India - Madhya Pradesh Major Irrigation Project

Document of The World Bank FOR OFFI1CAL USE ONDLY Report No. 11468 PROJECT COMPLETION REPORT INDIA MADHYA PRADESH MAJOR IRRIGATION PROJECT (CREDIT 1177-IN) DECEMBER 23, 1992 Agriculture Operations Division Country Department II South Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Name of currency = Indian Rupees (Rs) Appraisal Year (1980) US$1 = Rs 8.00 Completion Year (1991) US$1 = Rs 26.00 FISCAL YEAR OF BORROWER April 1 - March 31 ABBREVIATIONS CADA Command Area Development Authorities CWC Central Water Commission CWPRS Central Water Power Research Station, Pune ERR Economic Internal Rate of Return GOI Government of India GOMP Government of Madhya Pradesh HBP Hasdeo Bango Project HMITC Haryana Minor Irrigation Tubewell Corporation MRP Mahanadi Reservoir Project O&M Operation and Maintenance PCR Project Completion Report SAR Staff Appraisal Report SCF Standard Conversion Factor SDR Special Drawing Rights WAPCOS Water and Power Consultants GLOSSARY Chak Irrigation service area below the Government outlet (about 40 ha) Sub-chak Block or irrigation service area below the Government turnout (about 8 ha) Kharif Main agricultural growing season (rainy season, June to October) Rabi Second agricultural growing season (dry season, October to February)  F'OR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation December 23, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on India Madhva Pradesh Major Irriaation Proiect (Credit 1177-IN) Attached is a copy of the report entitled "Project Completion Report on India - Madhya Pradesh Major Irrigation Project (Credit 1 1 77-IN)" prepared by the FAO/CP and the South Asia Regional Office, with Part II contributed by the Borrower. The Report provides an accurate account of project implementation. Benefits and operational costs, however, deserve close scrutiny. The project did not succeed in collapsing the time needed to complete major irrigation structures as well as minor distributaries. In the absence of special institutional arrangements the physical objectives were reached over ten years, instead of the five years originally provided for. Accordingly, the PCR reestimates the rate of return at 1 5 percent, instead of 21 percent estimated at appraisal. The revised estimate may, however, be optimistic. It hinges on effective operation and maintenance and on the replication, over a wide area, of higher yields than estimated at appraisal. Follow-up action is needed to secure adequate maintenance funding and effective support services. On balance, the project is rated as satisfactory and sustainability as uncertain. An audit is planned. 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 OMCIAL USE ONLY PROJECT COMPLETION REPORT INDIA MADHYA PRADESH MAJOR IRRIGATION PROJECT (Credit 1177-IN) TABLE OF CONTENTS PREFACE ............................................. i EVALUATION SUMMARY ................................................ iii PART I PROJECT REVIEW FROM BANK'S PERSPECTIVE ......... ..................... 1 1. Project Identity .......................................... 1 2. Background ............................................. 1 3. Project Objectives and Description ........................................... 1 4. Project Design and Organization .. 3 5. Project Implementation .........................;... 4 6. Project Results .. 5 7. Project Sustainability .. 6 8. Bank's Performance .. 6 9. Borrower's Performance ...........................-... 7 10. Project Relationship .. 8 11. Consulting Services .. 8 12. Project Documentation and Data ..........................9 PART II BORROWER'S COMMENTS ON PARTS I AND M o.10 PART III STATISTICAL TABLES 1. Related Bank Cdits. .14 2. Project Timetable.16 3. Credit Disbursements. 17 4. Project Implementation .18 5. Project Cost and Financing ................................................ 22 6. Project Results ...................................................... 24 7. Status of Covenants . .................................................. 27 8. Use of Bank Resources .................................................. 29 ANNEX 1 ECONOMIC AND FINANCIAL ANALYSIS .41 Tables: 1. Summary of Financial and Economic Prices .................................... 38 2. Derivation of Economic Prices at Farm-gate for Traded Commodities ....................... 40 3. Inflation Factors and Exchange Rates ........................................ 43 4. Reallocation of Command Amas as Development Proceeds (Mahanadi Reservoir) ................. 44 5 Reallocation of Command Areas as Development Proceeds (Hasdeo Bango) .................... 45 5A. Yield Estimates for Future Without Project (WOP) and With project (WP) Situations ............... 46 6. Economic Analysis-Mahanadi Reservoir ...................... 47 7. Economic Analysis-Hasdeo Bango ............................ 50 MAPS IBRD 15148 R IBRD 15149 R 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.   i PROJECT COMPLETION REPORT INDIA MADHYA PRADESH MAJOR IRRIGATION PROJECT (Credit 1177-IN) PREFACE This is the Project Completion Report (PCR) for the Madhya Pradesh Irrigation Project for which an IDA Credit of SDR195.2 million (Credit 1177-IN) was approved in September 1981. The credit closed on June 30, 1991, four years behind schedule. The final disbursement from the credit was made on October 28, 1991. The undisbursed balance of SDR29.7 million (US$40.6 million equivalent) was cancelled. All US$ amounts presented in this report are expressed as US$ equivalent. Parts I (Project Review from the Bank's Perspective) and III (Statistical Information) were prepared by an FAO/CP project completion mission which visited India in November/December 1991. In March 1992, the Government of Madhya Pradesh was requested to comment on Parts I and III and to prepare Part II (Project Review from the Borrower's Perspective). The two Chief Engineers responsible for executing the two major project components have commented on Parts I and III, but this is the only content of Part II that has been received. The preparation of this PCR was based inter alia on the Staff Appraisal Report, the legal documents, supervision reports, correspondence between the Bank and the Borrower, internal Bank memoranda, relevant Bank reports on the sector, and discussions with the Borrower's project staff and the Bank's project staff in the New Delhi Office.   iii PROJECT COMPLETION REPORT INDIA MADHYA PRADESH MAJOR IRRIGATION PROJECT (Credit 1177-IN) EVALUATION SUMMARY Objectivea 1. The objectives of the project (which is a five-year time slice of a 20-year program superimposed on elderly existing run-of-river schemes) were to complete the planned and partly built reservoirs in Mahanadi Reservoir Project and Hasdeo Bango Project, and to extend and modernize the irrigation conveyance system to meet optimal water requirements and enhance efficiency of operation for mainly paddy cultivation. Implementation Experience 2. The project implementation closely followed the Staff Appraisal Report (SAR) with regard to components, but some of the components were increased in content during implemen- tation. Due to the depreciation in the value of the rupee in terms of the US dollar and the Special Drawing Rights (SDR), expenditure in rupees corresponded to less in dollars and SDR than estimated in the SAR. In order to use some of the excess credit made available by the depreciation, the scope of the project was changed to increase the area to be remodelled to 213,000 ha from the original 154,000 ha. The most critical deviation between planned and actual implementation was the failure to develop the main canal system in tandem with the minor canalization. The Government of Madhya Pradesh (GOMP) also had difficulty in posting sufficient staff to the project (a risk identified at appraisal), and of retaining senior engineers in their posts. The project has taken ten years to nearly fulfill the original five-year program. As of 28 October 1991 (the date of final disbursement), about 85% of the original credit amount of SDR195.2 million had been disbursed. The undisbursed balance of SDR 29.7 million was cancelled. Results 3. The project achieved most of its objectives in terms of components built. However, it is too early to judge properly the improvement of operation and maintenance and hence the benefits in terms of increased yield. These benefits only started in the Mahanadi Reservoir Project in 1986/87 and in the Hasdeo Bango Dam Project in 1990/91. However, farming research and monitoring have indicated that higher yields are being obtained than estimated in the SAR.1 The results of the delays in project implementation reduced the economic rate of return (ERR) from the appraisal estimate of 21% to 15%. This variation is smaller than might have been expected, due to yield levels being slightly higher than estimated at appraisal. 4. At full development, the annual production of food crops is estimated to increase by 1,254,000 tons of paddy (SAR 975,000 tons), 237,000 tons of other grains (SAR 184,000 tons), 1,071,000 tons of sugarcane (SAR 1,071,000 tons) and about 41,000 tons of groundnut. Net farm incomes are estimated to increase by about 160% due to the project. I Carried out by the Agricultural Department and the Research Unit of Raipur Agriculture University.  iv Sustainability 5. Given efficient continuing operation and maintenance (O&M), the benefits generated by the project's irrigation components are likely to increase and then be maintained during the economic life of the project. However, the sustainability of the project will be greatly in jeopardy unless two conditions are fulfilled: sufficient funds, based on actual requirements, are made available for O&M;2 and the unlined sub-chak field canals are kept operational. 6. Also, a gradual decline in the efficiency and conditions of canal lining over the years is inevitable and it is anticipated that, even with effective O&M, most of the lining will require replacement in about 40 years time. Findings and Lessons Learned 7. Findings. The project, viewed overall, was reasonably well prepared. The project concept was sound and the roles and responsibilities of the main agencies concerned were clearly defined and understood. The project has met its implementation targets, although with significant delays. With only a limited proportion of developed area now switched from 'protective' irrigation to the more efficient demand driven basis (Mahanadi Reservoir Project 4,700 ha, Hasdeo Bango Project 9,000 ha), it is difficult to estimate project benefits in terms of output. However, on the basis of the small areas which have been switched, the future looks most promising and, if adequate funding is available for efficient continuing operation and maintenance, the benefits generated by the project should be maintained throughout its economic life. 8. Lessons Learned. The main lessons of experience for the Bank are: (a) consulting contracts should be in a final state for signature prior to credit effectiveness; (b) all significant designs for the first two years construction should be complete by appraisal; (c) assurances of counterpart funding and resource availability should be closely examined to avoid eventual problems which cause implementation delays; (d) the ability of an engineering organization as in India to integrate all aspects of an irrigation project, so as to obtain optimally phased development of productive irnigation, is doubtful when the project document has optimistic construction targets and the project organization has to abide by public sector regulations; and (e) realistic budgets must be provided for O&M, if an irrigation project is to be sustainable. As for the Borrower, the main lesson is that every effort should be made to ensure continuity of senior staff to maintain a cohesive 'project team'. 2 At present, an average of Rs.80/ha/year is expended on O&M. Project engineers at the Mahanadi Reservoir Project and the Hasdeo Bango Dam Project consider effective O&M for sustainable operation requires Rs. 150/ha/year. However, O&M funding allocation should be based on actual requirements.  1 PROJECT COMPLETION REPORT INDIA MADHYA PRADESH MAJOR IRRIGATION PROJECT (Credit No. 1177-IN) PART I. PROJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identity Project Name Madhya Pradesh Major Irrigation Project Credit No. Credit 1177-IN RVP Unit South Asia Region Country : India Sector : Agriculture Sub-sector Irrigation 2. Background 2.1 The development objectives of the Government of India (GOI) at the time of project formulation included major emphasis on irrigation, energy and infrastructure. Investment in irrigation had, by this time, switched from concentration on main and branch canal conveyance with minor distribution being left to farmers, to projects which acknowledged the need for integrated major canal irrigation with the development of minor canalization and associated command area development. Such funding supported improved efficiency in system operation to ensure reliable supplies of water to farmers -- a prerequisite for efficient irrigation and economic projects. 2.2 Organization of irrigation commands at minor canal level had become, in many cases, the responsibility of Command Area Development Authorities (CADA). A main function of CADA was to coordinate activities of the State Agriculture and Irrigation Departments. Experience in the 1970s had shown that: (a) more emphasis was required on improving the efficiency and reliability of the canal system from source to irrigation outlet; (b) Government should accept greater responsibility for supplying water to an outlet close to individual landholding, to assist in construction of water courses conveying water to each field; (c) development of this micro-distribution system should proceed in blocks, in tandem with main supply works, to allow benefit to be obtained as soon as possible during the implementation process. These concepts were used in the project design. 3. Project Objectives and Description 3.1 The main objective of the project was to increase agricultural output (primarily paddy) by improving the quantity, reliability and timeliness of irrigation supplies to areas which were already receiving supplementary irrigation from run-of-river supplies. The project essentially  2 consisted of changing from 'protective' to 'productive'" irrigation in two on-going run-of-river projects, the Mahanadi Reservoir Project (MRP) and the Hasdeo Bango Project (HBP), together with provision for the planning and design of another, as yet unirrigated area (Arpa), and provision of a state-wide network of hydrological stations. 3.2 The original project financed a five-year slice of these two on-going irrigation development schemes, and also provided for the preparation of the Arpa Scheme. The main objectives of the project were to complete the planned storage reservoirs required to fully develop the available water resources and to serve the target commands, and to extend and modernize the conveyance system to meet peak water requirements and enhance efficiency of operation. The project involved the construction of Hasdeo Bango and Sondur Dams; a new diversion barrage at Rudri; improvements to three existing dams (Murumsilli, Dudhawa and Sikasar) and to Hasdeo Barrage; the extension and modernization of irrigation over 69,000 ha in the Mahanadi Reservoir Project and 85,000 ha in the Hasdeo Bango Project, including minor drainage works; pilot construction of sub-chak channels and field drains; construction and improvement of all-weather rural roads; detailed planning of the Arpa Scheme; farming systems research; a state-wide network of hydrometeorological stations, technical assistance; and monitoring and evaluation. 3.3 The project was restructured in 1990 to allow full utilization of credit savings by increasing the size of some components and by increasing disbursement percentage under Category I (Civil Works) of Schedule 1 of the Development Credit Agreement from 60% to 80%. The expansion of the Mahanadi Reservoir sub-project consisted of: (i) full completion of the new Rudri Barrage; (ii) additional construction and/or lining of feeder and branch canals; and (iii) increase in the unlined micro and rural irrigation networks by about 10% from 69,000 ha in the original project target to about 76,000 ha. All these additional works are encompassed within the original command of the Mahanadi Reservoir Project scheme and they are important to the overall project objectives. 3.4 The expansion of the Hasdeo Bango sub-project consisted of: (i) enhancing the level of completion of Hasdeo Bango Dam from 62% to 96%; (ii) completing the construction of 50 km of the Left Bank Canal with an additional unlined channel length of 18 km; (iii) completing construction of key branch canals; (iv) constructing associated distribution and micro networks, which will bring into irrigation about 52,000 ha of additional agricultural land in the area that is contiguous to the project command and part of the next time slice of the overall Hasdeo Bango Project scheme; and (v) extending rural road networks by 58 km. 3.5 The total project costs were estimated at appraisal to be Rs.3,513.6 million, equivalent to US$439.2 million. An IDA credit of SDR195.2 million (US$220 million equivalent) was to finance about 50% of the project cost, including all the foreign exchange component, estimated at US$63 million. Overall responsibility for project implementation was with the Chief Secretary in the Government of Madhya Pradesh (GOMP). Execution of the works was the responsibility of the Chief Engineer for the Mahanadi Reservoir Project and the Chief Engineer for the Hasdeo Bango Project under the coordination of the Engineer-in-Chief, Madhya Pradesh. I 'Protective' irrigation is the provision of irrigation water to supplement rainfall during drought periods during the kharif paddy season, and prevent disastrous failures. 'Productive' irrigation is the provision of irrigation water to ensure that crops receive the correct amount of moisture to ensure high yields.  3 4. Project Design and Organization 4.1 The project was originally formulated in the 1970s by the technical departments of GOMP and cleared by the Central Water Commission (CWC) of GOI. Bank involvement started in May 1979 when Water and Power Consultancy Services (WAPCOS) was hired by GOMP to prepare a feasibility study to Bank standards. Appraisal was based upon this feasibility study which addressed the main shortcomings of the original GOMP proposal (underestimation of crop water requirements, overestimation of system efficiency, insufficient regulation and incomplete provision for distributary systems). Sondur and Hasdeo Bango dams were under construction at the time of appraisal to designs which had been reviewed by the Bank and which were to be checked by the Dam Panel. Detailed project preparation had been completed for the feeder, and main and branch canals to be built in the first year of implementation. For dams, provision was made for a Dam Review Panel (national experts) to undertake periodic and comprehensive reviews of the plans, designs and construction of dams and related structures. The project design was conceptually simple and clear but technically complicated because the Mahanadi Reservoir Project relied upon the eventual combined use of six storage reservoirs. The design and project objectives were well understood by all directly concerned, though some parts of the micro network design were the subject of differing views. The project contained one main innovative feature - lined sub-minors and field channels in a predominantly rice growing area. It is most unusual to line canals in rice growing areas where irrigation water is traditionally passed from field to field, instead of using water courses to distribute to individual fields. The rationale for this innovative feature was well explained in the SAR but is still the subject of debate.2 The scope and scale of the project were appropriate to the circumstances. However, the inclusion of the hydrological network on a state-wide basis, although perhaps desirable for future projects, would have been more relevant for this project if restricted to the catchments contributing to the Mahanadi Reservoir and Hasdeo Bango Schemes and the Arpa proposal. 4.2 The project, viewed overall, was reasonably well prepared. The project concept was good and most components were clearly explained. The program for carrying out the investigation, design, tender and implementation aspects of engineering works was too optimistic and did not reflect the problems, already known at time of preparing the Staff Appraisal Report (SAR), of slow tender and evaluation processes which affect not only civil engineering contracts but also appointment of consultants to carry out the design work prior to drafting contracts. In addition, the implementation arrangements in the SAR did not acknowledge the short construction season (about five months per year for work for the irrigation infrastructure). 4.3 The timing of the project was appropriate with regard to government policies at the time (para 2.1). The SAR acknowledged the large staff increases necessary for the project -- 231 extra Irrigation Department engineers required in Year 1, increasing to 405 extra in Year 3 -- and also acknowledged that a heavy burden would be placed on existing Irrigation Department staff.3 However, the SAR did not explain how 231 engineers were to be productively absorbed into the project system in the first year, nor the effects that this might have on other state projects, nor the 2 "Tail-end" farmers interviewed supported the field channel design and stated that the design had ensured timely supplies of water. Engineers doubted the sustainability of the system at field level. 3 Staff Appraisal Report, para. 3.31.  4 effect of other World Bank-funded projects in the same state upon availability of engineers. 4.4 The roles and responsibilities of the main agencies concerned were clearly defined and understood. In general, these were validated under implementation conditions, although there were problems with the roads caused mainly by the desire of the Irrigation Department to have roads built by the Ayacut Department and not by Public Works Department. 4.5 The successes of the project are that so much was built and that, in most cases, major structures have been designed and built without serious problems. In the area of small-scale infrastructure, the lined canals within chak areas seem to have been most successful although the issue of their utility is still a matter of debate (para 4. 1). These successes were assisted by the SAR which specified technical assistance by national consulting firms. The areas of less success were indicated by the delay and failure to establish a block-by-block development sequence. This resulted in delays in obtaining benefits from the project. The aspects of project design and organization leading to these failures were: the implementation schedule was too optimistic; a lack of appreciation of the slow decision making process; an unrealistic assumption of the availability of trained engineers; and a failure to appreciate the effect of natural disasters upon local funds and resources and the need to allow for this in planning. 5. Project Implementation 5.1 Overall, the project has met most of its implementation targets. However, this could be achieved only following four one-year extensions, thereby prolonging the total project period to about nine years, compared to the originally planned period of about five years. Initial delays, budget constraints and a declining value of the rupee against the US dollar/SDR, affected disbursements and by June 1987, i.e. at the end of the originally planned implementation period, disbursements stood at about 55% of the SAR estimate. The credit disbursements increased over the next four years and by October 28, 1991 (the date of final disbursement), the disbursements totalled US$195.4 million or 89% of the original credit amount of US$220 million (85% in terms of SDR). As already noted (paras 3.3 and 3.4), the scope of the project was enlarged to cover an area of 213,000 ha, with micro irrigation and distribution networks as against the original target of 154,000 ha. Total project costs are now estimated at Rs.6,372.34 million (US$477.0 million), vis-a-vis an SAR estimate of Rs.3,513.6 million (US$439.2 million). 5.2 The most critical deviation between planned and actual project implementation was the failure to develop the main canal system in tandem with the minor canalization. The connection between main and minor canalization was planned in the SAR and was the way in which the project could be expected to generate benefits at an early stage. In the SAR,4 benefits were estimated to begin in Year 3. In fact, no benefits have occurred until Year 6, resulting in a lower reestimated economic rate of return (ERR) than the appraisal estimate. The failure to synchronize construction of main and minor canals simultaneously was caused by delays in the design for major structures, delays in awarding contracts, under-performing and defaulting contractors, and lack of continuity of senior engineers. Given the design and time scale of the project as outlined in the SAR, it is difficult to envisage how these problems could have been avoided. They might, however, have been reduced if GOMP had realized that the movement of senior staff would have deleterious effects on project continuity and staff supervision and accountability, if staff and working resources had been built up more rapidly, and if timely appointment of design consultants was ensured. 4 Staff Appraisal Report, Table T-27.  5 5.3 Of the three main project risks identil'ied in the SAR,s one became a reality: GOMP having difficulty in posting sufficient staff to the project. This did, in f'act, prove a great problem in the early years and throughout the project there was dil1iculty in retaining scenior enlginieers in their posts. The SAR expectation was that the use of consulltants would reduce the risk, and to some extent this was the case. However, the consultanits themselves had stafl'filng problems during the early years of the project. Natural and man-made disasters at state an(d sub-state level affected progress of the project due to curtailmenit of local fuind allocationis to the pro.ject. These included droughts in 1981, 1986, 1987 and 1988 and the leak ol toxic gas trom Union Carbide Works in Bhopal in 1984. Furthermore, tlhere was an unrieasonlable delay in awardinig contracts for consultancies and contractors. 5.4 During implementation, the Sondur Dam and Hasdeo Bango Dam reservoil areas came under submergence. The actual number of families to be resettled was 302 for the Sondur Dam and 2,716 for the Hasdeo Bango Dam, much morc tlhan the appraisal estimaltes of 190 and 1,400 families respectively. This variance was mainly due to a large number of "encroacher" f'amilies that were not officially listed in the revenue land iecords. Initially, GOMP was slow to react to Bank's requirement to formulate and implemeint a proper resettlemenit plan. However, at completion, the situation was a good dceal belter tlhan miglht have beeni expected. 5.5 As a result of experience gainied at the Sondul Dam, and the growing realization that the Bank was not going to overlook the problems, GOMP's resettlemenit and relhabilitation progr-am at the Hasdeo Bango Dam was better organized. The issue of' cash compensation disparity arose, but this was rectified by making extra ex-gratia payments to the al'fected families, especially those moved during the earlier stages of the program's implementation. The PCR mission visited two resettlement sites. Both were incomplete with regard to services, hut a major parlt of the work had been done. Not many people were seeni, but those met and interviewed seemed to be reasonably content. 6. Project Results 6. 1 The project has been, by and large, successflul in aclievinig most of its physical targets albeit with significant delays. The first beniel'its from the Malhanadi Reservoir Pro ject were in 1986/87 and from the Hasdeo Bango Project in 1990/91. It is expected that output of agricultural produce will increase year by year as the remaininlg bottlenecks in water supply are removed, and farmers transfer to higher yielding crops and cropping practices. There are reassuring indications that GOMP will press foorward with the remaining works necessary to complete the entire schemes. Thus, the project should achieve its main objective of increasing agricultural output. 6.2 Appraisal economic results were based upon the assumptionl that thle project-funded works would be completed in five years. In actual fact, the time takeni to carry out most of the works is ten years, with benefits lagging more tlhan predicted. As a result, tlle economic results estimated at appraisal have had to be lowered, par-ticuLlar-ly as the completioni date for the whole project is now expected to be the Year 2005 instead of 1996. The ERR for the project is 5 Staff Appraisal Report, Para. 6.07. Risks were (1) slow construction of sub- minors; (2) irrigation of summer paddy might be peimitted; (3) stafl'f recruitment difficulties.  6 reestimated at 15%, as against the appraisal estimate ol' 21%.6 This variation is smaller than might have been expected due to yield levels being slightly higher than estimated at appraisal. However, it should be noted that at present only about 10% of the irrigable command area has been actually developed. The re-estimated ERR is based on benefit build-up resulting from only a projected phased expansion of the developed area (Annex 1, Tables 4 and 5) and should, therefore, be considered indicative. At full development, the annual production7 is estimated to increase by 1,254,000 tons of paddy (SAR 975,000 tons), 237,000 tons of other grains (SAR 184,000 tons), 1,071,000 tons of sugarcanie (SAR 1,(071,()000 tons) and about 41,000 of groundnut. Net far-m incomes are estimated to increase by about 160%(I dLC to the project. 6.3 The implementation of the project has made a number of positive contributions in secondary benefits and hence the development of the project area and to the resources of the province. These are: secure and increased supplies of water to industry and for urban use; human resource development, in particular training and practical experience in the development of inigated agriculture; improvement in the physical environment, including provision of reservoirs as a social, nutritional and recreational resource; and multiplier effect of the project resulting in an undoubted increase in goods and services available in local towns, witlh a conresponding increase in local economic well being. 7. Proiect Sustainability 7.1 Given efficient continuing operation and maintenance, the benefits generated by the irrigation components are likely to increase and then be maintained durinig the economic life of the project. Most of the main structures (dams, batrages, regulators, etc.) are likely to last more than 100 years, if adequately maintained. The shorter life items, unless well maintained, are the minor canalization earthwork (particularly sub-chak channels) (1(0-15 years) and all canal lining works (20-40 years). Unless sufficient money is expended upon maintenance, canal lining will break up and become fragmented - which has in fact happened to distlibutaries lined about 30 years ago, only vestiges of which are now visible. The sub-chak and unlined chak channels are at risk fiom lack of maintenance because these channels have been built with flarmers' agreement but without purchasing the land from them. There is a danger that illegal outlets at the head of these channels will be built and the channels then fall into disuse and gradually disappear. 7.2 The risks of project performance deteriorating with time can be reduced by: ensuring that the beneficiaries pay the full cost of operation and maintenance (O&M); adequate funding of O&M;8 adequate staffing and training of project operation staff; enhanced awareness campaigns to emphasize the usefulness of sub-chak channels; and ftormation of effective farmers' users association to take over responsibility for O&M. In essence, the sustainability of the project will 6 The costs of and benefits arising from municipal and industlial water supply component were excluded in the SAR analysis but have been included in the PCR analysis (see para. 1 1 of Annex 1). 7 Based on yield estimates presenited in Annex 1, Table SA. 8 At present, an average of Rs.80/ha/year is expended on O&M. Pro'ject engineers at the Mahanadi Reservoir and Hasdeo Bango Projects consider effective O&M for sustainable operation requires Rs.150/ha/year. However, O&M funding allocation should be based on actual requirements. - --- --- -- ---~~~~~~~~~~~~~~  7 be greatly in jeopardy unless sufficient funds are made available foir operation and maintenance. Fund allocation for O&M should be based on actual requirements and not on some outdated standard parameter. In addition, it is also important that the unlined sub-chak field canals built under the project-supported pilot program covering 15,5(X) ha are well maintained so as to permit a proper evaluation of their peifoimance. If perfoimance of the pilot project is found beneficial, their adoption should be encouraged in other areas of the command. 8. Bank's Performance 8.1 Appraisal was on the whole well done, with a conceptually excellelnt project, slightly marred by excessive optimism about speed of delivery of designs, contract award, resources and hence achieving the required construction targets. The Bank's performance throughout the project cycle was competent and professional. Bank staff obtained a well thought out project from GOMP preparation and improved it at appraisal. Supervision was timely, thoughtful and tactful yet generally effective. Less emphasis on purely engineering supervision in early missions and the addition of an institutions specialist might have helped to mitigate later problems with contract adjudication and award. However, the Bank was responsive to mission staffing and soon provided a more mixed team for supervision. 8.2 The main lessons of expeilence that may be relevant to the Bank are: consulting contracts should be in a linal state lor signlature pi-ior to credit effectiveness; all significant designs for construction during the first two years of the project period should be complete by appraisal; assurances of counterpart funding and resourcc availability should be closely examined to avoid eventual problems wlhich cause implementation delays; full consideration should be giveni to the ability of the project organization to integrate all aspects of irrigationi development and its requirement to work under public sector regulations wlhen f'ixing constructioni targets, so that undue optimism is avoided; and realistic budgetary allocations for O&M, even al'fte closure of the project period, are essential if an illrigation pr'oject is to be sustainable. 9. Borrower's Performance 9.1 The BolTower made a genuine effort to meet the SAR targets in terms of finance and other resources, and tried hard to accelerate the development of tihe sclheme. Progress was not as rapid as projected in the SAR because of the implementation problems of budget allocation, staffing and letting of contracts (para 4.5). As a result of the lack of progress on tlhese problems, almost all aspects of the project were delayed beyond their target dates. Botlh the Mahaniadi Reservoir and the Hasdeo Bango projects sufl'ered firom chaniges ol' Chief Enginieers at critical periods. Frequent changing of senior staff resulled in lack of coordiniation, resettlemelnt delays, and reduced accountability. 9.2 During the preparation process, the Borrower was lhelpl'ul and enhllusiastic, and cooperated fully with the Bank. However, the planned rate of development (154,000 ha in a  8 30-month effective working period) was too optimistic, and provided a good example of the common dichotomy between what is seen as possible when arranging project tinancing and what is actually possible from a construction view-point. Througlhout implementation, GOMP endeavoured to build the schemes according to the principles of the SAR. Bank supervision missions' suggestions were, when possible, acted upon, although ofteni with considerable delay. The standard of construction was, in general, acceptable9 though some problems were caused by using quite small contractors for relatively large works. Overall, the most serious effect of GOMP's performance during implementation was the failure to obtain phased canalization/block development, and with this a consequenlt delay in obtaining benel'its. 9.3 In the Mahanadi Reservoir Project sclheme, delays in completion of Rudri barrage and cross regulating structuLes interf'ered with the phased developmenit plan, as did the delay in construction of five in-line syphons on the riglht bank main canal in the Hasdeo Bango Project. These were essential to enable increased water flows to the iriiigationl area, and three were still incomplete in December 1991. Project management was seriously al'fected by fiequent changes of senior personnel. This seems to have happened due to the pressuLe resultinig t'rom the need in India to not only supervise new construction bhut also service the increasinig demand for operation, maintenance and relhabilitation of projects executed durinig the large expansion of irrigation which has taken place. Absence ol' contilluity in and the consequellt lack ol firm project management, was probably one of the major causes of excessive delays in awardinig contracts, and of the lack of planning and drive to obtain ear-ly beiiel'its by proceedinig onl a block-by-block basis. 9.4 Lessons of experience tor both GOI anid GOM4P are: projects should have realistic conlstrullctioIn pIrogr-amils; every effort should be made to ensure continuity of' senior stal'f to maintain a cohesive 'project team'; major design work should be complete belore the credit becomes efl'ective and an angemenlts for consultinig work should he at a liinal stage ol' completioni; and procedures t'oi teniderinlg, adjudication and letting ol' conltracts shoulld be reviewed. 10. Project Relationship 10.1 The relationship between the Bank and GOI/GOMP was cordial and mutually respectfiul. Supervision provided a number of criticisms ot tihe Borrower's perlfor-manice, some of which might have developed strained relationis, but the use ol- reasonied discussion and the mature attitude of the Borrower obtained reasonable results without rallcourl. 9 Some reservationis about the conlstlrLctioll ol' the Hasdeo Bango Dam have been expressed in a separate note "Hasdeo Bango Darn, Note on Seepage Rates andl Action Required", Investment Center, FAO, Rome, Januar y 1992.  9 11. Consulting Services 11.1 Consultants played a substantial role in project procedures. They were used to assist planning, programming and preparation of the next time slice, and for the survey and design of the irrigation and drainage system below distributary canal head regulators. The consulting services, although useful in the long-term, took a long time to arrange and then commenced work slowly because of staff shortages. In India, if there is a shortage of engineers in the public service, there may also be a shortage of engineers in the quasi-government consulting services, such as were employed on this project. This suggests the need that the consultants should be made to provide a performance bond to guarantee adequacy of staffing. 11.2 The Dam Review Panel operated successfully and ensured a reasonable degree of safety for the existing dams by means of up-to-date hydrological analysis. This resulted in heightening, strengthening and better spillway arTangements. The design of Hasdeo-Bango Dam was slightly changed to provide concrete cover on its upstream face. A recent review has raised the problem of possible seepage at this dam.'0 GOMP has been informed of the problem and they refeiTed the matter to the Dam Safety Panel established under the project. If actions at-e required, the problem will be tackled under the ongoing Dam Safety Project (Cr. 2241-IN/Ln.3325-(IN). 12. Project Documentation and Data 12.1 The SAR provided a satisfactoiy fi-amework for the Bank and the Borrower and the provisions of the legal agreements wet-e generally observed (Part 111/7). 10 "Hasdeo-Bango Dam, Note on Seepage Rates and Action Requiied", Ibid.  10 PART II. GOVER1NMENT'S COMMENTS ON PARTS I AND III M.P. MAJOR IRRIGATION PROJECT CR. 1177-IN (HBP) COMMENTS ON PROJECT COMPLETION REPORT RECEIVED VIDE WORLD BANK LETTER DATED 27.03.1992. PART-I 1. Project Identify No Comments. 2. Back Ground 2.1 No comments. Z.7.2 No comments. 3. Project Objectives and Description 3.1 No comments. 3.2 No comments. 3.3 No comments. 3.4 No comments. 3.5 No comments. 3.6 No comments. 3.7 No romments. 4. Project design and Organisation 4.1 No comments. 4.2 No comments. 4.3 No comments. 4 . 4 This issue is still a matter of debate and its utility is still to be established. 4.5 No comments at this stage. 4.6 No comments. 4.7 No comments. 4.8 No comments. Contd... 2  11 4.9 No specific comments. Ilowcver remarks given under Para 4.4 may be referred. 5. Project Implementation 5.1 No comments. 5.2 No comments. 5.3 No comments. 5.4 No comments. 5.5 No comments. 5.6 No comments. 5.7 No comments. 6. Project Results 6.1 No comments. 6.2 No comments. 6.3 No comments. 6.4 No comments. 7. Project SustainabiLity 7.1 No comments. 7.2 No comments. 7.3 No comments. 7.4 No comments. 7.5 No comments. 8. Bank Performance 8.1 No comments. 8.2 No comments. 8.3 No comments. 9. Borrower Performance 9.1 No comments. 9.2 No comments. 9.3 No comments. 9.4 No comments. 9.5 No comments. 9.6 No comments. Contd.... .3  12 9.7 No comnments. 9.8 No comments. 10. Project Relationship 10.1 No comments. 11. Consulting Services 11.1 No. comments. 11.2 No comments. 11.3 Reply in respect of seepage is given separately (Annexure I). 12. Project Documentation and Data 12.1 No comments. 12.2 No comments. 12.3 No comments. 12.4 No comments. (N.V.RtE) (V.R.B. GOPAL) Chief Engineer Chief Engineer Mahanadi Reservoir Project I Hasdeo-Bango Project RAIPUR BILASPUR  13 COMIMENTS ON PART-III OF P.C.R. RECEIVED FROM WORLD BANK LETTER DTD Z.7.03.92. The Part-III of the P.C.R. prepared by the World Bank includes various Physical / Financial / Credit statements. These statements give$ the appraisal data/revised target and achievements upto June'91. There ara no specific comments on Part-III of P.C.R. as these are the informative statements. (N.VTE) .R.B.GOPAL) Chief Engineer Chief Engineer Mahanadi Reservoir Project }lasdeo Bango Project RAIPUR BILASPUR  14 PROJECT COMPLETION REPORT INDIA MADHYA PRADESH MAJOR IRRIGATION PROJECT (CREDIT 1177-IN) PART III. STATISTICAL INFORMATION 1. Related Bank Loans and Credits Loan/Credit Date of Title Purpose Approval Status Comments Madhya Pradesh To increase agricultural Jun-75 Project closed Most prescribed project Chambal Commaan production and farm on 6/30/81 works exceeded targets, but Area Development incomes through the after a two-year on-farm development works Credit 526-IN upgrading of irrigation extension 52% below target. Project facilities and provision failed on water management. of drainage, on-farm development works and rural roads. Madhya Pradesh To strengthen agricultu- Jun-77 Project closed Some 4% of credit was not Agricultural Exten- ral supporting services on 9/30/83 disbursed. Project largely sion and Research in Madhya Pradesh, on schedule. achieved its objectives. (Credit 712-IN) particularly extension and research. Second National To assist in the provision May-77 Project closed The project substantially Agricultural Refina of agricultural credit on 12/31/79 on achieved its objectives Development Corp nationally. Madhya schedule. and was fully disbursed. ration Pradesh was a partici- (Credit 715-IN) pating state. Third National To assist in the provision Jul-79 Project closed The project substantially Agricultural Refina of agricultural credit on 6/30/82 on achieved its objectives. Development Corp nationally. Madhya schedule. Certain problems were ration Pradesh was a partici- experienced with agricultural (Credit 947-IN) pating state. credit administration and high levels of defaults in loan repayment. The credit was fully disbursed. Madhya Pradesh To reorganize the Apr-81 Project closed The project, although delayed, Agricultural extension services in 30 on 6/30/89, six had substantially achieved its Extension II districts and to complete years behind objectives. It was fully (Credit 1138-IN) activities commenced schedule. disbursed. under Credit 391-IN. Madhya Pradesh To continue upgrading of Aug-82 Project closed The project did not achieve Chambal Irrigation irrigation systems on 3/31/89, two its target in most components, (Credit 1288-IN) commenced under years behind with on-farm development Cr. 562-IN and to estab- schedule. works much delayed. The lish an intensive block intensive development development in which to block successfully demons-  15 1. Related Bank Loans and Credits (continued) Loan/Credit Date of Title Purpose Approval Status Comments demonstrate conjunctive trated the contribution of aug- use of canal and ground- mentation tubewells. water from augmentation tubewels. National Agricultural To consolidate and Feb-84 Project still All components significantly Extension I improve agricultural on-going. The delayed. (Credit 1523-IN) extension services in project is now some selected states, expected to close including Madhya on 3/31/93, three Pradesh, and the Direct- years behind orate of Extension, schedule. Ministry of Agriculture, Government of India. National Agricultural To strengthen location- Oct-85 Project still Components in Madhya Research II specific research at the ongoing. Current Pradesh very delayed, (Credit 1631 -IN) level of the agro-clima- closing date of but-showing improvement. tic zones of India, inclu- 12/31/92 expected ding Madhya Pradesh. to be extended by two years.  16 2. Project Timetable Activity Date Planned Revised Date Actual Date Identification/Preparation May-79 Appraisal Mission Nov-80 Nov./Dec. 1980 Credit Negotiations Aug-81 Board Approval Aug-81 15-Sep-81 Credit Signature 24-Feb-82 Credit Effectiveness Oct-81 16-Apr-82 Credit Closing 30-Jun-87 30-Jun-88 30-Jun-89 30-Jun-90 30-Jun-9 1 Final Disbursement 28 -Oct-91 Comments: Delayed implementation and slow disbursements at the beginning of the project resulted in a four year-extension of the credit closing date to June 1991, to enable extended scope of project works to be completed and to draw down as far as possible funds available in the credit. The final disbursement was made on October 28, 1991.  3. Credit Disbursements Cumulalive Estimated and Actual Disbursements - (US$ million Equivalent) I111/IDA Fiscal Yew1 1962 2/ 1983 19S4 1985 1986 1987 1968 1989 1990 1991 1992 Appraisal Estimate 15.0 50.0 97.0 147.0 197.0 220.0 - - - Revised Estim_te 96.0 140.0 180.0 220.0 -- Actual 3/ 0 19.0 34.8 68.0 87.1 120.6 131.1 143.4 1U.0 187.9 4/ 195. 5/ Actutt as X of Appraisal Estimate 0 38.0 36.0 46.0 44.0 55.0 60.0 65.0 75.0 82.0 5/ 85.0 6/ Actual as X of Revised Estimate 89.0 86.0 73.0 65.0 75.0 82.0 85.0 Date of Finat Disbursement: October 28, 1]991 I July to 30 June. 3/ Though project 5-year time stice started from 1 July 1981, it became effective from 16 April 1982. Source: Uorld Bank, New Delhi. Monthly Disbursement Performance Reports. 4/ As of September 1990, the disbursement rate for civil works has been increased from 60 to 80X. 6/ As at 28 October 1991 (SOR 165.5 million). 6/ Percentages based on credit total in SOR (SDR195.2 million). Comments: The disbursement schedule was revised in an attempt to use all the credit, about 85% of which has now been disbursed. The undisbursed balance as at 280ctober 1991 amounts to US$40.3 million. Although the original amount of the credit was US$220 million equivalent, because of exchange rate movements of the SDR vis-A-vis the US Dollar, the revised estimate of the credit is now US$235.6 million.  18 4. Project Implementation A. Mahaadl Reservoir Project AcIua Amud u% 1bu Uan Ecai Revimd d R3visd D d Wa Sondur Dom % 1001/ 100 100 100 Rudn Barrmc % 97 100 3/ 87 87 Pain Dam % 2 2 2 100 Remod,elling/improvements / % 100 100 82.7 83 FsI Mm & Ba c Ciam S- p.sd (i) Earth work km 15 2/ 15 15 100 (ii) Structurms No. 31 31 31 100 (iii) Lining km 4 15 31 14 93 Mahi~ Per (i) Earth work km Completed beform March 1982 (ii) Structures no. do- (iii) Lining km 42 42 42 100 Asaami M am (i) Earth work km 49 108.4 3t 105 92 (ii) Structurs no. 110 12831 63(c) + 86 (p) 83 (iii) Lining km 49 49 48.3 99 Mamdhu BACb (i) Earth work km 13 16 3/ 16 100 (ii) Structures no. 25 25 24 96 (iii) Lining km 0 163/ 0.3 2 -o B (i) Earth work km 41 41 40 98 (ii) Structures no. 151 111 80 (c) + 26 (p) 615/ Blalloda fnr Bra 6 / (i) Earth work km 0 10 0 0 (ii) Structurs no. 0 22 0 0 D i--j Slm 7/ (i) Survey end design to 40 ha '000 he 69 7631 111.4 146 (ii) Unlined construnction to 40 ha lOO ha 69 763/ 38.9 52 (iii) Lined construction to 40 ha1 OOO ha 69 553/ 28.8 52 (iv) Structurs no. 2.200 2,200 955 43 Mio D ibb Stm (i) Survey and design to S ha 0W ha 69 76 3 96.8 127 (ii) Unlined construction to 8 ha 0 ha 69 7631 56.3 74 (iii) Lined construction to 8 ha 000 ha 3 3 2.8 93 (iv) Structures no. na. 9.391 7,189 77 (v) Sub-chak/field channel '0 ha 13.5 83/ 6.8 86 construction from 8 to 2 ha D