Nepal - Babai Irrigation Engineering Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7669 PROJECT COMPLETION REPORT NEPAL BABAI IRRIGATION ENGINEERING PROJECT (CREDIT 1093-NEP) MARCH 22, 1988 Agriculture Operations Division Country Department 1 Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization.  WEIGHTS AND MEASURE EOUIVALENTS m - meter (3.28 feet) km - kilometer (0.62 miles) ha - hectare (2.47 acres) liter - 61.02 cubic inches M - Million ABBREVIATIONS AND ACRONYMS DCA - Development Credit Agreement DIHM - Department of Irrigation, Hydrology and Meteorology (recently renamed the Department of Irrigation) DOA - Department of Agriculture DOI - Department of Irrigation GOI - Government of India HMGN - His Majesty's Government of Nepal SDR - Special Drawing Rights NEPALESE FISCAL YEAR July 16 - July 15  FM onUICL uU ONLY TIE WORtLO SANK Washnton. DC 20433 U.S.A. Ouce ti Os..tacC.n.I Opeatae IfAMSNmy March 22, 1989 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Nepal Babal Irritation Enaineerint Project (Credit 1093-NEP) Attached, for information, is a copy of a report entitled 'Project Completion Report on Nepal Babai Irrigation Engineering Project (Credit 1093-NEP)" prepared by the Asia Regional Office. Fu1l evaluation of this project hps not been made by the Operations Evaluation Department. Attachment This document has a restricted ditribution and may be ued by recipients only in the performnce of their official duties. Its contents may not otherwis be discloed without World Bank authorization.  FOR OFFICIAL USE ONLY HEPAL BBAlU IRRIGATION ENGINEKRING YROJECT ITED 1093--EP) PROJECT COMPLETION REPORT Table of Contents Pagfe No. Preface.i Basic Sheet ......................................................... ii Evaluation Summary ................................................. iii I. INTRODUCTION Background ................................................... 1 l Project Identificatior., Preparation and Appraisal .............. 2 II. THE PROJECT AT APPRAISAL The Babai Project Area ......................................... 3 Project Obl>ctives ............................................. 4 Project Description ............................................ 4 III. PROJECT IMPLEMENTATION General ................................ ....................... 4 Engineering Design ............................................. 4 Designs of Diversion Weir and Kohalpur-Babai Highway ...........5 Survey and Design for Irrigation and Drainage Systems ..........6 River Hydrology ................................................ 7 Topographic Mapping ............................................ 7 Semi-detailed Soil Survey ...................................... 8 Socioeconomic Benchmark Survey ................................. 9 Procurement of Engineering Equipment ........................... 9 Construction of Camps and Quarters ............................. 9 Prequalification of Civil Works Contract ....................... 9 Project Cost .................................................. 10 Disbursement .................................................. 11 Compliance with Covenants ..................................... 11 Processing of Follow-on Babai Irrigation Project .............. 11 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.  IV. INSTIST E .............................. 12 V. AM^ PIZ QW"fi=Nc ...................................... 13 VI. CONCLUSIONS AND LUSONS LEARNED.......................13 LIT FTABLES Table 1: Equipment Procured under the Credit Table 2: Actual and Estimated Schedule of Disbursements Annex 1: Compliance with Credit Conditions  MRAL IkAIA TUIRT1:OTN DIGINKEUIU ULT (CREDIT 1093-NKP) PROJECT COMPLETION REPORT Preface This is a project completion report (PCR) for the Babai Irrigation Engineering Project (Credit 1093-NEP) in Nepal for which a _redit of US$3.5 million was extended to His Majesty's Government of Nepal in April 1981. The credit closing date was extended three tiaes for two years and three months to March 31, 1986. The undisbursed balance of the Credit of US$0.03 million equivalent was cancelled. Information sources used for the PCR include the President's Report (No. P-2926-NEP), supervision reports and correspondence files. The PCR was prepared by Agriculture Division, Asia Technical Department staff. A specific field trip in connection with the PCR was r.ot made. The draft was sent to the Borrower on December 16, 1988 for comments; however, no comments were zeceived.  - It - PR8JECT cOIwIZTION HL903? NEPAL: DABT IhICIATbON GCINEMING PROJLCT (CREDIT 1093-NE?) RASIC DATA SEET m PROJECT DATA AppraiTl Actual or Actual * I of exaectttion cutrret estimate appDr il estimst* 0Lc 3 DJC dt 01 nt$S- in 35 1 Daiiefe 0o r *D/ov1 01/06/ 1- Date abrica co I o ntc co Dlatet 06130183 Proportio then comp.eted ) Closing date 12/311S3 036317 6 _ Economic rate of return (x) NA NA Financial rate of return (N) KA NA Institutional performance S aiefectorn Agronoadc performance NA Nuber of direct beneficiaries NA CUMULATIVE DISBUi.SEMENTS FY81 Fn82 FY83 nY84 FY85 n 86 rY67 Appraisal estimte (USS dillion) 0.4 1. 3.0 3.5 - Actu.l (US$ million) - 1.5 2.3 2.8 2.8 3.0 3.47 Actual as I of estimate - 100 77 80 SO 86 Wn Date of final disburseeent 11/25/86 Principal repaid to (no.ld/yr.) (US$ sillion) ACT 7e 7Q 80 fil 82 83 84 85 86 87 88 TOTAI PREAPPRAISAJL 7.8 7.8 F APPRAISAL 3.9 11.9 .2 16.0 F ONEGOTIATION 2.2 2.2 SUPEEVISIoN 1.2 5.0 3.8 2.7 1.3 .2 2.0 16.1 S ~oTHeR ,7 .18 TOTAL - 117 10 p 0 41 2 7 _ i3 2 . 2-0 42 9 KISSION DATA Date No. of Man-days Specializations Performance Type of MissionD (eo/yr) persons in field represented /b rating /c Trend It problems /e Identification 1977 Preparation 1977/78 Apprais&l 01/80 Supervirion 1 02/81 1 1 1 2 Spe.rvision 2 06/81 2 2 21 1 1 N Supervision -3- 12/81 -I 4-- 3 1 1 Supervision It 11/82 3 2EC 1 2 N Supervision 5 11/4 1- 2 i I I TotWl 8 14 OTHER PROJECT DATA Borrower HRi Majesty's Government of Ne pal (HMN) Ezecutia ncv De rtment of Irri ation. drlo and Meteorolo DuDE Fiscal year of borrower July 16 - July 15 ame of currency (abbreviation) Rupees (NRa) APPraisal vear averaze 1980 US$1.00 - NiA 12.0 Intervening Years averaes 1981-85 US$1.00 - NRJ 13.2 Completion year average 196 U S$ 1.00 - NRJ 14.3 /a Undisbureed balance of US$0.03 miI.. W& * aa eeled an 11V 2566. 7 Kb E e *ngineer; C - economist. i77 1 - problem-free or minor problem ; 2 - moderate problesw; and 3 - major probleme. /d 1 - improving; 2 - stationary; 3 - deteriorating. 7e_ F - financial; N - managerial; T - technical; P - political; and 0 - other. f Disbursed axounts shown in US Dollar equivalents are valued at the exchange rate applicable on the date of this statement.  - iil - BABAI IRRIGATION NINEERING PROJECT PROJECT CGO#PITION REPORT Evaluation_ SA ar The Babai Irrigation Engineering Project assisted His Majesty's Government of Nepal in the preparation of detailed designs and tender documents for irrigation and associated infrastructure covering a net area of 13,500 ha for the proposed Babai Irrigation project, and for a stretch of about 35 km length of the East-West Highway. The project was appraised by IDA in January 1980. Project cost was estimated at US$3.55 million equivalent. The IDA credit approved for the project was US$3.50 million equivalent. The project became effective on June 5, 1981. The expected project completion date was June 30, 1983, and the Credit closing date of December 31, 1983 at appraisal was extended three times to March 31, 1986. Progress on most project components was satisfactory. All appraisal targets were achieved bv October 1982, except for evaluation for construction prequalification and ensuing processes. The evaluation was not made because uncertainty prevailed as to whether the proposed Babai segment of the East- West Highway construction was to be included under the contract, concerns over the priority and relatively high costs of the project, and the concern that the use of the Babai water for the proposed project would adversely affect the established requirements of water for downstream users; data available was not adequate to refute the latter. Further implementation of the project was halted at this stage. Due to the suspension of project implementation, tendering for follow-on project construction as well as other start-up activities called for under the Babai Engineering Project were suspended. As these activities were to be financed from the Credit, the Llosing date was extended three times in anticipation that the above issues could be resolved. Actual disbursement amounted to SDR 2.78 million and the undisbursed balance uf SDR 0.02 million was cancelled on Novenber 25, 1986. In conclusion, the project achieved most of its technical targets. However, implementation of the proposed follow-on Babai Irrigation Project was postponed indefinitely due mainly to water rights issue between Nepal and India. The primary lesson learned is that the international water rights issue must be faced early by all concerned -- the Borrower, the Bank and the consultants -- and that a strategy should be agreed for dealing with the issue from the beginning of preparation.  UZAL IAlA IRlRIGATION ENGINES&ING PROJECT PROJECT COMPLETION REPORT I. INTRODUCTION Background 1.1 Nepal is a landlocked country situated between China and India and occupying a total area of 147,000 sq. Im. Its population in 1988 totals about 18 million, of whom 94% live in rural areas. Population growth between 1970 and 1986 has averaged 2.6% a year. The country can be divided into three broad ecological zones--the Mountains, the Hills and the Terai. The Nepal Terai plain, part of the Gangetic basin, accounts for only 16% of the total area but 90% of the country's cultivable land and is the center of agricultural production in the country. 1.2 Agriculture, largely rainfed, dominates the country's economy. In 1986-87, it accounted for 59% of GDP, contributed about 70% of total export earnings, and provided employment to 91% of the working population. Increasing pressure on land due to rapid population growth has led to a situation where self-sufficiency in food production is dependent on better than average rainfall. During the past decade, the production of foodgrains has grown at only 1.5% per year whereas the production of cash crops has grown at 5% per year. However, due to the large proportion of grain production in the total (94% of the area sown), the overall annual rate of production growth was only 1.6%. Current targets for agricultural production call for an annual growth rate of about 5%. However, this goal appears to be difficult to achieve, especially compared to historical growth rates. For growth in agricultural production to keep pace with population, an estimated additional 35,000 ha of irrigation needs to be developed each year. 1.3 Nepal has abundant surface and groundwater irrigation resc-urces. About 80% of Nepal's potential irrigated area is on the Terai. It is esti- mated that river discharges average about 150 billion cubic meter per year. However, only about 1.3 M ha of land are suitably located for command by gravity, of which about 0.4 H ha is already irrigated. Exploitable ground- water resources could irrigate about 0.6 M ha, of which 0.1 M ha has so far been developed. The Terai is traversed by eight major perennial rivers, the Mahakali, Karnali, Babai, Rapti, Nare.yani, Bagmati, Kosi and Kankai. All are tributaries to the Ganges. The many smaller stresms also crossing the Terai are largely annual, but are nevertheless developed, in whole or in part, for irrigation, usually through farmer-constructed schemes.  1.4 The development of surface water lrrlgatlon was initiated centuries ago by farmers who built temporary weirs to direct river flown into ungated Lntakes. Most of the schems were in the Hl11s until the 1920s, when development started to expand into the Terai. Many such schemeR are in operation and some have been improved through government assLitance. In total, farmer managed irrigation schemes account for about 70% of the total irrigated area in Nepal; the remaLning 30% comptise public lrrigatlon schemes developed mainly with external assistance starting in the early 1950's. The Agricultural Development Bank of Nepal (ADBN) has supported private sector irrigation with loans to individuals for minor lrrigation and for shallow tubewell development. ADBN has also provided a few loans to farmer groups for the rehabilit2tion or improvement of small surface irrigation schemes. 1.5 The Bank's first involvement with irrigation in Nepal was the Birganj Irrigation project (Narayani I) (Cr. 373-NEP, US$6.0 H, 1973) which had both surface and groundwater components. Development has continued with the Bhairawa-Lumbini Groundwiater project (Cr. 654-NEP, US$9.0 M, 1976) now being followed by Stage II (Cr. 1316-NEP, US$16.0 M, 1983); Narayani Zone Stage II (Cr. 856-NEP, US$14.0 M, 1978) now being followed by Stage III (Cr. 1715-NEP, US$24.5 M, 1986); Sunsari-Morang on the Kosi (Cr. 812-NEP, US$30.0 M, 1978), also being followed by Stage II (Cr. 1814-NEP, US$40.0 M, 1987); and the Mahakali I project (Cr. 1055-NEP, US$16.0 M, 1978) in the far western region, now about to enter Stage II. Several other IDA-assisted projects include small-scale irrigation components. These are: Second Rural Development Project (Cr. 939-NEP, US$11.0 M, 1975); Third Rural Development Project (Cr. 1727-NEP, US$19.1 M, 1986) and Hill Food Production Project (Cr. llOl-NEP, US$12.8 M, 1981). The main objective of Bank involvement in irrigation in the Terai continues to be better water distribution to the farm, through technical improvements and by more effective organization of water users. Project Identification. Preoaration and ADpraisal 1.6 The irrigation development potential of the Babai area was first explored in 1975 by an IDA identification mission. Based on the findings of that mission, UNDP financed preparation of development plans for the area for which the Bank was appointed Executing Agency. Reconnaissance studies were carried out by interr.ational consultants in 1977. The reconnaissance studies were followed by a feasibility study, which thp consultants completed in November 1978. Subsequently, HMGN redefined the project area in order to minimize forest clearing under the project, and engaged the same consulting firm to undertake additional studies. These complementary studies, which were issued in June, 1980, were fin anced with funds from Technical Assistance Credit No. 659-NEP. The feasibility and subsequent studies looked into several options for reliable and increased water supply for the project area and possible future stages, and concluded that a run-of-river diversion on the Babai to provide irrigation to about 13,500 ha on the left bank of the Babai  -3- river would be technically and economically viable. 1 However, detailed economic analysis indicated a rate of return of only about 14%. 1.7 At the request of HMGN, a Bank mission visited Nepal in January 1980 to plan the details of the project. In August 1980, the Bank decided that the project would proceed in two stages. First, preparation of designs and tender documents, and second, actual construction. Negotiations iere held in Washington, D.C., in December 1980 for IDA credit of SDR 2.8 million (US$3.50 million equivalent) to finance the preparation of detailed designs and tender documents for the Babai Irrigation Project (13,500 ha net) and for the stretch of the East-West Highway between Kohalpur and the Babai river. The Credit was approved by the Board on January 6, 1981, signed on March 26, 1981, and became effective on June 5, 1981. II. THE PROJECT AT APPRAISAL The Babai Project Area 2.1 The Babai project area of 13,500 ha net, is located in the mid- Western Region of Nepal, in the Bardia district of the Bheri zone. It has a subtropical monsoon climate with distinct wet and dry seasons. Annual rainfall averages ahout 1,500 mm. There are about 5,300 farm families with average farm size of about 3.8 ha. Distribution of land is skewed: about 72% of farms are less than 2.7 ha in size and cover about 17% of the area, while about 15% of farms are larger than 6.8 ha in size and cover about 72% of the F area. However, about 90% of land is cultivated by owner-operators. Crops grown during the wet season are paddy and maize and wheat, pulses and oilseeds during the dry season. Cropping intensity at appraisal was estimated at 122%. 2.2 The project area has been partly irrigated for many years by farmer- managed schemes, using primitive diversion structures requiring frequent replacement. In times past, maintenance or reconstruction of diversions was organized oin a semi-feudal basis by the few very large landholders who own most of the area. Since enforcement of the Lands Act of 1964, much of the area has been distributed to previously landless small farmers and settlers, and maintenance of the diversions has been continued communally. In the design of the project, the main emphasis was to provide more secure irrigation diversion and distribution, thereby providing a basis for intensified agricultural production, and to extend the area served through more efficient use of water. Project Objectives 2.3 The purpose of the Babai Irrigation Engineering Project was to prepare detailed designs and tender documents for the Babai Irrigation Project and for a nearby stretch of the East-West Highway. 1/ In addition to the run-of-river diversion weir, the options considered were groundwater, seasonal storage, and transbasin diversion from the Bheri to Babai River. All except the weir were at best only marginally viable.  -4- Project Description 2.4 The project included the following components: (a) preparation of detailed designs, specification, and contract document for a permanent diversion weir across the Babai; principal canals and drainage channels to cover a net area of 13,500 ha; and a 35 km length of the East-West Highway; (b) preparation of aerial photography and topographical mapping; (c) semi-detailed soil survey and socioeconomic benchmark survey; (d) procurement of engineering equipment; (e) construction of camps and quarters; and (f) assistance in prequalifying civil works contractors and ev".luation of tenders. III. PROJECT IMPLEMENTATION General 3.1 The implementation of the project was to take two years (June 1981-June 1983). The project made a good start by HMGN mobilizing resources and staff for the project implementation. HMIGN deputed six to nine engineers to support the consultants during the implementation period. Progress on most project components was satisfactory and followed closely the agreed timetable. All appraisal targets were met by October 1982, except for evaluation for construction prequalification and ensuing processes. Engineering Design 3.2 DIHM was to recruit a consulting firm to assist in conducting the surveys and preparing the detailed design and tender documents. The services of engineering consultants were to comprise of approximately 150 man-months of professional services. On September 21, 1980, HMGN sent invitation letters to six international consulting firms to submit technical and firancial proposals for preparation of detailed designs and tender documents. On the closing date, November 14, 1980, all proposals had been received. However, evaluation of the proposals by the Department of Irrigation, Hvdrology and Meteorology  - 5 - (DIHM) 2J was considerably delayed. DIHM organized a special committee to review the proposals. On March 17, 1981, HMGN informed IDA of its decision to recruit the selected consultants. 3.3 In June 1981, the project consultant was mobilized to prepare the detailed designs and tender documents for the 13,500 ha (net) project area and to assist DIHM with the prequalification of contractors. The inception and preli-.inary design report was submitted in August 1981, and reviewed in December 1981 at a tripartite meeting held among DIHM, the project consultants and IDA. The meeting discussed the project areas proposed to be developed, alternative canals and road alignment, design criteria and standards of the main components and a number of items on which decisions or advice from DIHM were required, to enable the consultant to follow the agreed timetable. 3.4 The consultants continued field work until April 1982 and detailed design of the project began in May 1982. The results of the soils survey, hydrology and sedimentation reports were submitted in August 1982. The final detailed design report, the engineer's cost estimate and the tender documents were all submitted and approved by HMGN and IDA in October 1983. This included construction drawings and quantities for the weir and associated headworks, the irrigation distribution system down to outlets for tertiary units, the drainage system, and the public and service road network in the project area. The bill of quantities for the tertiary units was based on preliminary layouts and detailed designs for four typical areas of about 100 ha each. The final design work for the tertiary units, inclusive of field channel design and any other redesign work, was to be undertaken during project implementation. The tertiary unit survey and design work was to be carried out by DIHM staff seconded to the consultants or through the engagement of a local consulting firm while the overall responsibility for the preparation of the final design was to be with the consulting firm as the consultant. This design work was to be carried out in harmony with the contractor's construction schedule. Designs of Diversion Weir and Kohalpur-Babai Highway 3.5 The diversion structure, to be located on the Babai river about 5 km upstream of Bardagaha. Design comprised of a concrete weir with scour Eluices on the left bank and the canal intake located on the outside of a curved sluiceway. The weir was designed to irrigate a potential 40,000 ha command area; however, the presently proposed project included only 13,500 ha because the additional water required for the larger area would necessitate a costly transbasin diversion which was not considered attractive at the time. The weir supported a road bridge which was to allow the East-West Highway to cross the Babai River. Since the East-West Highway was to cross the Babai River on the proposed weir and about 35 km (out of 46 km) of the Kohalpur-Babai Highway portion was to run alongside the Babai main canal within a confined easement 2/ Renamed the Department of Irrigation (DOI) in December, 1987.  -6 of 100 to 150 m, both works were to be implemented simultaneously by one contractor. However, as the funding for the construction of the highway portion was to be provided for under IDA's Highway III Project, with construction supervision from the Roads Department, the contract documents for the combined irrigation/highway package were divided into two separate sets of documents without interdependence. Tender documents were prepared to outline the arrangements for the implementation of the Babai Irrigation works and the Kohalpur-Babai highway portion by the same contractor under separate sub- contracts. The highway portion was dropped from IDA assistance, and the Government of India is currently assisting HMGN in its implementation. Survey and Design for Irrigation and Drainage Systems 3.6 Site surveys for cross drainage works on main and branch canals, public road crossing of Mand River, East-West Highway alignment were completed in March 1982, as envisaged during appraisal. Final figures for survey works are given below: Appraisal Actual Item Unit Target Achievement Main Canal km 29 29 Branch Canal km 15 15 Leferal Canal km 171 171 Drain km 224 224 East-West Highway km 46 46 Public Roads km 26 26 Site Survey no. 13 13 3.7 With the completion of field work, the project consultants' main emphasis was to complete the design work in their main office. The design of the irrigation layouts began with the task of identifying the areas of upland and lowland soils. From the soil survey and the aerial photographs, 1:5,000 countour maps were prepared. The secondary canal and drain lines set out in the field were drawn up, and alignments were reviewed in light of contour mapping. The capacity of the tertiary canal was set at 60 liters per second. The tertiary unit areas were adjusted to suit this flow depending on the percentage of upland soils within each unit. Layout designs were completed in August 1982. The net areas within the boundary were found to be as follows:  - 7 - Layout Boundary AD2raisal Estimate Actual Achievement - ---------------(ha)--- ..-.. Machegahr & Laxuaniya 5,295 5,295 Khumber 665 665 Shivania A 4,065 4,065 Shivania B 1,940 1,940 Budhi 1,085 1,085 Bhainsali 450 450 Total 13,500 13,500 3.8 All detailed designs were submitted to DIHM and IDA for review in mid-December 1982. Two Nepali engineers participated in the design process in the project's consultant head office. River Hydrology 3.9 The consultant analyzed the rather sparse measured river flow data available from the nearby river measuring station and derived a stage- discharge relationship formula. The formula was used to derive daily flow rate estimates from staff guage records for 1980/81. The derived stage- discharge relationship was probably adequate for establishing medium and high flows for weir design purposes. However, it had low reliability for low flows in the dry season, which is the critical period for water use allocation. Topographic Mapping 3.10 The contract for mapping was placed with a subcontractor to the consultants who carried out its survey in March 1981 and undertook ground- control and ground beighting in the priority area (3,500 ha) covering a 1 km wide strip along the northern boundary of the project. The maps were completed and delivered to DIHM in November 1981 and were used to locate the main canal alignment. The rest of their field work was completed on April 25, 1982 and covered the entire area (13,500 ha) plus additional areas near Bargadaha on the west bank of the Babai river, near Bhainsahi on east bank of the Babai river, and between Mand river and the Indian border south of the  - 8 - project area. The mapping contractor prepared 33 sheets of 1:5,000 scale contour maps and submitted them to DIHM in October 1982 as planned during appraisal. Semi-detailed Soil Survey 3.11 The consultant was to execute a semi-detailed soil survey on 20,000 ha on the east bank to locate the project area. In addition, a reconnaissance survey covering 10,000 ha on the east bank and 20,000 ha on the west bank was to be undertaken for possible extension areas for irrigated agriculture. The soil survey started in November 1981. Field reconnaissance trips were made over a large part of the east bank area. Initially, progress with the survey was severely handicapped by lack of transport and equipment. The consultants made field trips covering most of the project area and carried out a detailed inspection of the 1:20,000 aerial photographs. Arrangements were made with the Department of Agriculture (DOA) to use their facilities in inalyzing the soil samples collected in the project area. 3.12 The field work for the soil survey of both the semi-detailed and reconnaissance area was completed in February 1982. The number of auger holes, pits and field tests for the project area is summarized as follows: Item Semidetailed Reconnaissance Sample Survey Survey Area ------------------------(No.)--------------------- Auger hole 319 97 160 Trial pit 32 21 Infiltration test 23 10 Hydraulic Conductivity 30 20 Undisturbed Core sample 90 60 Disturbed sample 122 79 3.13 A total of 135 samples were delivered to the Department of Agriculture laboratory for soil analyses. Testing of soil samples was completed in April 1982. Subsequently, soil maps were prepared and submitted to DIHM. The soils and land classification reports and the hydrology and sedimentation report for the Babai Project were submitted to DIHM in August 1982. The findings of these reports were taken into account in the engineer- ing designs.  -9- Socioeconomic Benchmark Survey 3.14 DIHK entrusted in March 1982 the Agricultural Projects Service Center to cor.duct a socioeconomic benchmark survey in the Babai project area. The final report was submitted to IDA in September 1983, which was satisfactory to the Bank. Procurement of Engineering Eguipment 3.15 To avoid delay with the field work, the consultants were as part of their contractual obligation, to procure the equipment through international shopping procedures satisfactory to IDA. The equipment purchased on behalf of the DIHK by the consultant for use by the consultants and DIHM staff is given in Table 1. DIHM provided five to eight four-wheel drive vehicles and a boat for consultant's field work. Eight four-wheel drive vehicles were purchased under the credit. Construction of CamDs and Ouarters 3.16 The construction of temporary quarters, permanent housing, a new store, a new office block and drilling of water supply well was started in January 1982 in Baidi and completed in May 1982 through local competitive bidding. Pregualification of Civil Works Contract 3.17 Advertisements calling for contractors to submit prequalification data for construction of the major civil works were placed in the internation- al press as well as the local press in early July 1982. They also appeared in the DeveloDment Forum. The closing date for applications was set as September 30, 1982. 3.18 A total of 28 construction firms applied for prequalification. How- ever, evaluation for construction prequalification was not done because it was not clear at that stage how the werkq were to be grouped and whether the Babai segment of the East-West Highway construction was to be included under the contract. Thus, a final evaluation was postponed until it was decided which works to include in the construction contract. Furthermore, there were possible questions from India on the use of Babai River waters. It was therefore decided that invitations to tender would not be issued until the IDA's board has approved the Babai Irrigation Project. 3.19 Meanwhile, it was later decided that the project consultants were to proceed with preparation of three alternative evaluations based on: (i) one contract for the construction of whole Babai project including the highway; (ii) two contractors, weir, ancillary headworks and highway and a separate contract for irrigation and drainage distribution networks; and (iii) two  - 10 - contractors, one for weir and ancillary works (no highway) and a second one for the remaining works and drainage facilities. The project consultants fulfilled these tasks. Project Cost 3.20 Total cost of the engineering project was estimated at US$3.55 a equivalent with a foreign exchange component of US$2.58 m equivalent or about 75% of the total. Since a large portion of the costs was in foreigrn exchange, project cost estimated at appraisal is compared below with actual expenditures in SDR: Appraisal Revised Actual Actual Expenditure Category Estimate Estimate ExRenditure as % of revised ------------------(SDR)------ Civil work 240,000 397,000 396,737 99.9 Equipment and Vehicle 470,000 327,000 326,573 99.9 Salaries 120,000 160,000 159,981 100.0 Consultant Services 1,760,000 1,916,000 1,894,628 98.9 Unallocated 210.000 - - - Total 2,800,000 2,800,000 2,777,919 99.2 3.21 As shown in the above table, project cost was revised in late 1982 with IDA approval. The reasons for the revision were to add under the civil works category additional works not envisaged during appraisal. These were fence erections in the project compound, construction of more quarters, upgrading of an access road from Nepalganj to the project area, and provision of electricity and water supply for the compound. In accordance with amendment to the DCA dated May 16, 1986, the credit also financed about SDR 100,000 for consulting services, technical assistance and training related to Cr. 812-NEP. On November 25, 1986, IDA cancelled an undisbursed amount of SDR 22,081.  - 11 - Disbursemen 3.22 The IDA Credit of SDR 2.8 m (US$3.50 m equivalent) was to finance 100% of total project cost net of taxes and duties. In spite of initial delay in start-up of some components, actual disbursement at the end of the first fiscal year of project implementation reached the appraisal estimates. The slow disbursement since 1983 and three extensions of closing date were attributed to the pending issues related to processing of the follow-on Babai Irrigation Project (paras. 3.24-3.31). Table 2 summarizes disbursements by accumulated actuals semester-wise for fiscal years 1983-1987. Comtliance with Covenants 3.23 HHGN has complied with the most important DCA covenants (Annex 1). Processing of the Follow-on Babai Irrigation Proiect 3.24 The labai River, from which irrigation water was to be supplied for the 13,500 ha project area, originates in Nepal and flows into India where it discharges some 50 km south of the Nepalese border into the Karnali river, which also originates in Nepal. Most of the Babai River's catchment area is in Nepal. In the wet season (June to October), it provides minor amounts for supplementary irrigation for both Nepal and India. In the dry season (February to June), it is unlikely that the proposed project would have any significant impact on irrigatio!: in India. The amount of surface flow crossing the border is very small, and that flow is supplied mainly from regenerated groundwater. This is typical of the Gangetic plains. The above assessment by the Bank was based on limited hydrology database available and site observation. To support this assessment, the Bank repeatedly advised HMGN on the need to update and strengthen the hydrology database especially with regard to downstream flows into India. 3.25 While appraising the Babai Engineering Project, the- Bank did not consider that a formal approach to the Government of India (GOI) was required since it appeared from the feasibility studies that no adverse effects would be caused to downstream users. 3.26 After appraisal but prior to negotiations (as early as Ncvember 1980) of the Babai Engineering Project, GOI through its Executive Director (ED) voiced their concern that the proposed Bebai Irrigation Project would reduce the downstream flow of the Babai River, particularly during the dry season, adversely affecting the cultivable command area of two irrigation projects undertaken by the State of Uttar Pradesh, namely the Sarju Pumped Canal and the Sarju NehaL Parinjojana. The Bank indicated that while designing the project, the rights of the downstream users would be protected. GOI did not raise any objection at the Board meeting when the Babai Engineering Project was approved.  - 12 - 3.27 In February 1983, prior to tne appraisal of the proposed Babai Irrigation Project, the Indian ED again expressed GOI's concerns about the proposed project and argued that the appraisal mission should consider a proposal to build a reservoir on the Babai River which would provide irrigation water to both riparians. In this connection, the ED made reference to prior discussions between HMGN and GOI for the construction of such a reservoi.. However, at the feasibility stage, construction of such a reservoir had been analyzed and found uneconomic. Therefore, this option was not considered during appraisal. 3.28 In March 1983, the appraisal mission after visiting the project area was of the opinion that the proposed Babai Irrigation Project (even without a storage reservoir) would not adversely affect the downstream users in Uttar Pradesh. This view was repeatedly communicated during the following year to the ED, who continued to register GOI's concerns about the project. 3.29 In April 1984, the Bank suggested to HMGN that in order to process the proposed project, efforts should be made to reach an agreement with GOI to regulate the use of the waters of the Babai River. HMGN did not favor this course of action, but informally agreed that the Bank could provide to GOI zechnical information about the project in order to resolve the impasse. Consequently, in September 1984, a summary of the Staff Appraisal Report was furnished to GOI; technical discussions were held in New Delhi during February 1985 between the Bank staff and officials of GOI; and, additional information requested by GOI on the water flows of the Babai river were furnished during July 1985. 3.30 In accordance with the Bank s policy, on October 29, 1985, the Bank informed GOI through the ED that despite GOI's concern the Bank intended to proceed with processing the Project and gave GOI six months (up to April 28, 1986) to register final comments on the proposed project. On April 25, 1986, GOI informed the Bank that in its opinion the project would be harmful to India's interests and recorded once more its objection which finally prevailed. The Bank did not take additional steps to reach a decision on the water rights issue (e.g., appoint a panel of independent experts). 3.31 In June 1986, the Bank informed HMGN about GOI's ibjection to the project as well as the Bank's decision to postpone further its processing. Processing of the project was finally halted pending agreement between HMGN and the Bank on the priority of the project within the overall agricultural development plan. IV. INSTITUTIONAL PERFORMANCE 4.1 Direct responsibility for project implementation was vested with DIHM. DIHM appointed a project manager in accordance with the covenant and  - 13 - initially appointed six engineers to assist with the consultants. DIHM promptly provided five vehicles initially so as not to hinder consultant's field survey. Depending on the need of the project, additional engineers and vehicles were also provided. Their performance in assisting the consultants was satisfactory. 4.2 The project maintained records on the progress of the credit and to reflect project expenditures. The project set-up a special project account for the project, and this account was audited each fiscal year by either independent auditors or staff from the Auditor General's Office. The account- ing system was considered adequate by IDA supervision missions, although audit reports submitted to IDA for each financial statement were generally delayed. The audits confirmed proper management of the funds allocated to the project. V. BANK PERFORMANCE 5.1 The Bank's assistance in project preparation and formulation was useful and the appraisal was well received overall. Assistance provided to HMGN on drafting the terms of reference for the consultancy services in most of the project components was satisfactory. The overall design of the project, as a composite for development of irrigated agriculture, was consistent with HMGN policy. 5.2 Bank supervisions visited the project five times, averaging once every 10 months. As the nature of the project did not require regular super- vision, this was considered adequate. Supervision missions assisted with delineation of the project area, road alignment, design criteria and standards of the main components, and issues arising during the implementation. From the early stages of project implementation, IDA supervision missions also repeatedly advised HMGN to carry out investigations on the impact of the Babai weir on the river flow reaching India as there were possible questions from India with respect to international water rights; these suggestions did not meet with positive response from HMGN which considered such investigations unnecessary. VI. CONCLUSIONS AND LESSONS LEARNED 6.1 The Babai Irrigation Engineering Project (Cr. 1093-NEP) was satisfactorily completed and met its primar" technical objectives. However, it did not fulfill its operational purpose -- to produce a bankable Babai Irrigation Project -- due in part to international water rights complications. The primary lesson learned is that this particular matter needs to receive high priority attention by all concerned (the Bank, the Borrower, and the consultants) ir. any proposed project in which it may possibly become an issue. Due to the sensitivity, both to the Bank and the Borrower of international water  - 14 rights, such a project cannot be left to 'normal project processing". To do so risks delay or loss of the project for the country and breakdown of understanding between the Borrower and the Bank. Although well understood now, this was not appreciated at the time. 6.2 Clearly all parties concerned did not anticipate the difficulties which would arise because of the international water rights issue. During the Babai Engineering Project, the Bank 'repeatedly advised' HHGN about the issue but did not insist on the actions which ultimately would have been required for the follow-up Babai Irrigation Project to go forward. It did not adequately warn HMGN of the consequences of inaction, assuming that, since no downstream impact was expected, the issue could be handled internally during processing. The Borrower for its part did not face the issue openly, instruct the consultant to include it in project preparation work, and develop a strategy in cooperadion with the Bank to deal with it for the proposed project. The consultant failed to appreciate the data requirements to handle the issue, advise HMGN that the limited data available was probably inadequate to support the project's case, and suggest technical options to handle the issue.  EA&MI I RGATIOU MIG NEIna PROJECT (Credit 1093-NEP) PROJECT CKLRTION RIPOL.' Ecuinment Prcrd Under the Credit 1. Survey Equipment Units Purchased Automatic level 4 20 Sec theodolite 2 1 Scc theodolite 1 Leveling Stave 12 Stereo Scope 2 Prismatic compass 6 Abney level 4 Binocular 2 Calculator 1 Survey book 15 5G m tape 5 Optical square 2 Photocopier 1 2. Hydrological EauioMent Sediment sampler 1 Bed sampler 1 Current meter with ancillary 1 Gauge plate 20 Water level recorder 1 Stop watch 1 Rope 100 a 3. Camp EgUiRment Generator 1 Tent 10 Camp bed 14 C&mp Chair 4 Table 2 Lamp 11 Sheet 1 Net 14  -16- Table 2 NEPAL BABAI IRRIGATION ENGINEERING PROJECT (CREDIT 1093-NEP) PROJECT COMPLETION REPORT Actual and Estimated Schedule of Disbursements /a (USS '000) IDA fiscal Appraisal year and estimate Actual Disbursement as semester (cumulative) cumulative % of appraisal 1981 Second 0.4 1982 First 0.8 0.7 88 Second 1.5 1.5 IQO 1983 First 2.5 1.9 76 Second 3.0 2.3 77 1984 First 3.5 2.6 74 Second - 2.8 80 1985 First - 2.8 80 Second - 2.8 80 1986 First - 2.9 83 Second - 3.0 86 1987 First - 3.1/b 91 /a Original closing date: December 31, 1983. The closing date was extended three times to March 31, 1986. /b Includes about US$120,000 related to Credit 812-NEP.  -17 - ANNEX X NEPAL BABAI IRRIGATION ENGINEERING PROJECT (Cr. 1093-NEP) PROJECT COMPLETION REPORT Compliance wi;h Major Credit Conditions A. Conditions Met Remarks Section 3.02 The appointment of a Project The appointed project manager Manager with qualifications and was acceptable to IDA. experience satisfactory to IDA. Section 3.03 The employment of consultants under A contract was signed on contracts, including terms of June 2, 1981. reference, satisfactory to IDA. Section 4.02(a) HNGN shall, not later than June 30, HGCN decided that the lowlands 1981 decide and notify the IDA will become part of a whether approximately 2,400 ha of settlement scheme for the lowlands in the Khumber area shall Khumber Cotton Project. A be developed as part of the settle- formal communication from HMC ment cheme for the Borrower's was received on June 29, 1981. Khumber Cotton project or as part of a settlement scheme for paddy cultivators, and shall notify the Association of any institutional arrangements made or to be made for the forest clearing and settlement in the Khumber area. Section 4.02(b) HMGN shall cause the staff of the The coordination between rDA, IKhumber Cotton Project, the staff DIHM, UNDP and the project of the DIHM and the consultants consultant was satisfactory. employed for che project to coordinate the preparation of their plans. C. Conditions not Complied With Nil.