Mali - Office du Niger Consolidation Project

Document of The World Bank FOR OFFICIAL USE ONLY GG~14 I o6 - h '- c^A- A -Sr- M4L1 Report No. 6522-MLI STAFF APPRAISAL REPORT REPUBLIC OF MALI OFFICE DU NIGER CONSOLIDATION PROJECT February, 1988 Agriculture Division Sahelian Departrent Africa Region Africa Region This document has a resticted distribution and may be uwed by reipients only in the performance of their official duties. its contents may not otherse be d_osed without WodiI Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - CFA Franc (CFAF) US$1.0 - CFAF 314 CM? 1 million * US$3,185 US$1.0 - SDR 0.7778 1 SDR - US$1.28563 WEIGHTS AND MEASURES 1 Hectare (ha) - 10,000 m2 1 Square Kilometer (km) = 100 ha 1 Metric Ton (mt) - 1,000 kg ABBREVIATIONS AND ACRONYMS BEP - Bureau des Entreprises Publiques (Public Enterprise Coordination Office) BCEAO - Banque Centrale des Etats d'Afrique de l'Ouest (Central Bank for West African Monetary Union) BDM - Banque de Developpement du Mali (Development Bank of Mali) BNDA - Banque Nationale de Developpement Agricole (National Development BAnk for Agriculture) CAA - Caisse Autonome d'Amortissement (Debt Amortization Office) CFA - Centre de Formation Agricole (Agricultural Training Center of Office du Niger) CCCE - Caisse Centrale de Cooperation Economique (French Aid Loan Agency) DIGIS - Directoraat Generaal Voor Internationale Samenwerking (Dutch Aid Agency in the Ministry of Foreign Affairs) FAC - Fonds d'Aide et de Cooperation (French Aid Agency) IER - Institut d'Economie Rurale (Agricultural Research Institute) KfW - Kreditanstalt far Wiederaufbau (Federal Republic of Germany Loan Agency) ODR - OpOrations de Developpement Rural (Regional/Commodity Development Agencies) ON - Office du Niger OPAM - Office de Commercialisation des Produits Agricoles du Mali (National Cereali Marketing Board) ORSP - Office de R4gulation et de Stabilisation des Prix (Price Stabilization Fund) PRMC - Programme de Restructuration des Marches C6rdaliers (Food Aid donors supported program to restructure cereals sub-sector) SUKALA - Sugar Company of Kala (Company Sucribre du Kala Superieur) WAMU - West African Monetary Union FISCAL YEAR May 1 - April 30  FOR CFFICI4L LU ONY REPUBLIC OF MALI OFFIZE DU NIGER CONSOLIDATION PROJECT TABLE OF CONTENTS Page DOCUMENTS CONTAIkIED IN THE PROJECT FILE ............................... iii CREDIT AND PROJECT SUMMARY ............................. .............. vi I. BACXGROUND#*.*&a# ..* .............. 1 A. Introduction .................................... 1 B. The :tural Sector ..*........... ...... 1 II. TEl IRRIGATION SUBSECTOR................... 2 A. Resources and Prospects for Irrigation Development....... 2 B. The Office du Nigeri.......g...... .... 5 C. Experience with Past Lending............................. 6 III. THE PROJECT*~# .....o...... ... ... .*o.................. 7 A. Objectives, Design, Justification and General Description 7 B. The Project'Area ......................................... 8 C. Detailed Features.................................... . 8 D. Project Implementation ........................................ . 18 E. Monitoring, Planning and Evaluation ...................... 20 F. Environmental Impact ..... .......................... ...... 20 G. Safety of Dams .............................................. 21 H. International Water Rights .............................. 21 I. Cost Estimates and Financing ............................ 21 J. Procurement and Disbursements ............................ 25 K. Accounts and Audit .......... 27 L. Markets and Prices ....................................... 28 M. Cost Recovery and Recurrent Costs ........................ 29 IV. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS ................. 31 This report is based on the findings of an IDA appraisal mission which visited Mali in June/July 1986. The mission consisted of D. Lallement, Mission Leader/Economist, Messrs. A. Seznec, Agronomist, H. Plusquellec (part-time), Irrigation Advisor, L.T. Mpoy-Kamulayi (part-time), Lawyer, IDA, and J. Marie Fleury, Financial Analyst, C. Maguerez, Management and Training, J.P. Chirouze, Civil Engineer, G. Manuellan, Irrigation Engineer, and D. Murphy, Operations Assistant, Consultants. The report was written and processed by D. Lallement. Data processing assistance and secretarial support were given by L. Tran, M.C. Tsang and J. Nickerson. This document has a restrcted dtrbutoa and may be used by recipients only in the perfonnace of their offcial dutles. Its contents may not otherwise be dbclosed without World BDank authoriaon.  - ii- ANNEXES 2-1 Irrigation Subsector: Estimates of Land Resources Suitable for Irrigation 2-2 Background on Office du Niger 3-1 Schedules of Divestiture of ON's Activities 3-2 ON's Pricing Policy 3-3 ON Indicative Organizational Charts 3-4 ON's Projected Financial Restructuring 3-5 ON's Summary Investment Plan 3-6 Project Implementation 3-7 Schejule of Technical Assistance 3-8 Project Costs by Summary Accounts, and Project Financing 3-9 Preliminary Financing Plan 3-10 Disbursement Schedule and Profile 3-11 Farm Budgets 3-12 Economic Analysis MAP IBRD No. 20622: Mali Office du Niger Consolidation Project  i ii - MALI OP'TICE DU NIGER CONSOLIDATION PR JECT DOCUHCNTS CONTAINED IN THE PROJECT FILE A. Rrnorts Related to the Sector 1. Options and Investment Priorities in Irrigation Developments The Case of Mali. SCETAGRI/GERSAR, June 1985. 3 Vols. 2. Hopti Area Development Project. Staff Appraisal Report No. 5042-MLI 3. Office du Niger Technical Assistance Project Project Completion Report, dated June 21, 1982, Audit Report 4414. 4. Cereal Market Policy Reform in Mali. Club du Sahel, July 1986 S. Reports Related to the Proiect 1. ON - Esquisse du plan directeur hydraulique. SOGREAH, septembre 1981 2. ON - Rehabilitation des casiers Blanc, N'Debougou et Siengo Etude de factibilite (17,000 ha). SOGREAH, janvier 1982 3. ON - Regulateur du canal du Sahel en point A - R4gulateur du point B - porte de garde du canal Graber-Nord; Expertise des ouvrages. SOGREAH, avril '982 4. ON - Projet de rehabilitation de l'infrastructure hydraulique de l'Office du Niger: Zone dependant du Canal du Sahel. SOGREAH, juillet 1983 5. ON - Projet de rdhabilitation de l'infrastructure hydraulique de l'Office du Niger: Zone du Canal principal GrUber-Nord. SOGREAB, octobre 1983 6. ON - Reseaux hydrauliques des p6rimbtres irrigues de l'Office du Niger. Travaux d'entretien urgents. SOGREAH, 1983 et 1984 7. Barrage de Markala. Avant Projet Detaill6 pour la RAparation et l'Entretien du Barrage. SOGREAH, Janvier 1983 S. ON - Assistance technique pour la gestion de l'eau. Octobre 1982 - septembre 1985. Compte rendu dactivitd. SOGREAH, octobre 1985. 9. ON - Projet GEAU - Gestion de l'eau Tome III - Expdrimentation Agricole  - iv - Universit6 Agricole de Wageningen, juin 1984 10. ON - Projet GEAU - Gestion de 1Veau Tome I - Rapport principal Universit# Agricole de Wageningen, octobre 1984 11. ON - Projet d'lintensification de la riziculture dans le secteur du Retail. CCCI 1985 12. ON - Requete de financement au FED. ON, juin 1985 13. ON - Projet de r4habilitation de la zone de Nd6bougou. Etude de Factibilite - AGRAR and YD%RO'ECHNIK, 1985 14. ON - Plan d'opdration du projet ARPON. ON, mal 1985 15. Rapports du Cabinet DIARRA sur l'O.N. Mission d'Assistance - Rapport de Syntheso Analyse des comptes de tresorerie au 30 avril 1984 Analyse des comptes clients au 30 avril 1984 - sArie A Laalyse du Compte Etat Bilan au 30 avril 1985 16. Evaluation de la situariton de tresorerie de mai 1985 & avril 1987. SEDES, 1985 17. Projet de consolidation de l'Office du Niger. Rapport de pr6paration. D. Lallement et A. Arafa, novembre 1983 18. Office du Niger - Prospects for Agricultural Development. Tom Bredero, June 1985 19. Etude de restructuration financibre. Alain Teyssoniare de Gramont, I.C. Techno Transfer, juillet 1985 20. Evaluation et proposition de d6veloppement des associations villageoises b l'Office du Niger. Mamadou Cisse. 21. Mission de Pr4-dvaluation du Projet de Consolidation Aide-M4moire. D. Lallement, fevrier 1986. C. Workina Pacers 1. Etude de rdorganisation des structures de gestion, d'exploitation et de formation. Charles Maguerez, consultant, Juillet 1985/Ao6t 1986. 2. Evaluation de la Consolidation de la Regie d'Entretien. Jean-Paul Chii:ouze, Consultant, juillet/aott 1986.  - V - 3. Evaluation Qes Travaux Urgents sur le R4seau Hydraulique. J.P. Chirouze, G. Manuellan, Consultants, juillet/aott 1986. 4. Barrage de Markala - PAparations et Entretien. Rapport d'Evaluation. Pernando Posse Hernandez, Consultant, Juillet 1985; note de M. Porrier, SOGREAH, Ao6t 1986. 5. Eva'%ation des Travaux de Udhabilitation des Canaux Gru'aer-Nord et Siengo, et de rdam6nagement des phrimbtres de Siengo (3076 Ha), G. Manuellan, Consultant, September 1986 6. Prolrauue de Travaux Ruraux. A. Sezuec, Septembre 1986 7. Proposition d'am6lioration de la Gestion de l'eau. G. Manuellan, Consuitant, H. Plusquellec (IDA), Septembre 1986 '. Proposition d'amelioration de la production agricole et de la recherche d'accompagnement a l'Office du Niger. Alain Seznec, Septembre 1986. 9. Evaluation du developpement de l'elevage sur les zones de l'Office du Niger. Jean-Frangois Letang, Consultant, AoUt 1985 10. Analyse Financibre. J.M. Fleury, Consultant, D. Lallement Z, septembre/octobre 1986 11. Agricultural Credit, D. Lallement, November 1986. 12. Terms of Refe-ence for the Studies, D. Lallement, November 1986 13. Detailed Financing Plan, D. Lallement, L. Tran, November 1986 14. Detailed Project Costs, D. Lallement, L. Tran, November 1986  - vi - REPUBLIC OF MALI OFFICE DU NIGER CONSOLIDATION PRO.CT CREDIT MAD PROJECT SUMMARY Borrowers Government of Mali nfleficiariost Office du Niger (ON), National Agricultural Credit Bank (BNDA), farmers. Credit Amounts SDR 38.1 million of which: IDA: SDR 31.0 million (US$39.8 million equivalent) SFAs SDR 7.1 m Ullion (US$9 million equivalent) Terms: Standard IDA terms Standard SPA terms Flow of Credit Proceeds: Borrower to Office du Niger (US$21.0 million): 3Z interest rate, 10 years of grace on principal, 30 year maturity; and US$24.8 million as a grant. Borrower to BNDA (US$3.0 million): 31 interest rate, five years of grace on principal, 15-year maturity BNDA to farmers: Short-terms 101 interest rate, 12-month maturity Medium-term: 5Z downpayment, 91 interest rate, 1-year grace on principal, 5-year maturity BNDA to Village Associations: Short-terms 9? interest rate, 18-month maturity Medium-terms 52 downpayment, 81 interest rate, 1-year grace on principal, 5-year maturity. Proiect Descriptions The Project is conceived as the first phase of a long-term program aimed at rehabilitating the Office du Niger ana at increasing agricultural production and productivity in the Inner Niger Delta region. In order to ensure the financial and economic viability of the rehabilitation investments, the project calls Lor continuing a series of policy reform including the gradual divestiture of some of ON's activities, liberalization of trade and introduction of market-determined pricing for paddy and rice, increased security of farmers' land tenure rights, and provision of credit to farmers and traders. The reorganization of the ON, together with the recruitment of consultants and technical assistants, would  - vii - help ON develop in-house managerial and technical competence and improve its delivery of services to farmers. Another important feature of the project would be ONf's financial restructuring and the tightening of its financial management, which would enable the Offies to break even, i.e., to eliminate its financial deficit, in about three years. The project's main investments will consist oft the consolidation of the maintenance unit, long overdue repairs on the irrigation network, repairs and maintenance of the diversion dam, the rehabilitation of 3,100 ha, and labor intensive rural works on 3,500 ha. These investments will be complemented by a program to improve applied research, resource management, training and extension. Finally, the project will finance studies including feasibility studies for the subsequent phases of the rehabilitation program. Estimated Costs: (Net of identifiable taxes and duties) Local Forsign Total ------- US$ million -------- 1. Financial Restructuring 3.2 0.5 3.7 2. Line of Credit to BNDA 1.4 0.9 2.3 3. Preparatory tasks - 1.7 1.7 4. Consultant Services and Technical Assistance 0.2 4.1 4.3 5. Investments: Consolidation of maintenance unit 0.7 8.7 9.4 Urgent repairs 0.6 2.3 2.9 Markala Dam repair and maintenance 0.3 9.0 9.3 Rehab. of Gruber Nord/Siengo canals 1.8 9.9 11.7 -hab. of Siengo perimeter 1.3 10.2 11.5 Rural works 3.7 0.4 4.1 6. Applied Research, improved resource management, training and extension 0.1 2.3 2.4 7. Studies and Training 0.2 0.3 0.5 Total Base Costs 13.5 50.3 538 Physical Contingencies 1.2 6.9 8.1 Price Contingencies 4.3 7.4 11.7 Total Project Costs a/ 19.0 64.6 83.6 a/ Includes repayment of US$ 1.5 million PPF advance.  - t1jj - Local or aln Tot&l -------- us$ 8illion ---^---- 1. IDA 3.7 36.1 39.8 2. SIA 1.9 7.1 9.0 3. SJF/I. 1.3 17.7 19.0 4. FAC - 2.0 2.e s. ccci a ~~~~~~~~~0.4 0.4 S. CCCt _ . .3 6. DI