Nepal - Settlement Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4567 PROJECT PERFORMANCE AUDIT REPORT NEPAL SETTLEMENT PROJECT (CREDIT 505-NEP) June 20, 1983 Operations Evaluation Department This document has a rbstricted 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. CONVERSION FACTORS Logs 1 hoppus ft3 = 1.273 cubic feet 0.0360541 cubic meters 1 cubic meter = 27.7361 hoppus feet Sawn 1 cubic foot = 0.283168 cubic meters 1 cubic meter = 35.3147 cubic feet Fuelwood 1 cubic foot = 1.6 kilograms 1 metric ton = 625 cubic feet ABBREVIATIONS ADBN - Agricultural Development Bank of Nepal AIC - Agricultural Inputs Corporation AMC - Agricultural Marketing Corporation APROSC - Agricultural Projects Services Center DCA - Development Credit Agreement ERR - Economic Rate of Return FAO/CP - FAO/IBRD Cooperative Program FCN - Fuelwood Corporation of Nepal FPDB - Forest Products Development Board TMG - His Majesty's Government IDA - International Development Association ISC - Industrial Services Center JT - Junior Technician JTA - Junior Technical Assistant M&E - Monitoring and Evaluation MFAI - Ministry of Food, Agriculture and Irrigation MOF - Ministry of Finance NFC - Food Corporation of Nepal NRC - Nepal Resettlement Company RD - Resettlement Department SAR - Staff Appraisal Report SCC - Settlement Coordination Committee T&V - "Training and Visit" (System of Agricultural Extension) TCN - Timber Corporation of Nepal WFP - World Food Program FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT NEPAL SETTLEMENT PROJECT (CREDIT 505-NEP) TABLE OF CONTENTS Page No. Preface ............................................................i Basic Data Sheet ....................................................... ii Highlights ......................................................... iii PROJECT PERFORMANCE AUDIT MEMORANDUM I. PROJECT SUMMARY ...........................................1 II. MAIN ISSUES .................................. .......... 3 A. General ............................................. 3 B. Lack of Borrower Support for the Project and Continued IDA Involvement ....................... 4 C. Institutions .......................... ............ 5 D. Technology ............................. ........... 6 E. Project Content .......7.......................... 7 F. Environmental Impact ................................. 8 Table 1 - Nepal Settlement Project - Disbursements ................. 11 Annex I - Comments Received from the World Food Program .... 13 PROJECT COMPLETION REPORT I. Sectoral Background ...................................... 17 II. Project Formulation ..................................... 19 III. Project Implementation ................................... 29 IV. Technical Performance ................................ 43 V. Project Impact ........................................ . 55 VI. Economic and Financial Analysis .................... ..... 59 VII. Institutional Performance and Development ............. 65 VIII. IDA Performance ................................. 71 IX. Conclusions ........................................... 74 Annexes 1-3 Appendix Map IBRD 17107 (PPA) Nepal Settlement Project 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.  - 1 - PROJECT PERFORMANCE AUDIT REPORT NEPAL SETTLEMENT PROJECT (CREDIT 505-NEP) PREFACE This is a performance audit of the Settlement Project in Nepal, for which Credit 505-NEP in the amount of US$6.0 million was approved in June 1974. The Credit was closed in July 1982 as planned. The undisbursed balance of US$3,071,717.93 was cancelled on October 22, 1982. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department (OED) and a project completion report (PCR) dated September 21, 1982. The PCR was prepared by the Bank-s South Asia Regional Office. An OED mission visited Nepal in November 1982. The mission held discussions with officials of the Timber Corporation of Nepal and the Nepal Resettlement Company. The project area was visited and farmer settlers interviewed. The information obtained during the mission was used to test the validity of the analyses and conclusions of the PCR. The audit memorandum is based on these discussions, on interviews with Bank staff associated with the project, and on a review of the PCR, the Appraisal Report (No. 377a-NEP) dated May 24, 1974, the President's Report (No. P-1457-NEP) dated May 30, 1974, the Credit Agreement of August 14, 1974, correspondence with the Borrower, and internal Bank memoranda on project issues as contained in relevant Bank files. A copy of the draft report was sent to the Borrower and the co- financier for comments on March 17, 1982. Comments were received from the World Food Program; these are included as Annex I. The audit finds the PCR comprehensive and accurate with respect to the project's principal achievements and shortcomings and has no reason to question its conclusions. The audit memorandum deals with continued IDA involvement despite lack of Government support for the project, institutional and technical issues, the share of investments directly benefitting the settlers, and the project's environmental impact. These issues had a profound impact on the project outcome and have implications for other projects. The valuable assistance provided by the Government of Nepal and by local officials and the farmers visited is gratefully acknowledged.  - ii - PROJECT PERFORMANCE AUDIT REPORT NEPAL SETTLEMENT PROJECT (CREDIT 50-NEF) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as % of Item Estimate Estimated Actual Appraisal Estimate Total Project Costs (US$ million) 11.54 4.93 43 Credit Amount (US$ million) 6.00 6.00 100' Disbursed 6.00 2.93 47 Cancelled - 3.07 - Co-financing (WFP, US$ million) 1.81 1.16 64 Date Board Approval 05/74 06/13/74 - Credit Agreement Date/a 07/74 08/14/74 Date Effectiveness 12/74 02/20/75 11 Date Physical Components Completed 07/15/81 Incomplete - Proportion then completed by Above Date 100 Area clear-felled 39 Farmers settled 35 Closing Date/b 07/82 07/15/82 100/b Economic Rate of Return (%) 42 7 17 Financial Rate of Return - Below norm - Institutional Performance - Below norm - Number of Direct Beneficiaries (1982) 7,900 2,781 35 CUMULATIVE DISBURSEMENTS FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 Appraisal estimate (US$ million) 1.36 2.70 3.73 4.46 5.01 5.26 6.00 - - Actual (US$ million) 0.00 0.00 0.46 0.59 0.89 1.24 1.67 2.82 2.93 Actual as % of estimate - - 12.3 13.2 17.8 23.6 27.8 47.0 48.8 Date of final disbursement October 22, 1982 MISSION DATA Date No. of Manweeks Specializations Performance Types of Mission (mo./Yr.) Persons in Field Represented./c Ratingd Trend/e Problems-/ Identification 09/71 3 2.0 a,e,g - - - Preparation 04/72 3 8.6 a,e,g - - - Preparation 07/73 6 12.0 a(2),c,b,g,h - - - Appraisal 10-11/73 4 16.5 f,a,e,g - - - Subtotal 16 39.1 Supervision 1 05/74 1 0.6 f 2 2 T,0 Supervision 2 04-05/75 1 1.0 f 3 1 M Supervision 3 09-10/75 1 0.3 e 3 1 M Supervision 4 06/76 3 6.4 a,e,g 3 1 M,0 Review 08/76 2 2.0 a,e - - - Supervision 5 11-12/76 4 8.0 f,a(2),g 3 2 M,T,0 Supervision 6 05/77 1 3.0 a 3 2 M,T Supervision 7 05/78 1 0.4 a 3 2 M,T Supervision 8 09/78 4 8.0 a,f,i,g 3 2 M,T Supervision 9 11-12/79 3 9.0 a(2),g 3 1 M,T Supervision 10 , 09-10/80 1 2.9 a,h 3 2 M,T Supervision 11 11-12/80 1 3.6 g 3 3 M,P Total /g 3 45.2 OTHER PROJECT DATA Borrower His Majesty-s Government of Nepal Executing Agency Nepal Resettlement Company and Timber Corporation of Nepal Fiscal Year July 16 to July 15 Name of Currency (abbreviation) Nepalese Rupees (NRs) Currency Exchange Rate: Appraisal Year Average US$ 1.00 - NRa 10.6 Intervening Years Average US$ 1.00 - NRs 12.1 Completion Year Average US$ 1.00 - NRs 13.2 Follow-on Project: None /a A Project Agreement was not documented; HMG signed a Project Financing Agreement and a Subsidiary Loan Agreement on February 9, 1975 on behalf of TCN and NRC, and ADBN, respectively. /b Calculated in terms of months from the date of Board approval. /c a - agriculturist; b - marketing specialist; c - credit specialist; d - sociologist; e - economist; f - financial analyst; g - forester; h - farm management expert; i - irrigation specialist /d 1 - problem-free or minor problems; 2 - moderate problems; and 3 - major problems. Te 1 - improving; 2 - stationary; and 3 - deteriorating. 77 M - managerial; T - technical; P - political; and 0 - other. T9 The project completion mission in February 1982 consisted of an agriculturist, economist, forester and sociologist. / 하 - iii - PROJECT PERFORMANCE AUDIT REPORT NEPAL SETTLEMENT PROJECT (CREDIT 505-NEP) HIGHLIGHTS The objective of the project was to settle migrants from other parts of the country, primarily the Hill areas, in three locations of the Terai. The latter were areas covered with native forest, straddling the Indian border. Under the project, the forest was to be cleared and commercial logs and timber marketed, primarily in India, by the Timber Corporation of Nepal. The cleared, but not destumped, land was to be handed over to the Nepal Resettlement Company for preparation for settlement. The settlers were to receive agricultural land, a housing plot and timber for housing construction, but were expected to be responsible for making the land suitable for cultivation and for constructing their own houses. Schools, health clinics, hand-operated water pumps and village roads were to be provided for them. Farmers were to be given access to production credit and to receive advice from agricultural extension staff. The project failed to achieve its overall objectives. Its implemen- tation was poor, and US$3.07 million, or 51% of the Credit, was cancelled. The Credit was closed on the original Closing Date after an implementation period of seven and a half years. A major review took place in the second year of implementation, as a result of which overall settlement targets were reduced and the average farm size per settler scaled down from 2.0 ha to 1.5 ha. Project activities fell increasingly behind schedule. Eventually, only 7,300 ha were clearfelled compared with the appraisal target of 18,600 ha, and 2,781 families were settled instead of the anticipated 7,900 families. The project suffered most from a change in Government policy, which took a turn from supporting active settlement of forested areas in the Terai to favoring forest conservation. There were also problems related to weak- nesses in the executing agencies. A major, rather costly, delaying factor was the attempt to introduce winch lorries for timber extraction which proved to be inappropriate for local conditions. Short-term credit and other agricul- tural support extended to farmers was inadequate. However, settlers performed relatively well. While crop yields remained low, cropping intensity reached anticipated levels. The economic rate of return of the completed portion of the project was reestimated at 7% compared with the appraised estimates for the whole project of 42%. Other points of interest are: - IDA involvement continued for over seven years despite early lack of Borrower support for the project (PPAM, paras. 17-22, PCR, para. 3.34-3.41, 7.03 and 9.06); - iv - - adverse Government policies contributed to the poor performance of the executing agencies (PPAM, paras. 23-25; PCR, paras. 3.06, 3.10-3.11, 4.27-4.28, 7.04 and 7.07); - IDA inflexibly promoted technology unproven in the country, until the attempt was clearly shown to be a failure (PPAM, paras. 26-28; PCR, paras. 4.11-4.16, 8.03-8.05); - project overhead costs were extremely large in relation to expen- ditures directly benefitting the settlers (PPAM, paras. 29-31); and - project implementation was not undertaken with the due environmental concern stipulated at appraisal (PPAM, paras. 32-34; PCR, paras. 5.16-5.19). - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM NEPAL SETTLEMENT PROJECT (CREDIT 505-NEP) I. PROJECT SUMMARYI/ 1. Nepal is divided into three geographical zones: the Mountains, the heavily populated Hill Areas and the sparsely populated, largely forested Terai. With the growing population, the pressure to cultivate Terai forest lands increased, and spontaneous settlement began to occur in the 1960s. Consequently, His Majesty's Government of Nepal (HMG) felt the need to inter- vene and facilitate the planned and orderly settlement of the Terai. 2. A Bank Economic Mission identified the project in 1970, and FAO/IBRD Cooperative Program staff subsequently undertook project preparation. The project, estimated to cost US$11.5 million, was appraised in 1973, and an IDA Credit (505-NEP) in the amount of US$6.0 million was approved in June 1974. The Credit, which became effective in February 1975, was closed in July 1982 as planned, and the undisbursed amount of US$3.07 million was cancelled in October 1982. The World Food Program (WFP) provided food aid in support of the project valued the equivalent of US$1.16 million. 3. The objective of the project was to promote the settlement of 7,900 farm families on 18,600 ha of forest land in three areas of the Terai. The forest felled in the process was to be commercially utilized, mostly for export. The implementing agencies were the Timber Corporation of Nepal (TCN) and the Nepal Resettlement Company (NRC),. The implementation period was six years, starting in 1974/75. The project was designed to promote logging operations and establish a settlement infrastructure through the provision of sawmills, vehicles, machinery and equipment, and technical assistance. 4. Implementation of the project was only partially successful. Start-up activities encountered problems and were delayed as a result of a number of issues emerging subsequent to appraisal, including size and scope of the project, location of project sites and size of settlers' land holdings. After a project review in 1976, the design and targets were revised. The logging area target was reduced from 18,600 ha to 11,100 ha, and the settler target from 7,900 families to 6,250. Only 1.5 ha were to be allocated per family instead of 2.0 ha as appraised. The revised project cost estimate of US$8.0 million was 30 percent less than the appraisal estimate, but no changes were made in the IDA Credit amount. 5. Project achievements within the planned implementation period did not reach the revised targets, however. TCN was able to cleaiyfell only 7,300 ha (66% of the revised target) and produce about 309,000m of logs (46%) 1/ Adapted from the PCR. 2 and 81,000 m3 of lumber (39%). Settlement did not take place until July 1977 and had reached 2,781 families by July 1982 (44% of the revised target). These settlers occupied 3,446 ha, with the remaining clearfelled land being held by TCN. The cost of project activities as of the date of Credit closing was US$4.93 million or 43% of the appraisal estimate and 62% of the revised project cost estimate. 6. Two factors were the main causes of the physical shortfalls in this project and the cancellation of 51% of the IDA Credit: changes in Government policy leading to a sharp decline in support for the project, and institu- tional weaknesses. With the realization in 1976 that forest resources in the country were fast depleting, Government policy shifted from actively support- ing settlement of forest areas to conserving existing forests. The new policy was reflected in a ban on log exports, in increased taxes and duties on those forest products that were allowed to be sold abroad, and in a rigid pricing and grading structure of forest produce. 7. Institutionally, the capabilities of TCN and NRC were inadequate, and efforts to strengthen these organizations were mostly unsuccessful; staffing problems persisted throughout the organizations' involvement in the project. Another aspect interfering with TCN-s work was the reluctance of the Forestry Department to allocate forest land for logging purposes. NRC failed to adopt procedures consistent with appraisal guidelines for the selection and training of settlers. The project was supported by the World Food Program in order to provide subsistence food supplies for the arriving settlers prior to their first harvests. However, contractual problems initially delayed WFP aid and settlers had to look for outside work, thus neglecting agricultural development activities. 8. A serious implementation problem concerned winch lorries, which were to be used for timber extraction. In that event, procurement problems first delayed the arrival of the lorries by about two years. When the lorries were finally on hand, the type of logs to be extracted was unsuitable for the operation of winch lorries and the technique proved unsuccessful. 9. Farmers received adequate medium-term credit for the purchase of a bullock from the Agricultural Development Bank of Nepal (ADBN). The supply of short-term credit and farm inputs was poorly managed, however, due to lack of an effective working arrangement between ADBN and the Agricultural Inputs Corporation (AIC) and farmer organizations (Sajha). Agricultural extension services were weak, and there were few field demonstrations and little adaptive research to back them up. Destumping of the new areas was difficult and slow. 10. Under the circumstances, the performance of the settlers was good. Cultivation of the new land handed over to them was started promptly, and cropping intensity reached the appraisal target of 160 percent. Yields remained low, however. 11. The benefits derived from the project-s logging component were severely reduced as a result of Government-s pricing and export policy. Unsold stocks accumulated in TCN yards and eventually became worthless. - 3 - 12. The economic rate of return of the portion of the project completed as of July 1982 was estimated at 7 percent compared with an appraisal estimate for the whole project of 42 percent. II. MAIN ISSUES A. General 13. The trend in internal migration has been essentially the same in Nepal since the early 1960s when the Nepal Resettlement Company (NRC) was established. Population has continued to grow rapidly in the Hill areas, increasing the pressure on the relatively scarce local agricultural and forestry land resources and forcing more and more people to migrate. The Nepalese Government and FAO/Bank missions visiting the country in the early seventies correctly anticipated a continuing and growing flow of Hill dwellers into the Terai, and the decision to provide for an orderly settlement under an IDA-assisted project still appears basically sound. Public support for development efforts in the already populated areas of the Terai has generally continued unabated, particularly in the transport (roads, airports) and irrigation sectors, and the towns are expanding rapidly. 14. With the momentum thus generated in that region, which includes the project area, the effects of the poor outcome of this project as a result of a change in Government policy are profoundly felt by the new migrants. Large numbers of them who have arrived in and around the project area are illegally occupying public lands, lacking essential basic services and barely being able to feed themselves. Yet large tracts of Terai lands are very suitable for cultivation. Soils, climate and topography permit double-cropping with suitable crop rotations and, where groundwater can be utilized for irrigation in the lower portions of the Terai plains, yields can be raised and the drought risk reduced. Older settlements are self-sufficient in foods and are experiencing a rising living standard, albeit from a low level, with the development of cash crops. These examples reinforce the desire and determina- tion of landless migrants to settle in the area, and any efforts to the contrary could lead to social unrest. 15. It is not surprising that the scope and pace of potential overall settlement in the Terai have brought into the open the conflict between agricultural and forestry use of the land as well as ecological concerns. What is unfortunate, because it acts as a brake on human and economic develop- ment, is the fact that these conflicts and concerns have not been resolved in a timely manner. Instead of dealing with them, Government s realization of the problems has nearly paralyzed settlement activities in the Terai. That the project succumbed to this paralysis rather than serving as a catalyst for remedial action is the biggest disappointment. 16. The PCR gives a comprehensive and fair assessment of the project-s implementation experience, and the OED mission could only confirm most of the reported findings. The following sections highlight some of these findings in order to clarify the implications, first for the project itself and in a broader sense for IDA and the Borrower. The main issues covered are the Borrowers lack of support for the project and IDA's continued involvement, institutional and technological aspects, project content and the environmental impact. B. Lack of Borrower Support for the Project and Continued IDA Involvement 17. The project was prepared in the early 1970s with strong Government backing, and the IDA Credit was approved in June 1974. It is stated in the PCR that the Government began to reconsider its resettlement strategy and to embark on a conservationist course in 1976 after becoming aware of the rapid depletion of the country's forestry resources (para. 3.03). However, Govern- ment's timber export policy began to change already early in 1975 in contra- vention of the Credit Agreement (see PCR, para. 7.03), and IDA supervision staff reported noting a lack of interest in the project late in 1975. So, in effect, lack of Government support for this project is traceable practically to the beginning of the implementation period, and the later conservationist tendency merely added to an already adverse attitude. 18. The lack of Government support and the problems of project manage- ment in general are clearly demonstrated by the breach of or non-compliance with Credit Agreement covenants. While some of the covenants, such as those referring to ADBN lending terms and accounting and reporting requirements, were more of a routine nature, others were essential prerequisites for suc- cessful project implementation. The adverse effects of changes in Govern- ment-s log and timber export policy and of the failure to engage the required technical assistance are well described in the PCR. The large stockpiles of unsold logs - one of the effects of the policy changes - were still at hand at the time of the OED mission. Deterioration had progressed further while TCN was continuing to haul in additional quantities from areas where squatters had cleared patches of forest in preparation for unauthorized settlement. While these economic losses are the result of Government's export policy, it is reasonable to assume that the extent of the losses would have been reduced had TCN's project activities ceased sooner. A more consistent policy would have been to curtail forest clearing at the time exports began to be discouraged or, alternatively, to exempt already accumulated stocks from the restrictive measures. 19. IDA was unable to maintain an effective dialogue on this project with Government and project authorities. Divergent views persisted on staff- ing, technical assistance, monitoring and evaluation, settler selection and log export policy. In addition, there was a long disagreement on log extrac- tion technology. Supervision missions consistently reported slow progress and formulated proposals to speed up implementation. These proposals either focussed on action that project authorities were expected to take in any case but had not taken, or represented remedial action to deal with particularly pressing problems (e.g., technical assistance, monitoring and evaluation). Numerous times there was no reply to letters sent to Government, and in most cases appropriate action was not taken by the authorities. - 5 - 20. With the project being considered a problem project as early as May 1975 and the strong indications of a change in Government's attitude towards the project, the possibility of cancellation was raised in September 1975, i.e. only 15 months after Board approval and more than six years prior to the eventual Closing Date. Initially the threat of cancellation was not communi- cated to Government in order not to jeopardize the potential favorable poverty impact of the project, but later on it was repeatedly discussed. After several informal deadlines for action to avert early cancellation had passed without satisfactory response, IDA decided to let the project continue up to the revised (1977) Closing Date of July 15, 1982, but not to grant any exten- sion, and to cancel the remaining balance. 21. The main issue is whether the Credit should have been cancelled earlier. The only factor complicating an. answer to this question is the indisputable need for formal settlement activities in the project area. There is a clear match between available resources and popular demand, and it is unlikely that the ongoing migration from the Hill and Mountain regions can be stopped. Without Government involvement there is likely to occur not only disorderly settlement but also serious damage to the environment. The project, had it been implemented as designed, would have provided valuable support and guidance. Seen from this angle, therefore, there was some justi- fication for allowing project activities to continue, even at the extremely slow pace. 22. From the standpoint of implementation efficiency, legal compliance, Borrower responsiveness to IDA supervision recommendations, and the policy setting in the country, a cancellation several years ago would have been appropriate in retrospect. Implementation against the background of possible cancellation, as was the case with this project for over six years, is not conducive to congenial IDA/Borrower relations nor is it encouraging for project and IDA staff. Preferably, cancellation should have been combined with an effort to formulate a new project consistent with changed Government policies and institutional objectives in view of the social need and the reasonable assurance of a very good economic return.!/ C. Institutions 23. The designation of TCN and NRC as the lead implementing organiza- tions for this project was appropriate. The fact that there were serious management problems is primarily due to the waning Government support for organized settlement in the Terai. Major contributing factors were the uncertainties created through the establishment of the Forest Products Development Board (FPDB) and the Fuelwood Corporation of Nepal (FCN), and the inability or reluctance on the part of TCN and NRC management to attract suitable higher-level staff and to utilize technical assistance. 1/ The Bank-s weak reaction in the face of a deteriorating situation during project implementation has been mentioned in a number of PPARs (see Mauritius: Tea Development Authority Project, OED Report No. 3761 dated January 13, 1982 and Kenya Second Forestry Project, OED Report No. 3929, dated June 14, 1982. - 6 - 24. With better management, TCN certainly could have streamlined its operations. To what extent it could have promoted increased sales and thereby reduced deterioration losses in its yards is not clear in the light of Govern- ment-s restrictive policies and the remote location of the project area. Both TCN and NRC were severely handicapped in planning their activities because of the uncertainty regarding the land becoming available for their use. There were also major shortcomings in the management of NRC which primarily affected start-up activities and the quality of services provided to farmers. Re- garding the latter, NRC was not able to promote the organization of coopera- tive societies for the purpose of obtaining production credit from ADBN. Its agricultural extension services also remained very weak. 25. The OED mission also observed that NRC keeps operating in its villages for many years after their establishment. This is not the best use of NRC resources. A settlement organization is normally expected to cease operations after the new community is reasonably settled and move on to new areas. The various Government line agencies ought to assume their regular functions sooner. A complicating factor in the Terai was, of course, the uncertainty about NRC's future activities. Unable to plan new settlements but being kept in post nevertheless, NRC local staff became disoriented and demoralized. Some of their activities have the appearance of local initiative to keep themselves busy - with some commendable results, as for example with communal tree planting, the promotion of garden crops, and the support of small shops and artisans. But overall, staff and facilities of TCN and NRC were visibly underutilized at the time of the mission's visit, reflecting the passive way the project came to an end and the vacuum with respect to Govern- ment decisions on follow-up action. D. Technology 26. IDA staff had promoted the use of winch lorry technology for log extraction, and the audit agrees with the serious doubts expressed in this regard in the PCR (para. 8.03). The unsuccessful experiment with winch lorries had a serious impact indeed. It greatly delayed work under the project, strained relations between supervision staff and project authorities, was costly, and adversely affected the location of sawmills. IDA's part can be questioned in two respects. First, the appraisal judgment was proven wrong. This experience points to the need for a special review of proposals to introduce in Bank/IDA projects technology which is completely new to the Borrower country. 27. The second question concerns project supervision and resolution of problems related to the choice of technology. While there was resistance from TCN to the implementation of the winch lorry component, particularly the associated technical assistance part, IDA was inflexible without gathering additional information in the field. Eventually, 58 lorries were acquired and transported to the project sites - only to be subsequently found unsuitable. After unsatisfactory trials the winches were removed and the lorries gradually redeployed, mostly outside the project area. There is a possibility that IDA-s inflexibility in this case was related to staffing of the earlier - 7 - supervision missions, which was the same (on technology) as at appraisal. It would have been prudent to engage new expertise for a "second-opinion", either on the first supervision mission or certainly as soon as it became apparent that there was a problem. 28. There were also problems related to procurement and other Bank procedures. These were resolved with IDA assistance, but only after a long delay, and the audit agrees with the conclusion reached in the PCR that project implementing entities must be familiar with the required procedures (para. 9.02). Since staffing of these entities is usually incomplete at appraisal, it becomes the responsibility of the initial supervision missions to assure that the necessary expertise is being made available. E. Project Content 29. Observation of project works and activities in the field and careful scrutiny of the project cost summary call for a comment on the items that were actually funded under the project. Of the total project cost of NRs. 52.1 million, 55% was related to forestry (including technical assistance), 27% to the World Food Program, 15% to settlement, and 3% to farm inputs. Hence, only 45% of total cost was related to the settlement organization and farmers, of which nearly two-thirds was accounted for by food aid. According to audit estimates, about NRs. 6.1 million was NRC overhead and only NRs. 3.1 million, or 6% of total project costs, benefitted farmers directly. These direct benefits relate to village hand pumps, schools, clinics and farm inputs. The NRC overhead relates to the construction of area headquarters, the purchase of vehicles and staff salaries. Except for designing the village lay-out, the physical accomplishments in the villages and fields were mostly those of the settlers and represented almost entirely labor rather than capital investment. The food aid also benefitted the farmers, of course, but in the form of a consumption subsidy rather than investment. 30. This experience shows that a disproportionate share of project costs can be absorbed by overhead items unless a competent and vigorous effort is aimed at investments directly benefitting the settlers.11 This is one of the areas where IDA supervisions were unable to intervene effectively. As a result, the project settlements, while economically viable, tend to be extremely modest if not actually poor. Village roads basically do not exist, the farms are equipped with very few implements, effective credit channels have not been established, marketing and storage of village produce basically remain undeveloped, demonstration farms have not been established, and stumps have not been removed from the fields. Moreover, of the social infrastructure that was provided, many schools remained uncertified by the Ministry of Education and thus substandard, and delivery of health services was haphazard 1/ Project Authority absorbing a disproportionate share of project costs was also noted by OED in a number of settlement and agricultural development projects (see Rwanda Mutara Project, OED Report No. 3520, dated June 24, 1981 and Indonesia North Sumatra Smallholder Development Project, OED Report No. 3958 of June 21, 1982). -8- at best. A high frequency of eye disease was observed by the OED mission at Kailali, for example, without the problem having been diagnosed. A more balanced investment package in favor of the settlers would very likely have accelerated the pace of improvement in living standards and raised the return on investments. 31. The PCR notes the lack of accomplishment concerning the construction of roads (paras. 3.28-3.31) but in the audit's view understates the serious consequences of the villages relative inaccessibility. Not only is the settlement population having great difficulty transporting goods into and out of the villages, but it is actually cut off from essential social services for a good part of the year. The proposed project roads were primarily forest extraction roads and it is not clear to what extent these roads, had they been built, would have met the villages' transport needs. But the lack of bridges would still have left the rivers impassable during the rainy season even with the project roads. The design of settlement projects should give higher priority to access to the regional transport network than has been the case with this project, i.e., through a more suitable selection of sites, the provision of project access roads or extension of roads into the vicinity of the project area under an already ongoing construction program with financing from non-project sources. F. Environmental Impact 32. The river system in large portions of the Terai is extremely un- stable, changing course with every flood and threatening human settlements within a considerable distance from existing river beds. Where the surround- ing areas are still covered with forest, the floods are much less destructive. Deforestation thus tends to greatly increase the erosive impact of floods and, indeed, the probability of floods occtirring. It was expected under the project that these concerns would be taken into account in the siting of villages and of fields and tracks and that protective forest would be pre- served where required. 33. The PCR correctly states the adverse environmental impact of the project (para. 5.18). Areas were completely clearfelled regardless of the slope of the land, posing erosion hazards after removal of the stumps and creating a future shortage of firewood after the stumps are used up. The conflict between agricultural interests and wildlife preservation remains unresolved. While wild animals are easier to control in the cleared, open areas, the plantation-like cultivation interferes with their migration patterns and occasional forays from the remaining forest cause considerable crop damage. Environmental damage continues to be done by the squatters, but clearfelling of large areas has been less prevalent recently than it was under the project. 34. It is imperative that environmental concerns are more fully and systematically taken into account in the utilization of the Terai forest lands. The first step that needs to be taken is to resolve the problem of conflicting land use for forestry, agriculture and wildlife preservation purposes and clearly demarcate the areas with respect to the designated future - 9 - use. The land assigned to be cultivated around new settlements must be chosen so as to inflict minimum damage on the environment.1/ Within these areas enough space covered with trees must be preserved to meet fuelwood and other requirements and suitable conservation methods introduced. In this respect, the reforestation of community plots in the Kanchanpur project area is a step in the right direction, except that some of these plots should not have been cleared in the first place. 1/ Environmental issues have also been raised by OED in similar settlement projects (see Malaysia Johore Land Settlement Project, OED Report No. 4221, dated December 17, 1982).  - 11 - TABLE 1 PROJECT PERFORMANCE AUDIT REPORT NEPAL SETTLEMENT PROJECT (CREDIT 505-NEP) DISBURSEMENTS Credit Agreement Final Category Schedule 1 (08/14/74) Disbursement/a (US$ millions) (US$ millions) 1. Civil works included in parts B and D of the project./b 1.10 0.62 2. Equipment and vehicles 2.00 1.78 3. Incremental amount of ADBN short-term sub- loans for seasonal inputs such as fertil- izer, pesticides and seed. 0.40 4. ADBN medium-term sub- loans for such items as bullocks and tools . 0.60 0.05 5. NRC costs in the Project Area (other than civil works). 0 30 0.37 6. Consultants- services 0.60 0.11 7. Unallocated 1.00 - Total disbursed 6.00 2.93 Amount cancelled - 3.07 /a As of 10/22/82, the date of final disbursement from the Credit and cancellation of the remaining balance. /b Includes the construction by TCN of 26 sawmills and related civil works, the provision of related vehicles, and the construction of necessary basic infrastructure in areas to be settled (NRC offices and staff housing, food and produce stores, workshops, roads, wells, schools and health clinics).  Annex I WORLD FOOD PROGRAMME - 13 - PROGRAMME ALIMENTAIRE MONDIAL PROGRAMA MUNDIAL DE ALIMENTOS Pleaseque: FP 5 WGPAL 22 3 via delle Terme dC Caracarie cable Address: WORLDFOOD, ROME Rétérence, FP 5/2 Tel. 57971 Srvase citr 00100 - ROME Telex: 68096 WFP , 612030 WFP I 610481 WFP l ii M4; 1983 Dear Mr. Kapur, This acknowligez re,c2ipt of :rour letter of 1 1arch * wi th which :ou forwarled a cop- of th- draft project o,rfornance report for a Iepal settlement project, joint:r a itec b:; the . or'-] Bunk, under Droject CREDIT 505 NYP and the WFP, under our pro .]Oct 23 - Resettlement in the Terai. We are cleaed to sav that wc h$ýv- no objection- to the stntements and conclusions roncernin- tn- project. Attention is, howeer, drawin to a typin,f- error on Pa7 7 in the first line. Wc are very grat'ful for haviner been con=ulto prior to the finaliration of your docrmnt. Pro' rn Mr. Shiv S. Kapur Dir,ctor Operations Evaluation Denartrnnnt Th, Wo r1 d Bank 1818 H. Street, N.U. Wa2hington, .).C. 20W? U.S.A.  - 15 - NEPAL SETTLEMENT PROJECT (Credit 505-NEP) PROJECT COMPLETION REPORT September 21, 1982 SOUTH ASIA PROJECTS DEPARTMENT  - 17 - NEPAL SETTLEMENT PROJECT (Credit 505-NEP) PROJECT COMPLETION REPORT I. SECTORAL BACKGROUND 1.01 By almost any standards, Nepal is one of the world's least developed countries. Per capita annual income is estimated at $140 (1980) and has remained stagnant during the past decade. Health and education standards are well below the average for South Asia: life expectancy at birth is only 44 years, infant mortality is around 150 per thousand births, and adult literacy is of the order of 20 percent. Moreover, the physical and other obstacles to development, when viewed together, are much more severe than those found in most other countries. Part of the explanation for past stagnation lies in factors beyond Nepal's control: difficult natural environment resulting in extreme inaccessibility of many parts of the country, landlocked position, and the need to first establish a basic infrastructure. On the other hand weakenesses in economic policy and administration are also partly to blame. Problems with project implementation are common and persist in most sectors of the economy thereby lowering the rate of growth of capital formation. In addition the expected returns on those investments which took place often did not materialize because necessary and complementary investments were lacking. 1.02 Nepal's economy is based on agriculture which accounts for nearly 60 percent of GDP and provides the main source of livelihood to over 90 percent of the population. Crop production accounts for about 60 percent of agricultural output, livestock for 30 percent and forests for 10 per- cent. Paddy is the predominant crop (planted on about half of the total cropped area), followed by maize, potatoes, wheat and millet; and cash crops (oilseeds, jute, sugar and tobacco) are grown on about 10 percent of the cropped area. About 25 percent of total rural incomes arise from non-agricultural activities of which cottage industries are one of the most important. 1.03 Development efforts have also been handicapped by the worsening demographic situation. The rate of population growth has been accelerat- ing and Nepal's population grew from about 8 million in 1950 to 15 million in 1981. Population density per unit of arable land in the Hills and Mountains where two-thirds of the population live, has reached the alarm- ing level of 1,500 persons per hectare, and is threatening to overwhelm the resource base of the economy. - 18 - 1.04 Below subsistence conditions in the Hills and Mountains have forced increasing numbers to migrate in search of work and land, both on a seasonal and a permanent basis. Prior to the 1950s two factors limited the scope for migration to the Terai, a heavily forested area forming the country's southern border with India and amounting to about 17 percent of Nepal's land area. First, the dense forests were malarious and considered unfit for habitation, and second, much of the forests were owned by mem- bers of the ruling Rana hegemony and settlement was actively discouraged. By the 1950's, however, the incidence of malaria was largely controlled and in 1957, after the Ranas' were overthrown, all private forests were nationalized and jurisdiction over them, as well as over ownerless land, was transferred to the Ministry of Forests. As a result, vigilance against spontaneous settlement was reduced. At the same time, the popula- tion was growing in the Hills, and this put new pressures on the Terai forests. Initially, settlers both from the Hills and from India were only a trickle, but the tempo quickly picked up and between 1961 and 1971, 400,000 people are estimated to have migrated permanently from the Hills to the Terai. The pace of settlement has continued, and the 1981 census results show an annual average rate of population growth between 1971 and 1981 of 4.1 percent in the Terai compared with only 1.6 percent in the Hills and 1.4 percent in the Mountains. Settlement has made substantial inroads into the forest area. As a result, the Terai forests, which have long been a source of commercial timber and exports to India, and which provided important revenue for the government, are diminishing rapidly. It has been estimated that with the present rate of destruction and increased demand from a growing population, they may disappear entirely by about the year 2000. 1.05 The growing numbers of settlers caused official concern as early as 1960 when the need to organize settlement on a rational basis was recognized. However, official programs have played only a minor role in settlement. During the decade 1965-75, only 9,000 ha were settled under Government programs compared to some 120,000 ha settled spontaneously. Spontaneous settlement has been wasteful in terms of timber yield as the squatters burn standing trees. Limited expansion of organised settlements has been due to difficulties in obtaining top level decisions on release of forest land, the time taken to introduce organized logging and sawmill- ing and the limited institutional capability of Government agencies to handle large-scale settlement projects. - 19 - II. PROJECT FORMULATION GENERAL 2.01 Recognizing the need for organized settlement on a national basis, His Majesty's Government (HMG) sought advice from Israeli experts in 1960. They recommended: (1) establishment of the Nepal Resettlement (Purnavas) Company to initiate and oversee settlement projects throughout the king- dom, and (2) concentration of settlement in the Terai with its vast areas of potentially cultivable land. The NRC was subsequently established in 1963 and placed under the control of the then Ministry of Food, Agricul- ture and Irrigation (MFAI). NRC's four major objectives were: (a) Shifting Nepal's population from the more densely populated Hills to the Terai, thereby improving the man-land ratio; (b) bringing additional lands under cultivation, especially lands along the Nepal-India international border; 1/ (c) providing a fresh start for disadvantaged groups such as the landless, flood victims, returning foreign migrants, and ex-servicemen; and (d) increasing settlers' agricultural productivity (through tech- nical advice, provision of credit, and formation of coopera- tive societies). The first settlement project undertaken by NRC was started in 1963 in Nawalparasi District (Lumbini zone), and was followed by projects in Khajura (Banke District), and in Bardia, Kanchanpur, Jhapa, and Kailali Districts. By 1973, NRC had settled about 5,600 families and distributed some 7,000 ha of land. 2.02 In 1968, HMG established the Resettlement Department (RD) within MFAI and placed NRC within it. RD was to be primarily concerned with resettlement policy, but the distinction between the activities of both RD and NRC soon became blurred. RD, however, became largely involved in resettlement arising out of disaster relief and in resettling "illegal" encroachers in forested areas. 1/ The decision to encourage settlement, and clear fell in a strip, two to four miles wide, on the international border was arrived at by HMG in 1970 in order to eliminate a refuge for robbers and smugglers and to discourage anti-national activity. - 20 - IDENTIFICATION AND PREPARATION 2.03 In May, 1970 a Bank Economic Mission recommended, among other matters, a study of the feasibility of establishing pulp and paper, plywood and veneer factories. In the following year the Hetauda Plywood Project was prepared by FAO/IRBD Corporative Program (FAO/CP) and presented for Bank consideration. A by-product of the FAO/CP Preparation Mission was the identification and preparation of a possible forest exploitation and settlement project. 2.04 The project was prepared in 1971 and was presented for Bank con- sideration in January 1972. Considerable discussion ensued on the proposals contained in the Preparation Report, both between the Bank and FAO/CP and the Bank and HMG. However, a Bank Reconnaisance Mission, fielded in June 1972, recommended re-framing the project in view of HMG's proposals to clear increased forest areas over a period of five years, and to seek Bank financing only for the mechanical equipment required to reach clearing targets. The Bank, however, believed that settlement was an integral part of the project and that financing only the purchase of felling and logging equipment was not a suitable subject of Bank opera- tions in Nepal. HMG, subsequently, agreed with the Bank's view and a few months later, HMG requested Bank assistance in the preparation of a forestry/resettlement project to be located in the Western Terai. 2.05 A second FAO/CP Preparation Mission then visited Nepal in March/April 1973 and their report (July 1973) formed the basis of a sub- sequent project appraisal. Settlement under the project was to take place in three districts: two districts in the Far Western Region (Kanchanpur and Bardia) and one in the East (Jhapa). Total project costs were estimated at US$ 9.9 million with a foreign exchange component of US$ 6.2 million (63%). APPRAISAL, NEGOTIATION AND APPROVAL Appraisal 2.06 A Bank Appraisal Mission visited Nepal in October/November, 1973. Among their more important findings were: (i) Land suitable for agriculture was less than had been estimated by the Preparation Mission -- only about 6,600 ha for settle- ment of 3,900 families; (ii) Timber quality was lower than forecast so that revenues would be lower. The Mission, therefore, proposed a less costly method of logging so that the project could still be economi- cally viable; - 21 - (iii) Establishment of a new corporation (the Terai Settlement Corporation recommended in the Preparation Report) was unnecessary; the project could be effectively implemented through strengthening of existing organizations: the Timber Corporation of Nepal (TCN) for logging and milling; the Nepal Resettlement Company (NRC) for settlement and extension; and the Agricultural Development Bank of Nepal (ADBN) for provid- ing credit to settlers; (iv) The need for upward revision of TCN and NRC pay scales, in order to attract suitable staff to the project areas; (v) The need for effective project coordination through the estab- lishment of a Project Coordination Committee, comprising, among others, the Directors of TCN and NRC and their respec- tive General Managers; and (iv) The need for topographical and soil surveys, and a forest inventory in the proposed project areas of Kanchanpur, Bardia and Jhapa. 2.07 The proposed project, as presented to the Issues Meeting on Decem- ber 12, 1973, provided for timber extraction and sawmilling to be carried out by TCN, and settlement by NRC. The project envisaged, over a period of five years, to fell timber on about 8,650 ha of forest lands to be demarcated and on 1,000 ha of land already allocated to TCN, in Kanchanpur West Bardia and Jhapa Disricts; and to settle about 3,900 families on cleared land and make available land for a further 1,500 families already in the proposed settlement areas. Preliminary mission estimates indicated that the total cost of the project would be about US$4.0 million, of which foreign exchange component was US$2.5 million. 2.08 The Mission, however, believed that, subject to detailed survey, additional land in West Bardia and Kanchanpur Districts could be included from year 4 of the project, and it was likely a further 4,450 ha could be added in each of the two locations. This would then raise the total project area to 17,550 ha (excluding existing Kanchanpur area) and provide for the settlement of 7,900 settlers. Such a felling and settlement program would, however, depend upon strengthening of the managements of both TCN and NRC and require the timely provision of technical assistance and staff training. The expanded size of the project was estimated to raise the project cost to US$9.9 million, with a foreign exchange com- ponent of US$6.2 million. - 22 - 2.09 The main issues were: (i) Project size and phasing: The Mission had proposed that ini- tially only 3,900 families could be settled -- a number far smaller than had been recommended by the Preparation Mission. The Mission, however, felt that with improved logging techniques, the provision of technical assistance, and adequate surveys, the number of settlers could be increased to 7,900 settler families in years 4-6 of the project. (ii) Farm plot size: Although the proposed 2 ha plot per family appeared to be small, the Mission recommended acceptance as this size would be in accord with HMG policy and would also yield annually agricultural production of the value of about US$300 (higher than the estimated average national income). (iii) Irrigation potential: The Mission recommended inclusion of a sum of US$200,000 for studies into the irrigation potential of Kanchanpur District. (iv) Rates of interest: The Mission requested that HMG agree to the proposed annual rates of interest: for farm credit, 10 percent for short-term and 7.5 percent for medium term; and for funds lent to TCN, 7.5 percent. 2.10 The meeting endorsed the Mission's proposals. However, on the question of interest rates, the meeting felt that HMG should directly on-lend funds to TCN rather than use ADBN as a conduit. Negotiations 2.11 The project was negotiated between April 22 - May 3, 1974. As a result of these negotiations, only four conditions of effectiveness were agreed: (a) signing of a project financing agreement between HMG and TCN and NRC; (b) signing of a subsidiary loan agreement between RMG and ADBN; (c) establishment of a Settlement Coordinator Committee (SCC); and (d) submission by NRC of satisfactory evidence of NRC's right to operate and hold land in the areas where project operations would initially commence. Approval 2.12 The project was presented for Board approval on June 13, 1974 and was approved as negotiated. - 23 - PROJECT DESCRIPTION OBJECTIVES 2.13 The project's main objectives were: (i) felling of timber by TCN over five years on about 17,600 ha 1/ of newly alienated forest land, and on 1,000 ha of land already allocated for settlement, in Terai areas of Kanchan- pur, Bardia and Jhapa Districts; (ii) construction by TCN in Kanchanpur, Bardia and Jhapa Districts of about 26 small sawmills, each with a capacity of about 100,000 cubic feet of sawn lumber per year, together with related civil works, and the purchase and installation of related vehicles, machinery and equipment; (iii) settlement by NRC of about 7,900 families on felled land, including provision of rations during the first nine months after settlement, agricultural advice and demonstrations and credit to farmers to assist in the purchase of agri- cultural inputs such as seeds, fertilizers, pesticides, tools and bullocks; (iv) strengthening of NRC through provision of staff, training, equipment and vehicles to enable the construction of infrastructure in settlement areas including NRC offices and staff housing, food and produce stores, workshops, roads, wells, schools and health clinics; and (v) provision of technical assistance and equipment to enable HMG to: (a) carry out a soil survey in the Western Terai to determine sites and areas for future settlement programs; and (b) develop the irrigation potential in settlement areas. The total project cost was NRs 122.30 M (US$11.54 M) with a foreign cost of NRs 72.97 M (US$6.88 M). The rate of return to the economy was estimated at 42 percent. The project was expected to be completed by July 15, 1981. 1/ The figure of 17,550 ha (para 2.08) was rounded to 17,600 ha. - 24 - 2.14 Location. Two of the three project areas are located in the far western Terai, adjacent to the Indian (State of Uttar Pradesh) border; the third in Jhapa District, is in the extreme eastern Terai, a few kilometers from the Indian State of Bihar. The project was to cover the following six sites with a total area of 18,550 ha: Western Terai Existing settlement areas 1. Kanchanpur 1,000 ha New settlement areas 2. Kanchanpur A 2,400 ha 3. Kanchanpur B 4,450 ha 4. Bardia A 4,250 ha 5. Bardia B 4,450 ha Eastern Terai New settlement areas 6. Jhapa 2,000 ha PROJECT COMPONENTS Forestry 2.15 TCN was responsible for all felling operations. Trees above 11" in diameter, were to be felled manually, and then trimmed and cut by chainsaws to speed up the process. Trees less than 11" in diameter were to be left standing to be used later by the settlers for housebuilding, firewood and fencing. In Kanchanpur and Bardia, the project was to adopt a system of mechanical extraction of logs using winch lorries (the project would purchase 45 of these) and which had proved successful under Malaysian conditions. Three considerations influenced the choice of this system over the customary method of log extraction using bullock carts. First, the existing system was believed to be inadequate to handle the log volume expected under the project. Second, winch lorries could transport longer, and thus more valuable logs, than bullock carts. Third, speed in extraction was essential in order to prevent deterioration of logs. In Jhapa District, however, logging was to be undertaken by contractors and extraction by the traditional system of bullock carts. 2.16 In the first project year, logs were to be transported from the felling sites in Kanchanpur and Bardia Districts direct to railhead in - 25 - India and sold as logs but after the sawmills were constructed (14 units in Kanchanpur, 12 in Bardia), these were to be and converted into sawn lumber. Since transportation of logs within project areas always takes place in the dry season (November to May), provision was made for con- struction of 50 km of dryweather roads each in Kanchanpur and Bardia settlement areas. For transport of timber outside the project area and to railhead in nearby India, however, provision was made tor the construction of 4 km of all-weather roads at Kanchanpur and 11 km at Bardia sites. To further reduce turn around time at the sawmills, and eliminate the cus- tomary use of manual log handling, the project provided for mechanical front-end rubber-tired loaders -- two each for the Kanchanpur and Bardia mills. At Jhapa, contractors were to cut and deliver logs, either to the existing private sawmills at Bhadrapur, or to the nearest raithead for direct sale to India. The road system at Jhapa was deemed adequate. HMG gave assurances that in all cases TCN would have the discretion to sell felled trees either as logs or lumber, depending on the relative markets for the two products, and would sell either locally or in toreign warkets, again depending on relative prices. It was, however, assumed that after the first project year maximum financial benefits would accrue by market- ing all production from the Kanchanpur and Bardia sites as lumber, and from Jhapa as logs. 2.17 TCN logging operations were to be scheduled in a manner that all heavy timber would be felled and cleared before settlement. This was necessary both to recover the full value of the trees and to promptly make agricultural land available to the settlers. Settlement 2.18 Land development. It was planned that selected settlers would arrive at the settlement sites in the cool, dry months between October and December. On arrival they would receive one-third of their 2 ha plots (0.68 ha) as a house plot. This would be first cleared, and a temporary dwelling constructed. A year after initial settlement, the settlers would receive their main farm plot -- 1.36 ha. This plot would be clear felled and stumped over a period of three years: 0.68 ha in the second year after settlement, and 0.34 ha each in the third and fourth years. Full farm development would be attained by the fifth year after arrival. 2.19 Settler selection. While settlers were to be drawn mainly from landless rural Hill families, or Hill families with inadequate land, a two-stage method for settler selection was designed. Applications were first to be made to NRC through local district officials. Thereafter, NRC was to interview the candidates at a center near their home, and award points according to a scale based on age, number of children, extent of land ownersnip and aptitude for agriculture. Selected settlers were to sign a 10-year bond agreeing to abide by NRC regulations and which would - 26 - entitle them to the temporary right to reside and cultivate the land allotted to them. 2.20 Settlement villages. It was planned to group the settlers together in villages comprising about 250 families each. The total area occupied by each village community was to cover about 550 ha, excluding land set aside for village infrastructure (roads, schools and housing etc). In each scheme (totalling three in all) NRC were to build a per- manent headquarters, a store for food and marketable produce, and a clinic to be staffed by HMG's medical service. NRC were also to provide wells for drinking water equipped with handpumps at the rate of one well to every twenty settler families. Each scheme was also to include a small demonstration farm, and a settler orientation center, equipped with visual aid equipment. 2.21 Legal. Initially, settlers were only to have the right to lease their plots. However, commencing in the fourth year after settlement, settlers were to be given the right to purchase their land by paying interest-free installments of not less than NRs 90 per year (US$ 8.49) towards a total purchase price of NRs 900 (US$ 84.9). Agriculture 2.22 Cropping patterns. The project envisaged separate cropping plans for the house (0.68 ha) and farm (1.32 ha) plots. In Kanchanpur and Bardia areas, once temporary dwellings had been constructed, settlers were to plant vegetables, on the remainder of the cleared house plot, until the advent of the next monsoon (June of the following year) when maize was to be grown, followed in the winter season, by mustard and pigeon pea. As for the farming plot, it was expected that during the first three crop years maize would be grown during the main cropping season, followed by mustard in the winter season. At Jhapa where soil and climate conditions differed, a smaller area was to be sown to mustard in the first crop year, and millet planted instead in the second crop year. 2.23 Extension. The main purpose of agricultural extension was to assist Hill farmers to adapt to the Terai farming conditions and to achieve optimum farm production as soon as possible. Extention was to be provided by NRC staff specially trained by an internationally recruited consultant, the Agricultural Adviser. Settlers were to attend orientation courses on arrival, and demonstration farms were to be established. Credit 2.24 Settlers were to obtain seasonal inputs (including seeds, fer- tilizer and pesticides) from the Agricultural Marketing Corporation (AMC) against short-term credit vouchers issued by ADBN. ADBN was also to supply credit for the purchase of medium-term inputs (such as agricultural - 27 - tools, and one bullock per settler family) and when neccessary, for food. Credit was, however, to be supplied only through settler cooperatives (organized by NRC) and atter preparation of a farm plan, by NRC or ADBN, accepted by the settler. ADBN was to make loans to cooperatives at 7 percent interest per annum for short-term, and 5 percent per annum for medium-term credit; cooperatives would then on-lend the funds to farmers at 10 and 7.5 percent tor short-term and medium-term loans, respectively. World Food Program 2.25 As agreed at the time of appraisal that World Food Program (WFP) were to supply settlers, during the first nine months after settlement, tree food which would suffice to tide over the period between settler arrival, clearing ot land, home building and the first harvest. Further tood requirements and shortfalls between production and family consumption were to be met by ADBN through medium-term credit. Such arrangements were to terminate at the end of the first 18 months after arrival. ORGANIZATION AND MANAGEMENT 2.26 TCN. Several considerations favored selection of TCN, a govern- ment owned corporation, as the agency to fell, extract, and sell timber. It was, however, believed that TCN needed strengthening, particularly in the fields of winch lorry operation and maintenance, and marketing of timber. HMG therefore agreed that the appointment by TCN of two winch lorry operators and two winch lorry mechanics would be a condition of disbursement against any amounts allocated under the Credit for purchase of equipment and vehicles. TCN also undertook to appoint a Lumber Sales Advisor by August 31, 1975, to assist in the export of its products. HMG, on its part, undertook to permit TCN, at TCN's discretion and without restrictions, to dispose of the forest produce resulting from felling operations in project areas, either locally or abroad, and either as logs or lumber. TCN also agreed that, during the project period, the post of TCN General Manager would at all times be filled by a competent and qualified person. Furthermore, the Corporation would submit a staffing plan for International Development Association (IDA) approval by December 31, 1974. 2.27 NRC. The project envisaged strengthening of NRC staff both at Headquarters and in the field. At Headquarters, it was agreed that a Deputy General Manager, a Chief Agricultural Officer, and a Civil Engineer would be appointed by December 31, 1974. In the field, it was agreed that each settlement area would be administered by a manager, assisted by an agricultural officer experienced in extension activities. To assist in extension training, NRC agreed to appoint an Agricultural Advisor by December 31, 1974. Recognizing the temporary nature of settlement opera- tions and difficulties in recruiting personnel for the project frora out- side 11MG employees, NRC agreed to provide incentives to staff to ensure - 28 - adequate staffing in project areas. A staffing plan was to be submitted for IDA approval by December 31, 1974. Further, to prevent NRC staff from being stretched too thinly and thus intertere with etticient project implementation, it was also agreed that NRC would consult IDA before undertaking any substantial additional settlement activities during the project implementation period. TARGETS AND GOALS 2.28 Proposed phasing of timber extraction and settlement as envisaged at the time of appraisal was as follows: Project Year 1975/76 1976/77 1977/78 1978//9 1979/80 1980/81 1981/82 Timber Extraction (Hectares) Annual 1,300 2,500 4,500 4,500 4,000 1,750 - Cumulative 1,300 3,800 8,300 12,800 16,800 18,550 - Settlement (Number) /a Annual - 405 855 2,045 2,015 1,800 780 Cumulative - 405 1,260 3,305 5,320 7,120 7,900 /a This excludes 1,500 families already settled at Kanchanpur. Before start of operations, the project provided for the carrying out detailed boundary, base line, forest inventory and soil surveys and preparation of structural layout plans, all to be satisfactory to IDA. 1/ These surveys were intended to provide an accurate means for identifying areas unsuitable for agriculture and giving an inventory of forest resour- ces, by size and species. The structural layout plans were meant to indicate areas to be developed tor agriculture and settlement, and areas to be reserved for other purposes, such as tirewood, communal grazing or public service centers. 2.29 Forestry. It was estimated that over a period of five years the total timber extracted under the project would be 600,000 m3 (log or equivalent) with a gross value of NRs 247M (US$ 23M), and a net value of NRs 150M (US$ 14M). Further, the project would provide part or full-time annual employment to about 1,100 settlers over a period of six years with prospects of continuance thereafter. 2.30 Settlement. The project envisaged settling of 7,900 farm families, in addition to the 1,500 already settled at Kanchanpur over the 1/ Guidelines for the surveys, inventory, and layout plans were provided in the Staff Appraisal Report (SAR) -- Appendix to Annex 2. - 29 - project life in areas cleared of the torest. With extension, the intro- duction of improved seed varieties, the application of fertilizers, and provision of credit, it was estimated that at full development annual production per farm in the settlement areas of Western (Kanchanpur and Bardia) and Eastern Terai (Jhapa) would be as follows: Crops Western Terai Estern Terai Maize 1,800 kg 1,200 kg Paddy 600 kg N.A. /a Mustard 900 kg 210 kg Pigeon Pea 160 kg 160 kg Chick Pea 180 kg Jute - 1,400 kg Millet 600 kg /a The Appraisal Report contains no estimates of the amount of paddy/rice to be produced at Jhapa. The annual total net value of crops was estimated at NRs 2,700 (US$ 250) per family in the Western Terai, and NRs 3,700 (US$ 350) in the Eastern Terai, which would be greater than the settler families could earn from any previous activity (assumed to be mainly labor). Settlers were expected to be able to feed themselves within two years of settlement and that, at full development, only 40 percent of crop production would be retained for domestic consumption and the balance sold (mainly in the Indian market) through settler cooperatives. III. PROJECT IMPLEMENTATION CREDIT EFFECTIVENESS 3.01 The credit agreement was signed on August 14, 1974 after some delay due to "procedural complications" requiring HMG authorization to permit the Ambassador to Washington to sign the credit. The date tor credit effectiveness, initially set for December 20, 1974, was extended by two months and the credit finally became effective on February 20, 1975. 3.02 The initial delays in signing of the Credit Agreement and com- pliance with the conditions of effectiveness delayed project implementa- tion, which had been phased on the basis of commencement of logging and extraction in the dry season of 1974/75, and settlement in the monsoon of 1975/76. Thus the project was nearly two years behind schedule as of October 1975. - 30 - 3.03 Additional problems also started developing at about the same time and hampering project implementation. HMG began reconsidering the whole strategy of resettlement, when it was discovered in 1976 that only 22.4 percent of the total area of the Terai was covered by forest. Second, NRC, with the active concurrence of HMG, was considering reduction of plot sizes to accommodate increasing number of settlers. Third, the actual locations of settlement sites became the subject of dispute between TCN and the Forest Department. These circumstances necessitated re-examination of the entire project. DESIGN CRANGES 3.04 A review mission in August 1976, followed by a supervision mission in November/December 1976, reviewed the project in consultation with HMG and recommended the following changes in project areas, areas to be clear-felled and numbers of families to be settled: Timber Extraction (Hectares) Number of May 1974 Nov./Dec.76 families Project Areas Appraisal Supervision to be settled Appr. Nov/Dec Kanchanpur (Existing) 1,000 1,000 426 426 Kanchanpur A 2,400 2,400 1,022 1,022 Bardia A 4,250 4,250 1,810 1,810 Jhapa 2,000 - 852 - Kanchanpur B (Kailali) 4,450 3,600 1,895 1,354 Bardia B 4,450 - 1,895 - 18,550 11,250 7,900 4,612 The total area for settlement was thus reduced from 18,550 to 11,250 ha and the number of settlers reduced proportionately to 4,612. Jhapa and Bardia B areas were excluded from the project and Kailali replaced Kanchanpur B. It was also recommended that the project life be extended to July 15,1982 to accomodate the initial delays. The revised implementa- tion schedule is at Annex 1, Table 1. In view of the reduced area avail- able for settlement and increasing demands of settlers, the question of reducing the holding size became pertinent. The May 1977 supervision mission addressed the issue and it was agreed with HMG to reduce plot size from the original 2 ha to 1.5 ha. This reduction (it was estimated) would allow for settlement of 6,250 farm families on 11,250 ha of forest land cleared and would provide subsistence and an annual cash surplus of around NRs 1,000 (US$94) per family. 3.05 These design changes reduced project cost by 31 percent from US$11.5M to US$8.0 M but with no reduction in the credit amount. The rate of return on investment was estimated to increase to 51 percent (the original estimates being 42 percent). Revised project costs are at Annex 2, Table 1. - 31 - PHYSICAL IMPLEMENTATION FORESTRY 3.06 TCN did not commence forest clearing and sawmilling operations at Kanchanpur and Bardia until the 1976/77 season. Since Kailali, (sub- stituted for Kanchanpur B) was a new area with no existing infrastructure, land clearing and sawmilling did not start there until the 1977/78 season. In each of these project areas, land clearing tailed to gain momentum until the second year and sawmilling took 3 years to build up production. A number of tactors contributed to these delays: a) Lack of experienced staft and manpower, b) Uncertainty on the areas to be allocated for clear-felling, c) Lack of IDA procurement experience, d) Problems in conversion of winch lorries, e) LacK of coordination between Ministry of Forest, TCN and NRC, t) Inadequate planning and coordination at the project level, g) Diversion ot local management ettorts to existing projects, and h) Huge inventory of logs and lumber due to the ban on export of logs. 3.07 Recognizing these bottlenecks, targets for land clearing and sawmilling were revised in May 1977, as follows: Project Years 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 Totals Land clearing (ha) 450 1,050 2,350 2,450 2,450 - 11,100 Log volume (m ) 36,775 88,332 180,270 187,481 173,059 169,454 835,371 Sawm lumber (m ) 10,477 38,228 52,386 52,386 52,386 52,386 258,249 3.08 As against these targets, physical progress was slow as apparent trom the data given in Annex 1, Tables 2 and 3 (a, b and c); the summary ot the result is as follows: Project Years 1976/7/ 1977/78 1978/79 1919/80 1980/81 Total Land clearing (ha) 550 1,350 2,195 1,740 1,465 7,300 Log volume (m ) 61,797 34,402 54,998 90,953 66,628 308,778 Sawn lumber (m ) 8,703 6,747 19,428 27,419 19,199 81,496 - 32 - 3.09 At the time of Project Completion, the mission found that only 7,300 ha of forest land had been cleared or 66 percent of the revised target. Log production wag 308,778 m3 or 46 percent of revised target and timber production 81,496 m or 39 percent of target (Annex 1, Table 4). 3.10 From its inception, the project was plagued by bureaucratic delays. The appointment of a Deputy General Manager, responsible for the project, was delayed and eventually made in July, 1978, but he was in post for only three months. The Forest Department was slow to indicate plots for clearing with the result that forest blocks were not available for felling until the beginning of the 1976/77 season. There was lack of coordination both at policy and operational levels; work programs were set in Kathmandu without accurate information about forest resources. The remoteness of project areas and unreliable communication with Kathmandu also made planning difficult. SETTLEMENT 3.11 Settlement in the project areas did not commence until July 1977. In view of delays in the land clearing and the revision of its targets, the settlement program was also affected. The implementation schedule for settlement as revised in May 1977, and the number of farmers actually settled by 1980/81 is given in Annex 1, Tables 1 and 5. In summary form the results are: Project Years 1977/78 78/79 79/80 80/81 81/82 82/83 Total Families settled (number) Revised target 240 565 1,325 1,385 1,385 1,350 6,250 Actually settled 364 1,116 1,146 153 - - 2,781 By July 1981, only 2,781 had been settled, representing 35 percent of the original appraisal target, and 44 percent of the revised target. Settle- ment dropped off dramatically in 1980/81 when NRC was ordered by the Ministry of Forests in September of that year to stop land distribution and any further selection of settlers until further orders. The order was still in torce at the time of project termination. 3.12 Settlers were grouped together in villages of approximately the size recommended in the Appraisal Report. However, at no time during the implementation of the project were the agreed guidelines regarding settler selection tollowed. Farm plots were allocated by drawing of lots. People from similar ethnic groups tended to cluster together in the same residen- tial area. Population, and number and size of households were as tollows: - 33 - Settlement Total No. of Average Area population households household size Kanchanpur 3,224 658 4.9 Kailali 4,665 864 5.4 Bardia Taratal 5,602 1,057 5.3 Satbariya 1,050 202 5.2 14,461 2,781 5.2 Household size, however, varied enormously trom 2 persons up to as many as 30. 3.13 Destumping Operation. In the first year of settlement, and under the revised plot size, the settlers were allocated 0.17 ha as a house and kitchen garden plot. In the following year, the balance of 1.33 ha was allotted as the main tarm plot. It was expected that settlers would clear their entire plots within tour years atter settlement. This expectation was probably based on the assumption that logging would be efficient, and that destumping would consequently be a relatively simple matter. In fact, TCN left stumps of varying heights on the land (from 1/2 to 1 meter); the number of stumps left range from about 60 - 100 per hectare and the time taken to remove each stump ranged between an estimated 5 to 10 mandays per stump. To date only two settlers have managed to clear their entire plots. In some other cases, cooperative labor has been used to partially remove the stumps. In most instances, however, destumping has not been undertaken and cultivation takes place between the stumps. This has affected agricultural production as a result of the diminished area available for cultivation 1/. AGRICULTURE 3.14 The pattern of land distribution, area developed for cultivation and area actually cultivated by settlers at project sites are detailed in Annex 1, Table 5; the summary of the result is given below: 1/ Estimates of the area taken up by stumps range from 20 - 30 percent of the total plot. - 34 - 1977/78 1978/79 1979/80 1980/81 1981/82 Total Land distributed (ha) 224 779 957 1,295 171 3,446 Area made available for cultivation (ha) - 244 942 1,980 2,966 2,966 Area actually cultivated (ha) - 84 850 1,649 2,501 2,501 Source: NRC Of the 7,300 ha of forest area felled (para 3.09), only 3,446 ha of land have so tar been settled. The remaining 3,854 ha of land have still to be handed over by TCN to NRC for settlement but result trom the deliberate instructions of the Ministry of Forests in September 1980 not to allocate further land for settlement until instructed to do so. 3.15 By 1981/82, farmers had available for farming 2,966 ha of land (84% of the land distributed), of which the area cultivated was 2,501 ha (/3 percent of the area available for cultivation). 3.16 Procedures for settling the families as discussed in para 2.19 were not systematically Tollowed. Settler's families usualLy received home plots on arrival, but farming plots were given after considerable delays. Sometimes it took several years before the allotment material- ized. In most cases farming plots were first given during or after the monsoon season had started and when the optimum planting time had elapsed. 3.17 NRC did little to develop agricultural infrastructure; feeder roads and market outlets for agricultural produce were non-existent. Arrangements for providing medium and short term credit were unsatisfac- tory as were the availability of agriculture inputs. Even the agricul- tural extension services, for which NRC itself was responsible, remained weak. On average, each scheme had available one graduate agriculturalist, two Junior Technicians (JT), and one Junior Technical Assistant (JTA) per 200 or 300 farmers. The results were generally disappointing. The set- tlers, therefore, had access to agricultural advice that was low in quality and contacts with extension agents were few and tar between. No worth-while field demonstrations were laid out for the benefit of farmers, except in irrigatea paddy tields, ana which constituted a negligible proportion of the cropped area. 3.18 As most farmers were unfamiliar with agricultural conditions in the Terai, it was to be expected that agricultural productivity would increase slowly. Nevertheless, settlers managed to plant 2,883 ha by the 1980/81 season - a creditable performance. The summary of cropped area, - 35 - production, and value of production, (detailed in Annex 1, Table 6) is given below: Project Sites I Cropped Area (Ha) /a I Production (M.tons) Value (NRs) 1 78/79 79/80 80/81 I 78/79 79/80 80/81 I 78/79 79/80 80/81 Kanchanpur I 50 522 1199 1 53 548 1180 1 51890 753687 2140266 Bardia 1 61 553 1205 I 57 475 1395 1 55337 741241 2366955 Kailali | - 41 230 1 - 24 184 I - 42976 341981 Project totalsl 111 1116 2634 j 110 1047 2759 1107227 1537904 4849202 /a Cropped area figures are higher than the actually cultivated area figures (para 3.14) due to higher cropping intensity. The cropping intensities for 1978/79, 1979/80 and 1980/81 work out to be 132, 131 and 160 percent respectively. Source: NRC Over a period of three years from 1978/79 through 1980/81, the total production rose trom 110 m.tons to 2,759 m.tons and the value of crop production, trom NRs 107,200 to NRs 4,849,200. CREDIT 3.19 ADBN was responsible for credit operations in the project area. Sub-Branch Offices of ADBN undertake the making of loans and their collec- tion through the cooperative organization. ADBN provided management to the cooperatives upto May 19/8, but then HMG launched the Sajha Movement and organized multi-purpose cooperatives under the Panchayat systei and which are now managed by the Cooperative Department. Unlike ADBN, the Cooperative Department is not a banking institution; its tunctions are mainly regulatory -- consequently the level ot assistance given to Sajha has fallen off. 3.20 The organization of Sajhas in the project area was weak. In Kancnanpur area, 2 Sajhas existed, the tirst of which serviced 1,3/7 settlers of which only 558 were members; the second covered 907 settlers, of which 358 were members. In Bardia, and Kailali, the situation was no different. First, jurisdiction of the Panchayats (and so of Sajhas) did not coincide with the project areas with the result that many parts of the project areas were not covered by Sajhas. Second, not all the settlers in the project areas were members of the Sajhas, so they did not have access to farm credit or agricultural inputs, nor were they able to sell their - 36 - produce through Sajhas. Since ADBN and the Agricultural Inputs Corpora- tion (AIC) channel credit and inputs through the Sajha system, 1/ the settlers who were not members of the cooperatives or were not covered by Sajhas remained deprived of facilities to promote their farm production. 3.21 At the time of appraisal, the mechanism for supply of credit, inputs and sale of cash crops was detailed. To quote, "no credit would be advanced to a farmer without NSC (NRC) approval, which would not be given without a farm plan having been prepared by NSC (NRC) or ADBN and accepted by the settler" (SAR, p.16, para 6.14). In fact NRC did not take respon- sibility for preparation of farm plans; these were eventually prepared by ADBN. These farm plans were prepared for each Ward (there are 9 Wards to a Panchayat), and contained details of the various kinds of inputs needed by the farmers. The forms are filled by the representative of the Coopera- tive Sub-Committee of the Ward, with the help of JTA and the Cooperative Manager, after discussions with the farmers. Under the plan, recovery of loans was the responsibility of the Ward Committee. 3.22 In the settlement areas, AIC was to supply inputs (e.g. seeds, fertilizers and pesticides) to Sajha for distribution to farmers. ADBN supplied medium-term credit direct to farmers for such items as tools (axes, hand saws, shovels, ploughs, harrows) and one bullock (NRs 900 per farmer). Settlers were responsible for buying the other bullock. 3.23 The amount of ADBN operations in the three project areas is given in Annex 1, Table 7; a summary is given below: 1/ It was reported that 70-90 percent of fertilizer is distributed through the Sajhas. ADBN Credit Operations in the Project Areas 1 1 1977-78 1 1978-79 I 1979-80 1 1980-81 1 Total I I I 10therl I 10therl I 10ther I I 1Other I I 10ther I I I IAgric.lin- I jAgric lin- I lAgriclin- I lAgriclin- I IAgriclin- I I IBullocklTools Iputs IBullocklTools Iputs IBullockIToolsiputs (BullocklToolslputs IBullockIToolsIputs I IOutstand- I I I I I I I I I I I I I I I I lings/LoansI I I I I I I I I I I I I I I I lOverdue 1111000 1 - 1246111280200 1 - 1512021655900 1 - 12198071128711611070511933161233421611070514889361 I(NRs) I I I I I . I I I I I I I I I I I I I I I I I I I I I I I ILoanees I I I I I I I I I I I I I I I I I(Number) 1 90 I - I 251 304 I - I 741 438 I 50 I 2741 9981 N.A. 1541 15741 501 5271 II I I I I I I I I I I I I I I I ILoans I I I I I I I I I I I . I I I I I IDisbursed I I II I I I I I I I I I I I(NRs) 1 81000 1 - 1146111273200 I - 1362051407000 15316 11554521 8983001107261 444361165950011604212507041 II I I I I I I I I I I I I I I I ILoans I I I I I I I I I I I I I I I I ICollected I - I - I - I - I - I 84831 42000 15316 I 601711 1417431 211 543721 1837431 533711230261 I(NRs) I I I I I I I I I I I I I I I I - 38 - Total number of loans for bullocks was 1,830, amounting to NRs 1.66 M. Since the number of farmers actually settled was 2,781 (para 3.11), only 66 percent of them received loans for this purpose. Fewer farmers (50 in number) took loans for agricultural tools. Loans for agricultural inputs such as seeds, fertilizers and pesticides were also limited; 527 settlers taking advantage of a total of NRs 250,704, equivalent to NRs 476 per settler over the project life. The rate of repayment of all types of loans for 1978-79, 1979-80 and 1980-81 was 2.8, 19.1, ad 10.6 percent respectively. WORLD FOOD PROGRAM 3.24 HMG approached WFP authorities for arrangements to supply tree tood for settlers but changes in project size and location of settlement areas delayed formulation of an agreement between HMG and WFP. The agree- ment 1/ was finally signed on August 30, 1978, providing tor 18 months rations for each of 11,950 settlers, including 6,250 settlers on the IDA assisted settlement project. 3.25 The WFP project, costing US$ 9,744,200 over a period of five years, insured supply ot the following commodities: Wheat/Maize flour 13,842 m.tons Dried skim milk 1,628 m.tons Pulses 651 m.tons Edible oil, and 977 m.tons Wheat 2,884 m.tons It was agreed that eacn settler household 2/ would, for a period of 18 months, after initial settlement, receive a daily per capita ration of 425 gms of wheat or maize tiour, 50 gms of dried skim milk, 20 gms or pulses, and 30 gms of edible oil. In addition, NRC was entitled to sell 2,884 m.tons of wheat and utilize the proceeds for the purchase of materials and equipment for construction of roads and their maintenance, bridges, drink- ing water supplies, minor irrigation, storage, schools, dispensaries, and other community facilities, and for the purchase of agricultural tools and implements. NRC, on its part, agreed that settlers would provide 180 days of voluntary labor (100 days in the first year, and 80 in the second) for community work. This request was subsequently thought excessive, and WFP authorities agreed that the removal of small trees, stumps and bushes 1/ WFP Project 2233, Resettlement in Terai. 2/ Settler households were estimated at an average or 5 persons. - 39 - necessary to develop the settlers farms was tantamount to tultilling the obligation. 3.26 The delay in execution of the WFP agreement meant that more than a thousand families settled in the first two years of project implementation received no food until September 1979 when the first deliveries of tood commenced. Throughout the project implementation period WFP deliveries of tood were hampered by lack of definite information on the numbers of farm families to be settled in the tollowing year. This resulted in difficul- ties in estimating the amount of food necessary and in transport of food to the project areas. The total supply of WFP tood trom September 1, 1979 till June 30, 1981 was as toilows: Wheat Dried Edible flour skim milk Pulses oil ------------------ m.tons----------------- Quantity delivered 1,855.88 252.66 92.45 113.24 Quantity distributed 1,720.55 206.79 78.70 100.16 Losses 5.67 4.15 0.54 1.90 Balance stock 129.66 41.72 13.22 11.18 Source: NRC 3.27 Initially 2,884 m. tons of wheat was committed for sale to gener- ate funds for building of infrastructure in settlement areas. In May 1979, WFP authorities reduced this quantity of wheat by 1,000 m. tons as it was required tor distribution among settlers in the Nawalparasi area (i.e., outside the project area). NRC was thus lett with 1,884 m. tons of wheat, of which 1,000 m.tons were distributed and sold tor NRs 2,048,832 (US$ 193,286) and 884 m.tons remains in store. After deducting administrative costs of distribution, NRC had only limited tunds available for the proposed development activity. INFRASTRUCTURE Roads 3.28 The roads constructed under the project were mainly village and teeder, dry weather roads. There is no evidence of construction or all weather roads at the project sites. The roads built generally under the WFP, were poorly constructed and even more poorly maintained. 3.29 All Weather Roads. During 1976/77, three kilometers of brick surtaced road were constructed trom Bardia towards the Indian border and then abandoned tour kilometers short of the border. The road was formed - 40 - by hand and surfaced with a layer of bricks. The formation has proved unsatisfactory and the road is now unserviceable. 3.30 Construction was stopped by TCN because agreement could not be reached with the Indian authorities as to who would construct the five Kilometers in Indian territory leading to rail head. Construction of turther all weather roads was not contemplated because, in all cases, the roads would pass through Indian territory before reaching railhead. Fur- thermore, most connecting roads in India are impassable during the mon- soon. 3.31 Dry Weather Roads. Dry weather roads have been constructed as and when needed by hand by digging a drain and throwing the tailings on to the crown of the road. The topography is generally level and cutting and filling is seldom required. The roads are suitable for bullock carts but difficult for lorries. River crossings constitute the greatest hazard. Markets 3.32 Most settlements are close to the India-Nepal border and some distance away (an average of 20 kms) trom main Nepal markets. With the exception of Kanchanpur, the only stores in the project area are small tea stalls that also, at times, sell cigarettes, soap and few locally manufac- tured goods. Settlers still have to travel, either to main markets in Nepal or India, for their necessities. NRC has not constructed any godowns for the storage of crops (which under the project were to be marketed through cooperatives) partly because surpluses were so irregular. As a result, settlers have to travel to the main markets to sell any surplus produce. Water Supplies 3.33 NRC has constructed hand pumps for drinking water at an average ratio of one pump for every 20 households. These pumps hardly suffice and are frequently out of order due to the absence of spare parts and indit- terent maintenance. Various supervision missions brought this situation to the attention of project authorities, but with little response. POLICY CHANGES AFFECTING IMPLEMENTATION 3.34 Commitment of the government and effective management were essen- tial tor successful implementation of the project. HMG support to the project, however, waivered throughout the project life, and this was manifest through changes in policies announced by the government from time to time. - 41 - Increasing Emphasis on Conservation 3.35 At the time the project was being formulated in 1974, HMG was also becoming conscious ot the rapid depletion or its torest resources. the concerns raised by Forest Management Plans of Ministry of Forests prompted HMG to quickly change to a policy of forest conservation. The Nepal Forestry Sector Review 1/ in 1978 added to these concerns when it reported that Nepal had lost 25 percent or its torest area in the Hills over the past decade. These concerns set the scene tor a deliberate policy of forest conservation and a reconsideration of resettlement. This change in policy, accompanied by soul searching about the necessity for conservation as opposed to planned resettlement and consequent ambivalence about the utility of the project and its implementing institutions were major tactors attecting project implementation. Constitution of Forest Products Development Board (FPDB) and Fuelwood Corporation of Nepal (FCN). 3.36 HMG created the FPDB in 1976/77 to undertake tree felling and sale of logs to TCN sawmills and others. The revenues trom sales were to be used tor retorestation and aftorestation. 3.37 The FCN was constituted in 1976 and entrusted with the respon- sibility for extraction and sale of tuelwood. Its role in the project area was to remove fuelwood residues from logging operations and the remaining trees. The FCN started selling fuelwood in 1978. 3.38 The creation of FPDB and FCN introduced new elements into an already complicated procedure of clearing land tor resettlement. Although FPDB was not directly involved in settlement schemes, its newly defined responsibilities had a bearing on TCN operations and affected TCN staff morale and future prospects. The FCN, on the other hand, was directly involved in land clearing program, and added to delays of six to eight months in handing over the areas to NRC tor resettlement. Export Restrictions. 3.39 Despite section 3.07 of the DCA, HMG imposed restrictions on TCN sale operations. First, a ban on export of all sal logs was imposed in July, 1977; then, a ban on export of all species of hardwood logs in March 1981, and tinally, a ban on export or all semi-processed wood in January, 1982. These bans not only intringed upon provisions of the DCA, but were in conflict with project objectives and consequently impeded project implementation considerably. 1/ A World Bank document -- Report No. 1952-NEP dated August 1, 1978. - 42 - Duties and Taxes 3.40 Another policy change of major concern was increases in taxes and levies. HMG imposed the tollowing duties and taxes atter the project agreement was signed in 1974: 1. In 1975, imposition of a 25 percent export duty on logs and 10 percent on lumber; 2. In 1976, imposition of a 35 percent export duty plus 8 percent sales tax on logs and a 10 percent export duty plus 12 percent sales tax on lumber; 3. In 1977, imposition of an excise duty on sawn timber of NRs 35.31 per cubic meter; and 4. In 1980, imposition of a 50 percent custom duty and 15 percent sales tax on logs and raising of excise duty on sawn timber to NRs 105.94 per cubic meter. Uttar Pradesh State Government in India also imposed certain protectionist measures, which were subsequently lifted. 3.41 Although these duties and taxes did not intringe on any of the legal covenants, they attected sales of logs and sawn timber in the export market. Pricing and Grading System 3.42 Prices for forest produce in Nepal are determined on the basis of ruling market prices in India, and by working back the costs. These prices are related to the costs of production, after adding items such as traders' margins, transport costs, prevailing duties in India and Nepal etc. Prices are then approved by the TCN Board betore these are made etfective. The process of price-fixation is protracted, and by the time a new price list is implemented, further price movements have already taken place. Generally, prices are fixed once a year, indicating the difficul- ties in adjusting to market fluctuations (see Annex 3, Tables 6 and 7 for log and sawn timber average selling prices). 3.43 The price list applies to all stock regardless of age or condi- tion. No grading system (grouping timber lengths and sizes in accord with the market requirements) exists. Sale of forest produce, ungraded, at one tixed price has resulted in large stocks of old and substandard material. There is a provision for B grade lumber to be discounted by 25 percent, but in the absence of any grading, the discount is not generaly applied. - 43 - This pricing policy contributed substantially to the large surplus ot logs and lumber held at project depots and sawmills. New Forest Policy 3.44 HMG announced a new forest policy on January 9, 1982, the main teatures of which, as related to the the project were: (1) k'PDB only would be allowed to log in forest areas; (2) TCN would be responsible for supply of timber, and FCN tor the supply of firewood; and (3) Export ot logs and sawn timber would be banned, except in the case of existing contracts. HMG may, however, permit the export of non-hardwood varieties from Kanchanpur, Kailali, and baraia districts tor a prescribed period. In pursuit ol its conservation objectives, HMG thus turther constricted the process of project implementation. IV. TECHNICAL PERFORMANCE FORESTRY LAND CLEARING 4.01 Land clearing for resettlement was dependent upon the successful logging and removal of torest produce. The Forests Department allocates to TCN areas ot torest tor land clearing. Forests Officers mark the trees using two colors, one tor timber trees and another for fuel trees. TCN contractors enter the block first, felling timber trees by color and removing logs and poles before handing the area over to FCN. FCN fell the remaining trees and also remove all loppings and tops tor fuelwood. When FCN has completed operations, the area is handed over to NRC. 4.02 Land clearing performance was largely influenced by the physical problems of moving logs and tuelwood off the land in a highly seasonal climate. The monsoon rains prevent virtually all movement in the Terai tor five months of each year. The actual time available for physical work is approximately 160 days. During the 1980/81 and 1981/82 seasons a total ot only three months were worked, a wastage of over 40 percent of avail- able working time. - 44 - 4.03 At the time of appraisal (SAR, para 6.04) it was envisaged that TCN alone would be responsible for the land clearing program. The sub- sequent introduction of FCN into the clearing operations (para 3.37) delayed handing over of cleared areas to NRC and made assessment of cleared or partially cleared land ditticult. 4.04 In 1980 HMG began to effectively implement a policy of forest conservation which plagued torest operations with uncertainties (paras 3.36, 3.37 and 3.44). TCN, as a consequence, experienced further problems in most areas or its operations. These problems are reflected in the tinal area cleared and contributed to the disappointing performance in resettlement. LOGGING OPERATIONS 4.05 The torests in the western Terai have been exploited over two or three generations. The better Sal trees had already been logged and remnant trees of larger diameter were often defective, the smaller trees crooked. Larger diameter trees are now principally Asna species which have been bypassed in previous exploitation by contractors because of their lower value. The roundwood yield, to a mijimum 19cm diameter, for the various reas is as to lows: Kanchanpur 43m per hect re, (SAR estimate 35m ); Bardia 39m per hectare, (SAR estimate 28m ); and Kailali 50m3 per hectare. 4.06 The differences in volumes per hectare between SAR estimates and that achieved are not signiricant. Both figures represent very low total roundwood volumes per hectare for a commercial logging operation. 4.07 In the Terai project areas trees are predominantly small (seldom exceeding 60cm diameter) and poles are rarely straight. At Bardia, total volumes per tree averaged 0.72m3 and log volumes averaged between 0.25 and 0.30m3. Logs were very short averaging between 2.1 and 3.3 meters in length. The proposed introduction ot chainsaws failed due to lack of training of operators, poor maintenance and absence of spare parts. Log Lengths 4.08 The SAR placed emphasis on the price benefits in the Indian market tor longer lengths or sawn phanta and beams. To cut large dimension Lumber trom small diameter sawlogs the logs must be straight, and this is not a characteristic of trees in the Terai forests (where the otticial minimum size of log is only 25cm diameter with a 90cm length). The smaller the log diameter, the greater the influence crookedness and taper have on sawmill conversion factors. 4.09 Supervision of the logging operation is important in ensuring the achievement of requisite log specifications. A supervisor must understand - 45 - the need to optimize tree values and enforce maximum lengths by on the job supervision. But at none of the project sites was there any indication that staff were sufticiently profit-oriented or that they exerted any signiticant influence on the felling contractors. If contractors are not adequately supervised they cut what is convenient for themselves. 4.10 The stands have now been felled and it is not possible to assess the intiuence of supervision on log lengths against the assertion that longer lengths could have been obtained. The combination of small trees and bad trees coupled with hand loading, favors the production of short logs, but the basic problem was that the forest stands were initially of poor quality. Bullock Carts 4.11 In the conditions prevailing in the Teral forests the bullock cart is the cheapest and most efficient method of log extraction. Logs are transported from the tree stumps direct to depots or sawmills along tracks which are ditficult ror lorries to travel. At Kailali, up to 1,500 bul- lock carts were in use at anyone time and each bullock cart is capable of one log delivery per day of approximately 10 kms and two trips per day it the depot is five kms distant. Bullock carts with wooden wheels can carry approximately 1.0m3 but those with rubber tires can carry up to 2.5m3 Log lengths are not limiting on bullock carts provided the load is balanced over the axle. in common with lorries it is weight and the ability to hand load which determines the maximum log size. Cartage costs are approximately halt that quoted tor hired lorries. Winch Lorries 4.12 Winch lorries proved unsuccessful and were not used for selt-loading as was intended. It is undoubtedly the small piece size which was responsible for the failure of this loading method. 4.13 Winch lorries were developed in Malaysia to load and carry a tew larger logs per load in s lective type logging operations. With piece sizes averaging over 1.Om per log, self-loading can be achieved in under 30 minutes and the system is efficient. Under these conditions winch lorries have a good carrying capacity at a lower capital outlay than most alternative mechanical methods and can operate independent of other equip- ment. 3 4.14 In the Terai, total tree volumes seldom exceeded 1.Om (Bardia average is 0.72m3 per tree). Because trees a e crooked, short logs are produced and piece sizes average 0.25 to 0.3m , up to 25 to 30 logs are required to make up a lorry load of approximately 9.0m3. The winch lor- ries are unsuited to loading a large number of small logs. The winch is - 46 - slow and the load can become unstable during loading. As a result TCN resorted to hand loading of lorries. 4.15 The winches were used tor demonstration purposes only and then removed from the lorries and are now stored at Hetauda. As a consequence or slow hand loading and slow travel on poor or partially formed roads, the carrying capacity of the lorries was never fully utilized. High stumps and residual tuelwood left from FCN operations also impeded lorry movements. 4.16 The choice of technology was thus fundamentally unsound. It appears that insufficient account was taken of piece or log size and this is elementary to the selection of any mechanical handling method. Mechanization in low volume forest can only be justitied on the basis of the time available to clear the area, not on the basis of cost when labor is available. The high cost of lorries must be offset by producing higher volumes than alternative methods and this is difficult to achieve in poor quality, low volume forest and a monsoon climate. Lorries have high fixed costs in terms of depreciation and interest and in a situation where they are not tully utilized, average total costs increase to uneconomical levels. Labor intensive methods by contrast use fixed contract rates which are unchanged by productivity or downtime. Mechanization and Maintenance 4.17 The introduction of mechanization in the Terai forest and in the log yards experienced major problems. The Nepalese employees had limited knowledge of how to operate machinery. Mechanics were not available on site because the wage structure of TCN was lower than that offered in the towns. Without mechanics on project sites, breakdowns took several months to repair. Typical problems were: the identification of the parts required; communication delays; delays in the supply and delivery of parts to the project; and availability of service personnel to effect the repair. Drivers carried out their own maintenance to the best of their ability but downtime was high and machinery was poorly utilized. When repairs became a major problem, machines were withdrawn from use. The contribution of machiines has Deen minimal ana their purchase contributed to the delay in implementing the project by some two years. High Stumps 4.18 A feature of poor supervision of telled areas was high stumps. Stumps range from 30cm to 75cm in height and contain up to five percent of the tree volume and probably a greater proportion of the value. These stumps aiso hampe,eu the use of lorries. Part of the reason for high stumps can be attributed to poor supervision, but the Forest Department also contributed by frequently marking the base markings high on the tree, forcing the feller to cut high on the stem. - 47 - SAWMILLING 4.19 TCN operated 26 sawmills in the project areas. All are of Indian origin WiLh a hana wincned log carriage, a 90cm diameter horizontal band ureak down saw and a 90cm diameter vertical band resaw. The sawmills are powered by individual diesel motors with large flywheels and are in the 25-30 h.p. range. Band saws are narrow (62mm wide) and light (18 gauge) but are satisfactory for the slow cutting speeds used. 4.20 These type of sawmills are simple, easily repairable and flexible enough to be able to cut small diameter logs ror the fuil range of log lengths. Their technology and operational requirements are easily under- stood. Achieved conversion rates of approximately 55 percent were good in view of the small size and quality of the sawlogs. 4.21 Contrary to what was expected at appraisal, all sawmills were operated ror TCN by Indian contractors, using Indian labor. The contrac- tors also provided their own sawdoctors, but depended upon TCN tor supply- ing logs to the sawmill, and administrative support for the provision of spar parts, fuel and lubri ants. Sawmill production per day ranged from 5.6m at Kanchanpur to 7.Om at Kailali. Productivity of TCN sawmills surtered in the same manner as the logging operations from delay due to cumbersome administrative procedures. Details of sawmill production, lumber sales and stocks, are given in Annex 1, Table 8. 4.22 HMG banned all log exports (para 3.39) and this shifted greater responsibility to the sawmilling operations to maintain export sales of sawn timber. Although production improved by 188 percent in 1978/79 and again by 44 percent in 1979/80, the inability to sell all the production took the impetus away from the sawmilling effort. Cutting then became limited to filling orders which could not be serviced from existing stocks. Sawmill Cut 4.23 According to project staff estimates the sawmills during the period of operation (1976/7/-1980/81) produced lumber in the following percentages: Kanchanpur Bardia Kailali -------------percent------------- Phanta (includes sleepers) 30 30 20 Beams (Gattu) 20 15 25 Scantlings (Kadi) 40 40 40 Strips 10 15 15 100 100 100 Average length (meters) 2.1 - 3.1 2.4 - 3.3 2.1 - 3.3 - 48 - Tne SAR estimates of production were: Phanta 15 percent, beams 60 per- cent, scantlings and strips 25 percent. The ditterence is primarily attributable to the small diameter logs. Phanta and beams result trom large dimension timber which is cut from the center of the log. Kadi and strips are smaller dimension salvage cuttings from the material on the outside of the log. In smaller logs the proportion of Kadi and strips is higher, relative to larger sized logs. 4.24 The variance in product percentages did not have a significant intluence on average sawn values. Indications based on current price lists showed a decrease in value of less than 3 percent assuming average lengths. Lumber Yards 4.25 The lumber yards were disorganized and only at Kailali was there any semblance of order. Timber and sawmill waste were disgorged from the back of the sawmills and were only moved when the constricting effect on operations was evident. There is no planned flow of materials, lumber is seldom properly stacked and is in mixed heaps, often in contact with the ground and which only promotes taster deterioration. 4.26 There is no system of stock control and accurate stock-taking is impossible. TCN stock tigures are theretore only an educated guess. SETTLEMENT 4.27 Settlement operations by NRC were affected both by delays and inefficiencies, part of which were of its own doing and part imposed by outside torces. Since settlement was,to succeed land clearing which hinged on securing forest blocks from a reluctant Forest Department, the whole operation suftered delays. The settlement operations were initially to start in 1975/76 but did not actualy occur until the 1977/78 season--a delay of 2 years. Lack of organization and management within NRC also contributed to those delays. The result was that settlement targets were not achieved (para 3.11). 4.28 A number of tactors contributed to poor pertormance. There were: (a) Lack of coordination and information sharing between TCN/FCN and NRC, with the result that NRC at no time was completely aware of areas that had been clear-felled and were avail- able for resettlement. (b) Delays in allotment of forest blocks because of HMG's waivering commitment to the project, and Ministry of Forest's emerging concern for conservation. - 49 - (c) Introduction of the FCN to fell, extract and sell all tuelwood, a development which was not foreseen at the time of appraisal. 4.29 TCN logged all trees with a diameter at breast height of more than 8", not 11", as recommended in the Appraisal Report. The remaining trees were not lett tor settler housebuilding, firewood and tencing but were felled and extracted by FCN. Although settlers used logs provided by TCN tor housebuilding, no tuelwood trees now remain in the settlement areas. Settler Incomes 4.30 It has proved extremely difficult to obtain accurate statements of rarmer incomes and expenditures. The general picture that emerged, however, was that agricultural production was largely dependent on the number of units of labor in the house, the number of stumps remaining on the land, soil quality, the incidence of pests, rainfall patterns, and the presence of wild animals (a major problem in Bardia, where most settlers lost their crop to wild boars, monkeys and deer). Only in a "good year" and among the older settlers were the crops sulticient to teed a tamily of tour. The mustard crop proved to be the only source of cash income. Thus the main source of cash income became work with TCN, in road construction, work on other farms and in India. TCN is now cutting back employment and work in India depends largely on the proximity of the settlement areas to India. Income through labor is variable and usually insutticient to till the gap between income and expenditure tor most. Thus, apart trom the medium-term loan for a bullock, which the majority of settlers have taken from ADBN, most settlers are in debt -- either to fellow settlers, or to store merchants. AGRICULTURE 4.31 Since targeLb tor land clearance and settlement were not achieved (paia 3.09 and 3.11) the estimated size and net value of production also was affected. Besides, the settlers, on arrival were concerned about provision of food and other basic necessities of life and sought employ- ment with TCN and elsewhere till normal flows ot food from WFP became available. This influenced the early efforts of settlers in developing their plots of land. Limited supplies ot production inputs, (including credit) and poor extension advice aggravated the situation, with the result that the general level of agricultural production remained low. Further, HMG's failure to recruit an expatriate Agricultural Advisor to provide agricultural advice to NRC kept project activities at a low ebb. 4.32 At the time of Appraisal, two tarm models tor 2 ha tarms, one tor Western Terai, and other for the Jhapa scheme were developed. Neither of these models are now relevant following the reduction in plot size. On the basis of data collected, one farm model for a 1.5 ha farm tor Western - 50 -- Terai was developed. 1/ Farm models developed at appraisal for 2 ha farms for Western Terai appear at Annex 7, Tables 1-2 (SAR); the tinal tarm model, based on the actual situation of a 1.53 ha tarm belonging to one Kalu Man in Kanchanpur (Plot No. 136, Village Aeiniko) is at Annex 3, Tables 3 and 4. This model is generally representative of the present situation. This settler, migrating from Dhading with five members of his family, was given J hattas 2/ (0.17 ha) of land tor housing and 2 biggas 2/ (1.36 ha) tor tarming in 1977/78. He built a house in 5 months - tirst, a small hut and then a bigger house. He purchased two small calves tor NRs 900, on loans from ADBN. By May 1981, the calves had grown into a pair of bullocks. He also keeps 2 bufaloes, 2 cows, 4 sheep/goats and some poultry. In the monsoon season, he planted upland rice and maize, and in dry season, mustard. His cropping pattern was as toilows: 1978/79 1979/80 1980/81 1981/82 Upland rice 2 biggas - Maize 2 biggas 2 biggas 2 biggas Mustard - 1 bigga,5 hattas 2 biggas (mixed with lentil) His upland rice tailed in 1978//9 because of drought. Lentils, mixed with mustard (a common practice), did not germinate. 4.33 A comparison of data in the two tarm models of Western Terai indicates the following cropping intensities: Project Years 1978/79 1979/80 1980/81 1981/82 Appraisal projections 160% 167% 160% 156% Actual Situation 100% 100% 162% 175% As regards quantity and value of marketable surplus, the relevant data tor the terminal year 1981/82 is reproduced below: 1/ Jhapa scheme area was omitted as it had been dropped from the project. 2/ 20 hattas = 1 bigga = 0.68 ha. - 51 - Crops/Seasons Marketable Surplus Appraisal Estimates Final Analysis Quantity Net Value Quantity Net Value (quintals) (NRs) (quintals) (NRs) Monsoon Paddy 6.0 339 - - Maize 9.2 413 0 /a 0 /a Dry Mustard 8.2 853 8.0 2,092 (10.67) /b (2,789) /b Pigeon Pea 0.8 126 - Chick Pea 1.8 247 -- Total 1,978 2,092 (2,789) /b /a Eight quintals of maize valued at NRs 944 was produced, and all was consumed by the family. /b Figures in brackets are extrapolated figures for a 2 ha farm. The Appraisal report projected that a marketable surplus would be gener- ated for paddy, maize, mustard, pigeon pea and chick pea by Year 4 after settlement. In acutal tact only a saleable surplus in mustard has occurred. Although the net value of production is more in case ot the recent model, this is due to increased prices being paid for mustard. If appraisal prices for mustard (NRs 104 per quintal) are substituted, the net value of marketable surplus would be negative, as operating costs would exceed the gross production value. 4.34 Another point ot consequence observed is that it took settlers no less than 4 years to get into full production, and it was only after year 4 that some marketable surplus was being generated. Earlier estimates of 18 to 24 months could only have been realized if things moved as planned. CREDIT 4.35 The data on the supply of medium-term credit for bullocks and agricultural tools, and short-term credit tor seeds, tertilizers and pesticides are presented in Annex I, Table 7. The progress on achievement of targets is tabulated below: - 52 - Target Achievement As percent 1978/19 upto of target through 1982/83 1981/82 (%) Medium-term credit (000' NRs) 7,200 1,675 23 Short-term credit (000' NRs) 4,440 251 6 11,640 1,926 16 ADBN failed to achieve targets for advancing loans to settler families. On closer analysis it appears that 74 percent of all families purchased bullocks, but only few families had access to production loans to maximize their tarm output. 4.36 A number of factors contributed to this slow pace of credit supply: tirstly, slow progress on resettlement; secondly, inability of NRC to organize settler families into cooperatives so as to make them eligible for loans; thirdly, lack of initial resources for loaning due to limited allocations by HMG; 1/ fourthly, weak extension services which tailed to create effective demand tor production credit, and finally, lack ot communication between various administrative tiers within ADBN, and between ADBN, NRC, TCN and Ministry of Forests. WORLD FOOD PROGRAM 4.37 Whereas the settlers started arriving in July 1977, the first deliveries of tood under WFP commenced from September 1979, a gap of more than two years. A number of tactors contributed to this; tirstly, delayed execution of the WFP agreement; secondly, lack of precise information on the settlement program; and thirdly, transportation and storage difficul- ties. 4.38 During the 1977-79 period, WFP and NRC tried to arrange supplies of tood localiy through the Fooa Corporation of Nepal (NFC) and which were to be replenished subsequently on arrival of WFP supplies. This arrange- ment did not work out. Once WFP supplies started arriving in September 1979, further delays were incurred either through lack of planning by NRC or bottlenecks in transporation. The process of transporting imported food from Calcutta to the border warehouse and thence to the project areas was always cumbersome and resulted in many delays and losses. Settlers interviewed complained of irregular and short supplies of food and which 1/ Their funds were, however, reimbursable from IDA sources. - 53 - usually lasted them only 15 days in a month. In addition, the requirement that settlers should work in return for food provided during the tirst 18 months of settlement meant that this diverted labor from agriculture, and prevented settlers from accepting other paid work on a regular basis. SOCIAL ASPECTS Settler Compositions 4.39 The settlers were drawn from most of the Hill districts, though some districts (Dhading, Nawalparasi, Chitwan, and Surkhet) tended to be somewhat over-represented. For details, see Annex 1, Table 9. 4.40 Settlers represented most Nepali .castes, religious and ethnic groups. Following the skewed pattern from which settlers were selected, Brahmins, Tamangs and Chettris comprisea the highest settler percentages -- accounting for 21, 19 and 17 percent, respectively. In the Kanchanpur settlement, Tamangs account for 56 percent of the settlers; in Bardia (Taratal), Brahmins make up over 28 percent of the population (Annex 1, Table 10). This representation is much higher than the national distribu- tion of these caste and ethnic groups. Of the 2,781 settler households, 104 women are treated as settlers and heads of households. Reasons for Resettlement 4.41 Floods and landslides resulting in the entire loss of land were given as the main reasons for resettlement. The breakdown of causes for resettlement was: Kanchanpur Bardia Kailali (N=10) /a (N=12) (N=4) Floods - 5 1 Landslides b - - Insufficient land 2 1 Excessive fragmentation 1 1 1 Indentured labor 1 2 - Illegal settlement - 1 2 Debt - 2 1 Land acquired - 1 - Landless 1 3 - /a N = Number of farmers interviewed. At times there were multiple reasons for resettlement. - 54 - Occupation Prior to Resettlement 4.42 Out of 26 persons interviewed, 21 were farmers prior to resettle- ment, either in their own right or as i4ndentured laborers; 2 were in clerical service; and 3 in the army. The criterion of previous agricul- tural experience appears to have been tultilled in a majority of cases. Health Clinics 4.43 Each settlement area has a health clinic but the staffing pat- terns, budgets, and numbers of patients treated vary. In Kanchanpur, settlers initially subscribed NRs 15 per family annually towards the costs of medicines, but tollowing the take over of the clinic by the Ministry of Health, settler subscriptions stopped. The result of this takeover has been a decline in the level of services available, largely because the budget provided is totally inadequate to give more than the minimal serv- ice ana that ror only a tew months in the year. Although staffing at the Kanchanpur clinic is adequate, the statt is not always present as tunds only permit treatment for a few months in a year. A similar situation, with regard to staff and budget, exists at Kailali. Only at Bardia are there sufficient medical stocks to provide adequate treatment for minor ailments. 4.44 Most of the ailments reported by settlers were either respiratory or those of stomach (dysentery). The numbers treatea are no indication of treatment received. For major ailments, settlers at Kanchanpur and Kailali go to Dhangarhi; those at Bardia, to the hospitals in Bheri or in India. Annex 1, Table 11 sets out the staffing pattern, numbers of patients treated, and budgets of the clinics. Schools 4.45 There are tour primary schools in Kanchanpur, six in Bardia (Tara- tal) and seven in Kailali with a total enrolment of 2,114 pupils. 1/ Bardia also has one middle school with an enrolment of 187 students. The schools are adequately housed in buildings constructed by settlers them- selves, but most of the teachers are untrained and that only two primary schools are recognized by the ninistry or Education. Ettorts by NRC to obtain recognition have generally been frustrated. In Kanchanpur, where there is a widespread demand for a middle school, the preconditions set by the Ministry of Education (mainly a deposit of nearly NRs 150,000) are ditticuit to meet ana it is likely that the need for a middle school will not be satistied. Annex 1, Table 12 sets out the number of schools, stafting patterns, and numbers of students. 1/ Seven primary schools were constructed by NRC under the project. - 55 - V. PROJECT IMPACT 5.01 The project failed to achieve its overall objectives. Its impact, in general, in clearing forest land which could productively be used for agriculture, in settling farmers from the hill/mountainous areas, in increasing agricultural productivity and in building necessary physical and social infrastructure has been small. The project has, however, succeeded in identifying problem areas and in outlining a tramework for dealing with them in the tuture. LOG AND LUMBER INVENTORIES 5.02 TCN has accumulated large stocks of logs and lumber at the depots and in sawmill yards. Log Stocks 5.03 At Kanchanpur and Bardia, the yards are littered with rotting or deteriorating logs as the yards are disorganized. Losses are high but as stocks come from both resettlement and other areas, the allocation of these losses is ditficult. The Kailali yard is better organized, and because the logs are more recently felled, they are in better condition. 5.04 At Kanchanpur there are prospects of disposing of some logs as there are up to 60 private sawmills near Dhangarhi who obtain logs from FPDB. At Bardia and Kailali there are few alternatives to the Indian market. There is the prospect of sawing those logs which are still sound and holding the more durable sawn lumber. However, unless some improved marketing effort is made, this will only serve to increase the amounts of unsold lumber and increase overall losses. 5.05 Sal logs, because they are more durable, retain some value as sawlogs and the principal effects of age are loss of sap wood and some end checks. Asna logs, however, are prone to checking and splitting from the ends and within one year have little value as sawlogs and have firewood value only. Among the stock of logs of minor species tew it any logs have any value or market as sawlogs and more than 50 percent have decayed and no longer have even firewood value. 5.06 Of a total estimated stock of 31,517 cubic meters, Sal comprises 35.5 percent, Asna 47.5 percent, and minor species 17 percent. - 56 - Lumber Stocks 5.07 At Kanchanpur and Bardia heaps of old lumber are deteriorating tor want or removal and sale. At Kailali stocks are fresher and in better condition. 5.08 The downgrading effect of buyers selecting from stock is difficult to estimate. Undoubtedly there is a disproportionate volume of less popular sizes and lengths remaining in stock. Project staff estimate that only 60 percent of the lumber stock is saleable at list price it buyers could be found. 5.09 Of a total of 14,287 cubic meters in stock, Sal comprises 97 percent, Asna 2.3 percent and minor species 0.7 percent. Stock Values and Losses 5.10 An attempt has been made to value TCN stocks (as on July 16, 1981). The details are given in Annex 3, Table J, a summary of the result is as follows: Estimated Original Total Value Value of Estimated Value of Adjusted for Logs Unit Volume Stock Deterioration /a Deterioration NRs NRs NRs Sal m3 11,192.489 5,205,143 1,913,196 3,291,947 Asna m3 14,962.918 4,534,648 3,343,807 1,190,841 Other species m3 5,361.892 1,017,299 844,409 172,891 Poles no. 3,157.158 2,332,009 455,743 1,876,266 Firewood m tons 11.723 812 - 812 Sawn Lumber Sal m3 13,839.391 13,713,395 1,792,302 11,921,093 Asna m3 341.527 240,167 94,127 146,040 Other species m3 107.744 4/,121 31,673 15,447 Total Stock Value 27,090,594 8,474,257 18,616,337 /a The value of deterioration has been calculated on the following basis: Logs: A grade at full value, B grade at production cost less 25 percent, firewood at firewood production cost, and logs with no value, written off. Lumber: A grade at production cost, B grade at production cost less 25 percent, poor quality as a percentage value of A grade. The costs of stock are based on the current costs of production. - 57 - J.11 The estimated cost of stock is NRs 27,U90,594, and the revised estimated stock value, NRs 18,616,337, which is calculated after deriving an estimated value of stock deterioration of NRs 8,474,257. The loss through deterioration is heavy - 31 percent of total stock value. Had the stocks been sold at current prices, it should have realized approximately NRs 36,458,186, making an estimated loss of sales opportunity of the order of NRs 1/,841,849. MARKETING CONSTRAINTS 5.12 Successful marketing is fundamental to any etticient trading organization, and TCN was remiss in not taking action to strengthen this area of its operation. Weak marketing was a recurring theme in all super- vision reports. By project termination, about 28,300 cubic meter ot logs and lumber accumulated in the timber yards and torests of Kanchanpur and Bardia; had this production been marketed to India, as stipulated, TCN would not have incurred heavy losses (para 5.11). A number of other factors contributed this huge inventory build-up: (a) an intlexible pricing system for both logs and lumber irrespective ot wood quality;. (b) absence of a grading system; (c) export restrictions by HMG; (d) irrelevance of duties and taxes to pricing structure; and (e) lack of skilled marketing,. SOCIAL IMPACT Attitude 5.13 Few settlers regretted their move to the project area. Only two settlers suggested that they had ditticulty in adjusting to the Terai tarming conditions. For most, the project area was their home and they would not consider returning to their former hill districts -- only two settlers interviewed had paid short visits to their former areas. Many stated that they had nothing in their former homes to return to. Nine settlers had, however, left without giving any reasons, and 293 were evicted at Satbaria (Bardia) for tailing to follow NRC rules. - 58 - Settler Relations 5.14 Relations between settlers were good, but mutual help is usually contined to members of the same ethnic group, or caste. Villagers only act as a group when they undertake compulsory labor under the terms of the wFP program. Relations with NRC start, and those concerned with agricul- ture and extension are cordial. 5.15 Cooperative Societies (Sajha) have been started but they do not include all settlers as members. In 1982, the new settlement areas will be included in the national scheme of village panchayats. This should provide the basis for establishment of settler organizations. ENVIRONMENTAL IMPACT 5.16 The forests of the Western Terai have been constantly exploited since the turn of the century until the end of the Rana regime in 1951. Further incursions into the torests incurred from 1954 when the torests were nationalized and settlers began to invade the area. The result was that the forests were heavily moditied; the better torest having been selectively felled and the remaining forest left as sparse and generally small diameter second growth Sal, with remnant Asna or detective Sal. Invasion by men and animals has removed the lower tiers or regrowth and the ground was lett either bare or lightly grassed. 5.17 An aspect, examined at some length at the time of appraisal was the potential impact that logging operations would have on the project area environment. It was noted, tirst, that the orderly clearing of 18,550 ha of torested area under the project represented only 2.5 percent of the total residual torest area in the Nepal Terai. This clearing would have only a minimal impact on rainfall and runoft patterns. The project was to ensure that the land liable to erosion would remain under forest, as would areas unsuitable for agriculture. The project areas were not to contlict with three areas designated as national Game Parks. 5.18 In view of these circumstances, it was agreed that telling would only be undertaken in areas that were not liable to erosion. During project implementation, however, all trees were telled. Suitable conser- vation methods have not been introduced to compensate tor the removal of tree crops. 5.19 The September/October 1980 supervision mission took note of the adverse environmental impact of the project and underscored the need for ascertaining future role of forestry sector in the Terai. A subsequent mission in November/December 1980 noting that torest land in the Terai had dwindled trom estimated 52.6 percent of total area in 1964 to 22.4 percent in 1972-73 (some estimates put it at 19 percent) suggested that priority should be given to the identification of a comprehensive Terai Forestry - 59 - Project tor implementation in 1982 or early 1983. Forest Department predictions indicate that the current torest conversion and exploitation place the torest resource ot the Terai and Doon Valley heavily in deticit from 1980 onwards and it will disappear within 20 years. VI. ECONOMIC AND FINANCIAL ANALYSIS ECONOMIC ANALYSIS PROJEUT BENEFITS Forestry 6.01 The benefits from the torestry component have tallen tar short of expectation. By mechanizing logging operations, it was expected that 18,550 ha of forest could be cleared by 1980/81. In fact, only 7,300 ha were actually cleared, thus anticipated benetits have been substantially reduced. 6.02 However, the purchase of sawmilling machinery did enable some wood to be sold with a higher value added as sawn timber rather than as round logs. No exact estimates of the net benefit of this are available, but in 1980/81, it appears that the ditterence between the production costs and the average sale price of sawn timber were 13 percent of the sale price in Kanchanpur, 1U percent in Bardia, and 26 percent in Kailali. Applying these percentages to the value of sawn timber sales for earlier years gives a rough estimate of the benefits from the forestry component. Settlement 6.03 The benefits of the settlement component are agricultural incomes obtained by the settlers. Untortunately, tarm budget and crop data were not adequately maintained by NRC and agricultural benefits can therefore only be estimated approximately. Annex 1, Table 6 gives NRC estimates of the area, production, yields and crop value for 1978/79 to 1980/81, adjusted by mission staff. Future production, however, is likely to increase because: (i) the area distributed to settlers was 3,446 ha but as of 1980/81 only 2,501 ha had been cultivated (detined as main crop acreage of paddy, maize, wheat, mustard an pigeon peas) whereas chances are that the tull area would be cultivated by 1982/83; and (ii) as settlers get more experienced, yields would increase by a margin of about 10 percent by 1984/8j. - 60 - ECONOMIC RATE OF RETURN 6.04 Calculations of the project's economic rate of return (ERR) are based on the methodology used in the appraisal report; the only conversion from actual prices was to: (i) take only 60 percent of WFP costs as representing the alternative cost if wheat had been locally provided; and (ii) calculate the opportunity cost of family labor incurred in agricul- tural production. In addition benefits and costs were adjusted to 1980/81 prices. 1/ On this basis the realized Economic Rate of Return was calcu- lated to be 7 percent compared to 42 percent projected in the appraisal report. 6.05 However, this may underestimate the ERR because of the 7,300 ha cleared by July 1981 only 3,446 ha had been distributed to 2,781 families. Allowing 15 percent of the land area for various non-agricultural uses, means that there is another 2,759 ha available for settlement by 1,839 families (1.5 ha per family). Had these settlers arrived during 1981/82 to 1982/83 and making comparable assumption about input costs etc, the economic rate of return would increase to about 10 percent. 6.06 But a word of caution is necessary in interpreting these figures. The methodology assumes that the incremental settlement benefit is the full agricultural production. But in fact the official settlement program served only ten percent of the settlement into the Terai during the past decade, the rest was settled by squatters. Had the IDA project not taken place, a similar amount of forest is likely to have been cleared through encroachments. If so, the project's net benefit is only the difference between organized settlement and unorganized settlement, but no data was available to estimate this. FINANCIAL EVALUATION COSTS AND EXPENDITURES Appraisal 6.07 The project was appraised to cost NRs 122 million (US$11.5 mil- lion), of which NRs 44 million was for the forestry component and related technical assistance, NRs 13 million for organizing the settlement and providing infrastructure and services (including technical assistance), 1/ Forestry capital costs were inflated by the IBRD international price deflator, NRC costs by the Nepal CPI, WFP costs by international wheat prices, farm inputs other than labor by the Nepal CPI, while forestry benefits were inflated by the IBRD sawnwood price index and agricul- tural production by the IBRD price index. - 61 - NRs 37 million tor costs incurred by settlers (food and tarm inputs), and NRs 26 million tor contingencies. Project Cost Summary Original Revised Actual (SAR 1974) (Nov. 1976) (1976/77-1980/81) ----------------(NRs Million)---------------- Forestry 43.6 39.6 27.4 Equipment 20.8 19.8 21.9 a! Construction 10.9 5.6 5.5 Working Capital 10.1 12.5 Physical Contingencies 1.8 1.7 Settlement 11.2 11.5 7.2 Equipment 0.9 1.0 1.7 Construction 4.0 3.9 2.6 Other Costs 5.8 6.1 2.9 Physical Contingencies 0.5 0.5 - WFP Food 19.2 10.8 14.0 b/ Supplemental Food 3.7 1.9 - Farm Inputs 14.1 10.0 1.6 Medium Term 10.9 8.3 1.5 ADBN (8.4) (.9) (1.5) Farmers (2.5) (1.4) Short Term (ADBN) c/ 3.2 1./ 0.1 Technical Assistance 4.1 2.6 1.8 Forestry 2.5 1.0 1.3 a/ Settlement 1.6 1.6 0.5 Others d/ 26.4 23.3 - Total 122.3 99.7 52.1 a/ From IDA disbursement as per TCN records and converted at prevailing exchange rate. b/ Derived by pro-rating total WFP settlement costs to the three IDA projects. c/ Disbursements less repayments. d/ Price and other contingencies and further studies. Source: TCN, NRC and ADBN data except where specified. - 62 - 1976//7 Revision 6.08 Project costs were revised downwards to NRs 100 million when the project was reduced in scope in 1976/77. At that stage it was still intended to introduce the new logging technology and the provision for related equipment was maintained. The one exception was the elimination of the purchase of bulldozers since the log yard preparation and road construction for which these were to be used would have been completed before they could arrive on site. Construction costs were reduced due to lower estimates for the sawmill buildings and reduced provision tor statt housing. Technical assistance for forestry was also greatly reduced; the 96 man-months for winch lorries advisors was reduced to 8, those for the lumber export sales advisor from 36 to 12 and the 96 man-months for saw- mill operations dropped altogether (in favor of private contractors). NRC costs remained largely unchanged but with the reduction in the number of settlers, the provision tor tood and tor farm inputs was proportionately reduced. For details or revised cost estimates, see Annex 2, Table 1. Outcome 6.09 The project is estimated to have cost NRs 52 million up to the end of 1980/81, of which NRs 27.4 million was on account of the forestry component, NRs 14.0 million for WFP food, and NRs 7.2 million tor the settlement organization and intrastructure. 1/ The torestry costs were generally in line with the revised estimates, although there was some variation within the equipment and construction categories. Fitty-eight trucks were purchased, as against 45 winch lorries and 6 lumber lorries planned, and 7 jeeps as against 4 planned. However, only 2 front-end loaders were purchased compared with the 4 planned. The sawmill units appear to have cost less than originally expected. In the construction category, differences included the almost entire elimination of road building, and the inclusion of a river crossing. Forestry equipment was to be purchased during 1976/77 and 1977/78, and construction was to be undertaken during the same period. While a substantial proportion of transport and milling equipment was purchased in 1976/77, an equally large amount was purchased in 1980/82. Construction expenditures were also incurred through 1976/77 to 1979/80. 6.10 Major changes occurred with respect to the other parts of the project. WFP foods cost were substantially higher than the expected amounts while tarm inputs were less than one-titth. The higher WFP cost 1/ These costs are incomplete due to the absence of data on forestry working capital and on tarmers' inputs other than those purchased with credit trom ADBN. - 63 - is somewhat surprising in view of only 2,781 families being settled com- pared with the planned 6,250. There was however no supplementary food provided. The smaller number of families partly explains the lower farm inputs although less ADBN credit was made available per family than had been intended (para 3.23). 6.11 Settlement costs associated with NRC were less than anticipated principally because of the delays in establishing the settlements. With the slower progress in forestry, settlement equipment and construction expenditures which had been expected to occur during 1976/77 - 1977/78 and 1977//8 - 1978/79, respectively, were delayed by about two years. Operat- ing expenditures were planned to reach a substantial level by 19///78 but did not do so until 1979/80. Construction costs were less than planned, only 7 schools were built compared to 9 that would have been expected on the basis of the number of settlers, no demonstration farms were laid out and staff quarters cost was only half their anticipated level. On the other hand, equipment costs were in excess of the plans because of pur- chase of additional vehicles and miscellaneous equipment. FINANCING AND DISBURSEMENTS Project Financing 6.12 Project financing was planned on the basis of IDA meeting 100 percent of the toreign exchange cost of equipment and technical assis- tance, 75 percent of construction and settlement operating costs and 75 percent of ADBN loans for farm inputs. This covered 52 percent of total cost leaving WFP to pay 16 percent for food supplies, farmers three per- cent (second bullock) and HMG to cover remaining 29 percent which included working capital tor torestry operations. As seen below the outcome was somewhat different: - 64 - - in NRs million- IDA WFP Farmers HMG Total Costs 19/6/// 1976/77-1980/81 Forestry 25.5 - - 3.2 28.7 Settlement 7.3 - - 0.9 8.2 WFP Food - 14.0 - - 14.0 Farm Inputs 0.6 - - 1.1 1.7 Total 33.4 14.0 - 5.2 52.6 Percentage of total(%) 63.5 26.6 0.0 9.9 100.0 Distribution of financing at appraisal (%) (52) (16) (3) (29) (100) Source: Annex Table The low proportion tinanced by HMG, 10 percent, is due partly to the absence of supplementary rood which would have been tunded by HMG, and partly because equipment purchases (which IDA financed 100 percent of their foreign costs) were largely as planned. 6.13 At Appraisal the Government was expected to receive a net flow of NRs 126 million trom the project related activities because gross revenues generated by the timber sales were estimated to total NRs. 161 million, as detailed in cash flow table below: Appraisal Actual 1974/75-1980/81 1976/77-1980/81 ------------- 000' NRs ------------- Inflow From TCN Royalties 76,670 62,891 Exise Tax 19,787 2,885 Sales Tax ) 9,465 Export Duty )1,538 29,650 /a IBRD Loan Interest 5,056 242 Operating Revenue - Expenditures 58,467 19,713 Total 161,518 125,363 Outflow HMG Contribution to Project 35,422 5,148 Net Inflow 126,096 120,215 /a Hypothetical figure assuming that 95% ot TCN sales were exported, although there were restrictions on exports since July 1977. Source: Appraisal Report and data supplied by HMG. - 65 - Thus, despite the amount of torest clearance being much less than planned, gross revenue trom timber sales was NRs 125 million. However, higher duties and taxes were charged than had been anticipated at the time ot appraisal (para 3.40). As a result, the Government received a net flow of NRs lZu million from total project activities. Disbursements 6.14 The cumulative pattern ot IDA disbursements is given in Annex 2, Table 5, but actual disbursements lagged well behind the revised schedule. Generally, disbursements followed the pattern of project expenditures, but there were two exceptions. First, TCN did not request reimbursement for torestry civil works until 1980/81-1981/82, because its cash tlow allowed it to cover the costs out ot its own resources, thereby avoiding 7.5 percent interest to be paid on funds on-lent from HMG. Reimbursement was only requested atter TCN's cash position had deteriorated. This was in contrast to the timely reimbursement requests received tor expenditures on equipment. The second exception was ADBN loans tor which IDA received reimbursement requests for US$50,307, equal to only about 35 percent of ADBN loans made to settlers. This shortfall reflects the breakdown in communications both within ADBN and between ADBN and the Nepal Rastra Bank. VII. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT INSTITUTIONAL DESIGN AND GROWTH 7.01 The project contributed little to institutional development in Nepal, given trequent policy changes, lack ot planning and coordination, inadequate statt and high staft turnover. In the tace of varying HMG support tor the project and a changing policy climate, coupled with weak organizational structures, TCN and NRC accomplishments might be rated as satistactory, but much more coula nave been achieved it initial commitment to the project had been sustained. HIS MAJESTY'S GOVERNMENT 7.02 Probably the greatest brake on project implementation were fre- quent HMG policy changes, brought about by the necessity for tree conser- vation as opposed to planned resettlement and an uneven and gradually dwindling commitment to the project. Undoubtedly, throughout the project period HMG was taced with a growing tlood of settlers, the need to accomodate as many ot them as possible, a finite resource ot land for resettlement and competing claims of various institutions for that resource. This was a ditticult task but the results ot reconciliation - 66 - only served to undermine project implementation and hinder -ttainment of project objectives. 7.03 Initially, HMG was extremely enthusiastic about the project, however, policy actions were slow in coming. In an increasing concern for forest conservation, HMG started assigning low priority to resettlement. Throughout the project period, Government policies, expressed in terms of developing an institutional base, providing of incentives and budget, and improving organization and management, essential to the success of the project, were apathetic. Before the project commenced, HMG first intro- duced, in 1975, export duty on logs and timber and then, in 1976, increased these duties and added sales tax. In July 1977, HMGN banned the export of all sal logs. In March 1981, it banned the export of all hardwood logs. And in January 1982, it banned the export of all semi-processed wood. In effect these sales restrictions, impositions of increased taxes and duties and creation of new organizations (FCN and FPDB competitor to TCN) effectively prevented project implementation as originally designed. This culminated in September 1980, with the Minstry of Forest halting futher resettlement activities by NRC. The order has since neither been clarified nor rescinded. NEPAL RESTTLEMENT COMPANY General 7.04 The effectiveness of NRC in project implementation was hampered primarily by lack of coordination between the Corporation and TCN. In the initial stages of project implementation, NRC was located administratively within MFAI. In December 1976 NRC was transferred to the Ministry of Forest. This transfer did not appreciably improve coordination and NRC was unable to know sufficiently in advance the areas available for settle- ment and to make plans accordingly. Again, a lack of coordination prevented NRC from supplying precise information to WFP regarding food supplies needed for distribution amongst settlers. There was, in addi- tion, poor supervision of project implementation, poor communications between headquarters and field units, lack of delegation of authority, inadequate staff training, frequent staff turnovers, and poor maintenance of records. Staffing 7.05 In May 1975, NRC submitted a staffing plan to the Bank. With a few exceptions, the plan was adhered to during project implementation. Some of the exceptions, however, were important. A Deputy General Manager was appointed in 1977 for two years, thereafter he acted as General Manager, and the vacancy of Deputy was never filled. An internationally recruited Agricultural Advisor was never appointed; training of agricul- tural and extension officers in the field thereby suffered. The overall - 67 - etticiency and dedication or tield staft appointed was aftected by insecurity of tenure, lack of incentives, and a resultant desire to trans- ter out of NRC to other organizations offering greater job security and prospects of career development. 7.06 Probably the most crucial aspect of NRC implementation was the lack or supervision or rield statt. Head Ottice statt visited the project areas sporadically and tor very short periods. Given the ditticulties of transport and communications, greater delegation of authority to tield staff was necessary. But it was never granted. TIMBER CORPORATION OF NEPAL General 7.0/ Problems o implementation stemmed trom the apparent inability of TCN to adjust quickly to changing policy descisions and problems of management associated with the remoteness of project areas. Problems of coordination between TCN, the Ministry of Forests and NRC caused early delays in implementation and which persisted throughout despite the presence of a coordination committee. 7.08 The introduction into the land clearing process of FCN tor tuel- wood extraction, and of FPDB for roundwood production created turther confusion and which affected TCN operations. First, it resulted in the draining ott or statt from TCN, and second, with greater HMG support for FCN and FPDB, TCN's activities dwindled. In January 1982, all authority to log timber and tuelwood was removed trom TCN, which is now merely an organization for sawmilling and sale of lumber. 7.09 TCN management enjoyed only limited authority to act without board approval and tormal meetings were required tor most of its operational decisions. The Board of Directors were mostly out of touch with what was happening at the project level. In addition, they did not have the benetit of accurate and up-to-date financial or operational reports on which to base decisions. Decisions made were slow to reach project areas and this was retlected in a general uncertainty at project level of what current policies were in effect. Planning and Procedures 7.10 TCN lacked the ability to plan its future logging operations ettectively. Planning that was carried out was generally based on scant available intormation. However, implementation of plans otten received set-backs by slow bureaucratic procedures and delays in communication between Kathmandu and project areas. Again this shortcoming was recog- nizea ana technical assistance was provided to TCN through the appointment of a Logging Management and Planning Consultant. He was in position tor - 68 - 18 months from 19/9 to 1980. His ettectiveness was , however, short lived; his influence was limited and the time spent at projects insuffi- cient. TECHNICAL ASSISTANCE 7.11 The project, as appraised, included Z88 manmonths or consultancy services costing NRs 6,435,000 (US$ 607,075). Consultancy services were to be utilized as follows: Forestry Winch Lorry Operators (Malaysia) a/ 96 m/m Sawmill Operations (India) b/ 96 m/m Lumber Sales Advisor 36 m/m Settlement Agricultural Advisor 36 m/m Further Studies and Planning Soil Surveyor 24 m/m Irrigation - a/ Includes winch lorry operators and mechanics. b/ Includes sawmill operators and sawdoctors. Since, at the time of appraisal a USAID financed project was responsible tor surveying the irrigation potential over the whole Terai; a sum of NRs 1,060,000 (US$ 100,000) was earmarked for test drilling and pilot command area development or such other assistance as the survey might indicate. /.12 The Forestry Consultants were to be in position by August 31, 1975 and contracts entered with the others, by December 31, 1974. HMG, while exploring possibilities ot obtaining UNDP financing for the services of the Agricultural Advisor and the Soil Surveyor, raised questions about the content and size of the technical assistance program. The may/June 1976 supervision mission, recognizing changing project needs, agreed with HMG: a) to employ one Winch Lorry Specialist instead of two Winch Lorry Operators and two Mechanics; D) to waive the technical assistance input of two Sawmill Operators and two Sawdoctors; and c) to deter the appointment or a Lumber Sales Advisor. - 69 - These changes were agreed to because local Nepalese were to be trained as winch lorry operators and mechanics; private contractors were to be engaged as sawmill operators; and timber sales could only take place after August 1976, due to delays in project implementation. The mission sug- gested short-term consultancy assistance to examine TCN timber and log pricing policies and procedures. 7.13 In July 1976, the Ministry of Finance (MOF) requested FAO to recruit ana second to TCN a Winch Lorry Specialist (to be financed under the IDA credit) and UNDP to assist (on a grant basis) in the recruitment of an Export Sales Adviser for TCN tor 4 months, an Agricultural Adviser for NRC for 18 months and a Soil Surveyor for the Ministry of Agriculture tor 24 months. Little progress was made until the end of 1976 when IDA insisted that recruitment of a Winch Lorry Specialist and an expatriate Agricultural Advisor were essential conditions for IDA continued support of the project. TCN then recruited a Winch Lorry Specialist from Malaysia, and NRC started to search for an Agricultural Advisor. 7.14 The May 1977 supervision mission laid renewed emphasis on the need for technical assistance and advised appointment or a Logging Management and Planning Specialist for 2 manyears and agreed to the deletion of the Soil Surveyor (DCA Section 3.03b), in view of a Canadian aided land use survey which would yield*the data necessary for a policy review of tuture land settlement. The mission also recommended recruitment of a Planning, Monitoring and Evaluation Consultant. 7.15 Because of the failure to obtain bilateral aid (grant) assistance for these consultancies, the MOF agreed that TCN should recruit (a) a Logging Management and Planning Consultant; and (b) a Lumber Sales Advisor and (c) NRC to locally recruit an Agricultural Advisor. It was further agreed that their services would be paid trom the Credit. No action was taken to recruit the M&E consultant. TCN failed to recruit a Lumber Sales Advisor, but a Logging Management and Planning Consultant was appointed for 18 months. NRC hired a local senior otticial trom APROSC as an Agricultural Advisor, but IDA did not agree to the appointment as the incumbent lacked sufficient experience of the "Training and Visits" (T&V) system as outlined in the terms of reference. The consultant was relieved atter 4 months. 7.16 The November/December 1979 supervision mission, tollowing progress in recruitment of consultants, found the results disappointing. The mission advised .HMG to quickly appoint (a) the Export Lumber Sales Advisor, and (b) an Agricultural Advisor Trained in T&V system. The mission also felt the need for strengthening the management of TCN and supported a management consultancy, proposed by the Industrial Services Center (ISC). In addition, the mission proposed short-term consultancies in the following areas requiring attention: - 70 - 1. Agricultural Planning & Organization 3 m/m (from India) 2. Agricultural Training and Extension 3 m/m extentable to 15-18 m/m 3. Land Use Planning 1 m/m 4. Review ot Credit Needs in NRC To be carried out by ADBN 5. Domestic Water Supply 3 m/m 6. Monitoring and Evaluation I - 1.5 m/m By Project termination, both the Lumber Sales Advisor and Logging Manage- ment Consultants had not been appointed. With regard to the Management Consultancy, TCN and ISC signed an agreement in January, 1980 and ISC submitted a dratt report in August 1980 and which TCN is still studying. Of the 6 short-term consultants to be appointed by end March, 1980, only the Agricultural Planning and Organization Consultant was appointed. LEGAL COVENANTS /.1/ The DCA included 21 major legal covenants, of which HMG was to complete tive; TCN, three; NRC, ten and ADBN, three. HMG satisfactorily completed two covenants relating to on-lending of project funds to ADBN under a subsidiary loan agreement, and to TCN under a project financing agreement. The covenant regarding establishment and, hence, providing tor the regular meeting ot SCC was only partially implemented. The covenants concerning provision of funds for food loans to farmers in settlement and permission to TCN to sell logs locally and in the export market, were Cisregarded. 7.18 Ot the three covenants to be met by TCN, two were completed on time, whereas the covenant on appointing a Lumber Sales Advisor remained unfultilled. Ot the ten covenants to be met by NRC, seven were completed, some belatedly; one covenant (employing Soil Survey Consultant) was declared redundant; and remaining two covenants on employing an Agricul- tural Advisor and disallowing unauthorized settlements were only partially complied with. ADBN conformed with only one of three covenants; the covenant requiring agreement with IDA on revision of ADBN lending terms and provision of project accounts and quarterly/yearly progress reports were not complied with. - 71 - MONITORING AND EVALUATION 7.19 According to the SAR (May 1974), NRC was to be responsible for monitoring and evaluation (M&E) of agricultural performance (including regular surveys of tarmer operations), and TCN, for progress of forestry operations. Both agencies were required to submit evaluation reports annually to iDA. However, no institutional arrangements were made nor any operational guidelines developed by either organization to monitor or evaluate project components. The supervision mission in May, 1977 recom- mended establishment of a M&E unit in NRC at an annual expenditure of NRs 150,000 (US$14,151), to be met from project finances. The M&E unit was to be headed by an Evaluation Officer, supported by technical staff and with consultant assistance of 1 to 1.5 manmonths to help design and conduct survey work. The mission also set out guidelines for preparing the annual evaluation reports of TCN and NRC. TCN tailed to follow these guidelines, and NRC informed IDA in November 1977 that they would establish a M&E unit "in due course of time" and that they had approached a local consulting firm, Agricultural Projects Services Center (APROSC) ror assistance in survey design. APROSC completed a socio-economic survey in 1978 of the existing Kanchanpur and Bardia resettlement areas and compared the prevailing circumstances with adjacent areas outside the project bound- aries. The report couia have formed the basis for turther NRC evaluations but no further action was taken. 7.20 The Supervision mission of November/December 1979 reported that M&E by NRC was merely confined to reporting of physical targets and again recommended that NRC appoint a short-term consultant to help design a M&E system. The recommendation was not followed. Thus, on a vital aspect of settlement -- tarmer performance, participation, satisfaction, problems etc -- there is no evidence whatsoever. Furthermore, little is known, with any degree of confidence, about yields, crop and animal production, and settler's incomes. VIII. IDA PERFORMANCE 8.01 The project was formulated on the basis of conditions prevailing in 1974 when resettlement was seen as a clear national objective. Shortly thereatter it was being reported 1/ that Nepal had suffered a substantial reduction in its forest area, particularly in the Hills. 1/ Revised Forest Management Plans, Ministry of Forests, 1976, and Nepal Forestry Sector Review, August 19/8. - 72 - 8.02 Against this somewhat conflicting background, HMG began to adopt a more conservationist policy towards its forests and this was reflected firstly and shortly after credit signing in restrictions on log exports when the Forest Department became more reluctant to permit export of all scarce forest products and to forego forest areas for settlement. At the time of project appraisal these pressures, which subsequently adversely affected the land clearing and resettlement program, were not tully anticipated. Nevertheless, IDA must share in the blame for the outcome of the project. APPRAISAL Winch lorry technology 8.03 The winch lorry concept was introduced on the basis of Malaysian experience and without first testing the technology under Nepalese condi- tions. Furthermore, there was insufficient information as to the total forest resource available for exploitation in project areas. As it turned out, average log sizes were too small for effective operation of the self loading winch lorries. Serious doubts must, theretore, be cast on the appropriateness of the decision to include this component without prior testing on a pilot scale. 8.04 The choice of the winch lorry technology may also have been partly dictated to by the logistics of moving a large volume of logs into sawmill areas in the face of an anticipated shortage of bullock carts. It the bullock cart population had been surveyed and the possiblities for improv- ing their efficiency fully explored, it is possible that this method of log extraction would have prevailed. 8.05 To some extent the location of sawmills also had some bearing on the choice of winch lorries for extraction. With a decision to centralize sawmill areas came the need for workshop facilities, stores, roads, hous- ing and ancillary services. Had the sawmills been located closer to the resource and scattered throughout the areas to be cleared, the indigenous methods of timber extraction would have been effective and the need for a large infrastructure associated with mechanization reduced. TCN now have a considerable investment in buildings and plant which is becoming increasingly distant from the forest. Implementing Agencies 8.06 Two major entities responsible for implementing the project were TCN and NRC. Given past performance of these organizations -- carefully detailed by the Preparation Mission -- the project targets for logging, timber extraction and resettlement now appear over-optimistic. Although the Appraisal Report was correct in rejecting the proposal to establish a - 73 - new Corporation (The Nepal Terai Settlement Corporation) to manage settle- ment schemes in favor of using existing organizations, this decision, however, did not recognize the managerial constraints within these organizations and the complexity ot operations expected ot them. Further- more, given the inherent and known ditticulties ot obtaining statt tor these organizations due to the existing terms of service and lack of incentives to work in remote areas, the Bank was reluctant either to alter statt recruitment procedures, or seek the payment ot special allowances. In the light ot managerial constraints and poor terms or service, it can be turther concluded that project phasing was not realistic. SUPERVISION 8.07 IDA mounted eleven supervision missions and one review mission (in August 1976) during the project period, 1974/75 through 1980/81. Field supervision was difticult because of the remoteness of project areas and the difficulty of communications. Supervision missions failed, however, to influence the direction and progress of the project. The project became ettective in February 1975 and by October 1975, was classed as a "problem" project. In early 1976 changes in the size and location of project areas were being sought - betore implementation had actually commenced and by July 1976, consideration of credit cancellation was being mootea within the Bank. IDA was persuaded, however, by HMG at the Annual General Meeting in 19// to continue the project on a trial basis tor a year after which project pertormance would again be reviewed. This was followed, in January 1979, by an assessment that an honest attempt was Deing maue to torward project implementation and that, therefore, cancel- Lation was not warranted at that time. At the Annual General Meeting in late 1979 the question of phasing out the project was again raised but the Bank was persuaded to allow the project to continue. Nothing had, in the meanwhile, been done to rectify the breaches of DCA covenants. Taking cognizance of these tailures, the November/December 1979 mission recom- mended that unless HMG lifted the ban on the export of logs by Jauary 31, 1980, IDA should suspend further disbursements from the credit. A subseq- quent mission in Sepember/October 1980 found that not only the ban on the export of logs had continued, but the Ministry of Forests also had halted further resettlement by NRC. In order to allow TCN and NRC to complete partially completed works, it was then agreed with HMG that the project be terminated within the original timetable (July 15, 1982) and that the remaining 20 months be directed towards phasing out operations. With hindsight IDA should have been firmer in the use of the options open to it in order to ensure compliance with essential legal covenants. Such com- pliance would, undoubtedly, have speeded up implementation and improved overall project benefits. The tailure to hire technical assistance and remove the ban on sale ot logs is relevant in this context. - 74 - Procurement Difficulties 8.08 The initial delay (from which the project never recovered) in project implementation was caused by problems associated with preparation of international tenders and conforming with procurement procedures. The project authorities were inexperienced in these matters and required guidance which was not readily available. The need, however, for such assistance was tinally recognized by the November/December, 1976 supervi- sion mission and recommended that project personnel participate in Bank sponsored procurement seminars. The Bank subsequently conducted these seminars in Nepal. IX. CONCLUSIONS 9.01 The credit has been closed after six years of implementation (1974/75 through 1980/81). The chances of achieving project objectives as envisaged at appraisal and after subsequent revisions were remote trom the outset and even if the implementation period had been extended. The project principally suffered from changing policies on the part of HMG, design weaknesses and inherent ineffectiveness in the working of the implementing agencies. Despite these, the project provides important lessons. 9.02 Initial delays were largely due to a lack of thorough knowledge of Bank procedures by the implementing agencies (TCN and NRC), lags in appointments to senior positions in these organization and in recruitment of consultants. To counteract such delays in the tuture, it is recom- mended that: (a) a thorough knowledge of Bank procedures, particularly in respect of procurement, must exist within the entities implementing the project; and (b) a project should have a start-up period, the time-length ot which should depend on the complexity of the project to ensure timely recruitment of key personnel and consultants and allow start-up of main operations. In the present case, little progress could have been made, given the remoteness of the project areas, lack of infrastructural tacilities and non-exisitence of the institutional base. 9.03 The project envisaged introduction of "Sang Tai Wong" or winch lorries for timber extraction. The choice of technology turned out to be wrong with the result that winch lorries had to be abandoned in favor of the indigenous methods (oullocK carts and hand loading). However, IDA's insistence on int)rduction ot winch lorries not only took two years in procuring the equipment and putting it together, but it also involved a substantial additional investments in funds in building, plant, and equip- ment. The important lesson to be learned from this experience is that introduction of technology on a project basis should only be attempted after it had been tested on a pilot scale, and under local conditions. 9.04 The project also suffered from some built-in assumptions, e.g., that India would construct all-weather connecting roads on its side of the border to provide road links for the transportation of Nepalese forest produce to the Indian railheads. The Treaty of Trade and Transit, renegotiated every five years between Nepal and India, was considered as sufficient to provide a basis for such agreements. No such agreement was reached during the project period, and thus, marketing of forest produce, apart from other factors, received a serious setback. Similarly, it was assumed, keeping environmental concerns in view, that the land liable to erosion would remain under forest and would not be subjected to felling. However, during project implementation, indiscriminate felling took place without regard to the consequences of erosion. Any understanding reached in the matter was not complied with. 9.05 Some of these issues, though important, did not attract full supervision attention partly because of missions' pre-occupation with other major issues (winch lorries, etc.) and partly because of neglect of monitoring aspects of the project. A subsequent attempt to introduce a M&E system into the project failed to produce results. In view of these facts, it is underscored that: (a) basic agreements must be reached with the entities concerned on issues or works vital to the success of the project before it starts; and (b) strict monitoring of the progress of a project should be undertaken. 9.06 The manner and degree to which legal covenants were contravened requires comment. Some important legal covenants, for example, sale of logs by TCN without infringment of any sort, and employment of consultants (Timber Sales Advisor and Agriculture Advisor) remained unfulfilled until project termination. These covenants were critical to the success of the project and many attempts by supervision missions failed to remedy the position. Under similar circumstances it is recommended that: (a) when legal covenants, critical to the success of the project are violated, the Bank should take a serious view of such contraventions and take firm action, particularly when these affect the economic outcome of the project and are of national benefit; and - 76 - (b) when Government commitment to the project is lacking, and sufficient support is not forthcoming, the fact should be recognized and options available to the Bank used. NEPAL SETTLEMENT PROJECT Revised Implementation Schedule 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 Total 1. Land Clearing (Ha) Kanchanpur 200 400 450 450 450 450 - 2,400 Bardia 250 500 900 900 900 800 - 4,250 Kailali - 150 1,000 1,100 1,100 1,100 - 4,450 Total 450 1,050 2,350 2,450 2,450 2,350 - 11,100 2. Farmers Settled (No) Kanchanpur - 95 185 205 205 205 205 1,100 Bardia - 145 295 525 525 525 485 2,500 Kailali - - 85 595 655 655 660 2,650 Total - 240 565 1,325 1,385 1,385 1,385 6,250 mb NEPAL SETTLEMENT PROJECT Clear Felling of Areas by T.C.N. (Ha) 1976/77 1977/78 1978/79 1979/80 1980/81 Total Kanchanpur (existing) 100 250 375 285 90 1,100 0 Kanchanpur A 200 400 450 485 265 1,800 Bardia 250 650 1,020 475 405 2,800 Kailali - 50 350 495 705 1,600 550 1,350 2,195 1,740 1,465 7,300 NEPAL SETTLEMENT PROJECT Forestry Roundwood Production, Usage and Sales by T.C.N. (Volume) Kanchanpur Unit 1976/77 1977/78 1978/79 1979/80 1980/81 Total 3 Log Production m Sal 30,813 10,309 25,233 29,983 8,740 105,078 Asna 3,946 1,457 2,646 3,274 1,475 12,798 Other Species 611 344 374 411 134 1 872 35,370 12,110 28,251 TF U-T9 119,/46 Log Sales m3 Sal 10,838 116 131 6,148 995 18,228 Asna 3,684 654 3,408 147 3,818 11,711 Other Species 582 266 390 242 37 1,51 15,104 1,036 3T,9 29 6,537 4,850 31,456- 3 Sawmill Log Consumption m Sal 10,879 8,318 23,059 24,076 20,415 86,747 Asna 2 36 - - - 38 Other Species 28 13 43 10 10 104 10,909 8,367 23,102 T20To=1TF'9 3 Log Stocks m Sal 9,096 10,971 13,014 12,774 104 104 Asna 260 1,027 265 3,392 1,048 1,048 Other Species 1 66 4 164 250 250 9,357 12,064 13,283 16,330 1,402 1,402 Poles No Production 6,836 8,569 16,030 15,937 3,221 50,593 Sales 2,117 39 24 3,323 932 6,415 Stock 4,719 13,249 29,255 41,869 44,158 44,158 Firewood Tons Production 367 2,397 6,961 392 - 10,117 DC Sales 341 1,995 6,208 1,573 - 10,117 ,'m Stock 26 428 1,181 - - -WF NEPAL SETTLEMENT PROJECT Forestry Roundwood Production, Usage and Sales by T.C.N. (Volume) Bardia Unit 1976/77 1977/78 1978/79 1979/80 1980/81 Total Log Production m3 Sal 15,405 12,190 5,082 15,715 14,088 62,480 Asna 9,045 7,364 4,142 8,554 9,969 39,074 Other Species 1,977 1,609 1,213 1,892 1,501 8,192 26,427 21,163 10,437 26,161 25,558 109,746 3 Log Sales m Sal 3,562 4,416 4,125 5,115 4,992 22,210 Asna 4,359 4,571 4,242 6,729 6,521 26,422 Other Species 1,074 412 1,234 318 639 4,677 8,995 9,399 9,601 13,162 12,152 53,309 Sawmill Log Consumption m3 Sal 5,192 3,864 4,008 11,474 7;7Q9 32,247 Asna 331 26 675 407 876 2,315 o Other Species 11 36 16 228 4 295 5,534 3,926 4,699 12,109 8,589 34,857 Log Stocks m3 Sal 6,651 10,560 7,510 6,636 8,022 8,022 Asna 4,355 7,122 6,346 7,764 10,335 10,335 Other Species 892 2P053 2,016 2,362 3,220 3,220 11,898 19,735 15,872 16,762 21,577 21,577 Poles No Production 884 395 - 1,662 - 2,941 Sales 518 - - 1,663 - 2,181 Stock 366 761 761 760 760 760 Firewood Tons Production 1,611 4,065 3,113 2,903 - 11,692 Fe Sales 1,497 3,716 3,288 3,180 - 11,681 Stock 114 463 289 12 17 12 NEPAL SETTLEMENT PROJECT Forestry Roundwood Production, Usage and Sales by T.C.N. (Volume) Kailali Unit 1976/77 1977/78 1978/79 1979/80 1980/81 Total 3 Log Production m Sal - 1,106 12,557 20,701 15,243 49,607 Asna - 16 3,419 8,605 13,215 25,255 Other Species - 7 334 818 2263 4 + 422 - 1,129 16,310 31,124 30,721 79,284 3 Log Sales m Sal - - 5,978 4,428 6,472 16,878 Asna - - 2,510 7,033 11,193 20,736 Other Species -234 870 1216 2320 -8- 7-2 T-233 18'88 39',934 3 Sawmill Log Consumption m Sal - - 340 7,157 13,925 8,241 29,663 Asna - - 6 - 932 938 Other Species - 79 120 11 210 3 - 40 7,242 14,045 9,184 30,1811 Log Stocks m3 Sal - 765 187 2,535 3,066 3,066 Asna - 16 919 2,490 3,580 3,580 Other Species - 7 28 856 1,892 1p892 - 788 1,134 5,881 8,538 8,538 Poles No Production - 338 3,980 1,407 4,003 9,728 Sales - - 1,069 3,904 2,402 7,375 Stock - 338 3,249 752 2,353 2,353 Firewood Tons Production - 148 1,201 794 - 2,143 Sales - 16 912 1,215 - 2,143 H Stock - 132 421 - -- - 82 -Annex 1 NEPAL SETTLEMENT PROJECT Progress of Land Clearing and Forestry Production Unit 1976/77 1977/78 1978/79 1979/80 1980/81 Total Land Clearing New Areas ha 450 1,100 1,820 1,455 1,375 6,200 Already Allocated ha 100 250 375 285 90 1,100 Forestry Production Log Production U Log Sales M3 61,797 34,402 54,998 90,593 66,628 308,778 Log Stocks 33 24,099 10,435 22,252 32,030 35,883 124,699 Sawn Lumber Production m3 21,255 32,587 30,289 38,973 31,517 31,517 Lumber Sales a3 8,703 6,747 19,428 27,419 19,199 81,496 Lumber Stocks 33 7,808 5,735 17,082 23,403 13,179 67,207 894 1,905 4,233 8,269 14,287 14,287 Road Construction All Weather Roads km 3 - - - - 3 Dry Weather Roads km 6 5 12 17 13 53 Equipment Supplied Sawmills Installed units - 3 11 12 - 26 Winch Lorries Acquired units 10 10 - - - 20 Lumber Haulage Lorries units 3 - - 6 9 Chainsaws units - 26 - - - 26 Radio Transceivers units - - - 4 2 a/ 6 Front-end Loaders units - 2 - - - 2 Weigh Bridge units - 3 - - -3 Jeeps * units - 3 1 - 7 a/ 11 Technical Assistance (Manmonths) Winch Lorry Specialist M/m 4 - 2 - - 6 Sawmill Operator/Sawdoctor M/m - - - - - Nil Logging Advisor M/m - - 6 12 - 18 Export Sales Advisor M/m - - - - - Nil a/ 1981-1982 - 83 - Annex I Table 5 NEPAL SETTLEMENT PROJECT FAMILIES SETTLED, LAND DISTRIBUTED AND AREA CULTIVATED 1977/78 1978/79 1979/80 1980/81 1981/82 Total KANCHANPUR Families settled (no.) 141 291 170 46 - 648 Land distributed (ha.) 42.07 407.30 140 195.30 - 784.67 Area developed for cultivation (ha.) - 42.00 368.22 589.37 784.67 784.67 Area cultivated (ha.) - 41.99 354.00 586.00 780.00 780.00 BARDIA Families settled (no.) 223 594 579 6 - 1402 Land distributed (ha.) 201.87 331.63 588.13 401.35 171.00 1693.98 Area developed for cultivation (ha.) - 201.87 533.50 1121.63 1522.98 1522.98 Area cultivated (ha.) - 41.99 459.00 943.00 1216.84 1216.84 KAILALI Families settled (no.) - 233 397 101 - 731 Land distributed (ha.) - 40.00 229.00 698.00 - 967.00 Area developed for cultivation (ha.) - - 40.00 269.00 658.00 658.00 Area cultivated (ha.) - - 37.50 120.00 504.00 504.00 Total Number of Families Settled - 2,781 Total Hectares of Land Distributed - 3,445.65 Total Hectares Developed for Cultivation - 2,965.65 Total Hectares Cultivated - 2,500.84 - 84 - Annex I Table 6 NEPAL SETTLEMENT PROJECT Area: Hectares ---------~-------------- Yield: M. tons/ha Production: M. tons AREA, PRODUCTION AND CROP VALUES Price: NRs/ton ---~-------------------~------- Value: NRs ) 1978 - 79 ) 1979 - 80 1 1980 - 81 Crops 1 Area I Yield I Pro- I Price I Value I Area I Yield I Pro- I Price I Value I Area Yield I Pro- I Price ] Value I I I duction I I I I I ductionI I I Iduction I 1 KANCHANPUR Paddy 119.68 1 1.27 I 24.99 I 945.20123623.951292.001 1.20 I 350.40 1 965.901339852.961350.001 1.40 I 490.00 1054.101 516509.001 Maize 114.74 I 0.87 ] 12.87 I 999.70112819.951 42.001 0.86 1 36.12 11092.501 39461.101236.001 0.70 I 165.20 11179.501 194853.401 I l l 1 1 1 I I I II 1 I I 1 Wheat 115.21 1 1.00 1 15.21 11015.50115445.751 44.121 1.30 1 57.36 11024.201 58748.021 81.00) 1.40 1 113.40 11163.30) 129591.621 I I 1 1 1-. 1 I l l II Mustard 1 - 1 - - 1 - 1 - I 99.001 0.76 1 75.00 13085.001231375.001326.601 0.75 1 244.95 14265.0011044711.701 I I 1 1 I II I I I 1 1 1 Chick Peas I - 1 - 1 - 1 - 1 - I 30.001 0.66 1 20.00 12750.001 55000.001117.001 0.87 1 102.00 13000.001 30600.001 I l 1 1 1 I 1 1 l l II I Lentil 1 - 1 - 1 - - 1 - [ 15.001 0.60 1 9.00 13250.001 29250.001 88.001 0.73 1 64.00 13500.001 224000.001 BARDIA Paddy 124.66 11.20 1 29.59 I 945.20127970.361314.001 1.15 I 361.10 I 965.901348786.491517.00 1.37 I 708.29 11054.101 746608.481 II I I 1 1 I I 1 11 11 1 Maize 117.33 10.56 1 9.70 I 999.701 9697.091 83.001 0.56 1 46.48 11092.501 50779.001219.661 1.25 I 274.57 11179.501 323861.211 [ I I 1 1 I I I II I l II Wheat 119.33 10.90 1 17.40 11015.50117669.701 45.331 0.46 1 20.85 11024.201213546.001 94.671 1.24 1 117.84 11163.301 137083.271 I1 I I I 1I l l I I I Mustard I - 1 - - 1 - I - 1 26.331 0.10 I 2.63 13085.001 8122.801287.491 0.77 I 221.91 14265.001 946446.151 Chick Peas 1 - - 1 - I - 1 - I 12.001 0.12 [ 1.44 12750.001 3960.001 13.001 0.80 I 12.00 13000.001 36000.001 I I I I I I II I I I 11 1 Lentil I - 1 - I - I - 1 - I 20.001 0.20 I 4.00 )3250.001 12920.001 19.001 0.92 1 17.48 13500.001 61180.00 I1 1 1 1 1 1 1 1 1 Pigeon Peas 1 - I - I - 1 ] - I 52.00 0.74 I 38.48 12680.001103126.401 54.001 0.80 I 43.20 13680.001 115776.001 KAILALI Paddy I - - 1 - 1 - 1 - I 11.001 0.70 1 7.70 1 965.901 7437.431 66.601 1.15 1 76.59 11054.101 80733.521 Maize 1 - - 1 - I - 1 - I 10.001 0.56 I 5.60 11092.501 6118.001 46.00 1.20 [ 55.20 11179.501 65108.401 I I I I I I I I1 I ll I II Wheat - 1- 1 - 1 - 1 - 1 - 1 - 1 - 1 - 1 - I - j - 1 - 1 - 1 - 1 I1 1 1 I I 1 1 I I[I I ll I I I Mustard 1 - - 1 - 1 - I - I 5.001 0.50 I 2.50 13085.001 7712.501102.501 0.42 I 43.05 14265.001 183608.251 I l l1 1 1 1 I 1 l i 1 1 Chick Peas I - 1 - - I - I - 1 - 1 - I - 1 - 1 - [ 5.001 0.45 1 2.25 13000.001 6750.001 I l l 1 I l I 1l Il I I I Lentil I - 1 - 1 - 1 - 1 - 1 - I - 1 - I - I - 1 2.001 0.60 I 1.20 13500.001 4200.001 Pigeon Peas I - I - 1 - I I - I 15.001 0.54 I 8.10 12680.001 21708.001 8.001 0.74 1 5.90 12680.001 1581.001 Project Sites Area Production Value 1 [ 1978/79 1979/80 1980/81 [ 1978/79 1979/80 1980/81 I 1978/79 1979/80 1980/81 [ 1 1 1 1 1 [Kanchanpur I 49.63 522.12 1198.60 [ 53.07 547.88 1179.55 1 51889.65 753687.08 2140265.721 1 1 I I 1 jBardia I 61.32 552.66 1204.82 I 56.70 474.98 1395.29 I 55337.15 741240.69 2366955.111 IKailali * I - 41.00 230.10 1 - 23.90 184.19 I - 42975.93 341981.171 ]Project Totals 1110.95 1115.78 2633.52 ] 109.77 1046.76 2759.03 I 107226.80 1537903.70 4849202.001 Annex 1 Tabl e_7 NEPAL SETTLEMENT PROJECT Notations: 1 - Outstanding 2 - Loan Overdue 3 - Number of Households CREDIT SUPPLY BY ADBN TO PROJECT AREAS 4 - Loan Disbursed (NRs) 5 - Loan Collected I 1977-78 1978-79 1 1979-80 1 1980-81 1 ---------------------------------- ----------------------------------------- ---------------------------------------------- ------------------------------------------I Purpose Collection I Lending I Collection I Lending I Collection I Lending I Collection I Lending I 1 1 3 2 4 1 1 2 13 4 1 5 1 2 131 4 1 5 1 1 2 1 31 4 1 5 I- I--- -- -I-1----1----- - - I---I1--- 1--- -- ------1-------1-l- I -----I--1-----I1----1-- -1--1--- -- KANCHAPUR PROJECT AREA - BELAURI SUB-BRANCH | Paddy production I I I I I I I I 35 I 9,605 I - I I I 44 I 5,070 I 5,927 I I I I I I I Mustard production I t I I I I I 6 1 5,085 1 - I I I I I I I I I ) Wheat production I I I I I I I I I I I I I I I I I 46 I 10,110 I 3,569 I I Bullocks I I I I I 116 1 104,000 I - I I I 157 I 141,700 I 42,000 I 1 111 I 100,000 1 11,552 I I Il lI I III lllIl II II I 1 Sub-Total I 1 I I 1 | | | 157 1 114,190 1 - I . I 201 1 147,770 1 47,927 I | I 157 I 110,110 I 15,121 I I Ill lI I II I I Ill Ill II I II 1 (TARATAL AREA: DHODHARI) BARDIA PROJECT AREA - GILAURI SUB-BRANCH SI I Il lI II llllf I Ill I I Ill I Paddy production I 4,039 I - I 10 I 4,039 1- 4,084 I - I 3 1 4,084 I 4,039 I 24,273 I 18,407 1 13 I 44,680 I 24,491 1 26,273 | 26,273 I 13 I - I - I I Wheat production I I I I 12,987 I 12,987 I 12,987 I 15 1 14,094 I 1,107 I 56,513 1 43,526 1 25 1 43,526,1 - I 9,784 I 9,784 1 5 I 4,251 1 50,780 I I Maize production I 20,572 I - I 15 I 10,572 1- 10,572 I 10,572 1 15 I - I - I 1,634 I - 2 1 1,634 I 10,572 1 1,634 1 1,634 I 2 I - I - I I Agric. inputs * I I I I I - | - I - I 3,337 I 3,337 I 16,401 1 - I - I 16,401 I - I 16,401 1 16,401 I - I - I - i I Bullocks I 81,000 1 30,000 I 90 1 81,000 1 - I 250,200 1 30,000 1 188 1 169,200 1 - I 378,100 1 132,000 j 133 I 119,500 1 - I 568,000 1 232,907 1 211 1 189,900 I - I I I11 I111II11 111 111I II III I Sub-Total I 105,611 1 30,000 I 115 1108,598 - 277,843 I 53,559 I 221 190,715 I 8,483 I 476,921 I 193,933 I 173 225,741 I 35,063 I 622,092 | 286,999 ( 131 I 194,151 I 50,780 1 I (KAlJURA AREA: MOTIPUR) 1Ill II I I Ill Il lll IlIill I Paddy production I I I I I l 1 1 1 1 2,106 I I 14 1 - I 2,106 1 2,106 1 2,106 I 14 1 - I - I IMustard production 1 I I I I I I [ I I - I 1 - I - I - I 9,870 1 - I 15 1 9,870 I - I I Wheat production I I 1 1 I I ] I [ 35,197 I 21,750 I 119 I 35,197 I 13,447 I 30,800 I 21,750 I 59 I 9,050 I - IBullocks I I I I I I I I I I 145,800 I162 I 145,800 1 - 145,800 1 8,000 1 162 1 - I - I II II I I IIIIII IllIlI Ill I II II I Sub-Total I I I I I I I I I 183,103 I 21,750 I 295 I 180,997 I 15,553 1 188,576 I 31,856 I 250 I 18,920 I - I (GAUARIYA COOP) KAILALI PROJECT AREA - HUSULIYA SUB-BRANCH I I li Iitl IlI I I II I I I Il 1Paddy seeds I I I I I I I I I I I - I I 57 1 3,628 1 3,628 I | | | | I Agricultural Tools 1 I I I I I I I I I I - I I 50 I 5,316 I 5,316 I 7,368 I I I 7,368 I - I I Bullocks I I I I I I I I I I I I I I I I 126,200 I I 211 I 189,500 1 63,300 I I Sub-Total I I I I I I I I I I I | I 107 I 8,944 I 8,944 I 196,868 I I 211 1 196,868 I 63,300 I I III lilI I I II I Illi | (FULWARI WARD #1) I I I I I I I I I I I I I I I I I I I I I I I Ili llI lllll llI II 11111I I Paddy seeds I I I I I I I I I I I I I I I 11,132 1 1 1 11,155 1 23 1 IAgricultural tools 1 I I I ( I I I I I I I I I 3,337 I 1 1 3,358 1 21 1 B Bullocks I I I I I I I I I I I I I I 206,209 1 I 303 I 273,100 I 66,891 I 1 Sub-Total I I I I I I I I I | | | I 220,678 I I 303 I 287,613 1 66,935 I SIlII llII IIIIll lllll ll IlI I TOTAL 1 105,611 I 30,000 I 115 1108,598 I - I 277,843 I 53,559 I 378 I 304,905 I 8,483 I 660,024 I 215,683 I 776 I 563,452 I 107,487 11,228,214 I 318,855 11,052 I 807,662 1196,136 I I nI l g t S t s agricltl lriai 11 111ts.I a Land given to Societies to stock agricultural inputs.. Annex 1 Table 8 NEPAL SETTLEMENT PROJECT Sawmill Production Sales and Stocks - T.C.N. (Volume in cubic metres) 1976/77 1977/78 1978/79 1*79/80 l9go/fil Total Sawn Lumber Production Sal 6,007 4,680 12,884 13,063 10,614 47,248 Asna 1 21 - - - 22 Other species 15 6 25 6 3 55 Total 6,023 4,707 12,909 13.069 10,617 47,325 Lumber Sales Sal 5,421 4,184 11,301 11.067 5,517 37,490 Asna 1 21 - - - 22 Other species 9 5 15 3 2 34 Total 5,431 4,210 11,316 11.070 5,519 37,546 Lumber Stocks Sal 586 1,081 2,P64 4,660 9,757 9,757 Asna -- - - - Other species 6 7 17 20 21 21 Total 592 1,088 2,681 4,680 9,778 9,778 Bardia Sa.n Lumber Production Sal 2,522 1,810 2,055 5,853 3,291 15,531 1 Asna 153 14 294 144 364 969 , Other species 5 18 8 82 2 115 c, Total 2,680 1,842 2,357 6,079 3,657 16,615 1 Lumber Sales Sal 2,254 1,478 1,472 4,851 3,005 13,140 Asna 119 5 237 60 352 773 Other Species 4 8 7 34 1 6 S9 Total 2,377 1,401 1,716 4,94i 3,443 33,972 Lumber Stocks Sal 268 600. 1,183 2,186 2,391 2,391 Asna 33 42 99 183 195 195 Other species 1 11 13 6) 57 57 Total 302 653 1,295 2,430 2,643 2,643 KaHll sawn useder Prduction. 5A1411 Sa Asnla - 198 4,109 8,200 4,499 17.006 Other species 3 420 423 Ttl15 71 6 127 198 4,162 8,271 4,925 17,556 Lumber Sales Sal 34 4,029 7,315 3,937 15,315 Asna 2 15273127 Other species 9 275 277 - ~ 1 73 59 Total -34 4,050 7,388 4,217 15,689 Lumber Stocks Sal 164 243 1,129 1,691 1,691 A,ne 1 11416 Other species 13 1 146 146 Total --6 2729 29 29 70ta 164257 ,1591,866 1,866 - 87 - Annex 1 Table 9 NEPAL SETTLEMENT PROJECT Distribution of Settlers by Original Zone/District Zone District Kanchanpur Bardia Kailali Total MECHI Jhapa 5 5 Pachthar 7 7 KOSI Sansari 5 5 Morang 2 2 Sankhunasabha 2 2 SAGARMATHA Okhaldunga 2 2 Khotang 2 2 Bhojpur 10 10 JANAKPUR Sarlahi 35 4 39 Dhanusha 1 4 5 Ramechap 27 27 Mahottari 2 2 Sindhuli 1 12 13 NARAYANI Makwanpur 4 4 Chitwan 238 (25.4) 17 255 Bara 16 52 68 Parsa 5 5 BAGMATI Dhading 286 (51.3) 3 29 318 Nuwakot 23 1 24 Kavrepalanchowk 3 3 Lalitput 5 5 Bhaktapur 2 1 3 Kathmandu 11 2 13 GANDAKI Lamjung 3 67 (7.2) 70 Kaski 7 49 56 Tanahn 3 3 Syangja 2 10 81 (8.6) 93 Gorkha 4 4 LUMBINI Gulmi 6 6 Palpa 5 5 Nawalparasi 4 169 (24.6) 173 Rupanedhi 2 2 Argakanchi 9 9 DHAULAGIRI Parbat 149 (15.9) 61 210 Myagdi 7 7 Baglung 1 1 RAPTI Pyuthan 2 2 Sallyan 1 1 Rolpa 1 1 Rukum 1 1 BBERI Banke 7 7 Bardia 38 38 Surkhet 16 166 (17.7) 182 Dailakh 5 1 6 Jajarkhot 20 10 30 KARNALI Dolpa 2 2 SETI Kailali 203 (29.6) 203 Bajhang 28 28 Bajura 6 6 MAHAKALI Kanchanpur 140 (25.1) 19 159 Dandeldhura 8 8 N/A 35 14 49 Totals 11 dist. 42 dist. 20 dist. - 88 - Annex 1 Table 10 NEPAL SETTLEMENT PROJECT Distribution of Settlers by Caste, Religion, Ethnic Group Bardia Kanchanpur % (Taratal) % Kailali % Total % Brahmin 34 (6.1) 264 (28.2) 150 (21.9) 448 (20.5) Chettri 32 (5.7) 191 (20.4) 136 (20.4) 359 (16.5) Newar 2 54 ( 5.8) 5 61 ( 2.8) Thakuri 26 (4.7) - 19 45 Sarki 42 (7.5) 59 ( 6.3) 14 115 ( 5.3) Sonar - 102 (10.9) - 102 ( 4.7) Damai 14 18 37 ( 5.4) 69 ( 3.2) Kayasth - 2 - 2 Giri - - 25 ( 3.6) 25 Kumal 6 - 6 Baidi 1 1 - 2 Kami 36 (6.5) - 37 ( 5.4) 73 ( 3.4) Yogi 1 8 - 9 Moslem - I -- 1 Garung 4 74 ( 7.9) 10 88 ( 4.0) Rai - 3 3 Magar - 53 ( 5.7) 39 ( 5.7) 92 ( 4.2) Tamang 311 (55.7) 53 ( 5.7) 48 ( 7.0) 412 (18.9) Tharu 39 ( 7.0) 42 ( 4.5) 134 (19.5) 215 ( 9.9) Thakadi - 11 7 18 Others 10 4 22 36 Totals 558 937 686 2,181 -89 - Annex 1 Table 11 NEPAL SETTLEMENT PROJECT Clinics and Health Staff Bardia Kanchanpur (Taratal) Kailali No. of Health Posts 1 1 1 Staffing Pattern Health Assistant 1 1 1 Auxiliary Health Worker 1 Jr. Auxiliary Health Worker 4 Asst. Health Worker 2 Asst. Nurse/Midwife 1 Peon 2 1 Patients Treated 1978/79 5,695 2,677 165 1979/80 6,085 9,695 267 1980/81 6,483 13,200 1,000 1981/82 (Jan.) 9,601 Medical Budget (NRs) 4,804 20,802 7,000 (1981/82) - 90 Annex 1 Table 12 NEPAL SETTLEMENT PROJECT Schools Established 1979/80 1980/81 1981/82 KANCHANPUR Primary Schools 1 - 4 Student Numbers 35 37 287 No. of Teachers 2 8 BARDIA Primary Schools n.a. n.a. 6 Primary School Enrollment 954 No. of Primary Teachers 19 Middle Schools 1 Middle School Enrollment 187 No. of Middle School Teachers 1 KAILALI Primary Schools 7 Number of Students 873 No. of Teachers 17 S_TLEMENT PROJECT Revised Projqct Cost Estimate la (NRs '000) % Original Foreign Appraisal 2974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 Local Foreign Total Exchange Total Forestry Equipment Logging and Extraction 25.0 5392.8 5683.5 1071.9 10029.4 11101.3 90 9939.0 Milling and Transport - 2830.8 5885.7 581.5 8135.0 8716.5 93 10824.0 Sub-total 25.0 8223.6 11569.2 1653.4 18164.4 19817.8 92 20763.0 Construction Roads 510.0 815.0 75.0 1400.0 - 1400.0 1755.0 Buildings 50.0 1928.0 2259.0 - 2986.9 1250.1 4237.0 30913 Sub-total 50.0 2348.0 3074.0 75T_ 4386.9 1250.1 5637.0 22 10948.0 Sub-total (Forestry) 75.0 10661.6 14643.2 75.0 6040.3 19414.5 25454.8 76 31711.0 Settlement Equipment 341.4 627.0 5.6 5.6 79.8 899.8 979.6 92 901.2 Construction 166.0 2224.0 947.0 504.0 114.0 2835.1 1119.9 3955.0 28 1975.0 Other Costs (Includes HQ) 263.2 1080.8 1268.0 1359.7 1199.5 913.5 5248.6 836.1 6084.7 14 5778.7 Sub-total 77TTF 39JTI t 220.6 T16 TT375 VT9= VT6= 78537 ITUITT 27 1UU579 WFP Food 756.8 2150.3 2730.4 2766.9 2426.3 i083.1 9747.6 10830.7 9G 19234.0 Credit Items Supplemental Food 235.8 533.9 578.0 577.4 1945.1 1945.1 3730.0 Farm Inputs370, Medium-term L 675.0 1585.5 1654.5 2058.0 2301.3 7446.9 827.4 8274.3 10 10853.0 Short-term 29.3 116.4 533.3 1031.9 342.2 1368.7 1710.9 80 3227.0 Sub-total (Inputs) 675.0 1850.6 2324.8 3169.3 3910.6 9734.2 2190.1 11930.3 18 17810.0 Sub-total (Settlement) 770.6 5363.6 6221.5 6024.5 7249.7 7250.4 18980.8 14799.5 33780.3 49 Technical Assistance Forestry 250.0 760.0 20.0 990.0 1010.0 98 2562.0 Resettlement _ 779.2 779.2 29.6 1528.8 1558.4 98 1573.0 Sub-total 250.0 1539.2 779.2 49.6 2518.8 2568.4 98 4235.0 Working Capital 75.6 145.6 5275.2 5778.2 614.6 607.3 3748.3 8746.2 12494.5 30 10140.0 Total before Contingencies 75.6 218.6 16997.4 27324.2 7690.3 7531.8 7249.7 7250.4 28619.0 45479.0 74298.0 61 96385.0 Physical Contingencies - 5.0 799.7 1771.9 429.0 65.6 79.3 171.1 1304.6 1957.0 3261.6 60 4270.0 Total after physical Contingencies 75.6 223.6 17697.1 29096.1 8119.3 7597.4 7329.0 7421.5 30123.6 47436.0 77559.6 61 97955.0- Physical Contingencies Lc - - 913.1 4617.4 268).0 3159. 4044.7 5046.6 7164.9 13306.3 20471.2 65 22068.0 Total with Contingencies 75.6 223.6 18610.8 33713.5 10808.3 10757.2 11373.7 12468.1 37288.5 60742.3 98030.8 62 120023.0 Further Studies/Planning 25.0 800.0 800.0 40.0 1585.0 1625.0 98 2300.0 TOTAL PROJECT COST 75.6 223.6 18635.8 34513.5 11608.3 10757.2 11373.7 12468.1 37328.5 62327.3 99655.8 63 122323.0 /s Revised on January 25, 1977. b Incremental /c Following compounded % rates (averaged between years) 1976 1977-79 1980-85 Equipment and Service Equipment 9 8 7 Civil Works 13 12 10 February 1976 Guidelines - 92 Annex 2 Table 2 NEPAL SETTLEMENT PROJECT Project Financing (NRs million) IDA Total Cost 1976/1977 1976/1977 -1981/1982 WFP Farmers HMG -1981/1982 Forestry Equipment 19.923 - - 1.981 21.934 Construction 4.239 - - 1.259 5.498 24.162 - - 3,240 27.432 Settlement Equipment 1.639 - - 0.039 1.678 Construction 2.306 - - 0.348 2.654 Operating Costs 3.344 1/ - - 2.858 7.289 - - 0.387 7.190 WFP Food - 14.0 - - 14.000 Farm Inputs Medium Term Credit 0.604 2/ - - 0.945 1.549 Farmers - - Short Term Credit 0.000 -, - 0.110 0.110 0.604 - - 1.055 1.659 Technical Assistance Forestry 1.323 - - - 1.328 Settlement - - - 0.466 0.466 1.323 - - 1.794 Total 33.378 14.0 ... 5.148 52.075 1/ Some discrepancy here due to inclusion of disbursements during 1981/82 whereas costs go up to only 1980/81. 2/ From IDA records as of April 30, 1982 and converted at exchange rate of US$ 1.00 = NRs 12.6. Source: TCN, NRC and ABDN data except where specified. HMG share obtained as a residual in forestry, settlement and medium term credit components. 93 - Annex 2 Table 3 NEPAL SETTLEMENT PROJECT Forestry Capital Expenditures aJ (NRs '000) Original Revised Actual (SAR 1974) (November 1976) 1976/77 - 1980/81 Equipment Bulldozer 1,000 (2) Winch Lorries 7,650 (45) 8,577 (45) 14,758 (58) Chain Saws 104 (26) 125 (26) 71 (26) Jeeps 340 (4) 300 (4) 1,524 (7) Sawmill Units 1,040 (26) 2,358 (26) 899 (26) Diesel Engines - - 985 (26) Lumber Lorries 2,400 (6) 1,050 (6) - Front End Loaders 2,600 (4) 3,120 (4) 1,330 (2) Diesel Generators 1,600 (4) 100 (4) 242 (**1 Radio Transceiver 32 (4) 80 (4) 260 (6) Spare Parts 1,800 1.763 1,765 Other 2_1q7 2-3A4 124 Sub-Total 20,763 19,818 21,904 Construction Road 1,455 (115km) 1,400 (115km) 96 (3km) River Crossing - - 370 (1) Log and Lumber Store 150 (3) 300 (3) 48 (1) Buildings Sawmill 4,800 (26) 1,040 (26) 1,016 (24) Machine Shop 400 (2) 240 (3) 116 (3) Lorry Service 120 (12) 120 (3) - Office 210 (2) 315 (3) 682 (4) Senior Housing 288 (8) 432 (12) ) Subordinates' Housing 2,235 (190) 900 (60) )1,585 (...) Laborers'Quarters 800 - 600 - ) Guest House 140 (2) 140 (2) 486 (3) Miscellaneous 200 300 1,100. Subtotal 10,948 5,637 5,499 Physical Contingencies 1,813 673 - Total 33,524 27,128 27,403 Figures in brackets refer to quantity of items. Source: Appraisal Report, February 1977 Restructuring Memo, and TCN data. - 94 - Annex 2 Table 4 NEPAL SETTLEMENT PROJECT Settlement Cost Summary (NRs '000) Original Revised Actual (SAR 1974) November 1976 1976/77 - 1980/81 Eguipment 4 wheel drive 340(3) 340(4) 774(5) Tractor/trailers 385(4) 400(4) 213(3) Motorcycles 90(10) 60(8) 99(11) Bicycles 22(28) 20(28) - Generators 40(3) 100(4) 146(4) Radio transceivers 24(2) 60(3) 10(1) Other - - 436 Subtotal 901 980 1,678 Construction Demonstration farms 515 440 - Buildings Office 210 315 331 Store 300 300 409 Garage and workshop 60 60 25 Guesthouse 210 210 87 Quarters 1,218 1,096 557 Schools 660(25) 725(25) 300(7) Clinics 80(3) 87(3) 62(2) Village roads 288 288 11 Airstrips 64 90 - Tubewells 371 344 401 Other - - 471 Subtotal 3,975 3,955 2,654 Contingency 488 494 Operating Costs Settlement 4,080 4,181 2,622 Central office 1,699 1,904 90 T and V program a/ - - 146 Subtotal 5,779 6,085 2,858 Technical Assistance 1,573 1,558 466 Total 12,716 13,072 7,656 a/ Original included in Settlement operating costs. Source: NRC records - 95 - ANNEX 2 Table 5 NEPAL SETTLEMENT PROJECT Cummulative Disbursement Schedule for IDA Credit (US$ Million) /a IDA Fiscal Year Appraisal Revised Actual as % of & Quarter End Schedule Schedule Actuals Revised Schedule 1974/75 September 0.16 - - December 0.46 - - March 0.91 - - June 1.36 - - 1975/76 September 1.65 - - December 1.91 - - March 2.17 - - June 2.70 0.003 0.00 0 1976/77 September 2.91 0.07 0.01 14 December 3.11 0.24 0.03 12 March 3.32 0.44 0.04 9 June 3.73 0.46 0.05 11 1977/78 September 3.87 0.50 0.05 10 December 4.02 0.60 0.05 8 March 4.17 0.80 0.06 7 June 4.46 1.10 0.06 5 1978/79 September 4.59 1.40 0.06 4 December 4.72 1.70 0.06 3 March 4.85 2.00 0.83 41 June 5.01 2.40 0.83 35 1979/80 September 5.06 2.70 0.94 35 December 5.11 3.10 1.00 32 March 5.16 3.40 1.17 34 June 5.26 3.70 1.24 33 1980/81 September 5.40 3.90 1.28 33 December 5.46 4.10 1.45 35 March 5.52 4.30 1.50 35 June 6.00 4.50 1.67 37 1981/82 September - 4.70 1.93 41 December - 4.90 2.49 51 March - 5.10 2.73 53 June - 5.30 2.82 53 1982/83 /b September - 5.50 2.88 (Aug.31, 52 December - 5.70 1982) March - 5.90 June - 6.00 /a At the time of revision in November/December 1976 only illustrative schedule of disbursements was developed; the schedule was firmed up by a later mission in July 1977. /b Project terminated on Juy 15, 1982. Source: IDA records. NEPAL SETTLEMENT PROJECT Actual Project Cost (1976/77-1980/81) (NRs) 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 Total Forestry Equipment /a 5,978,638 1,234,361 1,099,497 97,054 2,368,002 11,156,979 /b 21,934,226 Construction Road (including river crossing 96,165 - - 370,489 - - 466,654 Buildings 986,472 997,531 1,048,883 1,883,108 115,494- 5,031,488 Sub-total 1,082,637 997,531 1,048,883 2,253,597 115,494 - 5,498,142 Sub-total (Forestry) 7,061,275 2,231,892 2,148,375 2,350,651 2,483,496 11,156,979 27,432,368 Settlement Equipment 150,143 1,246,047 153,147 85,340 42,843 - 1,677,520 Construction 5,705 416,565 729,501 797,785 704,444 - 2,653,990 Other Costs, including HQ 49,813 223,753 347,917 1,011,331 1,225,546 - 2 858 360 Sub-total 205,661 1,886,355 1,230,565 1,894,456 1,972,833 - 7:189,870 WFP Food - - 11,600,000 1,400,000 - 14,000,000 Farm Inputs Medium Term - 81,000 276,537 428,717 763,226 - 1,549,000 Short Term (net credit) - 14,611 27,722 77,776 -9,936 - 110,173 Sub-total - 95,611 304,259 506,493 735,290 - 1,659,173 Technical Assistance Forestry 135,075 123,563 157,524 364,848 547,272 - 1,328,282 Settlement 25,916 17,488 299,554 55,800 67,000 - 465,758 Sub-total 160,991 141,051 457,078 420,648 614,272 - 1,794,040 TOTAL 7,427,927 4,354,909 4,140,277 16,772,248 7,223,891 11,156,979 52,075,451 M X /a Data on forestry equipment is not available for each project. Costs were therefore derived fromm IDA disbursements H w as per TCN records and grossed up according to foreign exchange share of total cost for equipment. /b Equipment purchased in 1980/81 but disbursements made in 1981/82. Source: Derived from data supplied by TCN, NRC, WFP, ADBN. NEPAL SETTLEMENT PROJECT Economic Rate of Return (1980/81 Constant Prices) (NRs '000) 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 /a I. Forestry Incremental Benefit 665 755 2,626 3,172 2,685 Costs (Capital and TA) 11,172 3,566 2,952 3,034 14,187 Net Benefit -11,172 -2,811 -326 138 -11,502 II. Settlement Benefit Agricultural Production /b - - 120 2,015 4,849 7,356 11,139 11,404 11,669 11,669 Costs /c NRC 266 2,451 1,906 2,171 2,040 1,000 1,000 750 500 250 WFP - - - 9,125 840 - - - - - Farm Inputs Medium and Short Term - 124 386 641 807 502 580 585 591 591 Opportunity Cost of Family Labor - - _1668 - 3,409 3,641 3,641 3641 3,641 3,641 Total Costs 266 2,575 3,960 15,346 7,328 5,143 5,221. 4,976 4,732 4,482 Net Benefits -266 -2,575 -3,840 -13,331 -2,479 2,213 5,918 6,428 6,937 7,187 III. Project Incremental Benefit -11,438 -5,386 -4,166 -13,469 -13,981 2,213 5,918 6,428 6,937 7,187 /a ERR calculted for 20 year period, 1976/77 to 1995/96. /b Benefits: they increase overtime as cultivation practices improve, and then reach a plateau. e Tc Costs: since all settlers are in place by 1980/81, NRC and WFP costs decline thereafter, no further additions to opportunity cost of family labor, only slight increases in cost of farm inputs takes place as settlers would have purchased the costly input, bullocks. Source: Table 1 and mission calcultion. NEPAL SETTLEMENT PROJECT Farm Model: 1.5 Ha Farm in Western Terai Area, Yield, Production and Marketable Surplus Marketable Area Yield /a Production * Consumption Surplus 78/79 79/80 80/81 81/82 (quintals/ha) (quintals) (quintals) (quintals) 2 3 4 5+ 2 3 4 5+ 2 3 4 5+ 2 3 4 5+ 2 3 4 5+ Monsoon Upland rice 1.36 - - - 0 /b - - - 0 - - - 0 - - - 0 - - - Maize - 1.36 1.36 1.36 - 2.94 4.41 5.88 - 4.00 6.00 8.00 - 4.00 6.00 8.00 - 0 0 0 Dry Mustard - - 0.85 1.36 /c - - 1.18 5.88 - - 1.00 8.00 - - 0 0 - - 1.00 8.00 Gross cul- tivated 1.36 1.36 2.21 2.72 area Net culti- vated area 1.36 1.36 1.36 1.36 Cropping intensity 100 100 162.5 200 /a With improved tillage, yields increase till a plateau is reached in year 9, at full development. /b Crop was lost because of drought. /c Mixed with lentils, which did not germinate. Annex 3 NEPAL SETTLEMENT PROJECT Table 4 Farm Model: 1.5 ha Farm in Western Terai Gross and Net Production Values (NRs.) - Crop Gross Production Operating Net Production Net Value of Consumed Net Value of Maketable Value Cost Value Production Production 2 3 4 5+ 2 3 4 5+ 2 3 4 5+ 2 3 4 5+ 2 3 4 5+ Upland rice - - - - - - - - - - - - - - - - - - - - Maize - 400 656 944 - 830 1080 1224 - (430) (424) (280) - (430) (424) (280) - - - - Mustard - - 308 3412 - - 710 1230 - - (402) 2182 - - - - - - (402) 2182 Minus medium-term credit interest - 90 90 90 TOTAL - (90) (492) 2092 Sale price (NRs. per quintal) 1979/80 1980/81 1981/82 Maize 99.97 109.25 117.95 Mustard - 308.00 426.50 Note: Figures in brackets are in negative. IEPAL SEIITIXENT PROJECT Valuation of T.C.N. Stocka as at 6th July 1981 Etirated Coet Estimated Cout Provision for Deteri,ration UstiNsted Valu ujnit völuw of Production of Stock Ajunted Valu8 Ad1usted Toal of D-terloration 3-å 3L - --- NR p.r n NR NR per m Kanchanvur 3 Sal m3 104.196 454.59 47,366.45 363.68 37,894.00 -Asna 2,048.092 293.72 307,å45.58 46.08 48,296.07 Other species 250.323 177.23 44,ý64.74 3.70 926.19 Poles No 44.158 49.17 2,171,'248.86 39.34 1,737,175.72 Fire-ood Tona - 51.15 - sawn Lumber Sal m 9.757.041 988.97 9,649,420.83 865.20 8,441,791.87 Asna .311 696.48 216.60- 348.20 108.29 Gther species 21.100 413.88 8,765.97 103.47 2,191.49 12,229,229.03 10,268,383.63 1,960,845.40 Bardia 3 Sal u 8,022.433 457.64 3,671,386.23 220.34 1,767,662.88 Asna 10,335.015 2%.77 3,067,122.40 64.24 663,921.36 Other cpecies 3,219.703 180.28 580.448.05 .13.83 ' 44,528.49 poles . 760 49.17 37,369.20 36,88 . 28,028.80 Firewood Tons 11.723 69.29 812.28 69.29 812.28 Sawn Lumber 3 sal 2,391.100 989.21 2,365,300.03 815.76 1,950,563.73 Asna 195.017 . 696.72 135,872.24 348.20 67,904.9. Other species 57.228 413.88 23,685.52 10347 5,921.38 9,881.995.95 4,529,343.83 5,352,652.12 .5. ic3 sal l 3,065.860 484.02 1,486,390.24 484.82 1,486,390.24 Asna 3,579.811 323.95 1,159,679.71 133.98 479,621.07 Other species 1,691.866 207.46 - 392,466.52 67.36 127,436.09 PolNs No. 2,353 52.44 123,391.32 47.20 111,061.60 Fir w,cd Tons - 8.51 - - San Lumber 3 Sal m 1,691.250 1,004.39 1.693,674.58 903.91 1,528,737.78 A sn a 146.199 711.89 104,077.60 533.70 78,026.40 Other species 29.336 500.05 14,669.46 250.02 7,334.58 4,929,369.49 3,818,609.76 1,160,759.73 Total Stock Valua 27,090,594.47 18,616,337.22 6,474,257.25 c' (D- <8 - 101 - NEPAL TIMBER CORPORATION Annex 3 Table 6 Movement of Average Log Selling Prices At project sites per cubic metre in Nepal Rupees (based on average lengths) Sal Girth -Revision Date 31-41 41-51 5'-6' 6' & above February 1975 324.51 371.94 371.94 371.94 April 1976 337.27 382.20 382.20 382.20 March 1977 339.76 386.08 413.82 441.55 July 1977 436.84 483.16 510.89 538.63 November 1979 .520.05 566.37 594.10 621.84 July 1980 643.47 696.17 732.23 762.74 ASNA June 1976 263.49 305.09 305.09 305.09 April 1976 258.77 282.07 - 282.07 282.07 March 1977 240.47 263.49 286.51 309.81 July 1977 295.94 318.96 341.98 365.28 November 1979 326.45 349.47 372.77 395.79 July 1980 374.43 402.17 425.19 452.93 1. Prices fixed by HMG. - 102 - Annex 3 NEPAL TIMBER CORPORATION Table 7 Movement of Average Sawn Lumber Selling Prices1 At Project sites per cubic metre in Nepal Rupees (based on average lengths) Revision Date Strip Plank Kady Phanta Beam Sal February 1975 547.37 729.95 729.95 706.29 741.60 April 1976 438.60 507.63 605.29 640.60 610.23 March 1977 377.16 644.49 719.00 701.34 672.39 July 1977 553.73 821.06 895.58 877.92 848.96 July 1979 589.04 856.38 927.36 913.23 834.28 November 1979 606.70 929.48 1,001.94. 1,008.94 959.90 July 1980 798.11 1,267.79 1,313.70 1,331.36 1,299.58 ASNA February 1975 498.99 498.99 498.99 498.99.; 498.99 April 1976 370.80 370.80 467.91 450.26 423.77 March 1977 323.83 394.46 447.43 459.09 447.43 July 1977 429.77 465.09 518.06 529.72 494.40 July 1979 465.09 500.40 553.38 565.03 529.72 November 1979 465.09 538.54 567.50 600.34 571.03 July 1980 659.32 659.32 659.32 659.32 659.32 Prices subject to NR 35.31 per m3 excise tax prior to 1981 NR 282.51 per m3 sales tax prior to 1980 NR 353.14 per m3 sales tax 1980/81 NRI105.94 per m3 excise tax from July 1981 NR 529.72 per m,3 sales tax from July 1981 Prices for B Grade sawn timber 25% less on list price. 1. Prices fixed by HMG. NEPAL SETTLEMENT PROJECT Forestry Sales and Income (NRs) 1976/77 • 1977/78 1978/79 1979/80 1980/81 Tot.l' .anhanpur Tca Log sales 5,236,500.00 449,906.22 1,559,701.81 3,162,079.55 2,920,663.75 13,326,C51.33 Pole sales 36,605.90 994.CO 616.90 204,155.10 39,360.00 18e,731.90 Sawnill waste sales 417,251.35 661,670.75 853,241.22 1,635,599.70 2,009,275.22 5,627,038.32 Firewood sales 127,986.00 1,467,479.86 3,323,544.93 935,477.01 - 5,854,467.0 Lu-ber sales 2,843,706.00 3,032,107.04 7,943,456.01 - 9,020,614.51 6-,297,730.01 29,137,613..57 Total 8,662,049.25 5,612,157.07 13,680,560.87 14,907,925.95 11,267,028.98 ' 54,129,722.92 Bardia TCTN Lo9 sales 2,786,266.07 3,549,591.94 3,469,357.24 5,562,856.45 6,305,715.11 21,673,755.81 Pole sales' 10,2C4.29 - - 63,304.00 -7,5C±.29 Sa'ill waste sales 138,917.00 125,440.96 134,352.70 337,032.40 906,151.58 1,641 ,944.64 Firewood sales 467,761.00 1,812,561.80 1,760,061.44 - - 4,C40,364.24 Lurber sales 1.334,163.77 824.060.00 1,292,900.35 4,519,062.54 3,782,631.90 11,752,018.56 Total 4,737,312.13 6,311,654.70 6,656,671.73 10,487,307.39 .10,994,498.59 39,87,'.54 Kailali TCN Log sales - 3,450,181.59 5,283,932.50 9,596,009.58 13,335,123.67 Pole sales - 33,749.00 148,508.00 105,042.00 267,299.00 Sawnill waste salen - 271,799.50 557,866.75 569,881.50 1,399,547.75 FirZ-ood sales 7,110.00 468,460.21 584,480.05 1.00, 059.76 Lurýber sales - 20,378.23 2,307,792.55 6,289,914.97 5,723,928.99 14,842,014.74 Total 27,488.23 7,031,983.35 12,869,702.27 15,994,862.07 35,924,035.92 Felwood Corporation Kanchanpur 957,926.28 - 950,258.18 713,663.24 3,095,930.26 5,717,827.56 Bardia- 2,964,851.55 5,183,292.80 8,148,144.35 Kailali 1,027,314.00 1,561,483.16 5,381,467.24 7,970,261.40 Total 957,926.28 - 1,977,572.18 5,239,994.95 13,660,740.30 21,836.233.71 Tctal Income 14,357,287.66 11,951,300.80 29,346,788.13 43,504,930.56 51,917,129.94 151,077.437.09 OD w - 104 - Annex 3 Table 9 NEPAL SETTLEMEITT PROJECT Forestry Operating Cost and Net Income (NRs) 1976/77 1977/78 1978/79 1979/80 3990/81 Total Total Incoe (Tabe 3 14,347,287.66 * 11,951,300.80 29,346,788.13 43,504,930.56 51,917,127,94 151,077,43.09 Kanchan pu TCN Wages and salaries 993,670.12 829,117.10 1,187,341.95 1,834,276.09 1,615,249.42 6,459,654.68 Fuel and lubricants 222,687.46 218,094.42 339,716.94 446,637.74 522,425.64 1,749,552.20 Spare parts etc. 309,660.60 233,766.33 485,489.97 653.198.11 526,343.42 2,208,458.43 Repairs and maintenance 140,551.06 146,115.89 227,351.44 245,157.74 260,165.09 1,019,343.22 Miscell-neous - 40,853.94 4,129.78 - - 44,983.72 Royalty 2,193,107.55 1,420,746.57 5,545,976.3S 7,974,938.93 3,016,169.52 20,140,940.95 Excise Lr.y 4,110.00 - 399,621 ..00 680,831.00 848,251.00 1,932,813.00 Contract felling and haling 1,973,794.50 678,826.65 2,399,930.76 2,609,254.96 835,537.84 8.49744.71 Contract nilling 257,221.04 319,126.38 552,917.04 '657,345.27 828,461.79 2,615,101.52 I R 0 D Loan Interest - 242,110.23 - - - 242,110.23 Depreciation . 60,849.73 245,648.44 250,239.72 250,237.71 243,515.25 1,010,457.65 Operating Cost 6,155,652.06 4,364,395.95 11,392,748.99 15,351,977.55 8,696,118.97 45,960,793.51 Sardi. TCN Wages and salaries 398,334.82 677,886,69 1,252,209.85 1,440,059.06 1.502,588.32 5,471,078.74 Foel and lobsicants 40,848.45 210,903.65 266,123.69 408,976.67 437,430.09 1,264.182.56 Spare parts etc. 82,666.24 336,785.10 371,470.62 520,322.68 464,7t1.93 1,77E.496.57 .epai*s and maintenance 30,536.64 56,295.00 70,798.43 152,220.67 132,57,.20 442,421.94 miscellaneous 36,991.85 60,069.85 5,2'7.92 5,394.02 * 107,734.44 Royalty 3,278,728,36 5,148.642.00 2,785,S08.18 5,720,112.39 6,926,178.61 23,859,566.54 Excise Dty -- 87,901.90 149,946.76 141,04.93 378,913.49 Contract felling and haulang 683,498.79 1,296.529.86 667,255.46 1,818,657.06 1,345,629.78 5,811.561.95 Contract milling 228,960.86 82,992.90 92,73S.92 225,449.81 154,467.97 284,657.45 Depreciazion 79,411.95 370,127.36 394,307.19 457,331.62 464,545.02 1.765.723.14 Operting Cost 4,859,977.87 6,440,232.41 5,893,909.06 1P,6S8,671.54 13.569,218.85 41,662,2P9.87 railall TCN Wages snd salaries - 87,481155 731,890.14 I,536,339.81; 1,612,007.31 3,947.099.26 Fuel and lbricants - 18,529.05 18,C83.00 394,241.44 344,272.61 940,126.10 Spare parts etc. -45,566.45 2719,199.95 224,037.86 342,6,97.8191.9.0 Repairs anc maintenance - 7,746.76 41,382.10 170,274.57 06 ,809.91 326,213.64 Royalty -256,701.64 3,421,652.81 6,730,730.87 9.8,4.518.990:131.2,7 Escise Dty -120.60 150,132.00C - 267,5c)o.03 155,039.03 572 ,79-60 Contract felling and hxaulinjq 20,990.50 915,447,51 2.523,635.56 3,8,7.46.,50,9,87.67' Contract nillln,j - 6,986.49 144,123.58 321,284.141 392,406.28 664,e6-30.49 ~crcnton-109,938.57 319,521.54 331,765.05 711,241.16 69,099.63 69,099.j9 Operating Cost - 445,127.04 5,956,839.37 32,587,545.83 14,825,034.65 33,814,14.69 Fuelood tcpoaion Plrachanpar 444,038.85 - 438,464.30 477.339.15 2,091,738.97 3.4.1,581.29 Bardia - 1,449.562,88 1,503,049.39 4,951,611.27 Kailali - 610,383.25 1,079.807.03 3,410,915.89 5,101,10G.17 Operating Cost 444,038.86 - 1,049.847.55 3,0C6,709.06 9,034,704.25 13.504.299.72 Total Operat inCoat 11,459,658,89 13,249,755.40 24,292,424:96 41,845,003.98 44,095,076.72 134,941,929.95 Nett Inco=e 2,897,618.77 (-1,298,454.60) 5,054,363.17 1,659.926.58 7,922,051.22 16,135,501.14 Farm No. 2/032 Chaitra District ............. Panchayat ............ Ward No. ......... M/S Co-operative Society Crops Programme (FY ....... Loan Applications of member farmers and recommendation We following member farmers have demanded loan for following activities. If given details proved false, we will bear responsibility according to the law. For this loan, we agree to mortgage in the bank our own collaterals and products also. I I Cultivators' land I Type of loan demanded jTotaIDetails Signature The culti- Total landlIf loan I IName and I I I I I I I1oan of cl- of the Ivating landilimit men-Ipreviouslyl IS. IAddress of the IIrrigatedlNon- I Seeds I Chemical I Pesticides I Miscelleneous Idama-ilateralsiapplicantalmntioned tinned in taken losni INo.Iloan applicants|Bigha/ lirrigatedi I Fertilizers 1 1 Inded I I 1in basic basic limits in I I I Ropani IBigha/ I I I I in 1 1 linforma- informs- I Ra. I IRopani ITypealQtylPricelTypeelqtyIPriceITypeaIQtylPriceITypesIQtylPrie is. I I Ition Ition I I 11 1 2 I 3 1 4 1 5 161 7 I 8 191 10 111 112113 1 14 115116 17 1 18 1 19 20 1 Z 22 I I IIII I I I I I I I 1 1 I II 1 I I I II I I I I I I I I l nd I I 1 c II I II I I I I III I 1 1 I1 I I I I 1 1 II I I I * III I I 1I l I I I I III I I I ' I I I I I I I I I I I 1 1 II 1 1 I ' I 1 1 1 1 1 1 1 1 1 1 1 III I II I I I I I I I I 1 1 I I I II1 1 1 I I I I l I I I I I I I I I I I III 1 1 I I I I I I I I I I I I I I I III I 1 1 I I I I .1 1 I I I I I I1 1 I I I I I I I I I I I I I 1 1 1 1 1 III 1 1I I I I I I 1 I I I I I I 1 1 I I 1 1 I I I I I I I I I I I I 1 1 III I I I I I I I I I I I I I I I IIIIII I I I I . . . I I I It I I I I . . . . . . I I I I I 1 1I I 1 1I I 1 1 I 1 1 III I I I I I I I I I I I I I I I I I IIII I III I III I I I I I I I I I 1 1 I II l I I I I I I I I I I I I I I I I II g I l F I I I I I I I I ItI I 1 1 1 I I I I I I 1 1 I I I I I IIII I I I I I I I I I I I I I I I I I IIIII I I I I I I I I I I I I I I 1 1 III 1 1 [ II I II1 I I I I I I I I . I I I I I I I I I I I I I I I Il I IIIII I I IIlII I 1 1 I I I I IIII I I I I 1 1 1 1 1 1 1 1 1 1 1 1 I I I I II I I I I I I I I I I I I I I I I I III I C l : I I m 1 1 I I I I I I I 1 . . . . . T Signature e c u l t i - ITotal l loan. abovate ofCorpvar activSocites acri to the ariosf progratmes.i. corret . o ree leg'sascoding o above me col-lmount it e vils atn ro nd by l tmen co-opnaerat e ward er subcmittee.g., and it is agee tha. th opeaienardon tubo htte will be resaOl aerala p lthme s ary f oe tioediion and c ln ded tI Ielan basi bai t li t in I Chairman ~ ~ ~ ~ ~ ~ ~ ~ ~~ i of Bor VieCaraninfoeme ebr ebr Mmbr Mme Mmeebra lifRmbe r s I Pll Namcfo Cooeraiv manager I igntrel..........l l..... Dte of Peati 2. Dt o on rtv Scey........Bar fDretr.........etigsacodn1t bv metoe deais R........ac ie tofnac hemmerfrer ..,B.........it eomedtinIoIB........I.fie. W utoie nbhafo c-praie Mr..........todmadlonan o in nalIhencesrydcuetsicldngi Bns lo Chima f ord Vc-Carmn Mmbr Mebr obebe eme IMme Membe Mebe Mebe of Directors !Remaining Loan differen-jLFoan limitlProduct IEarlier luau i Type of Fertilizers and Loan Sanctioned by the Bank 1loan limit]tiation due tol at remained Itaken over- [Agricul- I A. Sulphatel Urea [ Complex I S. Sulphatel Potash I Seeds IlnsectisidesiMiscellaneoust Total I I in Rs. Idifferences inj present Ifor salesldue/not over-Iture landl Qty.1 Pricel Qty.| Pricel Qty.1 Pricel Qty.1 Pricel Qty.| Pricel Qty.1 Pricel Qfy.| Pricel Qty.1 Price I in N.Rs. I I lincome which I ] Idue (if over-LBigha/ I I F I I I 1 I I I I I F 1 1 ]is based on I I Idue mentionedlRopani 1 I F I | | [ I | I I I I I I F I I lcultivation I I Ithe amount) F I I F 1 ] | | I I F I 1 l in N .Ra ._ 1 I I I I I I I I I I I I I I I I F 1 23 I 24 1 25 I 26 1 27 I 28 1 29 1 30 1 31 1 32 I 33 1 34 _ 35 1 36 1 37 1 38 I 39 1 40 I 41 I 42 1 43 I 44 I 45 | | I I I l i l i I I I I F I I I I I I F I I F Ii l 1 I I I l l i I III ] I F I I I I I FI I 1 1 1 I I I1I I F I I I I I 1 1I I I I II I I I I I I l i l I IF I IF I I II III 1I I I I F I I I I I I 1 1 I I I I II III. S I I I I I 1 1 I I F I I I I lI I1 1 II I I I I I I l I l I I I I I II I I F I 1 1 I l I I I I I IF lI I1 1 I I I I I i I I I IF F l l i I IIII1 I I I I I l I I l iF I I 1 1I I 1 F I I I l I I ( 1 1 1 1 I I 1l I F F F . F I IF I I I IF 1 1 I IF I I I f1 I 1 o I 1 . I loa I If e l i I I I I I I I Ih I F I I I I [ I l i I l I I I I I IF 1 1I F I I I I I I I F I I 1 I I 1I II1I I I I I II I I I 1 1 II 1 1 F l Ii lIII I I I F F I I I I I I I I I 1 1 1I III I F I F I I IF 1 I I I IF I IF 1I II 1 F 1 I I I I I I I IF I I I F l i 1I IIII I 1 1 F l i I I I I I I I l lIII F F I F I F I l i I I FI I 1I II I I F F F 1 F I I FI I I I I I F 1 II IIII I I F I I 1 I IF I IF I I 1 1 I I I1 1lII 3. Recommrendation of loan Officer/Asat. Loan Officet of the Bank: With regards to this loan application, according to the pre-loan supervision conducted on dated.................by visiting and on each words of prescribed farmers who demanded loan, it is found/not found/ that the loan demanded, by the farmers is based on their real necessities. It is found/not found/ that the Co-operative Society has filled up all the columns of the loan limits of the farmers according to the basic information card; with this it is also found/not found/ that the loan demanded by each farmer is within the remaining loan limit. The loan limit amount is alright as there is not seen any differences between the income out of non-agricultural activities and the land proposed for cultivation as given in Basic Information and in existing area of cultivating land. Or, re-assessed loan limit on the ground of the deviation (minus or plus) on the cultivating land and fluctuation in the expected income is correct/not correct (in case of the Bai income by 60% the loan limit will increase. The books of account and other registers maintained by the Co-coperative Society are satisfactory, so to the purposes mentioned above (if Bank sanctioned loans the column should be mentioned) I recommend to release loan/not release/ Ra................in words .....................to the above mentioned farmers. Signature:- Date:- 4. Full name of the Supervisor: The loan committee's ...............meeting on dated ...............sanctioned Ra...............in words as mentioned in above hearing. Not sanction on the following grounds. The period of the loan will be short/Medium/term and is repayable within date. Signature Signature Signature Signature Note: While preparing these loan applications the Co-operative ward sub-committee should prepare two copies at a time, and both the copies should be submitted by the Co-operative in the Bank. Bank should mention in above column the amounts sanctioned for each farmer according to the purposes. Accordingly Co-operative should disburse loan to the farmers. With one copy of this loan application, Bank has to send with letter of approval of loan to Co-operative after sanctioning the loan and filling the amount according to the purposes. (Datails at 3 above are not necessary in the copy which the Bank handovers to Co-operative Society. Sanctioning the loan to the farmers it must not exceed the limit prepared for present, e.g. column 25.) I.82" 840 HUMLA N EPA L -DARCHULA\ SETTLEMENT PROJECT { C H I N A BAJHANG / - UGUN BAJURA> BA TA D BAUR Locafioni ofLProject Areas 0 Partially Inplemented DADELDHUR5 JUMLDA . OLPA Not Inplemented ( 'KALIKOT DT ACHHAM' KANCHANPUR \DAILEKH JAJARKOT MUSTANG_ _ KAILAl, RUKUM \ - MANANG i HIS MAP, SASE ON 0,i3 16b03, Kanchnp \AUGUST 1982, HAS BE EN PH EPA H E D SURKHET OR [HE PROJECT COMPL l 1ON AA KAKIRKHT MYAGDI REPORT OF THE SETTLEMEN PHOJECl BARDIYA SKI LAMJUNG 8arra> ,PaROLP Oara ''K. --28 R ( E " RASUWA. 28° BANKE PUTHANý GULMI ARGH YANGJA TANAHUN NW KOT SLNDHU- DANGDEUKHUR l HA PALCHOK DOLAKHA .Q . - 'KHANCHI PJ ~DN' SNHWSRA PALPA Dstr ict boundanes \ '' U M B--/ N /\ ADING U SANKHUWASAB KAI SB2AKTAUR':- 2 18 - Zonal boundaries KAPILASTU RAN D CH SOLUKHUMBU s.,..s. N A --TAPLEJUNG - International boundaries ---A) NI- \PARSA - VPU OKHALDHUNGA KI ( ) SN H UFl - - - .J' SINDHULI KHOTANG I KIlometers 0 50 100 150 200 BARA( \ -,.. DHANKUTA 0 Miles 0 50 100 -IUDAYAPURDL |IN D l A MORANG Th,s rnp has hee ppaed by The World Banks s taff ecswyfothe covn 'c f J • 1he ree1r and s ecluswely for the internal use 02 2he World Bank and the Ineraional Nih- ISAPTAR - Frn,nc C,oroto The denom,nalonso ued and the foundaes ho,w on p dh,s m -p APo AP npty on tepart of l e - Ihant,TIeW-rtoal Fnanceorporato ay u e n- - In the legal tatus0o any I-rdor Of any endorsernent o, ceptance of such boundanes