306*30'- 0 \p I? 5 0 15 2 25 Anurad Opura IE 0 20 30 40 x KICOME TERS p Rtolom ~ ~ H "D Aa ~ ~ ~ ~ ~ um asont RO,jsaRt Batticaloa WoAR ,00 .ld Isa GAs,. ES -7-30' Kurunegolo E "~ It~~4O,,IHirly liDt legl at0 l 6 INOIANGA AA- Mah 00° IcropAs an yOP ANAM G.IANiCUr do k* n - mlntheprto te0 RU COOmo Hott PottuV,l l N D l A TBURMA-1. BENGA l  RILANKA 0Ñ100A5 N O CE AN |MOONS A 5030 00 ' 0  |BRD 15492(PCR)(PPA) 80 30810 SRI LANKA \ TR I NCOMALEE MAHAWELU GANGA DEVELOPMENT PROJECT Tri malee STAGE I 8-30 0 0 15 20 25 30 35 40 <ILOMEFTERS 0 0 15 20 25 MILES5 VENDARASAN THIS MAP IS BASED ON IB1. 42 C T. T ~nc .4.e ANUARNY 1981 INTERNATIONA 11OUNDARIES HAVE 8E EN AMENDED KANAUA N K K BASAWKKUL M I --Mhitl TISSAWNEWA-- NUWARAWMEWA TANK 7.NAC CHADUWPAURUWA TURUW ARI~W ?ä qWA TANK TAIy I-ANUR D APU A Tamb.ttegama N A\H P R RAGNA MAM-N~AW USGALA KH.ow b-ron SIIIABALANGAM WA 'A MN -8.o ANK HfiR-WAUI INN I GgmuoKA AWIEWA BELANKADAW A TANUW TANK KANDA AMA - c DIER5ION SRI LANKA ---d istr¢t4undaiesELAHERA j A F F N Aj D,VERSION WE R -1 NAIANDA N SN DAM VAVUN1YA_~ MANNAR M A T E A N 0 R A D H A P R A "TRINCO A E AN- IM30'ET LPTTALA MotoNNAR 9 ~~~~ATTICALOA 11mcl PM HUE-Nd OSMC 4 UUE MATALE2 K A N D Y -- yKANDY 4 LLA ^f, 1, EG IIAMPARAI SK O MO p.A1G ,0 ocean GALLE BASNTT ADULLA DECEMBER 1981