Nepal - Second Technical Assistance Project

Dom The Wo FOR OFF&CL Psaort No. 9941 PROJECT COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1379-NEP) OCTOBER 3, 1991 Infrastructure Operations Division Country Department I Asia Region 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 EQUIVALENT Name of Currency: Nepalese Rupee (NR) Rate of Exchange: Signing (1983) US$1.00 = Rs. 14.9 Completion year US$1.00 = Rs. 34.8 GLOSSARY DCA - Development Credit Agreement HMGN - His Majesty's Government of Nepal IDA - International Development Association MOF - Ministry of Finance PCR - Project Completion Report TA - Technical Assistance UNDP - United Nations Development Programme USAID - United States Agency for International Development NEPAL FISCAL YEAR July 16 - July 15  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operatons Evaluation October 3, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Nepal - Second Technical Assistance Project (Credit 1379-NEP) Attached, for information, is a copy of a report entitled "Project Completion Report on Nepal - Second Technical Assistance Project (Credit 1379-NEP)" prepared by the Asia Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment Thb docomen hs a restricted dLstrtbutfou and may be used by recipients oy In the perfonnace of their oMcal duties. contentsmay not otherwbe be disclosed without World Bank authoriation.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1379-NEP) TABLE OF CONTENTS Pase No. PREFACE ...................................................... EVALUATION SUMMARY ........................................... iii PART I: PROJECT REVIEW FROM IDA'S PERSPECTIVE ............... Project Identity ............................................. Background ................................................1 Project Objectives and Description ........................... 2 Project Design ............................................... 2 Institutional Arrangements ................................... 3 Overall Implementation ....................................... 3 Project Results .............................................. 4 Compliance with Legal Undertakings ........................... 5 Project Sustainability ....................................... 7 IDA's Performance ............................................ 7 Borrower Performance ......................................... 8 Project Relationship ......................................... 8 Consulting Services ........................................... 8 Project Documentation and Data . 8 Lessons Learned .............................................. 8 PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE.... 11 Introduction ................................................. 11 Report ....................................................... 11 PART III: STATISTICAL INFORMATION ........................... 13 3.1 Related IDA Credits ..................................... 13 3.2 Project Timetable ....................................... 13 3.3 Credit Disbursements .................................... 14 3.4 Project Costs and Financing ............................. 15 3.5 Project Resulta ......................................... 16 3.6 Status of Covenants ..................................... 17 3.7 Use of IDA Resources .................................... 17 ANNEXES 1: Description of Subprojects and the Results ............... 19 2: Subprojects Financed by Eligible Category ................ 27 3: Follow-up Investment and Investment Support .............. 29 4: Subprojects Financed by Sector ........................... 31 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 COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1379-NEP) PREFACE This Project Completion Report (PCR) is for the Second Technical Assistance Project in Nepal for which a Credit in the amount of US$6.0 million (SDR 5.6 million) was approved on June 2, 1983. The original closing date was December 31, 1987, but was extended three times. The Credit closed on December 31, 1990, and the last disbursement was made on April 4, 1991. Preparation of this PCR was coordinated by the Technical Assistance Unit of the Asia Technical Department on behalf of the Infrastructure Operations Division, Country Department I. Part IL ;f the PCR was prepared by the Borrower after receiving Parts I and III. Preliminary work on the PCR commenced during an IDA mission to Nepal in October 1988 and was followed up by a PCR mission in April 1991. The Report is based inter alia on the President's Report (which includes a technical annex in lieu of a Staff Appraisal Report); Development Credit Agreement; supervision reports; correspondence between IDA and the Borrower; internal memoranda and interviews with individual Task Managers.  - iii - PROJECT COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1379-NEP) EVALUATION SUMMARY Objectives 1. The immediate objective of the Second Technical Assistance Project was to assist His Majesty's Government of Nepal in the identifica- tion, preparation and implementation of high priority projects suitable for IDA or other external financing. Its long-term objective was to contribute to a strengthening of the capacity and capability of participating institu- tions to implement the Government's development program (paras 1.4 and 1.6). The Credit was designed to provide an overall amount of financing agreed to between the Government and IDA for a number of subprojects with flexibility to delete and substitute subprojects at the "working level" as the need arose. Implementation Experience 2. The project provided financing for the implementation of 15 discrete subprojects which supported feasibility studies and other allied activities necessary for the preparation of projects suitable for external financing. It also financed staff training programs and other forms of technical assistance designed to strengthen institutions responsible for project planning and implementation. The closing date was delayed three years. Once approved, subprojects were implemented more efficiently than under the first Technical Assistance (TA) Project (Credit 659-NEP); however, delays occurred in identifying subprojects for financing. The most impor- tant reason was the availability of UNDP grant funding as a preferred alternative source of TA financing. There were also delays (a) in identi- fying and agreeing on the list of priority studies to be financed under the Credit; (b) because of the general lack of awareness by line ministries on how to access a Credit handled by the Ministry of Finance; and (c) in the negotiations wiih consultants for subproject implementation (para 1.12). However, all subprojects were satisfactorily completed by the extended closing date of December 31, 1990. Results 3. The project generated approximately US$369 million of follow-up investments. In particular, it provided substantial support to activities associat3d with the development of Nepal's hvdropower subsector based on the Master Plan -udy for the utilization of the water resources of the Kosi River Basin, thus facilitating the identification and implementation of the Arun III Hydroelectric Power Project (para 1.15). It had a similar impact on Nepal's water supply sector through the financing of two significant studies. The first, for the West and Central Regions of the country, has  - iv - provided data for the formulation of 65 new rural water supply schemes. The second resulted in the formulation of a Urban Drainage Master Plan for Greater Kathmandu. These studies are expected to generate significant investments (paras 1.16-1.17). Additionally, the project assisted in strengthening capacity by promoting the development of a standardized contract for the hiring of consultants which has helped to speed up the approval and implementation of consultancy services contracts (para 1.20). Pre-investment activities were heavily favored over institutional develop- ment by 92% to 8%. The infrastructure sector received 62% of the Credit. Agriculture received 19% and energy received 16%. The energy sector was also supported by many of the infrastructure subprojects. Population and human resources received only 3% of the Credit's resources. Sustainability 4. The benefits realized from the subprojects financed under the Credit are manifested through follow-up investments which are making a substaniial contribution to Nepal's economic development. Of particular significance is the project's contribution to the development of the coun- try's hydropower subsector and the potential benefits expected from future investments in its water supply and sewerage sector. Findings and Lessons Learned 5. There are a number of important lessons to be learned as a result of the implementation of this project. Once identified, subprojects have experienced speedier implementation as compared to the first TA Credit; however, the second Credit faced delays in subproiect identification. In this regard, attention in the design of future TA credits should be focused on responding to the Government's demand for the type of TA appropriate under reimbursable credits (para 1.33) and building in regular reporting to line ministries about the status and availability of TA funds (para 1.38). Secondly, implementation delays experienced while the Government searched for alternative sources of TA funding on a grant basis suggests that the Bank Group might consider providing grant funding for certain kinds of TA as an additional tool in its country lending strategy (para 1.33). There also appears to be a need for IDA to focus on the value it attaches to Borrowers meeting their obligations under dated covenants as well as the appropriate- ness of the covenants themselves.  PROJECT COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE REPORT (CREDIT 1379-NEP) PART I - PROJECT REVIEW FROM IDA'S PERSPECTIVE Project Identity Name : Second Technical Assistance Project Credit Number : 1379 - NEP RVP Unit : Asia Region Country : Kingdom of Nepal Sector : Technical Assistance Background 1.1 Nepal has been the recipient of considerable bilateral and multilateral technical assistance (TA) from a number of sources including the United Nations Development Programme (UNDP), the United States Agency for International Development, Canada, Germany and IDA. TA commitments to the country, which amounted to approximately US$66 million in 1975/76, rose substantially to nearly US$120 million in 1981. Approximately half of the TA commitments to Nepal were channeled into agriculture and ns' ral re- sources. Significant commitments were also made to general development planning, health and population. 1.2 In 1976, IDA approved a Credit of US$3.0 million for the first Technical Assistance Project (Credit 659-NEP) to assist His Majesty's Government of Nepal (HMGN) through tne provision of financing for the preparation of feasibility studies as well as for design and engineering work for future projects. This assistance was directed towards helping HMGN develop a pipeline of high priority projects in the agriculture, agro- industry and industrial sectors which were essential prerequisites in the country's development program and suitable for international financing. The objective of IDA's assistance was to help the HMGN fully utilize the aid available to it through bilateral and multilateral sources. The Credit also supported the strengthening of institutions responsible for project prepara- tion and implementation through the provision of consultant services and training. 1.3 The Project Completion Report (PCR) for the first free-standing TA to Nepal' reported that the Credit generated a healthy project pipeline resulting in around US$100 million of follow-up IDA investment while sup- porting a further US$50 million of such IDA investment. Less success was reported in the development of local institutional capacity because, among other reasons, the terms of reference for expatriate consultants emphasized 1/ Report No. 5935 dated November 25, 1985.  completion of a particular assignment (e.g., feasibility studies) instead. After full commitment of funds under Credit 659-NEP in early 1982, the Government requested IDA assistance in the preparation of a follow-up TA credit on the grounds that TA grant funding from traditional sources such as UNDP had been greatly reduced. However, shortly after Credit 1379-NEP was approved, UNDP's financ!al picture brightened and more grant funding became available (para 1.12). Prolect Objectives and Description 1.4 Proiect Objectives: Credit 1379-NEP was timed as a logical follow-up to Credit 659-NEP, serving a similar purpose. Its immediate objective was to assist HMGN in the identification, preparation and imple- mentation of high priority projects for international financing. A longer term objective remained to strengthen the capacity and capability of par- ticipating institutions to implement the Government's development program. 1.5 Project Description: The project provided HMGN with an assured flexible source of TA financing whenever grant financing was not readily available. In this context, a recourse to IDA firancing permitted more expeditious action. The multi-sectoral project comprised the following 15 subprojects (Annex 1 provides a detailed description). 1. Design of Karnali Bridge 2. Water Resources Adviser (Legal Services) 3. Panel of Experts for Hydroelectric Projects 4. Population Project Preparation 5. Population Studies 6. Terai Agricultural Development Project Study 7. Administration and Management Study of the Institute of Agricultural and Animal Sciences, Rampur 8. Arun III Access Road Survey (Dhankuta-Khandbari) 9. Least Cost Energy Generation Expansion Plan (1986-2000) 10. Detail Design for Stage II of Sunsari Morang Irrigation Project 11. Establishment of Computer Training Facility at The Tribhuvan University Institute of Engineering 12. Arun III Access Road Detailed Engineering 13. West and Central Development Regions Water Supply Study 14. Greater Kathmandu Water Drainage Master Plan Study 15. Predesign Investigation for Arun III Hydropower Project Proiect Design 1.6 Like its predecessor (Credit 659-NEP), Credit 1379-NEP was primarily intended to help HMGN to continue developing a pipeline of projects suitable for IDA or other external financing through the prepara- tion of feasibility studies, detailed design and engineering work. As such, it provided a line of credit which permitted HMGN to request IDA t.llocations for specific studies or subprojects on an as needed basis if they met certain mutually agreed criteria. Accordingly, a subproject was eligible  - 3 - for financing provided it was of high priority in the Borrower's development plans aud belonged to one of the following categories: (a) a feasibility study or other investigation required for preparing projects suitable for financing by IDA or other external financing agencies (with priority given to project rzat1d studies believed likely to be suit- able for consi -ation for financing by IDA); (b) technical assistance or staff training programs de- signed to strengthen institutions in Nepal responsible for project planning and implementation; or (c) a study to provide information required for the selec- tion of specific projects for implementation, or for improvement of overall economic planning. 1.7 It was also a requirement that a subproject should have no equally suitable grant financing available from UNDP or other external financing agencies. In short, Credit 1379-NEP was designed to provide flexibility and responsiveness to meet the critical needs of HMGN. It also permitted prompt action in collaboration with IDA to meet those needs. Institutional Arrangements 1.8 The Ministry of Finance (MOF) was responsible for satisfying the covenants u-ier the Development Credit Agreement (DCA), approving the subproject requests submitted by line ministries, and for overall project coordination. MOP appointed a Project Coordinator who monitored the 15 subprojects approved under the Credit, reported on their status, and pro- vided executing agencies with advice on the procurement of consultant services and related equipment as well as on disbursement procedures. 1.9 Line ministries were responsible for submitting subproject proposals for financing to MOF who reviewed them in the context of the Government's priorities before submitting them to IDA for final approval. Additionally, line ministries were responsible for the selection and employ- ment of consultants, supervision of their work and the maintenance of subproject accounts. They were also responsible for the submission of quarterly reports to the Project Coordinator in MOF covering disbursements and the status of subproject execution. Overall Implementation 1.10 Credit 1379-NEP was approved on June 2, 1983, and signed oh September 1, 1983. The effectiveness date of November 29, 1983 was extended to provide HMGN with more time to fulfill the requirement of appointing a Project Coordinator and to provide a legal opinion on the validity of the DCA. The Credit was declared effective on December 27, 1983 on the satis- factory fulfillment of those conditions. 1.11 Although implementation of individual subprojects proceeded relatively efficiently after each approval, the strategy to use the Credit as a source of last resort caused it to be extended three times (from December 31, 1987 to December 31, 1990). At final extension of the Credit  from December 31, 1989 to December 31, 1990, five subrrojects were in their final stages of completioa and the contract for subproject 13 (a study of the West and Central D3velopment Regions Water Supply) had just been awarded with its completion scheduled for the last quarter of calendar 1990. 1.12 The project suffered from implementation delays fcr a number of reasons not anticipated at the design stage. The most important of these was the unexpected availability of UNDP grant funding for TA financing that had been denressed a few years before. HMGN's recourse to UNDP funds resulted in gaps between subproject approvals under the TA Credit. Second, it appears that rotatitng officials in line ministries were not always aware of the Credit. Third, the recruitment of consultants, although faster than under the first Credit, still proceeded slowly in some cases--mostly at the negotiation stage. It should be noted tlhat unlike TA credits that support pteparatory work arsociated with a single project, multi-sectoral technical assistance credits necessarily take up more time for the preparation and submission of discrete subproject proposals in line with IDA's requirements. Future credits of this type should build in a longer implementation time to accommodate this unique feature of the multi-sectoral credit. 1.13 It may be noted that Credit 1379-NEP achieved some success in its objective of addressing some of the shortcomings of its predecessor. In particular, it attempted to resolve the difficulties encountered because of varying procurement and contracting procedures prevalent for the use of consulting services by different. executing agencies. Towards this end, the Government was able to draft -nd implement a standardized contract for the hiring of consultants that has helped rationalize this procedure and is helping speed up the approval and implementation of consultancy services contracts. Proiect Results 1.14 The success of the project in meeting its pre-investment objective can be seen from the fact that eleven subprojects were approved totalling approximately SDR 4.8 million or about 92% of available Credit funding for the purposes of pre-investment. These subprojects are listed in Annex 2 (Items 1 through 11). 1.15 In line with the project's primary objective, project success is measurable in terms of the investments generated by the subprojects that were financed. It is estimated that approximately US$369 million of follow- ap investments and US$154 million of investment support have resulted from these subprojects representing an appreciable achievement for a free- standing TA project (Annex 3). A sector analysis of the 15 subprojects indicates a major concentration (62% or about SDR 3.3 million) of the resources was associated with the development of Nepal's infrastructure of which 84% of the infrastructure resources also supported the energy sector. Seven subprojects were associated directly or indirectly with the energy sector (see Annex 4: Subprojects #1, #2, #3, #8, #9, #12 and #15). Sub- project #1 was aimed at establishing the final design specifications for the Karnali River Bridge leading to the site for the proposed Chisapani hydro- power project for which the feasibility study was financed under Credit 1452-NEP. Subprojects #8 and #12 facilitated the preparation of IDA invest- ment credit (Cr. 2029-NEP) of US$32.8 million in 1989 for the construction of the Arun III Access Road. Cost increases occurred in the implementation  - 5 - of subproject #12 because of an underestimation of the costs of constructing the Arun III Access Road resulting from changes made in its alignment, an unrealistic timetable of 2-1/2 years for its completion, followed by the invitation of bids at an inappropriate time.2 To address this problem, HMGI; decided to combine the road project and the proposed hydro project as a single operation. Subprojects #9 and #15 provided the rationale and pre- design investigation for the Arun III power project itself, and Subproject #3 provided an independent review of the feasibility of several other hydroelectric projects. Subproject #2 provided legal advice on water resources. 1.16 Credit 1379-NEP has also had an impact on the water supply sector through the financing of two significant studies. The first study for the West and Central Development Regions of the country (Subproject #'3) pro- vided useful data needed for the formulation of about 65 new ruraL water supply schemes that have been identified. UNDP has in parallel financed a study covering the rehabilitation of existing rural water schemes. It is envisaged that both these proposals would be combined in the formulation of an investment project in the next five year lending cycle with a likely IDA input of about US$28 million. The second study covers the formulation of an Urban Drainage Master Plan for Greater Kathmandu (Subproject #14) which was completed in September 1990. It provides Kathmandu with a 15-year sectoral development program of which the first five-year investment plan envisages an outlay of about US$51 million. 1.17 u.,der the Urban Water Supply and Sanitation Rehabilitation Project, approved in May 1991 (Credit 2239-NEP), a portion (about US$3.4 million) of the investment outlay contemplated under the first five-year priority investment plan was earmarked for the rehabilitation of two existing sewage treatment plants, repair of a large pumping main, rehabili- tation of a pumping station and interception of existing combined sewers and sewer network rehabilitation. A further US$2.7 million or so of funds from this project would also be used to finance the construction of a major sewer serving Kathmandu. The above mentioned investments were also identified under the UNDP-funded and World Bank executed Service Improvement and Management Support Project No. NEP/88/004. 1.18 Institutional development subprojects were not in demand under this reimbursable Credit. Only about 8% (approximately SDR 450,000) of the Credit went toward this objective (Annex 2). Compliance with Legal Undertakings 1.19 Apart from covenants on selection criteria for subprojects and reporting requirements, the DCA incorporated the following two undertakings: (a) The Borrower shall, not later than December 31, 1984, prepare and furnish to IDA for its review and comments, a draft standard contract for the employment by the Borrower of individual consultants and consulting firms, and, thereafter, 2/ Tenders were called when the Trade and Transit Treaty with India had expired and timely access to Nepal through India was not assured.  -6- taking into account the Association's comments, if any, utilize such standard contract in the hiring of consultants' services (Section 4.06 of the DCA); and (b) The Borrower shall, not later than December 31, 1984, prepare and furnish to IDA for its review and comments, a program to strengthen the local consulting industry of Nepal, including a survey of existing firms, development of guidelines for selection and use of local consultants, establishment of a consultants' registry, training, seminars and conferences, and, thereafter, carry out such program taking into account IDA's comments, if any (Section 4.07 of the DCA). 1.20 The objective of the first covenant was to strengthen the overall administration of TA by HMGN based on the lessons learned in the execution of the first TA Credit *:o Nepal (Credit 659-NEP) where different procedures used by various agencies for procuring and contracting of consulting ser- vices made TA administration cumbersome. HMGN's slow compliance with this covenant resulted from a continuous review of the draft document by dif- ferent Government agencies. Hence these delays were largely bureaucratic and stemmed from each agency's desire to ensure a full review of the condi- tions of the contract ';is-a-vis their own concerns. The model contract is now available and is being put to use whenever HMGN needs to hire consultant services. It is an important achievement under this project. 1.21 As agreed by both HMGN and IDA, the DCA was amended to remove the second covenant referred to above which entailed the conducting of a survey to strengthen the local consulting industry. The reason was that the Under Secretary's office within the MOF, serving as the Technical Assistance Coordinator, was not experienced or set up to recruit and supervise consul- tants. MOF did in fact make a strong effort. They advertised twice in the local papers for firms to express interest but there were no serious re- sponses. Another reason the covenant was eventually removed was the fear that if MOF selected a local consulting firm to set the groundwork for strengthening the domestic consulting industry, it may have led to the perception by other firms of biased judgment. The experience of other countries suggests that the strengthening of local firms must originate within the group of consulting firms themselves who must press for aid from the Government, especially when there may be no particular impetus in Government to strengthen an irdependent, autonomous consulting industry. 1.22 Finally, in reviewing IDA's legal requirements prescribed for this project, the audit covenant (Section 4.05 of the DCA) does not seem to be suited to the needs of free-standing multi-sectoral credits. Such credits provide for numerous individual subprojects to be implemented against separate consulting services contracts. Payment is made directly by IDA for services performed or goods procured under signed consultancy services contracts against the presentation of stipulated documentation. In such a context, the need for the Government to provide separate audits for each subproject would seem to be redundant, and management may wish to give consideration to redesigning this legal requirement to meet the unique situation of such credits.  -7- Proiect Sustainability 1.23 Overall the technical assistance provided to HMGN under the individual subproje2ts of Credit 1379-NEP has contributed to substantial follow-up investments amounting to about US$369 million. Particular mention is made of the studies commissioned towards the realization of the Arun III Hydroelectric Power Project. In addition to the detailed engineering work for the Karnali River Bridge (Subproject #1) and studies conducted for the construction of the Arun III Access Road (Subprojects #8 & #12), activities which were linked to expediting the implementation of the Arun III Hydro- power Project, Credit 1379-NEP also assisted in the predesign investigation work associated with the hydropower project itself (Subproject #15). Similar sustainable benefits from this project derive from subproject #14 which has provided Nepal with a Water Drainage Master Plan as a basis for future investments in this sector. However, not all subprojects intended to lead to IDA follow-up investment did so--notably Subprojects #4 and #5 (Population Project Preparation and Population Studies, respectively). Although no direct IDA investments followed from these two subprojects, Nepal was the recipient of bilateral and multilateral assistance in the population sector from other sources to whom these studies were available. The computer training facility set up under Subproject #11 for Tribhuvan University Institute of Engineering is clearly providing long-term benefits to the University. IDA's Performance 1.24 Flexibility provided in the design of this project had many obvious advantages. For example, it permitted HMGN to respond to new, stringent requirements by IDA and other donors relating to environmental issues. However, it also had some shortcomings. Because the Credit was not tightly programmed, there were gaps between subproject approvals. The inclusion of subprojects shortly before a closing date resulted in exten- sions of the closing date to cover disbursements. Designers of future credits may need to decide whether to sacrifice flexibility for a more specific program geared to disburse within the typical time period or to retain flexibility to finance TA as an unexpected urgent need and build in a longer disbursement period. 1.25 IDA's performance under the project met required standards. Project supervision was effective, timely and carried out in a satisfactory manner. Every effort was made to accommodate the Borrower in the selection of subprojects as well as to provide the Borrower with assistance in meeting contractual obligations. 1.26 In regard to Subproject #2 (Water Resources Adviser-Legal Ser- vices), it is questionable that IDA attached a high priority to this sub- project as no task manager or managing division was given or assumed respon- sibility for the technical oversight of this subproject. There is no record of any technical supervision (the overall Task Manager for the Credit in the TA Unit did check payments against the contract and did visit the project office to ascertain that there were no administrative problems) and no record of an IDA counterpart assigned to follow-up the impact this sub- pro.ect might have had, although the issue was raised.  -8 Borrower Performance 1.27 It is clear that with the UNDP resources available as grant aid for technical assistance, the Bank Group's soft window was used as an option of last resort. The Borrower's decision to give preference to the use of UNDP funds over the IDA line of credit affected its performance under the Credit and was one of the major reasons for delays between subproject approvals. In this context, it has been suggested elsewhere in this PCR that one of the ways by which this could be averted in the future is for IDA to look into the feasibility of providing its own grant funding for certain kinds of technical assistance (see paragraph 1.33). Project Relationship 1.28 IDA's relationship with the project executing agency were excel- lent at all times. The good rapport the TA Unit had with the HMGN and toe Technical Assistance Coordinator in the MOF contributed to the resolution of a number of project related issues, thus helping to expedite project imrle- mentation. Consulting Services 1.29 Virtually the entire TA Credit was implemented through consulting services contracts, both foreign and local. The consultants performed satisfactorily and responded well to changes in direction under several of the subprojects. The services t-re heavily output- or task-centered (see para 1.33). Project Documentation and Data 1.30 The DCA provided good and relevant subproject criteria eligibility to guide HMGN. However, the covenants relating to strengthening the con- sulting industry and developing a standard contract may have enjoyed faster and better results if handled under different mechanisms (see paras 1.34-1.35). The covenant relating to obtaining audit certificates required the standard IDA procedures which do not address the unique situation of a free-standing, multi-sectoral credit with numerous, discrete subprojects (see para 1.22). Lessons Learned 1.3; Consideration needs to be given to the question of project execution delays. Two facets of this issue deserve attention. The first concerns the time taken in subproject identification, development and implementation which accounted for some part of the delay in project pro- cessing. The second relates more broadly to the Government's exercising its option to use grant funding for technical assistance instead of utilizing the reimbursable funding available under the IDA Credit. 1.32 It is clear from the records that the Credit was conceived of as providing a source of funding for technical assistance because of the non- availability of UNDP grant funds at that time. It provided "an assured and flexible source of financing for technical assistance" and was modeled on the concept of an "umbrella" project made popular by UNDP in Burma. The idea is that one overall funding package is approved that covers broadly  - 9 - identified needs that may be separately identified and approved at the working level as needed. In support of this approach, agreed eligibility criteria were established to facilitate subproject selection. The illustra- tive list of subprojects identified in the agricultural sector as being high priority were not the subprojects actually financed. Priorities changed and the project had enough flexibility to be able to finance subprojects not initially envisaged. The implementation delays resulted partly from this change of emphasis and were a trade off for the flexibility provided in the selection of new subprojects. The situation might have been averted if the subprojects to be financed had been more closely tied to the lending program downstream. However, it is important to keep the flexibility to respond rapidly to environmental or cultural issues, or to natural disasters. 1.33 The Bank Group might rethink the purposes of TA provided under a loan/credit arrangement. Governments view these as investment because they must be paid back albeit at minimal handling/interest charges. Therefore, they expect to see a tangible rate of return--i.e., a product from their investment. Reimbursable, multi-sectoral TA credits might be more usefully oriented towards output-centered TA. That is, they would provide expertise to accomplish assignments such as specific project preparation or detailed engineering and design or master plans. It might be more realistic to concentrate on this output although some transfer of skills would certainly occur in the execution of the assignment. It appears that the attempt to serve two masters (i.e., pre-investment and institutional development) results in one overriding the other. Under these reimbursable credits, the need to produce the product supersedes. The goals of transfer of skills, institutional development, building capacity, policy advice, restructuring etc., should probably be addressed separately and as a specific goal not coupled with other goals. Also, these objectives will receive more focus from governments if they are provided on a grant basis. In order for the Bank Group to encourage these objectives and to demonstrate its serious desire that governments should focus on these important "non-product" goals, the Bank Group is justified in considering an internal grant facility. The Bank Group needs to acknowledge that the very reasons a governmeat may need institutional development technical assistance are the same reasons that make it virtually impossible for a government to execute the effort. Therefor,, it is recommended that the Bank Group execute the work initially and follow a careful plan to turn over more and more execution to line agencies correlated to demonstrated, increased capacity. For some large infrastructure projects, it is also suggested that a portion of a grant facility attached to the Bank Group be applied to project preparation. The reason given is that the use of a reimbursable credit as a last resort forces the government to locate other grant providers for project prepara- tion and preparation is subsequently shaped by the provider. This has delayed timing of IDA investment and disburse- ment. 1.34 The Bank Group needs to be careful about the covenants included in multi-sectoral credit/loans. We must be sure that a government has the capacity to satisfy the covenants, and they must be meaningful within the context of the ongoing project. For example, two important exercises did not meet these criteria as covenants; one resulted in the DCA being amended to remove the covenant, and the other was satisfied only after a long delay. The covenant to strengthen the consulting industry simply was not in the purview of the MOF to execute. Most credits are executed by line ministries  - 10 - who have experience in recruiting and contracting consultants. Because of the multi-sectoral nature of this Credit, the MOF was given the responsi- bility for implementing it, and the office in MOF responsible had no con- tracting experience. They also found it awkward to be the office respon- sible for picking a consultant who would set the ground rules for the entire industry. This important exercise might have been better handled by requiring that a UNDP project document be signed undertaking this work before the TA credit could become effective. 1.35 HMGN clearly supported and wanted to develop a stancard contract for use in contracting consulting services. However, attempting tc develop a contract format in the middle of executing consultant contracts ur.der the Credit was frustrating and distracting. The Bank's Legal Department ended up providing an inordinate amount of unreimbursed technical assistance to this exercise. Again, this objective would have been better met before the TA Credit came under implementation, e.g., as a condition of effectiveness. 1.36 Project reporting requirements (DCA Section 4.04 [e)) stipulated that MOF submit quarterly reports on the progress of each subproject to IDA. Instead, Government line agencies submitted reports of individual sub- projects to the respective Task Managers in IDA. In the future, all with- drawal applications should go through MOF with the requirement that a status report be attached for MOF to pass on to the overall Task Manager in IDA. 1.37 Audit procedures might be better designed to be suitable for multi-sectoral projects containing discrete subprojects that are virtua:ly all consulting services contracts (para 1.22). 1.38 Some of the delays in identifying subprojects may have resulted from a lack of awareness of rotating officials in line ministries about the availability of the Credit. Any future credits need to have a mechanism built in to keep all line ministries alert to the status of the TA Credits. 1.39 In conclusion, Credit 1379-NEP fully met its immediate objective. The studies under the Credit are helping to generate US$369.0 million of investment. Lessons learned from the previous TA credit have contributed to the success of Credit 1379-NEP--for example, better recruiting and con- tracting procedures. The experience under the Credit suggests that serious consideration be given to establishing a grant facility within the Bank Group to tackle institutional development barriers and to guide the prepara- tion of large investment projects.  - 11 - PART II - PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE Introduction 2.1 The Second Technical Assistance Project Credit 1379-NEP financed 15 sub-projects under six different sectors. The sectoral composition, including individual projects, is depicted below: (a) Power - Water Resources Adviser (Legal Services). - Panel of Experts for Hydroelectric Projects. - Least Cost Enerjv Generation Expansion Plan (1986-2000). - Predesign Investigation for Arun III Hydropower Project. (b) Agriculture - Terai Agricultural Development Project-Study. - Administration and Management Study of the Institute of Agricultural and Animal Sciences, Rampur. - Detail Design for Stage II of Sunsari Morang Irrigation Project. (c) Water Supplv - West and Central Development Regions Water Supply Study. - Greater Kathmandu Water Drainage Master Plan Study (d) Transport (Road) - Design of Karnali Bridge. - Arun III Access Road Study (Dhankuta Khandbari). - Arun III Access Road Detailed Engineering. (e) Health (Population) - Population Project Preparation. - Population Studies. (f) Education - Establishment of Computer Training Facility at Tribhuvan University Institute of Engineering. Report 2.2 The above projects were carefully chosen by His Majesty's Govern- ment of Nepal (HMGN) and agreed with IDA. While the first TA project to Nepal concentrated on agriculture sector development, the focus of the second TA project was on the development of Nepal's hydropower subsector. It provided funding to four subprojects directly associated with this subsector along with two Arun III Road subprojects which facilitated the preparatory work associated with the processing of the Arun III Hydropower Project. Consequently, Credit 1379-NEP paved the way for a major investment  - 12 - in the development of Nepal's power sector by assisting in the financing of preparatory works required for a least cost hydropower project (viz. the Arun III Hydropower Project). The detailed design of this project is nearing completion, the detailed design of the Arun III Access Road has been completed, the sensitive issue of the environmental aspect of this project is being addressed. The project is almost ready for implementation subject to improvement of institutional financial performance and funding arrange- ment. This clearly demonstrates the usefulness of the resources made avail- able under the Credit. The funding for the Legal Services subproject has helped the Ministry of Water Resources in assessing issues with India relating to water resources in the context of the Karnali Multipurpose Project. The Karnali Bridge is already under construction as per the design accomplished under the Credit which has helped to expedite the construction of the East-West Highway, a priority project for socio-economic integration of the natior.. The construction work of Sunsari-Morang Irrigation Project Phase II, targeted to irrigate 23,000 hectares, has also begun based on the design completed under the captioned project. Similarly, other studic,s and technical support projects were satisfactorily completed under t-is Credit. 2.3 The Miniotry of Finance (MOF) found the Bank very suppo..tve in its development endeavors and helpful in identifying the sub-projects. IDA extended its full cooperation to MOF throughout the implementation of the project. Similarly, MOF had a good rapport with the executing agencies and received full cooperation from them. 2.4 However, the project encountered some problems at different stages of implementation. One of them was the delay in identification of sub- projects and preparation of a standard contract document for consultancy services. The basic reason for this was the involvement of so many organi- zations/institutions in one single project, and the requirement for obtaining the approval of all of them prior to making a final decision. Despite MOF's efforts in undertaking a survey of local consultancy indus- tries, responses were very slow and came only at the end of the project period. These factors combined required the extension of the project for three consecutive years. 2.5 Apart from these problems, HMGN MOF has some observations on the implementation of the project. This project did not give adequate thought to local inputs including HMGN's financial contributions. As a result, subprojects especially with components involving heavy procurement like the Computer-Aided Teaching Programme, faced difficulty in managing local costs. The Arun III Access Road is a typical hilly road tailored to local geograph- ical conditions. For such a project a consortium of foreign and local consultants (and technical personnel) for both the feasibility study and detail design would have been very fruitful and practical. IDA could have been more helpful by passing on more information on complex and sophisti- cated projects like the Karnali Bridge Design Project through its experts or by providing manpower tr4ining to the Borrower since the Borrower's perfor- mance in this particula. project was somewhat restricted because of its high technology requirements. The part-time consultants under the project were very costly. HMGN feels that other arrangements need to be made in the future to realize the objective of providing short term consultancy services in a more economical manner.  - 13 - PART III - STATISTICAL INFORMATION 3.1 Related IDA Credits Credit Year of Title Purpose Approval Status Comments 1. First Provision of assistance 1976 Closed June Technical in the preparation of 30, 1983. Assistance feasibility studies, PCR issued Project design and engineering November, 1985 (Cr. 659-NEP) work in order to develop a pipeline of high priority projects suitable for by IDA and other external donors. 2. Sunsari Morang Rehabilitation and 1987 Under The detailed Irrigation II improvement of existing implementa- design work Project irrigation system. tion for this US$50 (Cr. 1814-NEP) million project was executed under Subproject #10 of Cr. 1379- NEP. 3. Arun III Construction of a 192 1989 Under The survey work Access Road km access road from implementa- needed for this Project Basantpur to the site tion US$32.8 million (Cr. 2029-NEP) of this proposed Arun project was done III Power Station. under Subproject #8 of Cr. 1379- NEP. 3.2 Prolect Timetable Date Date Date Item Planned Revised Actual - Identification - Preparation Mar-Nov 1982 -- Mar-Nov 1982 - Appraisal Mission Not applicable. Appraisals are not done for this type of multi-sectoral, free-standing Credit. - Credit Negotiations April 15, 1983 -- April 28, 1983 - Board Approval May 24, 1983 -- June 2, 1983 - Credit Signature -- ^- Sept 1, 1983 - Credit Effectiveness Nov. 29, 1983 -- Dec 27, 1983 - Ccedit Closing Dec 31, 1987 Dec 31, 1988/ Dec 31, 1990 1989 & 1990 - Credit Cowspletion June 30, 1987 -- April 30, 1991  - 14 _ 3.3 Credit Disbursements A. Cumulative Estimated and Actual Disbursements IDA Fiscal Year (US$ Million) FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 Appraisal Estimate 1.0 3.0 5.0 5.4 6.0 6.0 6.0 6.0 Actual - 0.3 1.1 2.0 3.1 5.2 6.2 6.7 Actual as % of Estimate - 1 22 37 52 87 103 112 Date of Final Disbursement: April 4, 1991 B. Actual Disbursements in SDRs IDA Fiscal Year IDA FY SDR (Mil) Percent 1984 -- 0 1985 0.3 5.1 1986 1.0 18.7 1987 1.8 31.3 1988 2.6 46.0 1989 4.2 74.7 1990 5.0 89.2 1991 5.3 95.2 (to April 4, 1991) Comment: SDR 5.6 million was approved for Credit 1379 and at that time was equivalent to US Dollars 6.0 million. At completion, SDR 300,000 was cancelled; however, because the SDR strengthened against the US dollar, US Dollars are disbursed over the appraisal estimate.  - 15 - 3.4 Project Costs and FinancinA A. Proiect Costs President's Report E,timate Actual (US$ Mil) (USS Mil) TOTAL 6.0 6.7 1/ A breakdown of project costs by individual subprojects is given below: Subproject Subproject Actual Number Name (SDR) 1 Design of Karnali Bridge 1,029,047 2 Water Resources Adviser (Legal Services) 319,472 3 Panel of Experts for Hydroelectric Projects 164,962 4 Population Project Preparation 30,205 5 Population Studies 10,397 6 Tarai Agricultural Development Project Study 17,007 7 Administration and Management Study of the Institute of Agricultural and Animal Sciences, Rampur 5,914 8 Arun III Access Road Survey (Dhan Kuta-Khandbari) 305,394 9 Least Cost Energy Generation Expansion Plan (1986-20005) 138,870 10 Detail Design for Stage II of Sunsari Morang Irrigation Project 985,337 11 Establishment of Computer Training Facility at Tribhuvan University Institute of Engineering 114,391 12 Arun III Access Road Detailed Engineering 1,462,466 13 West and Central Development Regions Water Supply 200,820 14 Study-Greater Kathmandu Water Drainage Master Plan 305,872 15 Study-Predesign Investigation for Arun III Hydropower Project 242,940 5,333,094 1/ Disbursements did not exceed the SDR allocation of SDR 5.6 million  - 16 - B. Project Financing Planned Credit Source Agreement Revised Final Comments (US$'000) (US$'OOO) (US$'000) IDA 6.0 -- 6.7 The Credit was denominated in SDRs, which did not change. Because of exchange rate fluctuations the US Dollar Amount increased as the SDR strengthened against the US Dollar. TOTAL 6.0 -- 6.7 3.5 Proiect Results Studies Comment: A major purpose of the Credit was to provide funds for pre- investment studies, e.g.: design, detaA'id engineering and feasibility as needed. The studies completed under the Credit subsequertly had an impact on the following investment proj3cts: Subproiect No. Proiect Name #3 Primary Education Project - US$ 3.5 million #5 Primary Education Project - US$ 3.5 million #6 Calcium Carbide Project - US$ 9.4 million  - 7- 3.6 Status of Covenants Deadline for Covenant Subiect Compliance Status DCA Section 4.01(c) Appointment of qualified and 12/22/83 Completed experienced Project Coordinator DCA Section 4.04(e) Submission of Quarterly Reports 3/31/84 General Reports submitted to Technical Division commencing 12/31/84 DCA Section 4.04(d) Submission of Project Completion 4/30/91 Completed Report (PCR) by Borrower DCA Section 4.05(b) Furnish subproject Accounts and Annually Under Audits Compliance DCA Section 4.06 Draft Standardized Consultant 3/31/84 Completed early 1990 Contract DCA Section 4.07 Program for strengthening local 12/31/83 Deleted in agreement consulting industry with Government in July 1989 as similar study undertaken by Bank's Internal Audit Dept. 3.7 Use of IDA Resources A. Staff Inputs (Staff Weeks) Stage of Prolect Cycle Planned Revised Final Comments Through Appraisal - - - No appraisal Preparation of - - 5.7 President's Report through Board Approval Board Approval - - 1.9 Through Effectiveness Supervision - - 19 weeks I/ 1/ Staff inputs by Task Managers of individual subprojects have not been included.  - 18 - B. Missions Stage of Month/ Number of Days Specialization Performance Types Proiect Cycle Year Persons in Field Represented Rating Status of problems Through 11/82 1 7 TA I 0 a! Preparation of President's Report President's - - - TA 1 0 Report through Board Approval Board Approval 11/83 1 7 TA 2 0 through Effectiveness Supervision 1/84 1 6 TA 1 0 7/84 1 6 TA 2 0 11/84 1 7 TA 2 0 7/85 1 7 TA 2 0 11/85 1 3 TA 2 0 5/86 1 10 TA 2 0 9/86 1 7 TA 2 0 9/87 1 14 TA 2 0 2/8,8 1 11 iA 2 0 10/88 2 15 TA 2 0 4/89 1 7 TA 2 0 9/89 1 11 TA 2 0 3/90 1 5 TA 2 0 4/91 1 12 TA 2 0 a/ 0 - "Other" refers to disbursement delays.  - 19 - Annex I Page I of 7 PROJECT COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1379-NEP) Description of Subprolects and The Results 1. Design of Karnali Bridge Executing Agency : Department of Roads, Ministry of Works and Transport, Government of Nepal Amount : SDR 1,029,047 Consulting engineers were selected to undertake a series of studies leading to the establishment of the final design specifications to be used in the construction of the Karnali River Bridge. The contract signed on March 13, 1984 covered a 54 week assignment. It encompassed studies on the expected forces to be applied to the proposed bridge in order to determine the degree of stress and amount of tonnage the bridge should be designed to withstand; soil investigations and topographical surveys at the site area in order to pinpoint the optimum location for placing the bridge structure, as well as preliminary cost estimates for the bridge. These studies helped to speed up the preparatory work for the Third Highways Project (Credit No.1515-NEP) financed by IDA in the amount of US$ 47.5 million. A related activity was the Karnali Prepa-ation Project - Phase I (Credit No.1452-NEP for US$ 11.0 million) which generated among others, a feasibility study of the Karnali (Chisapani) Multipurpose Project on the Karnali River in Nepal. 2. Water Resources Adviser (Legal Services) Executing Agency : Ministry of Water Resources, Government of Nepal Amount : SDR 333,900 Under this subproject, the Government signed a contract on March 13, 1984 for the services of a legal consultant to provide "opinion, conduct research and studies, make recommendations, draft documents of varied nature, perform and assist in negotiations or other tasks as shall be determined by the Government on legal (municipal, or international) institutional, financial and related issues relating to or in connection with the exploitation and development of water resources in Nepal."  - 20 - Annex 1 Page 2 of 7 The assignment was primarily focused on the Government's intention to develop the Karnali River. Its objective %as to provide the Government with assistance in the collection of relevant documentation on the international theory and practice on water sharing rights and related matters including advice on all legal matters connected with the implementation of Nepal's Water Resources Development Plan. The latter included the provision of legal advice on matters pertaining to negotiations with India, including the creation of bi-national legal entities for part of the implemtntation of the Water Resources Development Plan, as well as the legal framework to be created for the best possible external financing of projects. 3. Panel of Experts for Hydroelectric Projects Executing Agency : Nepal Electricity Authority, Government of Nepal Amount : SDR 165,000 This subproject provided for a review of the feasibility report for the Sapt Gandki Hydroelectric Project by a panel of four experts. The Panel was also assigned the responsibility for supervising the undertaking of Hydraulic Model Tests for the Marsyangdi Hydroelectric Project (Credit 1478-NEP for US$107 Million) during the project preparation stage, as well as advice on the most economical method of dealing with the cracks that had developed in the Kulekhani Dam and the landslide near the intake under the Kulekhani Project (Cr. 600-NEP). A subsidiary activity under this subproject was the provision of the services of a Claims Advisor to assist the Marsyangdi Project Authority in claim handling procedures generated by the numerous contractors providing services to the Marsyangdi Hydroelecttic Development Board under the Marsyangdi Hydroelectric Project. '4. Population Project Preparation Executing Agency : Ministry of Health, Government of Nepal Amount : SDR 30,205 This subproject financed a consultancy assisting FP/MCH and the Population Commission in a pre-project study of service intensification of the FP/MCH Program and training requirements. The Study undertaken by a Task Force of eight national technical consultants assisted by a foreign expert was for the purpose of preparing a population project proposal for IDA financing. There appears to have been no follow-up action on the Study by IDA, even though a preliminary proposal for a US$11.6 million project was developed. It is understood that this was because USAID and UNFPA continued to provide the further assistance needed in this area eliminating the need for IDA's intervention.  - 21 - Annex 1 Page 3 of 7 5. Population Studies Executing Agency : Ministry of Health, Government of Nepal Amount : SDR 10,369 The subproject financed two studies. The first on Population Research and Training Centers and the second on Vital Registration. A project proposal was developed by IDA for a US$11.0 million investment for the construction of permanent structures for the national training center at Kathmandu and three regional centers. As with the previous subproject, follow-up action was not pursued since further training activities continued to be financed by UNFPA and USAID. 6. Tarai Agricultural Development Proiect Study Executing Agency : Ministry of Agriculture (MOA), Government of Nepal Amount : SDR 17,007 This subproject pertains to the services provided by a local consulting firm under the first technical assistance credit to Nepal (Credit 659-NEP). Under subproject #9 of this previous Credit, this 1.irm was contracted to prepare the Tarai Agriculture Development Project for World Bank financing in accordance with the provisions of the Aide Memoire of the FAO/World Bank Cooperative Program Project Identification Mission of December 2, 1982. The work was completed between December 2, 1982 and April 27, 1983 at the cost of US$100,000. US$80,000 of the amount due to the consultant firm was disbursed under Cr. 659-NEP. As no more funds were available to meet the balance of US$20,000 from Credit 659, the Government requested that this payment be made under Credit 1379-NEP. The contract covering the balance amount due to the local firm was signed with MOA on April 15, 19P5. 7. Adminietration and Management Study of the Institute of Agricultural and Animal Sciences. Rampur Executing Agency : Ministry of Education, Government of Nepal Amount : SDR 5,914 This activity represents an overdue payment for work completed under subproject 16 of the first technical assistance Credit to Nepal (CR. 659-NEP). Payment was made to a local consulting firm for a review it had undertaken of the objectives and activities of the Institute of Agricultural  - 22 - Annex I Page 4 of 7 Sciences (IAAS), Rampur with specific focus on its three main functions - instruction, research and extension. The review was carried out by a team of three experts from this firm. The team was required to make recommendations on measures to strengthen and improve the administration and management of the Institute in the context of the proposed IDA financed Agricultural Development Project which was expected to implement those recommendations acceptable to the Government and IDA. 8. Arun III Access Road Survey (Dhankuta-Khandbari) Executing Agency : Nepal Electricity Authority (NEA), Government of Nepal Amount : SDR 305,394 This subproject was established in October 1986. Its ultimate objective was to speed up the implementation of the Arun III - Hydroelectric Power Project. Hence NEA assumed the role of implementing agency. The Arun III Power Project was identified by the Master Plan Study for th2 utilization of the water resources of the Kosi River Basin as the most promising proposal for harnessing the regions hydropower potential. However, the road to connect the site with Dhankuta (Hile) remained a serious bottleneck to implementing the hydropower project. The studies commissioned under the subproject were to help to speed-up the detailed design and construction work of the Access Road from Dhankuta (Hile). They involved: the preparation of a topographical map of 1:5000 scale with a contour interval of 5 km to determine the proposed road alignment, bridge requirement and cost estimation of the Access Road from Dhankuta to the Arun III hydroproject site; conducting a field survey covering topographical, geo-technical and hydrological studies to identify the proposed route alignment; carrying out a study of the road alignment to identify the most cost-effective and technically feasible route; carrying out a route survey in the selected alignment wherever necessary and conducting a cross- sectional survey along the alignment. The Arun III Hydroelectric Project will stimulate development activity in the region through the provision of a cheap source of energy. 9. Least Cost Energy Generation Expansion Plan Executing Agency : Nepal Electricity Authority (NEA) Government of Nepal Amount : SDR 140,000 This subproject (cofinanced by CIDA) helped to finance an electric power system planning study for Nepal covering the electricity load forecast for 1986, as a basis for the preparation of a Generation Expansion  - 23 - Annex 1 Page 5 of 7 Plan for the country for the period 1986 to 2005. The objective of the study was to enable decisions to be taken on the next power generation project to meet the long-term load demand of Nepal. As such, it contributed to the formulation of the proposal for the Arun III Hydroelectric Project. This subproject is consequently closely linked to subproject #8 of this Credit which was a prerequisite for the successful implementation of the Arun III Project. The subproject also provided for assistance (system planning) to enhance NEA's capacity to carry out similar studies on a regular basis in the future. Additionally, the subproject provided funding for the Donor's Meeting on the development of the Nepal Power Subsector which was convened in Paris in 1988. 10. Detail Design for Stage II of Sunseri Morang Irrigation Project Executing Agency : Department of Irrigation, Government of Nepal Amount : SDR 1,100,000 This subproject has helped to speed up the Bank's appraisal of the Sunsari Morang II Irrigation Project (estimated cost US$50.0 million) through the use of the consultancy services for the completion of baseline and survey design work and the preparation of tender documents for the proposed project. Apart from improvements to the Chatra Main Canal, the project includes improvements to Stage I of the Sunsari Morang Project, providing irrigation to about 9,759 ha; rehabilitation and construction of surface irrigation and drainage network on about 16,700 ha (the Stage II area); and the construction of 1,500 tubewells and other works which would help to increase agricultural production and farmers' incomes through the provision of a reliable supply of water to users enabling them to optimize irrigation benefits. 11. Establishment of Computer Training Facility at the Tribhuvan University Institute of Engineering. Executing Agency : Institute of Engineering (IOE), University of Tribhuvan Amount : SDR 140,500 Under subproject 11 the services of a consultant were secured to assist in the start-up of a new computer assisted teaching facility at the Central Pulchowak Campus of IOE. Under the subproject IOE's Computer Facility was provided with modern technology, software and services to  - 24 - Annex 1 Page 6 of 7 support and strengthen ongoing instructional programs and in particular to provide remedial teaching in Science and Mathematics to first year students of the Technicians Training Program. 12. Arun III Access Road Detailed Engineering Executing Agency : Department of Roads, Government of Nepal Amount : SDR 1,462,637 The subproject extended the assignment of the consultant firm for design work initiated under subproject #8 to include the detailed engineering work for the Arun III Access Road. The request followed a suggestion in an Aide Memoire prepared by a World Bank Transport Mission to Nepal in 1988. 13. West and Central Development Regions Water Supply Study Executing Agency : Department of Water Supply and Sewerage, Governnment of Nepal Amount : SDR 250,000 This activity involved the assessment of 158 reports prepared by local consultants on rural water supply projects proposed for the development of the Western and Central Regions of Nepal. The work was undertaken by a firm of foreign consultants working in collaboration with national consultant firms. The objective of this exercise was to ensure that these reports were of a quality acceptable to external donors. The Assessment Report submitted conforms with the latest Government policy which emphasizes community involvement in the planning, construction and maintenance of systems by User Committees. Consequently, it gives community involvement greater stress over strict engineering intervention in project preparation. The Report covered the preparation of about 65 new rural water supply and sanitation projects estimated to cost about US$12.0 million. Under a parallel UNDP effort, the Management Information and Technical Support Project (NEP/88/005), about 280 existing schemes were prepared for rehabilitation prior to their being handed over to User Committees. The two preparatory exercises together provide a basis for a package of investments in the rural water supply and sanitation sector by interested bilateral or multilateral agencies. The Regional Water and Sanitation Group South Asia (RWSGSA) has also prepared a Rural Water and Sanitation Sector Memorandum which will serve as a 1'b%sis for a dialogue with the Government to address the main problems in this sector.  - 25 - Annex 1 Page 7 of 7 14. Greater Kathmandu Water Drainage Master Plan Study Executing Agency : Department of Water Supply and Sewerage, Government of Nepal Amount : SDR 354,000 Under this subproject a contract was signed on March 3, 1989 requiring the consultant to prepare a Drainage Master Plan for Greater Kathmandu (i.e., Kathmandu-Lalitpur) along with a Five Year Investment Plan. The Drainage Master Plan presented a broad outline of the system concept, the technical criteria and methods appropriate to various elements of the system, including their linkages to other aspects of urban development. It also identified the most critical measures needing immediate attention. The Five Year Investment Plan prepared by the Consultant identified the more urgent works in the Master Plan. It included an appraisal of the institutional constraints and the technical assistance needs for the design and implementation of these works as well as their cost implications. The Study, completed in September 1990, envisages a long term investment requirement of about US$320 million in 1990 prices for works covering storm drainage, sanitary sewers and sewage treatment as well as preliminary engineering for urgent drainage and allied works. An interim package with a 20 year horizon costing about US$180 million in five year time slices is also indicated. The 1991-1995 program of about US$51 million, excluding contingencies, represents a more realistic figure covering such urgent works as the rehabilitation of existing facilities and the construction of new treatment plants. The Study highlights in particular the piecemeal effort pursued in the provision of stormwater drainage and sanitary sewerage which also function as combined sewers in the process of operation requiring a major effort if the situation is to be turned around. 15. PredesiRn Investigation for Arun III Hydropower Prolect Executing Agency : Nepal Electricity Authority Government of Nepal Amount : SDR 256,000 The objective of this subproject was to finance supervision by the Panel of Experts of the detailed engineering study of the Arun III Hydroelectric Project which was financed by KFW. This subproject represents the logical conclusion of the activity commenced under Subprojects #1, #8, #9 and #12.  - 27 - Annex 2 Page 1 of 2 PROJECT COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1379-NEP) Subpro4ects Financed by Eligible Category Actual Actual A. Pre-Investment Studies Allocation Disbursements Disbursements (SDR) (SDR) (US$ equivalent) 1. Design of Karnali Bridge 1,029,047 1,029,047 1,109,114 (Subproject #1) 2. Panel of Experts for Hydroelectric Projects 165,000 164,962 191,077 (Subproject #3) 3. Population Project Preparation 30,205 30,205 30,913 (Subproject #4) 4. Tarai Agricultural Development 17,007 17,007 20,000 Project Study (Subproject #6) 5. Arun III Access Road Survey 305,394 305,394 390,474 (Dhankuta-Khandabari) (Subproject #8) 6. Least Cost Energy Generation Expansion Plan (1986-2000) (Subproject #9) 140,000 138,870 179,797 7. Detail Design for Stage II of Sunsari Morang Irrigation Project (Subproject #10) 1,100,000 985,337 1,276,468 8. Arun III Access Road Detailed Engineering (Subproject #12) 1,462,637 1,462,466 1,917,922 9. West and Central Development Regions Water Supply Study (Subproject #13) 250,000 200,820 272,382 10. Greater Kathmandu Master Plan Study (Subproject #14) 354,000 305,872 400,716 11. Predesign Investigation for Arun III Hydropower Project (Subproject #15) 256,000 242,940 314,477  - 28 - Annex 2 Page 2 of 2 B. Policy Oriented and Institutional Studies Actual Actual Allocation Disbursements Disbursements (SDR) (SDR) (US$ equivalent) 1. Water Resources Adviser 333,900 319,472 387,703 (Legal Services) (Subproject #2) 2. Population Studies (Subproject #5) 10,369 10,397 11,228 3. Administration and Management Study of the Institute of Agricultural and Animal Sciences, Rampur (Subproject #7) 5,914 5,914 6,729 4. Establishment of Computer Training Facility at Tribhuvan University Institute of Engineering (Subproject #11) 140,500 114,391 147,763 Total 5,600,000 1/ 5,333,094 2/ 6,656,763 1/ Subproject totals add up to SDR 5,599,973 due to rounding off. 2/ SDR 266,906 was cancelled as of April 4, 1991.  - 29 - Annex 3 Page 1 of 2 PROJECT COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1379-NEP) Follow-up Investment and Investment Support Subproject No. Project Follow-up Support (US$M) (US$M) #1. Design of Third Highways - 47.5 Karnali Bridge (Cr.1515) #2. Adviser on Marsyangdi Hydro - 107.0 Water Resources Power (Cr.1478) (Legal Services) 1#3. Panel of Experts for Hydroelectric Projects #3. As above Proposed Sapt - Review of Gandaki Hydro feasibility Report #8. Arun III Arun III 32.8* Access Rd. Access Rd. survey #12. Arun III Detailed Eng. #10. Detailed Sunsari Morang 50.0 Design Stage II Irrigation II Suns6ri Morang (Cr.1814) #13. West and Projected 28.0 Central Investment Development Regions Water Supply #14. Greater Kathmandu Projected 51.16 Water Drainage Investment Master Plan * This investment could increase substantially to an estimated US$100 million. See paragraph 1.15.  - 30 - Annex 3 Page 2 of 2 Subproiect No. Project Follow-up Support #9. Least Cost Energy Arun III 207.2** Generation Hydro Power Expansion Plan #15. Predesign Investigation Arun III Hydropower Project Total 369.16 154.5 ** Project under preparation  - 31 - Annex 4 Page 1. of 2 PROJECT COMPLETION REPORT KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1379-NEP) Subproiects Financed by Sector Actual Disbursements (SDR) Infrastructure - (62%) Design of Karnali Bridge 1,029,047 (Subproject #1) Arun III Access Road Survey 305,394 (Dhankuta-Khandbari) (Subproject #8) Arun III Access Road 1,462,466 Detailed Engineering (Subproject #12) West and Central 200,820 Development Regions Water Supply Study (Subproject #13) Greater Kathmandu Water Drainage Master Plan Study 305,872 (Subproject #14) Total 3,303,599 Population & Human Resources - (3%) Population Project 30,205 Preparation (Subproject #4) Population Studies 10,397 (Subproject #5)  - 32 - Annex 4 Page 2 of 2 Actual Disbursements (SDR) Adm.& Mgt.Study of 5,914 the Institute of Agricultural & Animal Sciences, Rampur (Subproject #7) Establishment of 114,391 Computer Trg.Facility at Tribhuvan University Institute of Engineering Total 160,907 Agriculture - (19%) Tarai Agricultural 17,007 Development Project Study (Subproject #6) Detailed Design for Stage II of Sunsari Morang Irrigation Project (Subproject #10) 985,337 Total 1,002,344 Energy - (16%) Water Resources 319,472 Adviser (Legal Services)* (Subproject #2) Panel of Experts for 164,962 Hydroelectric Projects (Subproject #3) Least Cost Energy 138,870 Generation Expansion Plan (Subproject #9) Predesign Investigation for 242,940 Arun III Hydropower Project (Subproject #15) Total 866,244 Grand Total 5,333,094 *Served both Energy and Agriculture