Mexico - Bajo Rio Bravo/Bajo Rio San Juan Irrigation Rehabilitation Project

Doeunt of The World Bank FOR OFmICIL USE ONLY Report No. 6207 PROJECT COMPLETION REPORT MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION REHABILITATION PROJECT I (LOAN 1111-ME) May 30, 1986 Projects Department Latin America and the Caribbean Regional Office 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.  CURRENCY EQUtVALENTS 1975 US$1 - Mex$ 12.5 1978 US$1 - Mex$ 22.8 1983 US$1 - Mex$ 120.0 WEIGHTS AND MEASURES 1 hectare (ha) - 10,000 m2 - 2.47 acres 1 kilometer (km) - 0.62 miles ABBREVIATIONS CAERIB - Agricultural Experimental Station Rio Bravo ERR - Economic Rate of Return ICB - International Competitive Bidding LCB - Local Competitive Bidding O&M - Operation and Maintenance SARE - Secretariat of Agriculture and Hydraulic Resources SRH - Secretariat of Hydraulic Resources SPP - Secretariat of Programming and Budgeting  FOR OFFCIAL IUP', ONL THE WORLD BANK Washington. D.C. 20433 U.S.A. ONfic. of DI,ectov-Gngwal Opwatan Evakuation May 30, 1986 MEMORMADUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Mexico Bajo Rio Bravo/Bajo Rio San Juan Irrigation Rehabilitation Project I (Loan 1111-ME) Attached, for information, is a copy of a report entitled "Project Completion Report: Mexico Bajo Rio Bravo/Bajo Rio San Juan Irrigation Rehabilitation Project I (Loan 1111-ME)" prepared by the Latin America and the Caribbean Regional Office. Under the modified system for project performance auditing further evaluation of this project by the Operations Evaluation Department has not been made. Attachment 7 ~~~~~~~~~ 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 Rank anthnrivtiirnI  FOR OmCIAL USE ONLY MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRG&TION REHABILITATION PROJECT I (LOAN 1111-ME) PROJECT COMPLETION REPORT Table of Contents Page No. PREFACE ... .......................*.*******.***.***.*. BASIC DATA SHEET .. ................................... ii EVALUATION SUMMARY ......................*............... iii I. INTRODUCTION ............ ...................... 1 II. PROJECT FORMULATION ....... ..................... 1 Preparation and Appraisal ...................... 1 Kegotiations and Board Approval ................ 1 Objectives and Description ..................... 2 Project Cost and Financing ..................... 3 1II. PROJECT REFORMULATION ...... ... ...........*.... 3 Implementation Problems ........................ 3 Revised Project Description .................... 3 Revised Project Cost and Board Approval ........ 4 rv. PROJECT IMPLEMENTATION ........................ 4 Achievements by Component ........ ............... 4 Disbursements ....6.................... 6 Procurement .........7....................*...* 7 Reporting 7............................ 7 Accounting and Auditing ....... ................. 8 Compliance with Covenants ...................... 8 V. AGRICULTURAL AND ECONOMIC IMPACT ............... 8 Agricultural Impact ..... 8.................... 8 Economic Impact ..........................**** 11 VI. PERFOR10ALCE OF THE BORROWER .................... 12 Marketing ...................... ... .. 12 Training *.. -*.-*e....eo@e****e@ 12 This document has a restricted distribution and may be used by recipients only in the performance of their official dutie. Its contents may not otherwise be disclosed without World Bank tuthoriation.  Page No. Agricultural Credit .......... ........ .... 12 Cost Recovery ..................................... 12 VII. PERFORMANCE OF THE BANK .....................o... 13 VIII. CONCLUSIONS AND RECOMMENDATIONS ................... 14 IX. COMMENTS FROM THE BORROWER 6........................ 16 ANNEXES 1 - Original (1975) Project Cost Summary ................. 19 2 - Revised Cost Estimate ............ ...... ..... 20 3 - Actual Project Costs .....................********** 21 4 - Expenditures Incurred and Disbursements .............. 22 5 - Actual Withdrawal of the Proceeds of the Loan ........ 23 6 - List of Compliance with Loan Covenants ............... 24 7 - Stage 'I-Volume of Production, With and Without Project 25 8 - Stage I - Gross Value and Costs of Production ........ 26 9 - Stage 1 - Cropping Pattern District 25 and District 26 27 10 Cropping Pattern, Production Costs, and Net Value of Production ...................................... 28 11 - Cropping Pattern, Production Costs and Net Value of Production ...................................... 29 12 - Incremental Value of Production, Investment and Operating and Maintenance Costs .................... 30  - i - MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION REHABILITATION PROJECT I PROJECT COMPLETION REPORT PREFACE 1. This is the Project Completion Report (PCR) on the Bajo Rio Bravo/Bajo Rio San Juan Irrigation Rehabilitation Project (Loan 1111-ME). The loan amount of US$150 million was approved by the Board on May 8, 1975, and the legal documents are dated May 22, 1975. The project was redesigned and reformulated in 1978 with a total estimated cost of US$130.9 million; the revised Bank loan was US$50 million (US$100 million of the original loan was cancelled). The revised loan was approved by the Board on March 29, 1979 even though implementation had already begun in 1977. The final total project cost in current prices was US$174.5 million, and total Bank disbursements as of March 31, 1984 were US$43.375 million; US$6.625 million was cancelled. 2. The PCR was prepared by the Latin America and Caribbean Region, Agriculture Division C, after a field visit in November 1983. The PCR is based on a preliminary report prepared by the Borrower in September 1983, data and information provided by the Borrower following the visit of the November mission, and a final completion report submitted by the Borrower in September 1984. Legal documents, the President's Report, supervision reports and correspondence were also reviewed. 3. The draft report was sent to the Borrower on February 6, 1986, for their comments. Those received from the Ministry of Finance, prepared with other cooperating agencies concerned, are included as chapter IX of the PCR. The Operations Evaluation Department has decided not to audit the project.  PRWOCT hIT AD? RPOT HiCtOo 544 RIO DRAVO/BA. RIO SAN JUAN IRRIGATION RUetLITATION PROJWCT PRASI I (LANV II11-E) BAgIC DATA P T E PWROJECT VATA Appratal Actual or Actual as 2 of La letimte Estimated Actual Ar a l tstimate Project Coats (%N$ millitn) Originl 384.6 evised 130.9 174.5 133 Loa A.cunt (USP Stllion) OrGginal 130.0 Revsd 50.0 43.4 87 Date Board Approval Origsnl - 05/08/75 isd - 03/29n79 Date Effectivenes - 07/30/75 Date Pbysical Comnnts CoUpleted 06/30/82 09/30/83 117.4 Pr.-ortion then completed (I) 100 ff Posing Date 12/31/82 09/30/83 109.8 Economic Rate of Return (2) origin" 19 Rvsed 17 12.5 NImber of Direct beeficisrias (ftr families) 19e000 15.360 87.0 _ ~ ~ ~ ~ ~ ~ ~ . ,3 CUIAXIVE DISBUSIgSS Apprasal eotimte (US dllSon) 36U.1 F6Y7 118. 5 1 507 .0AM Rvise estimate (Us mllin) - - - 1.5 8.0 25.0 43.0 47.0 50.0 Actual (08 mllion) - - - 1.38 10.1 22.0 31.4 37.5 43.4 Lb ctual as of evied estimat - - - 92 126 88 7s 80 87 Date of Fnal Disbursemant (eat.) 03/21/84 Prineipal repaid (038 million) 08/31/84 - 0382.61 million. STAUP IIPUTS /c 1175 m6 t77 FY8 179 P10 18l PY82 PY83 FY84 m Appraisal 89.3 Negotiations 7.2 Preparation 5.3 Supernision 0.2 13.1 63.1 38.8 23.6 5.4 16.0 8.8 5.6 10.9 1.3 tI81IOI DATA mouth/ so. of Staffdays Speteisttions Perfo Tp a of Mi-ss Year Persons In Field Regresatd /d Rttina /a Srzd Lf Problm Apprasl 10/74 6 *,b,b,b,d,d Supervision I 02/76 3 21.0 *,d,d 2 2 S1,0O Supvlision 1I 04/75 3 42.0 o,d,d 3 2 T,F,O Superision III 09/76 5 70.0 *,b,d,d,d 3 2 TF,O Supervision IV 03/77 3 24.0 d,d,d 3 2 T,F,O Supervision V 10/77 2 14.0 d,d n.e. n.e. n.e. Supervision VI 03/78 3 30.0 s,d,d 1 1 n.e. Supervision VII 12/78 3 30.0 a,b,d I I 3.r Supervision VIII 07/79 2 22.0 *,d 1 1 0 Supervision IX 05/80 1 18.0 d I I 0 Supervision I 11/80 2 10.0 *.d I I 0 Superviston XI 11/81 2 18.0 *.d I I 0 Supervision XII 05/82 1 3.0 d 1 1 0 Completion 05/85 3 21.0 a,b.d TOTAL (SPY) 302.0 OTIER PROJECT DATA Borroer laconl Financiers S.A. (NAPINS) Execting Agency Ministry of Agriculture and Water Resources (SAW) Follow-on Project Phase II * Loan 2100-NE. for W15810.0 millton, approved 03/16/82. */ Percentage in third colurn calculated from "ard approval date. bl Estimte. Actual diabursements - US943,473,553. e/ Source, Planning and Budgettitg Department - tn staff weeks. d - aSriculturalist; b - agricultural eonomist; d - irrlgatton engineer. *I I * problem-free or nmnor problems; 2 * moderate problem; 3 * major problms. I/ I - iproving; 2 * stationary; 3 * deteriorating. F P financial; N * magerial; T * techncal; 0 - Other.  - iii. - PROJECT COMPLETION REPORT MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION REHABILITATION PROJECT (LOAN llll-ME) EVALUATION SUMMARY Introduction In the early 1970s, the decline in agricultural production of Mexico raised concerns about the long-term ability to keep pace with the growth in domestic consumption and the need to reduce income disparities among the population. The project was envisaged as an important step to bring agricultural production back in line with domestic and foreign demand. Objectives The project, the second Bank-financed irrigation project in the area, was to rehabilitate the drainage and irrigation systems on about 280,000 ha, increase agricultural production through changes in cropping patterns, and alleviate the disparity of income levels among the rural population. Total project costs were estimated at US$384.6 million. The Bank loan of US$150.0 million was to be disbursed over. 7* years. Implementation Experience Project start-up was delayed by a lack of counterpart funds and the need to reconsider and complete basic studies and designs before construction of infrastructure could commence. As a result of basic studies, it became apparent that the project was overly ambitious and should be redesigned and divided into three phases over a 12-15 year execution period. The project, as reformulated, was the first phase, comprising the rehabilitation of the drainage and irrigation system on 130,846 ha and provision of extension serv- ices and rural roads in the total area of 280,000 ha. The revised project cost was estimated at about US$130.9 million. The Bank loan was reduced to US$50.0 million and US$100.0 million of the original loan was cancelled. Implementation of the revised project was satisfactory. The rehabilitation and construction of the drainage system and the construction of roads exceeded the targets. The irrigation and land levelling components fell short of expectation, and only 60% of the estimated O&M equipment require- ments were purchased. The research and extension services were substantlilly strengthened. Total project costs amounted to US$174.5 million, 33% higher than expected. Total disbursements amounted to US$43.4 million, or 87% of the revised loan, and the balance of US$6.6 million was cancelled. A Phase II project is now under implementation and project works are expected to be completed under the Phase III project (1989-1993).  - iv - Results The project impact is difficult to measure at this stage, as all the investments originally envisaged have only been completed in a small area. Less crop diversification and shift towards high-value crops than expected have taken place; yields of the main crops (maize and sorghum) have increased (yet less than anticipated), due to the strengthening of research and extension services, better salinity control and the improved road net- work. The project ERR is now estimated at 12.5%, lower than the 17Z estima- ted at project reformulation. Sustainability Two factors contribute to good prospects for project sustainabil- ity: (i) the follow-on projects (Phase II and III) are expected to consoli- date the results of this first project and (ii) project institutions have proven efficient. However, two factors may have an adverse effect on project sustainability: (i) assessment of adequate water charges is a continuing unsatisfactory situation, with a possible negative impact on O&M; and (ii) the project area lacks the marketing organization required to promote alternative high-value crops. Findings and Lessons The project confirmed some of the lessons already learned from other irrigation and rural development projects in Mexico (Panuco and Rio Sinaloa - ORD Report No. 5191; Papaloapan Basin Rural Development (OED Report No. 5766): (a) the project was too ambitious in terms of technical and financial capacity; (b) large irrigation projects of this nature require adequate basic studies and advanced stage of final design before appraisal; (c) the alternative of phasing projects in successive stages, each benefiting from the experience of the previous one, should be considered for large and complex projects of this nature; (d) need for an adequate monitoring and evaluation system; (e) shifts in the cropping pattern are not only dependent on investments and technical considerations, but also on price and support policies of the Government; (f) a more careful evluation should be made of farmer acceptance of critical components, such as land leveling, to determine the incentives available and the farmers' willingness to make the necessary investments; and (g) providing for improvement of production supporting services in a larger area under a first-phase (short-term) project should be considered while providing for construction and rehabilitation of costly and time consuming infrastructure under a long-term multi-phased program concept.  MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION REHABILITATION PROJECT I PROJECT COMPLETION REPORT I. INTRODUCTION 1.01 Mexico's impressive agriculture sector performance until the 1960s was accompanied by a reduction in the importance of agriculture in terms of its share of the GDP. Yet, agriculture remained an important sector in the economy, contributing 40% of the commodity export earnings and employing 40% of the labor force. At the same time, the decline in agricultural production raised concerns about the long-term ability to keep pace with the growth in domestic consumption and the need to reduce income disparities among the population. Exploitation of extensive agriculture, which contributed to the dramatic growth of production in the past, had run its course, and the Government's focus shifted to measures directed at increasing yields and cropping intensity and crop diversification. Limited land resources mado exploitation of existing irrigated and rainfed agriculture areas necessary. The project was envisaged as an important step to bring agricultural production back in line with domestic and foreign demand. II. PROJECT FORMULATION Preparation and Appraisal 2.01 The Bajo Rio Bravo/Bajo Rio San Juan Project was prepared by the Government of Mexico, assisted by a local consulting firm (Estudios y Proyectos S.A.). The project was prepared when Mexico enjoyed an impressive economic performance, and it was assumed the country would have the financial means to carry out large projects. A June 1974 Bank mission reviewed the preparation report and recommended that the project be appraised. 2.02 Project appraisal was carried out by two missions, pre-appraisal in October 1974 and appraisal in December 1974. The principal recommendations made by the appraisal mission were that: (a) no tenders be let for lining of irrigation canals until studies were conducted that indicated water losses in the canal system; (b) no additional development be permitted in the Bravo Basin that would further deplete the supply of irrigation water; and (c) adequate water charges be assessed and collected to cover the cost of O&M. Negotiations and Board Approval 2.03 Negotiations focused on the principal issues identified above, as well as on providing adequate counterpart funds, particularly for credit. A satisfactory understanding was reached on all of these aspects. The Board  -2- approved a loan of US$150 million on May 8, 1975. The principal concern raised during discussion was the high percentage of contingencies (80%) in relation to project base costs (US$214.5 million). The Board wondered how and when resultant surplus funds would be cancelled; the staff explained that contingencies were calculated in accordance with standard Bank estimates and consequently no surplus funds would result if these estimates proved correct. Objectives and Description 2.04 In accordance with the Government's strategy, the principal objectives of the project were to: (a) increase agricultural production in the Bajo Rio Bravo Basin; and (b) alleviate the disparity in ineome levels among the rural population. The project was to complete the rehabilitation of the irrigation and drainage system and increase yields and diversify crop production on the 280,000 ha covered by irrigation Districts 25 (Bajo Rio Bravo) and 26 (Bajo Rio San Juan). 2.05 In order to accomplish the objectives, the project was designed to: (a) line most of the irrigation canals with concrete (.bout 3,200 km); (b) rehabilitate the existing drainage system and construct an additional 1,300 km of drains; (c) provide an improved all-weather road system (about 2,700 km); (d) level about 200,000 ha of land; (e) provide intensive extension and research services for the entire project area; (f) purchase additional equipment for operation and maintenance; and (g) provide miscellaneous civil works (buildings) and equipment. The basic benefit assumptions of the appraisal were that yields and crop diversification would increase the volume and value of production: (a) by improving the efficiency of the irrigation system (thereby making more water available to meet the full requirements of the crops); and (b) by strength- ening technical services (to improve agronomic practices). 2.06 The executing agency was the Secretariat of Hydraulic Resources (SRH), which became the Secretariat of Agriculture and Hydraulic Resources (SARK) in 1977. The SRH state representative for north Tamaulipas had overall responsibility for construction and operations. Designs and tenders were prepared at SRH headquarters in Mexico City while construction was carried out by the Construction Division District Office. Production supporting services and OEM were carried out by the Irrigation District Managers.  -3- Project Cost and Financing 2.07 The total original project cost was estimated to be US$384.5 million (Annex 1). The Bank loan of US$150 million was to finance the foreign exchange cost and 50% of the technical assistance (extension) program; the balance was to be financed from the Government budget. III. PROJECT REFORMULATION Implementation Probleme 3.01 From the date of project effectiveness (July 30, 1975), It was *lear that the project was facing major implementation problems: First, the appraisal mission recommended that water loss studies be conducted before tenders were let for concrete lining of canals (this recommendation was justified because studies indicated leakage Wias not severe and irrigation water was not yet fully utilized). Second, the preparation of other infra- st.ructure detailed designs and related bidding documents did not begin until 1976 delaying the start of construction. Third, the economic crisis c- 1976 and the subsequent austerity program following the change in administration in that year created a shortage of counterpart funds. As a result, the Goverrient and the Bank: (a) realized that the project was overly ambitious and would have to be carried out in phases, with the existing project covering only the first phase, and (b) agreed that a conceptual change was necessary, with a much greater emphasis on drainage, water management, roads, and extension, and less emphasis on canal lining. Project execution did not get underway until 1977 and ultimately SARH, as requested by the Bank, re-evaluated and reformulated the project and submitted a proposal to the Bank in 1978 to carry out the project in several stages over a 12 to 15 year period. Under the revised project (now Phase I), the irrigation and to a lesser extent, the drainage infrastructu a components were scaled down substantially and emphasis was placed on roads and production supporting services. Revised Project Description 3.02 The objectives and assumptions (para. 2.04) of the revises project did not change; however, the components of the project were substantially reduced. The reformulated project provided for: (a) improvement, including concrete lining of 190 km of irrigation canals covering an area of 6,260 ha in Unit 1 of District 26; (b) improvement and construction of 1,476 km of drains over an area of 102,882 ha in selected areas of Districts 25 and 26; (c) improvement and construction of 555 km of roads; (d) land leveling on about 78,000 ha;  -4- (e) technical assistance and research throughout Districts 25 and 26 ; (f) purchase of operation and maintenance equipment; and (g) miscellaneous civil works (buildings) and equipment. Revised Project Cost and Board Approval 3.03 The revised project cost estimate (1977) was US$130.9 million (Annex 2) of which the Bank loan of US$50 million would finance the foreign exchange cost and 50% of the technical services cost. The revised project was approved by the Board Marcli 29, 1979, and US$100 million of the original loan was cancelled. The actual project cost at completion was US$174.5 million (Annex 3), of which the Bank financed US$43.4 million (25%). The increase in cost was mainly caused byhigh inflation during project implementation. IV. PROJECT IMPLEMENTATION 4.01 Implementation of the revised project started to gain momentum in early-1978 and was satisfactory thereafter. In May 1979, the project was fully staffed and the technical assistance program to farmers well underway, having a favorable impact on farming practices throughout the area. However, reflecting pressures from several farmer groups outside the project area, SARH decided to add new areas to the project's scope: 6,800 ha in the third unit of District No. 26, and 21,158 ha in the first unit of District No. 25. Financing of these additional works was done exclusively out of Government funds. Thus, the area to benefit under the project was increased from 101,800 ha to 130,846 ha. In addition, rehabilitation of rural feeder roads systems was extended to cover the entire area of the two districts. Thereafter, preparation of additional designs and bidding documents and actual construction progressed satisfactorily. Nevertheless, there was a continuous delay in disbursements, reflecting lengthy and cumbersome internal procedures regarding billing, verification of supporting documentation, processing and payment. Achievements by Component 4.02 Details of project achievements are summarized in Table 4.1 below and are discussed in subsequent paragraphs.  Table 4.1: Su!nary of Ackhvtments As Appraised As Revised As Cmtpleted Actual as CknrYerts 1974 1978 Sept. 1983 Fevised Est. a. frr'igat'on 3,200 km l/ 190 km 1/ 138 kn 2/ 70 b. Drainage Systan 1,700 kI 1,476 I= 2,176 1km 147 c. Foads 2,700 km 555 km 3/ 757 km 136 d. Land Levelizq 200,000 ha 78,000 ha 14,500 ba 20 e. co! Fqpimnnt UB$6.0 M US$6.0 M US$3.5 M 5/ 55 f. MLor Civil Wrks 4/ $1.5 M $4.9 M $3.4 M 70 g. Technical 280,000 ha 280,000 ha 280,000 ha 100 e/ molded n amrte lining.wsnt 3/O,crete hourg of cbamels mmnot 4molded. / riority to be gLven to roads in its 2 ard 4 D4strict 25 ard unit 1 ln District 26. 4/ Prvdislon for cwstruction of fteld offtces, loxusi aid ccm,plantary work 3/ MDre than 80% procurd by ICB ard thwefore finaced with local fumds. 4.03 Civil Works (Irrigation, Drainage, Roads and Minor Civil Works). Irrigation works were essentially confined to rehabilitation and construction in Unit 1 of District 26 where all components, irrigation, drainage and roads were completed on about 5,600 ha. Rehabilitation and construction of the drainage system was one of the most successful components of the project, and both the kilometer and area targets were exceeded: 2,176 km were completed on about 131,000 ha. Improvement and construction of all-weather roads were considered vital to the development of both irrigation districts. More than 755 km of roads were improved and constructed exceeding the target by 200 km. The investment in roads was about US$26 million, or approximately double the reformulated project estimates. Adequate Bank financing was available for the additional investments in the roads component from the equipment and land leveling components. The minor civil works component, consisting of housing, offices, workshops and complementary works, was financed primarily by Government funds. 4.04 Land Levelin. While land leveling was considered essential to provide more efficient utilization of water and increase yields, it nevertheless, was the least successful of all of the operations under the project. Only 15,000 ha, or about 20% of the revised target of 78,000 ha were leveled. Land leveling was financed from local credit sources as was envisaged at appraisal. Although the appraisal mission considered land leveling essential to improve the efficiency of irrigation and yields;  -6- it has not been widely accepted by farmers. Farmers generally have given land leveling a low priority in terms of investment and utilization of their limited financial resources because yields can initially decline and recovery of investment costs can take several years. The benefits of land leveling need to be further evaluated and demonstrated under the second phase project. 4.05 Operation and Maintenaace. Even though the project and the loan agreement provided finance for O&M equipment, the Borrower chose to purchase most equipment by LCB procedures; thus Bank reimbursement was not requested. Of the O&M equipment purchased, less than 20% was financed by the Bank. Only about 60X of the estimated O&M equipment requirements were purchased. Supervision missions and Irrigation District management felt that additional equipment should have been purchased. Neither the equipment or the O&M budget were considered adequate to maintain the infrastructure. 4.06 Technical Assistance. Technical assistances including extension services and research, was substantially strengthened and improved under the project. Fifty-seven technical assistance areas (each covering 5,000- 6,000 ha) have been established: 41 in District 25 and 16 in District 26. Staffing reached its peak in 1981 with 57 agronomists and 141 technicians; a ratio of one extension worker for each 1,400 ha and approximately 1 to 100 beneficiaries. The number of extension workers was reduced due to budgetary constraints to 126 in 1982, implying a ratio of 1 extension worker to 146 beneficiaries; which still is considered adequate coverage. A survey conducted in April 1983 indicated that more than 80% of the farmers are satisfied with the services. Farmers generally rate the effectiveness and satisfaction with technical assistance higher than any other production service or input. 4.07 Research has also been substantially strengthened under the project with 39 researchers assigned to the Campo Agricola Experimental Rio Bravo (CAERIB). Major emphasis has been placed on developing new varieties of maize, sorghum, soybeans and on the control of pests and diseases. Control of pests and diseases has improved under the project due to improved research and extension. Investigations were also conducted in relation to drainage and salinity. New varieties of soyleans, maize for the winter season and beans for the sprihg season, are now beizg developed and will enable further changes in the cropping pattern in the future. Disbursements 4.08 Total disbursements under the project amounted to US$43.375 million, or 87% of the revised loan of US$50 million, and 25% of project expenditures. There were no disbursements in the first three years of the project and less than 1% in 1978 (Annex 4). The slow rate of disbursements can be attributed to: (a) overoptimistic appraisal estimates in terms of the readiness of the project for execution and capacity for implementation; (b) lack of counterpart funds which delayed implementation; (c) lower Bank financing of total project cost than appraised; and (d) internal delays in processing applications for reimbursement.  - 7 - 4.09 Although disbursements did not begin until after the project was reformulated in 1977, urgent works did not stop andabout lOX of the loan amount was disbursed by the time th( reformulated project was approved by the Board in March 1979. Of the original US$150 mllion loan, US$100 million were cancelled at the time of reformulation; nevertheless, final disbursements only reached US$43.375 million by March 1984, and US$6.625 million were cancelled (Annex 5). Procurement 4.10 The original guarantee agreement provided for major infrastructure to be contracted on the basis of ICB, except for those contracts of value less tban US$160,000 and not to exceed an aggregate of US$8 million. These thresholds were obviously low and were raised three times during project execution ultimately to US$275,000 per contract and an aggregate limit of US$16 million. With inflation and devaluation of the peso the threshold for ICB was still unrealistically low to be of interest to foreign contractors. Total expenditures were about US$106 million for civil works and US$3.5 million for equipment. The civil works and a large portion of the equipment contracts were let following LCB. 4.11 Supervision missions discussed the Bank requirements for ICB on several occasions; however it has been the general practice of SARH to let many small contracts under most Bank financed projects; thus contracts awarded normally did not exceed ICB threshold. There is no evidence that the Bank attempted to enforce the overall aggregate limit for LCB contracts. The procurement process was further complicated by the protracted implementation period, budgetary constraints and reformulation of the project which resulted in many small contracts scattered in both time and place. Procurement procedures improved after the Public Works Law was enacted in 1980. This law provided for centralized control and verification of procurement by the Secretariat of Programming and Budget. Although it resulted in more uniformity in the application of internal procedures, it did not overcome the problem of fragmentation and packaging of works in contracts unsuitable for ICB; thus LCB procedures generally continued to be applied. A subsequent review of ICB and LCB procurement procedures in Mexico has been undertaken by the Projects Department and action is now being taken to promote compliance with Bank procurement policies and guidelines. Reporting 4.12 SARH regularly submitted progress reports in an agreed format. A preliminary draft PCR was submitted to the Bank in September 1983, and it was agreed during the November 1983 supervision mission that a final PCR would be submitted early in 1984. Additional data and information were provided during the subsequent five-month period. SARH submitted its final PCR in Se3ptember 1984 and the iaformation was found to be generally consistent with that already provided and taken into consideration in preparing this report.  -8- Accounting and Auditing 4.13 Bank supervision missions considered that accounts were being adequately maintained so as to reflect the financial operations, resources and expenditures of the project. SARE accounts are subject to a series of internal control procedures by the General Directorate for Internal Auditing and the Secretariat for Programming and Budgeting (SPP). After reviewing the procedures in October 1979, the Bank agreed to accept certification of project accounts by SPP in lieu of an audit. This procedure has been complied with. Compliance with Covenants 4.14 Compliance with covenants was satisfactory, except for procurement and collection of water charges necessary to recover O&M costs. As has been the case with other projects during the same time period project benefici- aries resisted paying water charges; as a result, actual fees covered about one-third of O&M cost throughout the project implementation period. A pro- posal was submitted to the Bank in 1983 that would provide for adjustment in water charges sufficient to cover O&M costs by 1985. A list of covenants and comments on compliance is shown in Annex 6. V. AGRICULTURAL AND ECONOMIC IMPACT Agricultural Impact 5.01 It is difficult at this stage to make a meaningful measurement of incremental agricultural production based on changes in the cropping pattern and yields attributable to the first-phase project operations. Loan 1111-ME, as revised and implemented, was not a free standing project, but rather a time-slice of a much longer term investment program. Thus, most project components were reduced from those estimated in the original appraisal; works and operations were scattered throughout the entire project area; and there were major delays in implementation. A phased approach delays the completion of the combination of works necessary to achieve full development benefits. All the investments originally envisaged, have only been completed in a small area, Unit 1 of Division 26, covering about 5,600 ha. In this Unit yields equalled or exceeded appraisal estimates by crop year 1982 (Annex 11) as shown below: Table 5.1: Average Annual Yields in Unit 1, District 26 1982 Actual Appraisal 1978 1979 1980 1981 1982 Estimates Maize 2.94 3.50 2.59 3.82 3.39 3.2 Sorghum 3.45 3.75 3.81 4.56 3.92 3.4 Beans 0.80 0.77 N.A. 0.81 0.80 0.8 5.02 At the time of appraisal, crop production in the project area was dominated by basic grains: maize and sorghum. The basic assumptions were  -9- that: (a) cropping patterns would shift more toward cotton and horticultural crops (diversification into higher value cash crops), while the area under sorghum and maize would decrease (Annexes 7 and 8); (b) cropping intensity would decrease to provide full water requirements for the first cycle crop, while second cycle cropping would be substantially reduced; (c) salinity would be reduced and controlled to improve and maintain the quality of soils for production; and (d) yields would increase due to availability of water for optimum crop production and improved agronomic practices, made available by research and disseminated by the extension services. While the irrigated area has not increased over the original 280,000 ha (a condition of the loan), there has been noticeable improvement in soils due to the reduction and control of salinity, and there are indications of a possible increase in cropping intensity (para. 5.03). 5.03 Thus far, no important shifts in the cropping pattern have taken place; and maize and sorghum continue to dominate even in the area where all investments have been completed and improved extension services are fully operational. It has become evident that crop diversification had three major problems: (a) Government pricing policies and production support services (research, extension and credit) favored basic grain production; (b) the profitability of cotton production was reduced ay an increase in pests and diseases, which resulted in frequent and costly spraying; and (c) horticul- tural crops faced marketing limitations because of the lack of efficient marketing organizations, as well as seasonal restrictions on the US export market. Nevertheless, due to the fact that the road network was completed, research ind extension were subtantially strengthened. Salinity is now being controlled, and there is a trend towards increasing yields (para. 5.01, Table 5.1) and cropping intensities. Cropping intensities in 1982 were 1.33 for District 25 and 1.14 for District 26, compared to the overall appraisal estimate of 1.08 and the revised estimates of 1.20 for District 25 and 1.09 for District 26. 5.04 The conflicting views regarding the availability of 6Aequate water for optimum crop production at full development have not been resolved. The appraisal report indicated that under the existing levels of efficiency the irrigation system would only provide 60X of the theoretical crop water requirements for cultivation of the 280,000 ha of Districts 25 and 26. It was estimated that with the project, 85-100% of the water needs (depending on supplementary rainfall) would be met. The appraisal assumed that all the irrigation water available would be utilized for optimum production during the first-cycle crop (spring/summer), and that the second-cycle crop (fall/winter) would essentially depend on residual moisture and rainfall. Thus, the total area cultivated in the two cycles would be reduced and a cropping intensity of 1.08 would be achieved (Annexes 7-8). By utilizing all available water for the first cycle crop, higher yields would be achieved that would more than compensate for any reduction in second-cycle cropping. Both the revised first-phase project and the second-phase project assumed that water availability would not be a constraint; howerer, the revised first-phase project assumed cropping intensity could be maintained, while the second-phase project assumed an increase. 5.05 The second-cycle crop which is relatively minor in terms of total annual production is now grown essentially under rainfed conditons. When  - 10 - required and water is available, supplementary irrigation can be used. The Rio Grande Basin is an atypical area, where double cropping cannot automati- cally take place under irrigation. At best, the second-cycle crop fields are substantially lower, and risks of crop losses are much higher, due to adverse climatic conditions (low and freezing temperatures, and hurricanes). There- fore, it is reasonable to assume that on the average 10-30% of the area would be planted during the second cycle with or without irrigation. The crop?ing pattern and water availability need to be carefully monitored during the second phase project. 5.06 In 1981, SARH conducted a hydrological study (Estudio Hidrologico con el Patron de Cultivo) Indicating that adequate water would not be avail- able to maintain cropping intensity at full development. This issue was again raised by SARH during preparation of the Borrower's Project Completion Report. It is possible this premise could be correct if the cropping pattern were to shift substantially towards higher water requirement crops, as was envisaged during appraisal. In line with revised project's approach maize and sorghum continue to dominate and yields increased because of better drainage, better water management and improved extension/research. 5.07 Land leveling, a major factor for better water management, has so far been completed only on 15,000 ha instead of the 78,000 ha estimated in the revised 1,roject. Farmers are reluctant to make the investment in land leveling because they are not convinced of its benefits. They consider land leveling to be costly, while only providing gradual increases in yields. Thus further analyses need to be undertaken to demonstrate the benefits. 5.08 Under the circumstances, it is difficult to see how the cropping pattern will evolve. In the longer term, it would seem essential that the cropping pattern should shift towards higher value crops, which would make additional investments in improved irrigation and drainage infrastructure more profitable. For this to happen, extension and research services must make more of an effort to promote crop diversification (para. 5.02). Research and extension are presently working on some promising alternative crops, such as soybeans, which have yielded 2 to 2.5 tons/ha in field trials, and beans as a first-cycle crop, which has yielded 1 ton/ha in the field trials. It is, however, too early to indicate the applicability and acceptance of these crops as alternatives to maize and sorghum. Meanwhile, benefit calculations are conservatively estimated, on the assumption that maize and sorghum would continue to dominate the cropping pattern (para. 5.12). 5.08 Producer Returns. The incremental volume and value of production attributable to Phase I (Loan 1111-ME) project investments cannot be quanti- fied at this time. Notional cropping intensity and yields for full develop- ment were estimated during the 1981 appraisal of Phase II (Loan 2100-ME and are shown in Annexes 9-11. More information is now available (para. 5.01) thus yield estimates for Phase I (Annexes 10-11) are still considered valid. 5.09 Land Tenancy. The project has not had, and was not expected to have, any effect on land tenancy. As is generally the practice throughout Mexico, a proportion of ejidos and small farmers, with alternative sources of income either as employees of the farm unit or off-farm employment, continue to rent out their land to others.  - 11 - Economic Impact 5.10 As indicated in para. 3.01 and 3.02 decisions were made in 1977/78 to reformulate the project into a broader, longer term program of 10-15 years and to limit the works under the project to a first tranche of this program. A Phase II project (Loan 2100-ME) is now under implementation in which 82,000 ha (62% of the project area) would be rehabilitated from 1982 to 1988, However, because of the economic crisis and inadequate counterpart funds available, the Government and the Bank recently decided to divide Phase II into two stages, and it would only be during the Phase III project (1989- 1993) that the remaining 50,000 ha (38%) of the project area would be reha- bilitated. Thus, the Phase I project forms only part of an integrated program of improved irrigation and drainage, agriculture extension, and on-farm development to improve the efficiency of the production system. 5,11 Therefore, in view of the difficulty of segregating the impact of Phase I project investmen.s, an economic analysis was performed on the inte- grated program, i.e., Loan 1111-ME (Plase I) and 2100-ME (Phase II). This analysis was recently completed as part of a supervision review for the Phase II project, and showed an expected economic rate of return (ERR) of 12.5% on program investments while the Borrower's PCR (September 1984) shows a rate of return of 13%. These figures are lower than the 19% estimated in 1974 for Phase I, 17% estimated at reformulation in 1978, and the 17% estimated in 1981 for the combined Phase I and Phase II projects. The ERR has diminished because: (a) crop diversification (para. 5.02) is not expected to occur to the extent originally estimated, and lower value basic grains would dominate; (b) yield increases would be less than estimated under Phase II; and (c) implementation has been prolonged. The program's economic costs and benefits are presented in Annex 12. 5.12 The cropping patterns assumed for the reanalysis of the overall program's economic viability assumes continuation of heavy emphasis on basic grain production, in accordance with recent observed trends. Should the Government change its agricultural policy to emphasize crop diversification on irrigated land, it is expected that the project's viability would be enhanced through higher valued cotton and horticulture crops. Therefore, economic results presented herein are considered lower bound estimates. 5.13 Sensitivity analyses demonstrate that the program's viability is sensitive to delays and decreases in benefits and to increases in costs. A 3% escalation of real costs or drop in benefits would cause the projected ERR to fall to 12%. However, since Phase I costs and a portion of Phase II costs are known, remaining costs in future must rise by a much larger factor than 3% to yield an overall switching value of 3% based on present value analysis. These results, nevertheless, support the need for cost contain- ment, expeditious implementation of remaining investments including parti- cular emphasis on land leveling expected to have significant impact on production (para. 4.04).  - 12 - VI P ERFORMCE OP THE BOROWER 6.01 The -.stitutional performance after the revision of the project in. 1978 was satisfactory. SARH, through its representative of Tamaulipas Norte, established and adequately staffed a resident office for rehabilitation works in the project area. The project was also supported by the Offices of Irri- gation and Drainage in both districts, which are responsible for technical assistance (extension), research, land leveling, water distribution, water charges and operation and maintenance. Coordination and cooperation at the State, District and project levels were satisfactory. There were other aspects, not financed by the Bank, where the Borrower's performance deserves mention, namely: (a) marketing; (b) training; (c) credit; and (d) cost recovery. Marketing 6.02 The project area lacks the strong marketing organization and experience of states, such as Sinaloa, required to promote alternative high value cash crop production (particularly fruits and vegetables) for export; thus the marketing system would have to be strengthened to facilitate high value horticulture crop production. Storage capacity for basic grains (maize, sorghum and beans) has increased substantially and now exceeds 2.0 million tons (70X private and 30% public sector). Storage and. marketing (through CONASUPO) has been strengthened and favors basis grain production. Training 6.03 Training, per se, was not a component of the project, however, as a normal part of the SARH operations, extension and research staff receive regular periodic training. The impact of extensive training is obvious from the response of the farmers in the field. Agricultural Credit 6.04 Use of farm credit has traditionally been high in the project area. Although the project did not provide finance for credit, assurances were provided that adequate credit would be made available and this was generally done. More than 80% of the area planted in 1982 received institutional credit: 63% from commercial banks and 37% from public banks. An additional 8% of the area planted benefited from credit provided by farmers and farmer organizations. The demand and availability of credit are expected to increase as the program reaches full development. Cost Recovery 6.05 In theory, it has always been the intention to charge water rates sufficient to cover the cost of operation, maintenance and administration of the irrigation system (para. 2.02 c); however, the income from water charges has declined in relation to costs since 1978. An adjustment made at the beginning of 1982 increased the revenue (in Pesos) by 80%, but the resulting coverage of actual costs increased only from 24.5% in 1981 to 29.7% in 1982,  - 13 - leaving a subsidy of about US$6.7 million. A series of increases in water charges, at a 30S p.a. rate, was under consideration at the end of 1983, and an agreement was subsequently reached with SARH to gradually increase water charges so as to reach a 100% coverage of O&M costs by 1986. In addition to water charges, the State Government collects a production tax equivalent to 2X of the value of production of each commodity. 6.06 Under the present system of operations, assessment of adequate water charges is a continuing unsatisfactory situation. Water charges always meet strong resistance from farmers and are the subject of frequent socio- economic studies; a study was prepared by SARR in 1981 and submitted to the Bank. However, these studies are time consuming and often overtaken by changing economic conditions before they can be completed and implemented. Also, present procedures for enacting increased water charges call for negotiations with farmers until agreement is reached. In order to overcome the perennial problem of adjusting water charges to cover cost of operation and maintenance, an automatic adjustAent system should be formulated and implemented by the Borrower. Such an automatic adjustment could be linked to inflation, farm-gate prices, and costs of production. VII. PERFORHANCE OF THE BANK 7.01 At appraisal, in 1974, it was assumed that all project works would be completed over a period of seven years. In retrospect, the results suggest that this schedule was too ambitious, especially in view of the inadequate preparation and resultant reformulation of the project, implemen- tation capacity constraints, and difficulties encountered regarding alloca- tion of Government counterpart funds, wbich could not have been foreseen in early 1975. Also, the original project's design concept was not sound since detailed studies on the need for extensive irrigation canal lining (para. 3.01) were not available at the time of appraisal. The Bank found in early 1976 that the preparation of detailed designs and related bidding documents for both the irrigation and drainage systems was significantly lagging. After having analyzed the reasons for lack of progress, it became clear to the Bank that project scope should be substantially reduced, focusing mainly on the drainage system, roads and technical assistance to farmers. 7.02 The decision in 1976/77 to adopt a time-slice approach, by subdividing the project into stages, proved to be correct. Tn spite of all the difficulties encountered and delays caused by the lengthy reformulation exercise, the subsequent progress made under the project was satisfactory. During the early Implementation stages, BanV. missions consistently advised SRH of the problems the project was facing and the potential risks involved. The reformulation process actually began in late 1976 but was completed only in August 1978. Given the prevailing circumstances in Mexico (elections in 1976 and the economic hardships thereafter), it seems unlikely that this process could have been accelerated. 7.03 Continuity and frequency of supervision was reasonable until 1979. Thereafter, as implementation gained momentum and progressed, supervision mission frequency decreased. In view of the shortfalls in the implementation of the land leveling program and acquisition of O&M equipment, (para. 4.04)  - 14 - it seems that Bank missions should have monitored these components more closely. Generally, there was a reasonable mix of professional skills in Bank supervision missions. Bank staff were active ard productive during the reform'ilation stage, received full cooperation from fexican professional counterparts, and succeeded in establishing a constructive and working dialogue with the Government. The appraisal recommeadation that contracts for concrete lining of irrigation canals should not be let until studies regarding water losses were completed was correct. However, the basic studies indicating that concrete lining was not required should have been conducted prior to appraisal. VIII. CONCLUSIONS AND RECOMMENDATIONS 8.01 The justification and objectives were correct in view of the Government's strategy (para. 1.01 and 2.04) for increasing production through investment in construction and rehabilitation of irrigation and drainage infrastructure. In retrospect the project was not adequately prepared for appraisal and was overly ambitious. The unavailability of final designs (para. 3.01), the requirement that water loss studies be conducted before contracts be let for concrete canal lining, and most of all the shortage of coumterpart funds (due to the economic conditions) during the first two years of the project contributed to the delays in implementation and ultimately led to the decision to reformulate the project. 8.02 Considering the information available at appraisal it would not have been reasonable to expect that concrete canal lining would not be required; although obviously the appraisal mission believed that studies would indicate that some areas would not require concrete lining. Also, in view of Mexico's impressive economic performance during the preceding years neither the Borrower or the bank could have predicted the economic slump (para. 3.01) that followed in 1976 and 1977. Furthermore, it was reasonable to assume that a more efficient irrigation system would lead to crop diversification (para. 5.02 a) and an increase in production of high value crops. 8.03 The principal lesson learned has been to avoid embarking on over-ambitious projects in terms of technical and financial capacity. It is also apparent that more thorough basic and feasibility (technical, financial and economic) studies are required and that completion of basic studies and a substantial part of detailed design work are prerequisites to appraisal and approval of projects with major infrastructure components (para. 3.01). Another major lesson learned under the revised project was recognition that shifts in the cropping pattern are not only dependant on technical considera- tions (i.e., availability of water, sufficient drainage) but also on price and support policies of the Government (para. 5.03). 8.04 The key elements required to achieve significant increases in yields and cropping intensity now exist: (a) a strong research and extension service accepted by the farmers (paras. 4.06 and 4.07); and (b) improved soil conditions (para 5.02). In the future, project management and research and extension staff should devote more effort to the critical aspects of land  - 15 - leveling, water management, and the possibility of water availability constraints at full development of the project area (paras 5.04-5.06). Land leveling was considered to be a major element of this project that would contribute substantially to more efficient water utilization and increased yields. However, land leveling (para. 5.07) has been the least satisfactory operation under the project in terms of achievements (less than 20% of target as revised in 1978). Farmers' objections are the high cost of land leveling, initial reduction in yields, relatively small yield increases, the long term required to obtain net benefits, and short-term enortization (five years) for credit (para. 4.04). These objections should be verified and amendments made where necessary. Financial incentives for investment in land leveling should be evaluated during the second phase project. Analyses may indicate that the advantages of land leveling (a more efficient irrigation system and more water available, particularly to farmers down stream) benefit all farmers in the project area and therefore should be considered as public investment the same as irrigation and drainage infrastructure. 8.05 Appropriate and prompt staffing of agricultural extension services proved to be an important factor for achieving progress in agricultural productivity. The technical assistance program became very popular among farmers, and their future cooperation is a prerequisite for the eventual achievement of the long-term production goals. The impact of improved technical assistance can be seen in the increased use of inputs (seeds and fertilizer), better pest control and improved agronomic practices. 8.06 Management at the local level was strengthened and appropriately staffed; under the existing administrative and organizational constraints, their technical capacity and actual performance was satisfactory. There was, however, a series of shortfalls at the central levels, such as: delays in issuing authorizations for project implementation operations; delays in processing contractors' bills and paying them on time; delayed acquisition of badly needed O&M equipment (para. 4.05); and serious delays in disbursing funds from the Loan Account. Recently, the Government and the Bank have agreed on new procedures to expedite disbursements. 8.07 An adequate cost recovery and O&M program needs to be established to ensure that equipment and funds are available to carry out a regular maintenance program throughout the project area. Although considerable progress was made in 1983 towards achieving the stated O&M cost recovery goals, the Borrower needs to consider an automatic indexing system for water rates; perhaps linked to the periodic calculation and adjustments for costs of production and establishment of farm-gate prices. 8.08 Finally every effort should be made to familiarize farmers with alternative crops, so that cropping patterns can be diversified to maximize the benefits to the producers.  - 16 - IX. COMMENTS FROM THE BORROWER E-813/86 April 25, 1986 Spanish (Mexico) OEDD1 DRJB:bas United Mexican States SECRETARIAT OF TREASURY AND PUBLIC CREDIT Directorate-General of Public Credit Directorate of International Lending Agency Affairs Projects Department (Agriculture Sector) Mexico, D.F. (undated] Our ref: Of. No. 305.III.4.1. Mr. Otto Maiss Operations Evaluation Department IBRD Washington, D.C. Dear Mr. Maiss: We acknowledge receipt of your communication of February 6, 1986, accompanied by a copy of the draft Project Completion Report on the Bajo Rio Bravo/Bajo Rio San Juan Irrigation Rehabilitation Project I (Loan 1111-ME). As requested, we now give below our comments on the document, for inclusion in the final version that will be distributed to the Executive Directors of the Bank. There is no doubt that the Report contains valuable observations certain to be of assistance in improving the development and implementation of future Bank-financed investment projects in Mexico's agriculture sector. At various points, the document states that the results of the project did not matcl original projections -- one of various reasons being that the difficult economic situation Mexico went through in the mid-70s led to a reordering of Federal Government investment program priorities, and, as part of that process, to reformulation of this project and reorganization of it into several phases. Since it was at this juncture that the project began to take on real momentum, we consider it to be a valid general conclusion that Phase I was of great benefit in increasing agricultural production through investments in the rehabilitation and building irrigation infrastructure, roads, and drainage systems in the project zone.  - 17 - Although in general terms we regard the OED document as covering all aspects of the project execution process, we clarify and expand on certain points in the comments set out below, which we should be glad to see included in the final version of the Report; they have been drawn up jointly by staff from the Secretariat of Agriculture and Water Resources, as Executing Agency for the project, Nacional Financiers, S.N.C., as Borrower, the Secretariat of Treasury and Public Credit, as Guarantor, and the Office of the Comptroller- General of the Federation. General Comments See new 1. The Report indicates that because the project was reformulated and para. 2.e1 redesigned it did not achieve all the original objectives. On this score, we think it important to note that the project was initially negotiated at a time when Mexico's economic stability justified the planning of projects on such a major scale, with relative certainty that they would actually be carried out, and in fact the Bank itself, through its various preparation and appraisal missions, endorsed the intended size and scope of the project with conviction. See para. 2. It is important to make clear that the results of the project were 6.01 satisfactory. In certain instances, projected goals were exceeded. In others, special emphasis was placed on aspects of the project not financed by the Bank (training, credit, and cost recovery). As regards farming, notable successes in reducing and controlling soil salinity helped increase cropping intensity. In addition, coordination and cooperation at state, district, and project levels also proved satisfactory. See para. 3. It should be emphasized that the project contributed to the improvement 4.07 of farming practices, pest control, and crop selection, and to greater and more efficient use of inputs. See new 4. With regard to the increase in the final cost of the modified project, it para. 3.03 should be noted that it was a consequence of the unprecedentedly rapid inflationary process that affected Mexico during the second half of the 70s and the early 80s. See new 5. Although no project proceeds were disbursed during the first three years para. 4.09 of the execution period, it should be pointed out that the most urgent works in the target zone went ahead notwithstanding. Once the redesign process was completed, 102 of proceeds were disbursed immediately. It should also be noted that the revised disbursement program (1979-1984) was carried out almost entirely, with only US$6.6 million of the final loan figure of US$50 million being canceled aa of December 21 (sic], 1984. [TN: No paragraph numbered "6" appears in the original text.] See new 7. Regarding the references in the Report to repeated disbursement delays para. 8.06 occasioned by complicated, time-consuming internal procedures associated with billing, verification of vouchers, processing, and payment, we feel it should be pointed out that new mechanisms such as the Statement of Expenditures have been introduced on some projects as a means of  - 18 - streamlining the drawing down of loan proceeds. It only remains for the Bank to approve extension of them to all current projects, a change which, it should be indicated, is under negotiation. See para. 8. Regarding the observation that the project zone lacks the kind of 6.02 commercial organization likely to foster the introduction of other, high-value crops, it would be advisable to indicate that in fact the project succeeded in increasing marketing activity in the zone, although further developmental effort is still needed. See para. 9- The Report quotes various internal rates of return for the project: 5.11 182 (page iv); 15% (para. 5.11); and 17% (Basic Data Sheet). We recommend clarification as to which figure should be taken as the actual IRR. See para. 10. The Report indicates that procurement of operating and maintenance 4.11 equipment and award of civil engineering contracts were mainly a matter of local competitive bidding. It should be noted not only that contracts were awarded according to the procedures agreed on with the Bank but also that conversations are now being held with the Bank on methods of making the procurement and contract award process even more efficient and rapid. See paras. 11. Finally, it should be made clear that although the Borrower has no power 4.14 & 8.07 to set or increase the rates charged for water use, the Secretriat of Agriculture and Water Resources has set consumption quotas, on the basis of various analyses of consumer capacity to pay and considering the production incentives advocated in the National Integrated Rural Development Program. Yours, etc. Is/ Jose Luis Flores Hernandez Director. International Lending Agency Affairs  - 1e- I 1 MEXICO WJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION RE1ABILITATION PROJECT I PROJECT COMPLETION REPORT Original (1975) Prolect Cost SumarY Foreign Local Foreign Total Local Foreign Total Exchange - Nex$ dillion - - USS million -- Physical Works 668 445 1,113 53.4 35.6 89.0 40 Canals 125 83 208 10.0 6.6 16.6 40 Roads 64 43 107 3.1 3.4 8.5 40 Staff Rouses 10 1 11 0.8 - 0.8 10 Land Leveling 200 200 400 16.0 16.0 32.0 50 Total Works 1,067 772 1,839 85.3 61.6 146.9 42 materials 182 - 182 14.6 - 14.6 0 041 Equipment 18 26 44 1.4 2.1 3.5 60 Radio Telephone 2 4 6 0.2 0.3 0.5 60 Engineering and Adminis- tration 263 - 263 21.0 - 21.0 0 Right-of-Way 39 - 39 3.2 - 3.2 0 Technical Assistance 310 _ 310 24.8 24.8 0 Base Cost of Project 1,881 802 2,683 150.5 64.0 214.5 30 Contingencles Physical 118 85 203 9.4 6.8 16.2 42 Price 1,153 768 1,921 92.4 61.3 153.7 40 Total Project Costs 3,152 1,655 4,807 252.3 132.1 384.4 34 September 18, 1984  -20- Annex 2 MEICO BAJO RIO BRAVO/BJO RIO SAN JUAN IRRIGATION REHABILITATION PROJECT I PROJECT COMPLETION REPORT Revised Cost Estimate (US3$ milllon equialhent) Z of Foreign Foreign Item Local Exchange Total exch. a. Irrigatiou Distribution Systems 5.2 3.1 8.3 37 b. Drainage Systems 18.0 11.2 29.2 38 c. Roads 5.7 3.6 9.3 39 d. Complementary Works 0.9 0.5 1.4 36 e. Land Levelling & On-farm r'orks 2.9 1.9 4.8 40 f. Rights-of-Way 0.9 - 0.9 - g. Mechanical Equipment for O&M 3.3 1.0 4.3 23 h. Technical Assist. & Applied Research 31.0 - 31.0 - i. Engineering and Supervision 5.3 - 5.3 - Total Base Cost 73.2 21.3 94.5 23 Physical Contingencies 5.2 3.1 8.3 Price Contingencies 16.8 11.3 28.1 Total Project Cost 95.2 35.7 130.9 a/ 27X a/ 1977 Estimates - Exchange rate MQz$ 22.57 u US$1.00. September 18, 1984  MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN REHABILITATION PROJECT I PROJECT COMPLETION REPORT Actual Project Costs 1; (in mill. Hex$ current purces Expenditures by Years- 1977 1978 1979 1980 1981 1982 1983 Total Irrigation Systems 1.0 36.3 89.7 102.4 44.1 22.5 11.2 307.2 Drainage Systems 35.3 169.3 402.1 505.1 304.6 227.9 110.6 1,754.9 Roads System 9.7 51.4 143.8 98.0 169.0 243.9 371.9 1,087.7 Materials 5.6 20.0 60.0 55.0 61.7 50.0 5.2 257.5 Complementary Works 8.0 22.1 18.4 21.5 - - - 70.0 Land Leveling 2/ - - 14.2 58.7 73.4 120.1 47.2 313.6 Indemanificatioja - - 0.5 0.5 1.5 1.5 - 4.0 O&M Equipment - - 14.4 31.7 35.0 - - 81.1 Agric. Extension and Applied Research - 68.0 100.0 150.0 190.7 199.4 113.0 821.1 Engineering and Super- vision 23.9 47.9 71.8 92.0 104.0 125.8 112.0 577.4 Total 83.5 415.0 914.9 1,114.9 984.0 991.1 771.1 5,274.5 Rate of Exchange (avg.) 22.8 22.77 22.81 23.00 24.50 56.8 120.09 Equivalent in US$ million 3.698 18.226 40.110 48.474 40.163 17.449 6.421 174.541 1/ Not including Mexican Value of Taxes and other taxes. 2/ Table 3.2.4 - SARK Report (revised). September 18, 1984  MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN ItRIGATLON REHABILIT&TION PROJECT I PROJECT COPLETION RIEPORT Expenditures Incurred and Disbursements (from Loan Account - in current terms) As Expec- Actual Cumula- Z of Total During Cumula- During Cumula- ted in During tive end Disburseunt Year the Year tive the Year tive May 1979 the Year of Year vs. Actual Cumulative In Mex$ million Equiv. In US$ Expenditure million in US$ zillion 1977 83.5 83.5 3.698 3.698 - - 1978 415.0 498.5 18.226 21.924 - 0.149 0.149 0.7 1979 914.9 1,413.4 40.110 62.034 4.0 4.231 4.380 7.1 1980 1,114.9 2,528.3 48.474 110.508 14.4 10.174 1414.554 13.2 1981 984.0 3,512.3 40.163 150.671 36.0 11.265 25.819 17.1 1982 991.1 4,503.4 17.449 168.120 45.0 7.123 32.942 19.6 1983 771.1 5,274.5 6.421 174.541 50.0 8.416 41.358 23.7 1984 - - - - - 2.017 43.375 5.0 1/ Not including Mexican Value Added Taxes and other taxes. Ht  MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION REHABILITATION PROJECT I PROJECT COMPLETION REPORT Actual Withdrawal of the Proceeds of the Loan (Schedule I of Loan Agreement) Amount of the Actually Disbursed as Z Category Loan Allocated 1/ Disbursed 2/ Reformulation (1977) ln US$ equivalent (25,500,000) (1) Civil Works 34,276,001 30,231,397 119 (9,500,000) (2) Tech.Asslst. 13,723,999 12,307,577 130 (5,0000000) (3) Equip. for OE& 2,000,000 835,579 17 (10,000,000) (4) Unallocated 0 - _ (50,000,000) Total 50,000,000 43,374,533 87 Balance 6,623,467 13 1/ Figures in brackets refer to allocations in December 1977, as approved at project reformulation; figures underneath refer to latest modifications, made on August 10, 1982, upon Borrower's request. 2/ Final disbursements as of March 21, 1984; the balance was cancelled on that date. September 18, 1984  Annex 6 - 24 - BhJO RI0 BIAVO/IAJO RIO SAN JUAM IUIG?I0ON MUSUITLZ?ATION MlOJKCT I MlOJECT COJnMPTION REPORT List of CoSMliance with Loan Covenants Section SubJect Compliance Loan Asreement Section 3.01 The Borrower shell mske contractual arrangements with Complied with. the Guarantor for the transfer of the proceeds of the Loan for carrying out the project. Guarante Agreement Section 3.06(a) The Guarantor shall formulate and carry out a Complied with. seven-year proaram for technlcal assistance to farmers. section 3.08 The Guarantor shall ensure that credit, fertilUser and Complied with. Improved seeds be made avallable in the project area. Section 3.09 The Cuarantor shall not allow any new developmet in Not yet applicable. the Rio Bravo Basin that would reduce the amount of water available to the project beneflciaries. Section 3.10(a) The Guarantor shall carry out a socioeconomic study by Study submitted. June 30, 1982 to determine the ablity of water users to pay for the cost of Irrigation. Section 3.10(c) The Guarantor shall collect sub meter charges as Water charges were raised necessary to recover all 06K costs and within five several times since moaths after completion of above-mentioned socio- project appralsal. A new economic study also as much as practicable for recovery plan drawn up ln 1981 of investment costs. contemplated to recover OO of OCK costs Ia 1986. This is now being revised ln view of the changes that oceurred In the econoay. Section 3.11 The Guarantor shell: (i) maintain separate accounts to (i) complied with (ii) reflect the financial situation of the project; procedures for (11) cause such accounts to be audited anaually; verification (inatead of (111) make available to the lank copies of audited auditing) in view of accounts; and (iv) provide information concerning the Government internal accounts at Bank's request. regulations were redefined in 4ay 1982. (ill) Verified financial statements as of 12/31/82 - received. (iv) Complied with. Section 4.02 The Guarantor shall within seven months issue Legislation amended regulations to enforce Article 70 of the Lay Federal de several tims since Aguas to establish and collect water charges. signature of Guarantee Agreement* There is not legal impediment to establish and to collect water charges. iptember 18, 1984  WAJO R10 UAVO/DAJO 10 SAN JOAN IllTCLtOH IIHAOIITATION PBOJDCT I Cropping Pattern, Production, Costs ad Not Value of Production Vieboue tbe Projecte 11 Cross Production Caste Not Value of Area Yields Productlon Prices Production Value Labor Other Productioo (ha) (ton'hOO) (too w00) (IW-oa) ------------ A. Irrigated Seasonal Cotton 10,000 1.47 14.75 5,200 76.70 21.86 23.35 31.49 Hals 82,360 2.99 246.2S I,S00 . 369.38 67.65 119.31 182.42 Sorghum 171,500 2.99 513.58 1,200 616.30 97.50 25S.63 262.97 lheat 30 1.67 0.05 1,500 0.08 - 0.05 0.03 Beans 320 0.84 0.27 6,000 1.62 0.22 0.48 0.92 Forage 2/ 574 17.72 10.17 350 0.50 3/ 0.10 0.20 0.20 okra 2,010 4.70 9.45 2,200 20.79 3.10 3.44 i4.25 Squash 540 2.44 1.32 1,500 1.98 0.80 0.78 0.40 Strlagbeas 65 3.38 0.22 3,600 0.79 0.10 0.09 0.60 Various Vegetables 45 6.00 0.27 2,500 0.68 0.07 0.07 0.54 Groundmuts 9 I.SO 0.02 S,000 0.10 0.01 0.02 0.07 Sorghum Escobero _ 251 1.38 0.35 3,000 1.05 0.27 0.28 _.S0 0 Subtotal 267,704 796.70 1,089.97 191.68 403.90 494.39 Perennial Pasture 2,160 milk 14.60 41 3.0r0 S/ 43.80 10.00 22.12 11.68 beef 4.68 6 Subtotal 2.160 16.36 Total Irrigated 269,864 *S10.7S B. Dry-Warning Seasonal maite 37,275 0.90 33.46 1,500 50.19 11.12 19.60 19.47 Sorghbu 7,950 1.28 10.20 1,200 12.24 1."4 4.30 6.30 Beans 4,892 0.56 2.76 6,000 16.56 2.34 5.00 9.22 Squash 215 1.63 0.35 1,500 0.53 0.22 0.22 0.09 Broccoli 5 2.00 0.01 3,S00 0.04 0.01 0.01 0.02 Various 402 1.59 0.64 2,S00 1.60 0.20 0.20 1.20 Total Dry-Farming 50,739 47.42- 81.16 15.53 29.33 36.30 Crand Total 320,603 547.05 |- 1/ 1970-1974 weighted average. i2 Hainly matze and sorghum but also colsa, 8oar and oats. 3f 1,430 tons of oats only; the rest is Included In beef and milk production value. Mi Millions of liters. 1/ )Gx$l. 6/ Sale of 4,231 cows and bulls at net income of Wo$ 965 each and 2,386 calves at net fncome of $ 250 each. September 18. 1984  8AJO R10 uBAVOISAJO 110 BAN JUAm lIGATtION SaiLIThflON nPoJUC I P OJECS CONfLZTION uEPORT CroppIog Pattern, Production, Costs and Nkt Value of Production With the Project (1975) Gross Production Costa Net Value of Area Yields Production Prices Production Value Labor Other Production (ba) (tonths) (tow '000) (KbxJtou) --------. -... (IIex* ll110) A. Irrigated Seasonal Cotton 48,000 2.S 120.0 S,200 624.00 126.96 135.65 361.39 maize SS,000 4.5 247.5 1,500 371.25 54.67 96.42 220.16 Sorghum 78,000 4.5 351.0 1,200 421.20 53.66 140.79 226.75 Beans 23,000 1.5 34.5 6,000 207.00 19.41 41.45 146.14 Okra 5,000 8.0 40.0 2,200 88.00 38.67 10.36 38.97. Squash 4,000 10.0 40.0 1,500 60.00 7.09 6.93 45.98 Stritgbeana 12,000 5.0 60.0 3,600 216.00 22.21 30.90 162.89 Various Vegetables 11 2,500 6.7 16.7 2,500 41.75 8.09 3.74 27.9i Sesame 7,000 1.0 7.0 6,000 42.00 6.19 9.44 26.37 Croundauts 11,000 2.0 22.0 5,000 1tO.OO 14.98 18.68 76.34 Flaxseed 2,500 2.0 5.0 3,000 15.00 1.79 S.23 7.98 Subtotal 248,000 943.7 2,196.20 353.72 501.59 1.340.89 Perennial Pasture-Dalry 2I 10,000 90.00 41 296.52 36.42 116.57 143.53 a' Pasture-leaf 37 22,000 43.01 - 516.14 34.98 326.48 154.68 Subtotal 32.000 812.66 71.40 443.05 298.21 Total Irrigated 280,000 3,008.86 425.12 944.64 1,639.10 S. Dry-Farming Seasonal maize 5,000 1.2 6.00 1,500 9.00 1.99 3.51 3.50 Sorghum 6,500 1.7 11.05 1,200 13.26 1.79 4.69 6.78 Beans 4,000 0.8 3.20 6,000 19.20 2.36 5.05 t1.79 Squash 2,200 2.2 4.84 1,500 7.26 2.73 2.67 1.86 Broccolt 1,200 2.6 3.12 3,500 10.92 1.61 1.37 7.94 Onions t,200 4.0 4.80 1,500 7.20 1.42 2.55 3.23 Various 1.000 2.0 2.20 2,500 5.50 1.20 1.43 2.87 Total Dry-farming 21,200 35.21 72.34 13.10 21.27 37.97 Grand Total 301,200 3,081.20 438.22 965.91 1,677.07 1/ Weighted average of okra, squash and striagbaons. il 250 units of 40 ha each with 30 he pasture. For details on production value and costs. 1 T/ 220 units of 100 ha each. TI Millions of liters. September 18, 1984  - 27 - Annex 9 MEXICO BAJO RIO BRAVO/BAJO RIO SAN JUAN IRRIGATION REEABILITATION I PROJECT COMPLETION REPORT Cropping Pattern District 25 and District 26 1/ (ha) District District 26 First Cycle Crops cotton 1,100 350 Corn 61,000 46,000 Okra 1,400 0 Sorghum 134,000 19,000 Subtotal 197,500 65,350 Second Cycle Crops Beans 5,200 4,600 corn 42,000 6,500 Other 2/ 4,200 1,000 Subtotal 51,400 12,100 Total Cropped Area 248,900 77,450 Cropping Intaensity 1.20 1.09 1/ It is assumed that the cropping pattern with and without project would not change. However, if the project would not be implemented the cultivated area would decrease by about .5% per annum, up to the 14th year, as a result of soil salinization. 2/ Tomatoes SOURCE: BRB/BRSJ Second Phase Loan 2100-ME, SAR. September 18, 1984  MEXICO SAJO R1O BAVOBAJO RIO SAN JUAN IRRI6ATION RENABILITATION PROJECT I PROJECT COWPLETION REPORT Tietd Estiostes RIstritt 25 Rtonvsha) 1978 1979 1980 1981 1982 1983 1984 19ss 1986 1987 19t8 1989 1990 1901-7132 with Project First Cyclo Cotton 1.5O 1.547 1.567 1.S87 1.s87 1.609 1.632 1.6ss 1.678 1.72 1.726 1.75o 1.7m7 1.8Jn Corn 2.350 2.437 2.437 2.517 2.s1? 2.L6s 2.61? 2.669 2.721 2.77S 2.829 2.88S 2.942 3.01n co Okra 5.000 s.100 5.150 s.200 5.200 5.232 5.26S s.24s 5.331 S.364 s.39s S.432 S.446 s.s50 Sorghum 2.600 2.787 2.83? 2.887 2.887 2.959 3.032 3.107 3.184 3.264 3.345 3.428 3.S13 3.6nn Second Cycte Beans 0.470 0.480 0.490 n.s00 0.500 o.s19 o.s39 o.ss9 0.589 0.603 0.626 0.65o 0.674 oM7M1 Coan 1.000 1.042 1.062 1.100 1.100 1.139 1.178 1.220 1.t63 1.307 1.3S3 1.400 1.449 1.500 Other I/ 4.700 4.800 4.900 5.000 5.000 5.190 S.388 s.593 S.7 6.028 6.25 6.496 6.743 7.non Without Project First Cycte Cotton 1.500 1.500 .s08 1.S16 1.524 1.S33 1.541 1.s49 1.SS7 1.556 1.s74 1.s83 1.591 1.600 Corn 2.350 2.350 2.370 2.390 2.410 2.430 2.451 2.472 2.493 2.S14 2.S35 ?.SS6 2.s?7 2.600 Okra 5.000 S.000 S.024 5.049 5.073 s.098 S.123 S.149 S.173 n .198 S.223 S.249 5.274 S.300 Sorghum 2.600 2.000 2.616 2.632 2.649 2.665 2.681 2.69M 2.715 2.732 2.749 2.766 ?7.s ?2.80 Second Cycte Beans 0.470 0.470 0.480 0.480 0.40 o.S16 o.s20 0.524 0.S5S .0.533 0.S37 0.S41 P.S45 M.Ms0 Corn 1.000 1.000 1.008 1.016 1.024 1.032 1.Q40 1.049 1.057 1.066 1.074 1.083 1.091 11.t I" Other 1 4.700 4.?00 4.800 4.800 4.900 5.048 s.096 5.14s 5s.194 5.244 s.294 5.345 s.396 5:5no M 1/ Tomatoes. August 31, 1981 - Source Phase tt, Loan 2100-NE estimates for Pbase I.  MEXICO SAJO RIO BRAVO/DA.O R10 SAN JUAN IRRG6AT10 EREIALITATtON PROECT I PROJECT COMPLETION REPORT Ylltd Estimate t4strict 26 (tons/ha) 1978 1979 1M90 1981 198 1983 1984 1s98 1986 10R7 1910 199 1990 101-7032 With Project First Cycte Cotton 1.450 t.466 1.486 1.500 1.s00 1.526 1.552 1.579 1.606 1.643 1.662 1.691 1.no 1.750 Corn 3.000 3.120 3.180 3.218 3.218 3.297 3.377 3.460 3.545 1.631 3.720 3.811 3.901 4.rnn Okra - -- - - - - - - - - - Sorgh6 ' 3.000 3.233 3.333 3.418 3.418 3.443 3.468 3.494 3.519 3.54S 3.571 3.59s 1.623 1.650 Second Cycte Beans 0.700 0.755 0.78s 0.83S 0.835 0.82 0.849 o.ss6 0.863 n.870 0.878 0.885 n.82 0.900 Corn 0.950 0.990 1.030 1.070 1.070 1.111 1.153 1.197 1.243 1.21 1.340 1.391 1.44S 1.5Sw et ,er 4.700 4.800 4.900 S.000 S.000 S.10 5.388 S.S93 5.807 6.n28 6.257 6.496 6.743 7.011 Without Project First Cycle Cotton 1.450 1.450 1.458 1.466 1.474 1.482 1.491 1.499 1.507 1.516 l.524 1.533 1.541 1.5"0 Corn 3.000 3.000 3.023 3.048 3.072 3.097 3.121 3.146 3.171 3.197 3.222 3.24* 3.771 1.0 Okra - - - - - - _ _ _ _ Sorghum 3.000 3.000 3.020 3.040 3.061 3.081 3.102 3.122 3.143 3.164 3.186 3.207 3.27 3.250 Second Cycle Beans 0.700 0.700 0.705 0.711 0.71? o.m o.7s O.74 .0.740 0.746 0.7S2 0.758 0.764 0.77n Corn 0 .O9 0.950 0.958 0.966 0.974 0.982 0.990 n.909 1.00 1.015 1.024 1.n33 1.041 1.0n5 Other I 4.700 4.70n 4.800 4.800 4.900 5.04 5.096 5.145 5.194 5.244 5.294 5.US 5.396 5.S0W 1/ Tomatoes. August 31, 1981 - Source Phase 11, Loan 2100-WE esti"tes for Phase t.  uBnco SAM0 RI0 BRAVO/IAJD RIO SUN JUAN liRIGATION MEIU3LITATICN PROJECT I PROJECT COXMUlETIOI REPORT Incremental Value of Productiog, Investmet aad Operating and Haintesance Costs 1981 1982 1983 1984 198$ 1986 1981 1988 1989 1990 1991 1992 1993 1994-2030 With Project Net Value Distriet 25 3,837 4,047 3,733 4,388 3,301 6,.22 8,200 8,896 9,1S1 9,958 10,2S1 10.251 10,2S1 10,251 O Net Value Dltrict 26 2,005 4,651 1,640 1,981 2.502 3,160 3,638 3,851 3,924 4,176 4,241 4,241 4,241 4,241 cross Net Value 5,843 8,697 5,373 6,368 7,802 9,882 11,837 12,747 13,075 14,135 14,492 14,492 14,492 14,4S2 lithout Project Net Value District 25 2,760 2,823 2,871 2,413 1,986 1,586 1,214 861 543 24S -39 -39 -39 -39 Net Value Distict 26 1,527 1,359 1,592 1,627 1,699 1,780 1,83 1,883 1,83 1,883 1,883 1,883 1,883 1.883 Cross met Value 4,287 4,381 4,463 4,040 3,685 3,366 3,097 2,750 2,426 2,128 1,845 1.845 1.84S 1,845 Incre eotal Value 1,556 4,316 910 2,328 4,117 6,516 8,740 9,997 10,648 12,007 12,648 12,648 12,648 12,648 INVES51N COSTS 6,222 Loan 1111-WI 32,S94 3,342 1,610 Loan 2100-HE 590 1,192 1,000 3,137 3,479 3,500 2,090 Third Time Slice 5,494 7,29S 9,003 9,003 S.402 OPERATING & NAINTIM!NAC COSTS 1,576 1,576 2,626 2,626 2,626 2,626 2.626 2,626 2,626 2,626 2,626 MEt EEPIT/COST SEM -24,816 384 -1,892 -248 -S96 412 2,614 5,281 2,528 2,086 1,019 1,019 4,620 10,022 SOURCE: Second Pbase Project Supervisioa Reviev, April 1984. 'I  Z. 4 10.~~P* ~ A) II SAN'it -~~~~~ ~~~~~> ~~~~PROJECT. ~~~~N _ i :~~~~~~~ t i~~~~~~~~~~~~~~~~~~~~~~~~~~~f~ boD uS @R yCT f~~~~~~~~~~~" 4 / I v~~~~~~~~~~~~~~~~~~~~d - k ' e' -., Z I '- o MEXICO , j -25 l~~~~~~~I Nuevo Cludod Guerrer A/0 Ccudo Ciudf;