Turkey - Northern Forestry Project

Document of The World Bank FOR OMCAL USE ONLY RepotNo. 10210 PROJECT PERFORMANCE AUDIT RLPORT TURKEY NORTHERN FORESTRY PROJECT (LOAN 1585-TU) DECEMBER 30, 1991 MICROFICHE COPY Report No. 10210-TU Type: (PPR) ALEGRE, I / X31755 / T9059/ OEDD1 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Name of Currency: Turkish Lira (TL) Rate of Exchange: Appraisal - September 1977 US$1.00 - TL 25 1979 - TL 31 1980 - TL 76 1981 - TL 111 1982 - TL 163 1983 - TL 225 1984 - TL 367 1985 - TL 522 1986 - TL 674 1987 - TL 857 ABBREVIATIONS FAO - Food and Agriculture Organization of the UN FPMU - Forest Project Management Unit GDF - General Directorate of Forestry MOF - Ministry of Forestry PCR - Project Completion Report UNDP - United Nations Development Program FISCAL YEAR OF BORROWER GOT: January 1 - December 31 WEIGHTS AND MEASURES Metric System THE WORLD BANK FOR OFFICIAL USE ONLY Washington, D.C 20433 U.S.A. Offce of DMrcto-CeeWal Operatim Evalatkan December 30, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on TURKEY - Northern Forestry Project (Loan 1585-TU) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Turkey: Northern Forestry Project (Loan 1585-TU)" prepared by the Operations Evaluation Department. Attachment 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. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT TURKEY NORTHERN FORESTRY PROJECT (LOAN 1585-TU) TABLE OF CONTENTS Page No. Preface . . . . . . . . . . . . . . .. . . . . .. . . .i Basic Data . . . . . . . . . . . . . . . * . . . . . . .. iii Evaluation Summary . . . . . . . . . . ... . . . . . . . ... . v I. BACKGROUND . . . . . . . . ....... . . . . . . . . . . I II. IMPLEMENTATION EXPERIENCE . . . . . . . .. . . . . . . . . . 2 A. Industrial Roundwood Production . . . . . . . . . . . . . 3 B. Clearfolling . . . . . . . . . . . . . . . . . . 4 C. Natural and Artificial Regeneration . . . . . . . . 4 D. Road Program . . . . . . . * * * * * . . . 4 E. Forest Management Plans . . . . . . . . 5 F. Forest Project Management Unit (FPMU) . . . . . 5 G. Procurement . . . . . . . ..... . . . . . . . . . . . 6 F. Technical Assistance and Training . . . . . .. . . . . 6 I. Afforestation . . . . . . . . . . . . . . . . . . . . . . 7 J. Erosion Control Works . . . . . . . . . . . . . . 7 K. Fire Protection Program . . . . . . . . . . . . . . . .. 7 III. PROJECT OUTCOME . . . . . . . . . . . . . . . . . . . . . . . 7 A. Civil Works . . . . . . . . . ... . . . . . . . . . . . 7 B. Industrial Roundwood Production . . . . . . . 0 . . . 0 . 8 C. Economic and Financial Rates of Return . . . . . . . . . 9 IV. FINDINGS AND ISSUES . . . . . . . ...... . . . . . . . . 10 A. Project Preparation . . . . . . . . . . . . . . . . . . . 10 B. Project Size . . . . . . . . . . . . . . . . . . . . . 10 C. Project Reformulation . . . . . . . . . . . . . . . . . . 11 D. Technical Assistance Follow-up Project . . . . . . . . . 11 ANNEX Government0s comments .......................13 Map IBRD 13330R1 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. PROJECT PERFORMANCE AUDIT REPORT TURKEY NORTHERN FORESTRY PROJECT (LOAN 1585-TU) PREFACE This is a Project Performance Audit Report (PPAR) on the Turkey Northern Forestry Project, involving an IBRD loan of US$86 million to the Government of Turkey. The objectives of the project were to more than double industrial roundwood production in 16 forest conservancies; improve forest management planning on some 5 million ha; create additional employment for forest villagers; and to reduce or eliminate forest product imports. The loan was approved on May 12, 1978. Final disbursement took place in April, 1988, two years after the original closing date, when US$0.8 million of the loan was canceled. The PPAR is based on the Project Completion Report (PCR) which was submitted to the Board on January 25, 1990, the Staff Appraisal Report (SAR), the President's Report, the loan documents, a study of project files, and on discussions with Bank staff. An OED mission visited Turkey in May, 1991 and discussed the effectiveness of the Bank's assistance and project execution with relevant GOT agencies. Their kind cooperation and valu"ble assistance in the preparation of this report is gratefully aQknowledged. The PCR provides a good account and assessment of the project experience, and discusses the performance of the Bank and the project executing authority. The PPAR elaborates on particular aspects, such as shortcomings in project preparation and the size of the project. Following standard OED procedures, copies of the draft PPAR were sent to the Government for comment. These were received in November 1991. They have been reflected in the text and added as an annex. - iii - PROJECT PERFORMANCE AUDIT REPORT TURKEY NORTHERN FORESTRY PROJECT (LOAN 1585-TU) Basic Data Sheet Appraisal Actual Estimate Economic Rate of Return (Z) 76 27 Financial Rate of Return (%) 70 negative Incremental Production of Industrial Roundwood (MCM) 10 none Cleaefelling ('000 ha) 403 143 New Road Construction ('000 km) 26 14 Revision of Forest Management Plans Sm ha 2m ha -------------------------------------------------------------------------- Proiect Timetable Date Actual Planned Date Reconnaissance 11/76 Identification - 4/77 Preparation/Preappraisal 4/77 6/77 -7/77 Appraisal 9/77 9/77-10/77 Loan Negotiations 5/78 5/78 Board Approval 6/01/78 6/01/78 Loan Signature - 6/05/78 Loan Effectiveness 9/04/78 10/30/78 Loan Closing 3/31/86 6/30/87* Project Completion 9/30/85 3/31/88 * Last Disbursement date 4/13/88. - iv - Cumulative Estimated and Actual Disbursements (US$ million) FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 Appraisal Estimate 27.00 37.88 47.06 54.98 66.70 74.50 86.00 Actual 0.97 16.77 18.65 29.44 36.18 38.94 43.23 58.78 75.16 85.20 Actual as 2 of Estimate 3.6 44.3 39.6 53.5 54.2 52.3 50.3 68.3 87.4 99.1 Last Disbursement: April 13, 1988 Staff Inputs (weeks) FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 TOTAL Preappraisal 27.0 69.6 - - - - - - - - - - 96.6 Appraisal - 65.7 - - - - - - - - - - 65.7 Negotiation - 9.0 - - - - - - - - - - 9.0 SuDervision - 0.4 20.1 15.4 24.6 20.1 13.9 12.1 55.5 21.7 7.3 3.6 194.7 Other - - - - 0.2 - 1.6 - - - - 1.8 Total 27.0 144.7 20.1 15.4 24.8 20.1 13.9 13.7 55.5 21.7 7.3 3.6 367.8 Source: TRS. - 5 - The technical standards of new road construction were satisfactory but the road stabilization component encountered some surfacing problems, which slowed implementation. Costs of new road construction and stabilization were 50% and 25% higher than estimated at appraisal, largely due to the lower percentage of productive machine hours (waiting time and moving time between job locations). The lower than expected road program reflects the GDF decision to implement a reduced logging program. As the PCR points out, the reduced road program was not one of the causes but the effect of reduced industrial roundwood production. E. Forest Management Plans 2.09 Revision of the existing forest management plans for the 16 project forest conservancies was considered to be of critical importance to the success of the project. The revision was to incorporate into al'. forest management plans proposals for more intensive forestry management including shorter rotations, reforestation with fast growing species, natural and artificial regeneration and greater flexibility. The ^arget was to complete revision of forest management plans for 5 million ha of the project area (all the high productive forest) by 1985. To achieve this, 30 management planning teams were expected to be operating in the field by September 30, 1980. 2.10 Implementation was generally unsatisfactory as management planning teams were often below strength, financial incentives were limited and the assignments involved working in poor conditions in remote areas. Despite GDP efforts to accelerate the revision of forest management plans, including, in 1983, the use of large management teams employing higher sampling intensity, completion was rescheduled from 1985 to 1987. Subsequently, during the May, 1985 Bank mid-term project review it was deteimined that: (a) only 26% of the project area forest management plans had been revised by end - 1984; (b) poor weather, shortage of pilots and, to a lesser extent, fewer than needed management planning teams had contributed to the delay; and (c) revision of all forest management plans in the project area would take another 8 years, with completion in 1993. As the GDF is unlikely to reconsider the size of the annual allowable cut, and to revise production targets upwards until the revision of management plans is completed, the implicatiors ot the long delay are serious. F. Forest Proect Manaement Unit (FPMU) 2.11 The FPMU, which was previously the GDF Planning Unit, was formed to coordinate all project activities in conjunction with the four Directorates responsible for project implementation. FPMU's proposed main activities were: (a) consolidation of annualwork programs for the 16 project forest conservancies to reflect the revised forest management plans; and (b) coordination and monitoring and evaluation of all project activities. Unfortunately, the FPMU was not effective throughout most of the project period - for the following reasons. The FPMU Director lacked the stature and authority to interact on an equal level with the four GDF Directors responsible for project implementation. The number of FPMU staff fluctuated widely and averaged only 50% of requirements. In addition, staff allowances were below GDP norms; transport was limited; and approval for field visits had to be obtained from each of the four GDF Directors. -6- When the Forest Service was reorganized in 1982 the status of FPMU was adversely affected. In mid-1983 the Bank suggested that FPMU should be transferred as a separate unit to the sngle GDF Directorate now responsible for project implementation, and that FPMU should be directly responsible to the Assistant General Director. It was June, 1984 before the Government, with Bank approval, replaced FPMU with a Policy Steering Committee, and with a Research, Planning and Coordination Department with its own Director. This was expected to improve the project coordination function and lead to the establishment of a monitoring and evaluation system. However, it became clear that little had changed when the MOF and the GDF failed to respond to a Bank request to review project achievements, and to prepare a proposed action program, prior to an extensive mid-term review by the Bank in May, 1985. Thereafter there was little interaction between the Bank and the Research, Planning and Coordination Department and efforts were concentrated on completing vehicle and equipment procurement, which was behind schedul6, and closing the project. G. Procurement 2.12 There were procurement problems and delays throtghout the project, due to cumbersome bidding procedures. Procurement was governed by the MOF Administrative Specifications, which were at variance with the Bank's procurement guidelines. Most overseas procurement required Ministerial approval, and one major purchase of vehicles was blocked, temporarily, by a State Planni..g Organization because of a financial ceiling on foreign procurement. 2.13 Examples of recurring procurement problems included the Government's inability to accept normal bid security procedures, or to follow letter of credit and other usual suppliers payment methods. The MOF/GDF bid evaluation criteria was applied very rigorously, and there were a large number of bid rejections for reasons which were not clearly specifiee in the bid documents. This gave rise to considerable dialogue between the Bank and MOF/GDF, and to serious delays on occasion. It also resulted in a number of appeals to the Bank by suppliers whose bids had been rejected, often without explanation. There was some modest improvement as experience of the Bank's procurement procedures increased, but difficulties arose again in 1986- 87 when 33% of the vehicles and equipment financed under the Bank loan was procured. A concentrated Bank procurement seminar early in the project cycle helped, but the real problem appears to have been the entrenched, bureaucratic and inflexible MOF purchasing procedures. H. Technical Assistance and Training 2.14 The project provided 144 months of consultancy services to provide technical assistance in forest management planning (36 months), log extraction techniques (12 months), workshop administration (12 months), mechanized plantations (12 months), reforestation and afforestation site evaluation (12 months), wildlife conservation and national park development (12 months), and various short-term consultancies (48 months). The Loan Agreement required the consultants to be employed before December 31, 1978. There was also provision for 144 months of training fellowships for Turkish staff overseas in various aspects of forestry management and practice. - 7 - 2.15 The GDP vac reluctant to recruit consultants, changing their requirements on a number of occasions and expressing concern about the high cost. Despite the loan covenant, the first consultant appointed, to assist in forest management planning, was not recruited until February, 1983, more than four years after the target date, and for a reduced period of 12 nonths, instead of 36 mouths. Other consultants were recruited in 1983 -85 but total usage was only 38 months, 26% of the amount provided. The training program suffered serious delays also but, at the Bank's suggestion, GDF made a contract with FAQ In March, 1985 to organize and administer training for 53 staff from 1985 thro.gh 1987. During the project period more than 100 staff benefitted under the fellowship program, including those trained under the FAO contract. I. Afforestation 2.16 Tree planting in unforested areas was very successful, particularly in the pine growing regions, and the appraisal target was exceeded by 80%. Much of the success is attributed to the efficient mechanical afforestation techniques employed by GDF. J. Erosion Control Works 2.17 This component, which involved tree planting, terracing and check-dam coastruction in water catchment areas, is dependent on programs proposed by the State Planning Organization. During the project period only 42% of the appraisal target was implemented. K. Fire Protection Program 2.18 Fire towere, radios, access roads etc. were provided under the project. There was a reduction in fire losses from 43,000 ha of forest in 1977 to 3,500 ha of forest in 1983, much of the success being attributed to the project. III. PROJECT OUTCOME A. Civil Works 3.01 This component comprised nearly 75% of the appraisal cost estimates but the physical results were substantially below SAR targets. For new road construction and road stabilization, which included essential equipment for forest access and log extraction, only 54% of the appraisal target was achieved. Similarly, for road stabilization, which encountered some technical problems, the project achieved only 312 of the appraisal target. For the road upgrading and maintenance programs the achievements were 69% and 722 of appraisal tirgets respectively. Also included under the civil works component were the erosion control and range improvement components, which were 42% and 63% of physical appraisal targets respectively. The number of vehicles acquired under the project was approximately 502 of the appraisal target; for bulldozers and -8- tractors it was V22i for loaders, 28%. In the case of special logging and other forestry equ: c the mix changed (eg. winches were 255% of appraisal estimate, disc harrovw 37%), but the component was fully utilized. Despite the reduced civil works, v. .les and equipment program procurement was substantially delayed, reflected by the fact that nearly 50% of the Bank loan was disbursed during the 1986 - 88 period, much of it after extension of the closing date. B. Industrial Roundwood Production 3.02 Industrial roundwood production from the project area during the 10 year period 1979 - 1988, compared with appraisal estimates, is shown in the following table: Xtar SAR Actual ('000cm) ('000cm) 1979 7,000 4,564 1980 7,500 4,540 1981 8,000 4,844 1982 8,500 3,854 1983 9,000 4,301 1984 9,500 4,715 1985 10,000 4,508 1986 10,000 3,890 1987 10,000 4,159 1988 10,000 4,340 3.03 As the table shows, industrial roundwood production from the project remains at approximately the same level after 10 years of operation. Conversely, fuelwood, which was expected to decline to about 3.2 mom (equivalent) in 1985 and thereafter, averaged 4.1 mcm (equivalent) until 1988, when it fell to close to 3.0 mcm. Project area production figures are not available for 1989, but total national industrial roundwood production was only 6.7 mcm (compared with a prior annual average of 7.5 mcm) and fuelwood was 5.6 mcm (equivalent), compared with a prior annual average of 7.4 mcm (equivalent), suggesting that project production in 1989 fell. Forest imports were not eliminated during the project period, as hoped, averaging 1 mem during the years 1986 - 1989, partially offset by average annual exports during the same period of 0.35 mcm. At appraisal it was expected that all the project industrial roundwood production, 10,000 cm, would be domestically consumed. Detailed market analyses made by FAO/UNDP in 1976 for the long-term (1975-1995) Integrated Forestry and Industrial Development Program Feasibility Study, show industrial roundwood requirements of 14 mcm in 1985, rising to nearly 28 mcm by 1995. With total annual industrial roundwood production, plus imports, currently averaging 11 mcm the 1976 domestic demand forecasts were clearly way off the mark, as were the production estimates. 3.04 The project failed in its objective to increase industrial roundwood production in Turkey's under-exploited forests, but helped to maintain production at pre-project levels. There were a number of reasons for the failure to -9- increase industrial roundwood production, as mentioned earliert overestimation of the resource base and domestic demand during project preparation and appraisal; GDF reluctance to undertake a large clearfelling and artificial regeneration program, in accordance with the project design; delays in revising forest management plans; problems with regeneration of beech and spruce forests; and severely depressed timber sales from 1981 - 83 due to Turkey's adverse economic situation during that period. 3.05 Other project objectives which remained largely unfulfilled were the introduction of improved silvicultural, forest management and nursery practices; the resolution of natural and artificial regeneration problems; and the provision of additional employment for forest villagers, which was curtailed by the reduced civil works program and the failure to increase industrial roundwood production. However, the afforestation program was successful, exceeding appraisal targets, as was the fire protection program. C. Sconog and Financial Rates of Return 3.06 When the project was appraised, three alternative scenarios were adopted to calculate the economic rate of return. The first was that, without the project, the M0F would not make significant investments in the forestry sector, and that all forestry operations would cease by 1982 when existing equipment would be scrapped. With this assumption the economic rate of return was 76%. The second alternative was that soma machinery could continue to be used, a modest road building program would be implemented, and that production would be phased out gradually through 1998. With this assumption the economic rate of return was 50%. The third alternative was that the current level of production would be maintained indefinitely by making additional investments in road building and forestry operations, which gave an economic rate of return of 72%. The high economic rates of return under the three alternatives reflected the project's ability to take advantage of substantial sunk costs. 3.07 In the PCR the economic rate of return has been recalculated on the assumption that, without the project, industrial roundwood production would have fallen to 2.3 mcm, about 50% of the average project area production for the 10 years through 1988. With this assumption the economic rate of return is 27%. Although this assumption is purely arbitrary it is supported, to some extent, by the following facts. The project: (a) replaced vehicles and equipment which were 15 - 20 years old; (b) provided modern logging equipment, techniques and training facilities; (c) opened up news inaccessible areas, although not to the extent originally envisaged; and (d) included an afforestation plantation program which was very successful, where the area planted was substantially higher than planned under the project. On balance, the Audit accepts the indicative economic rate of return of 272, although the PCR assumption regarding production attributable to the project may be somewhat conservative. Unfortunately, the revised financial rate of return, which at appraisal was 70%, based on incremental output attributable to investments, is negative. This is largely due to the fact that wood prices in Turkey are held substantially below world market prices. - 10 - IV. FINDINGS AND ISSUES A. Project Preparation 4.01 The consultants feasibility study terms of reference did not require them to carry out a full forest re-inventory, and inventory data was extracted from 1,800 existing forest management plans made between 1963 and 1972. In addition, the feasibility study did not include any judgement on the quality of mapping, or the accuracy of area measurement. Clearly, this was a major oversight which had an adverse effect on the project and substantially reduced the estimated project benefits. The lesson is that a complete forest inventory, or at least a detailed, reliable sampling in accordance with established forestry practices, is essential for the preparation of all forestry projects, regardless of size. B. Project Size 4.02 The physical targets set during the consultants feasibility study, FAO/CP preparation and Bank appraisal were far too ambitious. Although the significant over- estimation of high forest in the project area (see paragraph 2.03) contributed to the overly ambitious physical targets there were other factors at work which, with hindsight, pointed to the need for project phasing. The PCR states that: "the MOF and the GDF were never convinced that the northern forests could support the annual allowable cut recommended at appraisal, or that the proposed forest management and silvicultural improvements would work, but did not raise objections in order to obtain the foreign exchange provided under the project for road construction and logging equipment. Throughout project implementation the MOF/GDF lack of commitment to the project was reflected by their reluctance to change forest management practices (clear felling, artificial regeneration, revision of forest mana ement plans), or to resolve technical problems (beech/spruce regeneration)".! The Audit endorses this view and would add to the MOF/GDF lack of commitment the additional factors of MOF/GDF apathy regarding recruitment of consultants and implementation of the fellowship training program and, most importantly, the ineffectiveness of the FPMU. The only time that the project size and scope was questioned within the Bank was at the Issues Paper Decision Meeting. At that time the Operations Division argued that the 16 forest conservancies proposed under the project represented a natural forestry region which should be developed on an integrated basis in view of its climatic patterns and resulting inter-mixture of forest species, and that acceptance by the HOF of a modern, fully integrated approach to forest management represented a major breakthrough towards improved forestry practices in Turkey, which the Bank has been fostering for many years. And again at the time of Board presentation one of the Executive Directors questioned the size of the project area and asked whether the project could not have been done in phases on a smaller basis. 11 The Government has objected to part of this quotation from the PCR. - 11 - 4.03 In view of the project preparation shortcomings, and the MOF/GDF lack of commitment to the project, it seems clear, with hindsight, that the project should have been implemented in two or more phases. By concentrating initially on, say, one or two forest conservancies, instead of sixteen, the impact of the over estimated resource base, and the forest management and other technical problems would have been more clear and more concentrated, and thus more manageable, and MOF/GDF commitment to a future, larger project may have been secured over time. The lessons are that: (1) assessing Government and Agency commitment to any project, large or small, prior to project appraisal or earlier, is paramount; and (2) major changes in policy and management practices in a traditionally conservative discipline, such as forestry, should normally be tested first in a pilot scheme or smaller-scale project for appropriateness and acceptance, rather than in a large scale nationwide operation. The PCR states that in retrospect, the policy changes required under the project were too important to be achieved through a single project or, more specifically, through the provision of foreign exchange for vehicles and equipment for an amount less than 10% of project costs. The Audit shares this view, although due to the reduced scope of the project the Bank loan turned out to be 30% of total project costs. C. Proiect Reformulation 4.04 The PCR commented that the Bank missed opportunities to: (a) reformulate the project in 1982, when the GDF revised the physical targets downward; and (b) verify the forest resource base in 1982-83 when revised forest management plans indicated that there was less high forest in the project area than anticipated. The Audit agrees with (a), but it is unlikely that it would have been possible to verify the resource base rapidly (item (b)) because of mapping difficulties due to weather and limited access to Turkish military aircraft, the only source available for aerial mapping. At the end of 1983 about US$50 million of the US$86 million loan remained undisbursed, when it may have been possible to partly restructure the project and to reallocate funds to try and resolve some of the policy and technical problems. But to be successful this would have needed full MOF/GDF commitment which, on the basis of the experience throughout the project, was unlikely to be forthcoming. D. Technical Assistance Follow-up Project 4.05 The Bank undertook a major review of the project in May, 1985. While recognizing the delay in policy changes and the many technical problems, it was agreed that the replacement of overage vehicles and equipment should still be completed, in view of the economic benefits. At this time, the Bank proposed a Technical Assistance Follow - Up Project to address a number of critical problems, particularly seed supply, plant production and nursery practice, natural and artificial regeneration, weed control etc. Initially this was supported by MOF and the Treasury but the files are silent as to why the Technical Assistance Follow - Up Project, which the Audit supports, did not proceed. One explanation is that the Government was reluctant to use loan funds for this purpose. Yet the Technical Assistance Follow - Up idea did not die. In September, 1988, a German funded and managed pilot scheme began. The pilot - 12 - scheme, which is in one of the Bank project forest conservancies, is concentrating on silvicultural problems (eg. natural regeneration, supported by artificial regeneration), social forestry aspects (eg. village income generating activities) and selection of a forest management model for general adaptation. Another initiative, funded by PAO and scheduled to be started by GDF in mid-1991, is a community forest development pilot scheme. This pilot scheme will examine the development of community forests, to be funded by Government and managed by MOP, in 10 villages in each of 5 forest conservancies. The community forests are intended to provide income for villagers, who will also receive reZorestation grants to plant up forest land. Grant funds are also being sought from Denmark by MOP for 5 small pilot projects involving nursery practices, use of windbreaks etc. 4.06 The Audit observed several other positive signs of changing attitudes among GDF staff. For example, a recent GDF workshop attended by village heads, villagers and GDF staff at different levels, selected 6 pilot villages in one forest conservancy to: (a) review and agree village range management activities; (b) study village forest plantation prospects (for fuelwood and/or poplar production); and (c) sponsor mushroom production. If both the results and the response are favorable, similar pilot schemes will be extended to other forest conservancies. These developments, although modest, can be attributed in part to the Northern Forestry Project, and to the concepts set out in the proposed Technical Assistance Follow - Up Project which had similar objectives. 4.07 Despite the indicative economic rate of return of 27% the project was not successful. There were some important benefits - the introduction of modern logging equipment and techniques, new road construction which enabled production to be obtained from previously inaccessible areas, and the maintenance of industrial roundwood production at 're-project levels. Also, the project resulted in the institutionalization of annual forestry management plans and the initial conversion to modern forestry practices, including the development of new concepts currently being tested in pilot schemes (paras 4.05 and 4.06). However, the project failed to achieve many of its objectives. The principal shortcomings were: over-estimation of the resource base and domestic timber demand; industrial roundwood production was not increased; the clearfelling and artificial regeneration program fell substantially short of target; the revision of all forest management plans, expected by 1985, is unlikely to be completed until 1993; and there were serious and unresolved technical problems, such as the regeneration of cutover beech and spruce forests. Furthermore, neither the NOF nor the GDF fully supported the project concept, or its size, which prevented the introduction of modern silvicultural and forest management practices, one of the primary objectives of the project. - 13 - ANNEX Page 1 of 3 Government's Comments on the Draft PPAR The following letter requests the removal of most passages critical of Government's role, but provides little information to support the request. OED has tried to soften the relevant passages without abandoning the main points. - 14 - ANNEX Page 2 of 3 THE REPIJPLTC OF TURKEY PRIME MINISTRY THE UNDERSECRETARTAT OF TREASURY AND FOREIGN TRADE )3 1 a11. 91 5018 82;Ifr Ref: DEI-IV-2-1585 Ankara, Mr.Graham Donaldson Division Chief Agriculture and Human Development Division Operations Evaluation Department The World Bank Washington, D.C. U.S.A Re: TURKEY- Northern Forestry Project. (Ln 1585-TU) Dear Mr Donaldson, With regard to referred project performance audit report, we would like to indicate that the report is satisfactorily prepared and the points indicated to show the performance of the project are well chosen. However, we believe that the underlisted changes should be made to reflect the real situtation more realistically during the implementation period. Page vii : Please, delete the first three items of this page Page viil : Please, change the sentences beginning from the 14th line through 20th line as "The overall impementation of the Project experienced some failures due to ineffectiveness of the Forest Project Management Unit (FPMU), as a result of insufficient support provided to this unit. Procurement procedures of the Bank and lack of experience in this respect in the MOF added to a certain extent to this failure. - 15 - ANNEX Page 3 of 3 Page 4 clause 2.1 : Please, delete the paragraph beginning with "The MOF and GDF" Page 5 clause 2.02: Please, delete 5 lines beginning with "...... The conservatism of...." and ending with "now widely accepted" Page 7 clause 2.06: Please delete te 6 lines beginning with "The GDF held" and ending with 'orest management practices" Page 7 clause 2.06: Please, delete the last three lines beginning with "There is a danger" Page 9 clause 2.10: Please, change the starting clause as "Tmplementation was not satisfactory, in certain area-management planning teams were at some occasions below strength as there were no financial incentives for a task" Page 9 clause 2.10: Please, delete the third and fourth lines Page 10 clause 2.11: Please, change the third sentence on the sixth line as "Unfortunately, the FPMU was not effective enough throughout most of the project period" Page 11 clauce 2.12: Please, delete 'he third sentence on the 4th line beginning with "In addition to" Page 12 clause 2.13: Please, delete the sentence on the 7th line beginninig with "it also" Page 19 clause 4.02: Please, delete the third sentence beginning with "The PCR" We already thank you for your attention. Best regards. Yours sincerely, qgpIiV .erO8 ．介