Tunisia - Central Tunisia Irrigation Project

Document of The World Bank FOR OM1CIAL USE ONLY Rept No. 11729 PROJECT COMPLETION REPORT TUNISIA CENTRAL TUNISIA IRRIGATION PROJECT (LOAN 2234-TUN) MARCH 17, 1993 Agriculture Operations Division Country Department I Middle East & North Africa 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.  TUNISIA CENTRAL TUNISIA IRRIGATION (LOAN 2234-TUN) PROJECT COMPLETION REPORT CURRENCY EQUIVALENTS Currency Unit = Tunisian Dinar (TD) Appraisal Year Average = US$1.00 = 0.68 TD Implementation Average US$1.00 = 0.81 TD Completion Year Average = US$1.00 = 0.80 TD WEIGHT AND MEASURES Metric System ACRONYMS BNA National Bank of Tunisia BNT National Bank of Tunisia (formerly) CRDA Regional Development Agency DGPC Highway Department ERR Economic Rate of Return FAO/CP FAO-World Bank Cooperative Programme FOSDA Agricultural Development Fund ODTC Central Tunisia Development Agency OMIVAK Kairouan Development Agency PCR Project Completion Report PPI Deep Tubewell Command Area PS Shallow Dug Well SAR Staff Appraisal Report USAID United States Development Agency WUA Water Users Associations GOVERNMENTAL FISCAL YEAR January Ist - December 31st  FOR OMCIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation March 17, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Tunisia Central Tunisia Irrigation Proiect (Loan 2234-TUN) Attached is a copy of the report entitled "Project Completion Report on Tunisia - Central Tunisia Irrigation Project (Loan 2234-TUN)" prepared by the FAO/CP with Part II provided by the Borrower. It provides a fair record of constraints and achievements. This project upgraded and expanded public and private well irrigation in arid Kairouan and Kasserine Governorates. It also strengthened support services including extension, credit, and livestock, marketing and mechanization services. Overall results were satisfactory. Implementation was timely and realized unit cost savings. Physical targets for structures and benefits were exceeded. On the other hand, users' groups proved hard to organize and cost recovery targets were not achieved. Sustainability is likely but will require an effective monitoring and evaluation effort to assess the impact of pumping on the aquifer and to maintain the momentum towards increased reliance on farmers' groups and private sector services. 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 OFFICIAL USE ONLY TUNISIA CENTRAL TUNISIA IRRIGATION (LOAN 2234-TUN) PROJECT COMPLETION REPORT CONTENTS PREFACE. EVALUATION SUMMARY ........................ ii PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE ................. 1. Project Identity ................................................. I 2. Background ................................................... 1 3. Project Objectives and Description ..................................... 2 4. Project Design and Organization ...................................... 3 5. Project Implementation ............................................ 4 6. Project Results ................................................. 5 7. Project Sustainability ............................................... 9 8. Bank Performance ............................................... 10 9. Borrower Performance ............................................ 10 10. Project Documentation and Data ...................................... 11 PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE Project Analysis (Kairouan component) ............................... 12 Project Design and Organization (Kasserine component) ..................... 13 PART III 1. Related Bank Loans .............................................. 19 2. Project Timetable ................................................ 20 3. Loan Disbursements ............................................... 21 4. Project Implementation ............................................. 22 5. Project Costs and Financing .......................................... 23 6. Project Results .................................................. 24 7. Compliance with Loan Covenants ...................................... 26 8. Use of Bank Resources ............................................. 28 9. Economic Analysis ............................................... 30 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.   TUNISIA CENTRAL TUNISIA IRRIGATION (LOAN 2234-TUN) PROJECT COMPLETION REPORT PREFACE 1. This is the Project Completion Report (PCR) for the Central Tunisia Irrigation Project for which Loan 2234-TUN for US$16.5 million was approved on January 25, 1983. The loan was closed on December 31, 1990, 6 months behind schedule. A sum of US$2.8 million was cancelled on October 9, 1987 and US$3.4 million at the end of the project. 2. The PCR (Preface, Evaluation Summary, Parts I and III) was prepared based on a report by FAO/CP and Part II was prepared by the Borrower. 3. An FAO/CP completion mission visited Tunisia between September 16 and 27 1991. Its report is based on findings of the mission, the Staff Appraisal Report, the Loan Agreement, two Project Agreements, supervision reports and a project completion report (in two parts) prepared by the Ministry of Agriculture.   - jj - TUNISIA CENTRAL TUNISIA IRRIGATION (LOAN 2234-TUN) PROJECT COMPLETION REPORT EVALUATION SUMMARY Objectives 1. The primary objectives of the project were to: (a) increase agricultural production in Central Tunisia; (b) increase farm incomes; (c) create employment; and (d) implement a coherent and sustained water resources policy through the development of water users' associations capable of managing public irrigation schemes and through the support of private initiative to develop and use groundwater resources efficiently. Implementation Experience 2. In spite of a slow start-up due to initial lack of experience of project managers and low levels of counterpart funding, the project was successful in meeting its physical targets. Except for some minor adjustments, all project activities were implemented according to appraisal estimates. Loan savings resulting from the devaluation of the dinar against the dollar were used to implement an additional program within the timeframe and objectives of the project. The loan closed six months late, on December 31, 1990, because of construction delays caused by a dispute with a contractor. Results 3. As a result of project activities, agricultural production at full development (1991) increased from pre-project levels to exceed SAR targets. The incremental production resulted from intensification of cropping and modification in cropping patterns due to increased water availability and improved cultural practices. Mainly due to the effects of the drought which lasted from 1986 to 1989, yield increases were generally lower than foreseen in the SAR. However, it is expected that over time, as a result of continued improvements in extension support and the return to more normal climatic conditions, yields would increase further. Demand for fruits and vegetables has been strong and the significant increases generated under the project were readily absorbed by the domestic and export markets. The decreased risk of farming due to more reliable water supplies and gains in income provided sufficient incentives to the farmers to participate in the project. The economic analysis shows that farmers had the necessary financial incentives to produce summer vegetables and fruits, in particular, but benefits from winter vegetables and forage crops were lower. The analysis results in an ERR of 15.1 % which is slightly lower than the 16% estimated at appraisal mainly due to lower yields caused by the long periods of drought.  - iii - Sustainability 4. The rehabilitated deep tubewell command areas (PPIs) and the newly constructed PPIs are expected to be sustainable both in terms of water resources and ability by the Borrower to maintain the infrastructure. Long-term sustainability of the shallow wells (PS) component depends upon future exploitation of the aquifers which will need to be monitored closely to ensure that water is being used effectively. The agricultural support components of the project, such as marketing services, extension, research, and the strengthening of the offices have benefitted all farmers of the irrigated subsector in the project zone. The roads component has provided improved farm access to about half the farm families in the area. These services provide additional incentives to farmers and will help sustain the region's agricultural production. Findings and Lessons Learned 5. Participation of farmers in irrigation projects can be expected. However, the organized participation of farmers in exploiting and distributing irrigation water generally takes a long time and it appears that the Bank was overly optimistic in estimating that farmers would be ready to take over the management of the irrigation schemes after the rehabilitation works undertaken under the project. In Tunisia, the process is in full development and being fine tuned following five years of experience after the publication of the basic legislation on the water users' associations. In the most advanced associations, water management, control of water losses, use of water saving methods, and maintenance of the irrigation and drainage infrastructure is in general satisfactory, which proves that encouraging the participation of WUAS is still the best approach to be pursued in Government sponsored irrigation development. 6. Similarly, the process initiated with the project to release Government agencies from commercially oriented activities is in expansion and consolidation which has also proved that the private sector is there to compete when fair conditions exist. In certain instances, private initiatives have been booming in fields not anticipated but resulting from the presence of the project. In future lending, such prospects should be explored further. 7. In spite of its importance, proper project monitoring and evaluation has not yet found a satisfactory solution. Lack of commitment by the borrower is probably the main reason why, even with short-term technical assistance support to the Offices, final results are inadequate. A continuous and evolving technical assistance, lasting throughout the project implementation period, might be the solution.  TUNISIA CENTRAL TUNISIA IRRIGATION (LOAN 2234-TUN) PROJECT COMPLETION REPORT PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identitv Project Name Central Tunisia Irrigation Project Loan No. 2234-TUN RVP Unit MNA Country : Tunisia Sector : Agriculture Sub-sector Irrigation 2. Background 2.1 The Project was the thirteenth Bank-group assisted agricultural project in Tunisia. Its objective was to increase agricultural production to meet the needs of the rapidly growing population, provide higher farm incomes and create employment in one of the least developed areas in Tunisia. The Project was identified in 1980 by a World Bank mission and was prepared by the Government of Tunisia with assistance of the FAO/World Bank Cooperative Program (FAO/CP) in May 1982. The Project was appraised by the Bank and approved by the Board on January 25, 1983. The Loan and Project Agreements were signed on February 28, 1983 and became effective on November 2, 1983. The Loan closed on December 31, 1990, after one extension. 2.2 At appraisal, the Project was to be implemented over 5 years at a cost of US$43.8 million, of which the Bank would provide US$16.5 million, the Government US$19.7 million, the National Bank of Tunisia (BNT) US$4.8 million and the beneficiaries US$2.8 million. Policy and Sector Context 2.3 A primary objective of the Fifth Plan (1977-81) was to achieve self-sufficiency in food. This goal was not achieved since Tunisia's higher per capita income growth and the shift of tastes to higher value crops created a growth of demand in food, diverting exports to local consumption and increasing imports. 2.4 The overall objective for agriculture of the Sixth Plan (1982-86) continued to be progress towards self-sufficiency in food. Food imports (especially cereals) would be compensated by increasing exports, particularly in the labor intensive subsectors, such as livestock and fruit tree plantations. Certain basic  -2 - issues had to be addressed urgently, i.e., the need to increase rural employment (which was providing 35 percent of total employment in the early 1980s, at the time of appraisal of the project, against 50 percent in 1972) and agricultural revenues and improve efficiency of investments due to the necessity to adjust the economy to a post-hydrocarbon situation of lower investments. 2.5 Irrigation has contributed significantly to rapid growth of Tunisian agriculture. At the time of project identification in 1980, it accounted for about 25 percent of the country's total agricultural GDP. However, the subsector's contribution could have been higher if more intensive use had been made of the irrigable areas. The Government's objectives during the Sixth Development Plan for this sub-sector were: extension of irrigable areas and intensification of water utilization and crop production on existing irrigable areas. 2.6 The project goals are fully consistent with the Tunisian development objectives of food self- sufficiency, reduced regional income disparities and employment creation. In addition, the project would increase the efficiency of investments by improving the mobilization and utilization of water resources in the area. 3. Project Objectives and Description 3.1 The primary objectives of the Project were to increase agricultural production, farm incomes and employment possibilities in Central Tunisia. In addition, the Project was to implement a coherent and sustainable water resource policy through the development of Water Users' Associations (WUAs) capable of managing public irrigation schemes and through the support of private initiative to develop and use efficiently groundwater resources. 3.2 At appraisal, the Project consisted of the following main components: Development of Infrastructure - Rehabilitation of 37 public irrigation schemes (PPIs), totalling 4,700 ha. - Creation of 5 new PPIs totalling 555 ha. - Support for improvement of 1,600 existing shallow private wells (PS) in the form of additional credit for well lining, pumping equipment, pipes, small reservoirs, etc. - Rehabilitation of about 130 km of feeder roads. Institutional Development - Strengthening of the Central Tunisia Development Agency (ODTC) and the Kairouan Irrigation Development Agency (OMIVAK). - Strengthening of the offices' repair and maintenance units. - Cteation of a shallow well support unit in each office benefitting a total of 36,000 ha. - Strengthening of the extension services of the two offices, including the establishment of an applied research and extension support center in Kairouan, 3 pilot mechanization units, and the strengthening of 2 marketing support centers.  -3- Support and Pilot Actions - Strengthening of animal production support services in the Project. - Testing a livestock development model for Central Tunisia, which integrates the management of herds and feed resources of the rainfed and irrigated subsector. - Promotion of credit and input supplies. - Strengthening of services to monitor groundwater resources. 3.3 As discussed in Chapters 5 and 6 and shown in Part III, Table 4, the project implemented most of the above components and in some cases the targets set out at appraisal were exceeded. For example, 5 additional PPIs were rehabilitated, 3 new ones were created, and a cold storage facility (not foreseen at appraisal) was constructed and equipped. However, the creation of WUAs and the efficient use of groundwater resources under PSs were not fully achieved. 4. Project Design and Organization 4.1 The general problem of low agricultural productivity, low farm incomes and limited employment opportunities as well as the specific needs of irrigating farmers in Central Tunisia provided a clear conceptual base for the project. 4.2 The project was well designed and its objectives were understood by all parties involved. The most noteworthy features of the project were: - the emphasis given to providing reliable irrigation water supply to farmers under existing PPIs through rehabilitation of the infrastructure; - creation of new PPIs and lines of credit for on-farm investments under PS; - farmer participation in management of PPIs; - need for continuous monitoring of groundwater exploitation to ensure long-term water availability; - introduction of improved water management and cultural techniques to ensure optimum production per unit of water used; - strengthening the organization of support services for PPIs and PS including the provision of technical assistance and extension services. 4.3 In supporting the rehabilitation of 1600 private surface wells through provision of credit for well lining, small reservoirs and pumping equipment, the project design had not sufficiently addressed the risk of overexploitation of water resources. The farmers equipped the PS with over-powered pumps thus overexploiting the aquifers. The unnecessarily high consumption of energy led to high costs of irrigation water. The Project could have also considered electrification of surface wells and the introduction of improved on-farm water distribution systems for tree crops. 4.4 Project works were executed by ODTC in Kasserine, by OMIVAK in Kairouan and for the roads component by the Highway Department (DGPC) of the Ministry of Public Works. The ODTC also benefitted during project implementation from a USAID financed project which assisted in strengthening its planning and implementation capacity. OMIVAK was strengthened under the project as planned. In general, the project implementation arrangements were well designed and proved satisfactory even though additional planning and implementation support should have been provided to OMIVAK.  - 4 - 4.5 The Ministry of Agriculture in Tunisia was reorganized in 1989 as a result of which its activities were decentralized and regionalized. The irrigation development agencies, including Kasserine and Kairouan, were merged with regional agricultural development agencies (CRDA) creating new structures at governorate level. This organizational change did not affect project implementation since the majority of key staff remained in their positions. 5. Project Implementation 5.1 The Loan and Project Agreements were signed on February 28, 1983 and became effective about eight months later, on November 2, 1983. This delay was due to cumbersome bureaucratic constraints since there were no additional conditions of effectiveness aside from the standard ones. The project was also affected in the beginning by the lack of experience of project managers with Bank procedures and requirements and by the low level of counterpart funding which was not initially available for the additional works included in the project and for maintenance. 5.2 The Loan closing date was set for June 30, 1990 and extended 6 months to complete works delayed by a dispute with a contractor. An additional program of works financed from loan savings was executed within the originally foreseen project period. Variances in Project Implementation 5.3 Except for some minor changes made to the project to conform to actual needs (see para. 5.4 below), the project was successfully executed and this is reflected in the supervision reports which generally rate implementation as problem free (1-rating) (ref. part III. Table 8B). However, with regard to the institutional development component, the organization of farmers into WUAs proved to be more cumbersome than anticipated and out of a planned 42 associations only 9 were created despite considerable pressure from supervision missions. The legal framework and model statutes of these associations were approved in October 1987 and January 1988, respectively. The ongoing Irrigation Management Improvement Project (loan 2573-TUN) is following up on the issue of increasing the role of WUAs in the operations and maintenance of irrigation schemes. 5.4 The Loan Agreement was amended in September 1987 to allow loan savings to be used for the rehabilitation of an additional 5 PPIs, the creation of 3 new PPIs, including one using waste water from the Kairouan sewage treatment plant, and the establishment of a cold storage facility at Kairouan; due to lack of demand, only one milk collection center was built in Kairouan and the construction of a veterinary station was dropped. Proiect Costs 5.5 At appraisal, total project costs were estimated at US$43.8 million of which US$16.5 million (85 % of the foreign exchange costs) would be financed by the Bank. At completion, project costs were US$29.43 million or 67% of SAR estimates; Bank disbursements totalled US$10.5 million or 63% of SAR estimates; the balance of US$6 million was cancelled in two stages, US$2.8 million in May 1986 and US$3.4 million at Loan closing, in December 1990.  -5 - 5.6 The loan savings realized under the project as a result of the devaluation of the dinar against the dollar ($1 =0.67 TD at effectiveness in 1983 vs. implementation average of $1 =0.81 TD) were used to implement the additional investments mentioned above and shown in Part III. Table 4. Due to the change in exchange rate, the reduced Bank loan of US$10.5 million financed 35% of the total project cost compared to 38% estimated at appraisal (Part III. Table 5B). 6. Project Results 6.1 The Project was very successful in achieving its main objectives. Agricultural production rose through increased water supplies to farmers, creation of newly irrigated areas, and provision of credit and agricultural services including extension. As a result, farm incomes and employment opportunities increased considerably. Rehabilitation of Existing PPIs 6.2 The Project rehabilitated 42 existing PPIs covering 5,410 ha compared to 37 PPIs over 4,700 ha expected at appraisal. Rehabilitation works were carried out on the water extraction, conveyance and distribution systems. Water conveyance losses decreased and water distribution through better furrow irrigation systems improved (refer para. 6.11). More water was pumped than previously (the maximum more than threefold) which together with a drought midway through the project reduced groundwater levels somewhat - but not significantly -as monitored by 20 piezometers provided by the project. Using reserve funding included in the project, seven reserve tubewells were constructed during the project period, to replace aging existing wells. Creation of New PPIs 6.3 The Project created 8 new PPIs covering 1,255 ha compared to 5 PPIs over 555 ha expected in the SAR. Water was conveyed through underground piped distribution networks which delivered water to a newly established furrow distribution system. It should be noted that all newly created PPIs were rainfed previously and were mainly planted with fruit trees. Therefore, farmers immediately benefitted from the irrigation provided. Size of Pumping Equipment 6.4 The new electric motors or diesel engines used for the pumps of shallow wells were too high powered, and there was thus excess consumption of energy, leading to higher than necessary pumping costs. Support for Improvement of Shallow Private Wells (PS) 6.5 The Project was to support improvements of 1,600 private wells (PS) in the form of additional credit for well lining, deepening, cleaning, pumping equipment, pipes, small reservoirs. More credit was provided than foreseen (ref. para. 6.18) which allowed for considerable expansion of this component. In Kairouan alone, 1,556 pumps and equipment were purchased and 178 new wells constructed. The corresponding data for Kasserine are missing, but total credit delivery for irrigation was about DT 2.44 million corresponding to about 620 pumps and equipment. Due to the heavy duty equipment purchased  -6 - by farmers, there was a considerable increase in water pumping costs (ref. Part III. Table 9D). Despite the deepening of the wells, many wells became dry during the project period or yielded less water than expected. A persistent drought is mainly responsible for this, but it is clear that the erratic deepening of wells and the overexploitation of the aquifer affected the operation of shallower wells. The excessive pumping and the uncontrolled deepening program essentially allowed mining of the upper groundwater reserves. Water now has to be pumped from a deeper level at additional cost. This development, although foreseeable and not unique to Tunisian conditions, could have been partly avoided by equipping the wells with smaller sized pumps and through tighter control of private well development. However, there was tremendous pressure from farmers at the time of the drought to exploit the wells and the water shortages which resulted temporarily put a stop to overexploitation. 6.6 Nevertheless, the water was made good use of during the project period, and particularly during the drought years, as is apparent from the reported yield increases obtained with the PS. Rehabilitation of Feeder Roads 6.7 The Project rehabilitated and improved 130 km of unpaved feeder roads as foreseen in the SAR. In addition, about 12 km of these roads were resurfaced by means of external sources of financing. Repair and Maintenance Services/Mechanization Units 6.8 Repair and maintenance services for irrigation schemes provided by the Offices were strengthened as foreseen in the SAR except that the mobile equipment and related services to repair the pumps were mainly provided by the evolving private sector. The equipment which was to be provided to the mechanization units was also reduced because of the increasing role of the private sector providing mechanized support services to farmers. Shallow Wells SuDpOrt Units 6.9 Seven well support teams were established as foreseen in the SAR for rehabilitation of existing shallow wells (cleaning, deepening, lining). Towards the end of the project, however, the deepening of wells was carried out by farmers without the support units' assistance. Water Users' Associations 6.10 The 9 WUAs established are functioning fairly well, although with limited participation of farmers. Operation and maintenance of the wells, major repairs and the operation of primary and secondary canal systems are still the responsibility of CRDA staff. The farmers' task consists of operating and maintaining the unlined irrigation distribution system. Farmers have not assumed control of the operation and management of the entire irrigation system and this has contributed to some instances of farmers damaging the main and secondary canal networks in order to obtain more water. Water Use Effciency 6.11 The efficiency of water conveyance systems (from the pump to farmgate) on rehabilitated PPIs has improved on average from 62% to 74% which corresponds to a 20% increase of water availability. Changes in on-farm water use efficiency were not monitored; however, it is clear that considerable water  -7 - losses still occur with the prevailing furrow system, leading to a water use efficiency rate not much higher than 50%. Water use efficiency in the context of new PPIs and existing PS was not monitored consistently. Field observations indicate that new PPI schemes (having underground piped distribution networks) may operate at around a 60% efficiency rate and some of the shallow wells at an even higher rate. Agricultural Production 6.12 As a result of project activities, agricultural production at full development (1991) reached higher levels than projected in the SAR. This was mainly due to an increase in area cropped resulting from the rehabilitation and creation of new PPIs. The increase in area cropped was also accompanied by a moderate increase in yields (ref. part III. Table 6A). However, yields have generally not reached SAR targets mainly due to the drought which lasted from 1986 to 1989. It can be expected that as a result of improved and strengthened extension services and the return to more normal climatic conditions, yields could be further increased. Demand for fruit and vegetables has been strong and the significant increase in production generated under the Project was readily absorbed by the domestic and export markets. 6.13 The overall rates of growth in fruit production were higher for individual crops such as olives, apples and pears. Increased production from existing and new olive plantations in the project area was substantial (by an estimated 6,640 t in 1991). This was a result of the increase in area cultivated (778 ha) and yields (2.8 to 5 t/ha). There was also an increase in areas plarnted with apple and pear trees (from 240 to 609 ha). However, even though water availability and marketing conditions improved, there was very little improvement in use of inputs and yields did not increase compared to pre-Project levels of 8 t/ha. There is a need to monitor the agro-economic variables of these tree crops in order to provide the extension service with sufficient data for the formulation of appropriate corrective messages for diffusion to the farmers. 6.14 The additional water available mainly benefitted the summer crops although there was also a large increase in winter crops. The incremental production was 18,000 t for summer and 14,000 t for winter vegetables. The main production increases were from hot peppers (3,000 t), mostly in Kairouan, and tomatoes (5,000 t), mostly in Kasserine. Yield increases were close to SAR estimates but total production increases (238% to over 46,000 t) were mainly as a result of an increase in area cultivated. The total production of cereals increased by about 264% to 3,605 t with average yields of about 2.2 t/ha which is very close to the SAR estimate of 2.3 t. 6.15 Production of fodder crops was low (1.3 million f.u. vs SAR projections of 3 million f.u.) given the low profitability of livestock activities when compared to irrigated vegetables and tree crops. 6.16 In Kairouan, the small incremental production of 270 t of industrial crops (tobacco and cotton) supplied the domestic processing industries, thus contributing, albeit in a small way, to substitution for imports. 6.17 The rehabilitation of the PS also contributed to an increase in total production. Given the large numbers of wells, it was difficult to quantify the incremental benefits due to rehabilitation. A more thorough monitoring and evaluation system should have been set up to accurately estimate the impact of the project on the PS. The PCR Mission estimates that total production increases were similar to those reached by the PPIs.  -8 - Credit 6.18 The investments required by farmers were mainly for the rehabilitation of the wells, the purchase of tractors and motor pumps for the PS. Credit was provided by BNA (the former BNT), FOSDA, the third Agricultural Credit Project (1885-TUN) and other bilateral sources. The volume of credit delivered was higher than SAR estimates. An important issue remains the low levels of loan recovery. Agricultural Support Services 6.19 The extension service was strengthened and reorganized during project implementation. Extension agents were recruited and trained and as a result, the ratio of extension agents to farmers improved. However, extension agents still need to visit farmers on a more regular basis. Good progress was also made with the establishment of demonstration plots. The newly created National Agency for Extension and Agricultural Development should provide henceforth adequate support to an efficient and well organized extension service. Marketing, Farm Machinery and Veterinary and Milk Collection Centers 6.20 The Project financed four mechanized farming units which included the purchase of appropriate equipment needed to demonstrate the benefits of improved farm mechanization. Given the success of this component, the private sector has become very active in the provision of these services. 6.21 The construction and equipping of five fruit and vegetable collection centers strengthened the marketing infrastructure in the project area. As foreseen, private operators have now become active in all aspects of fruit and vegetable storage and distribution. 6.22 Proposed livestock investments were affected by their low profitability when compared to irrigated vegetables and crops due to the drought period from 1986-1989. Thus, the project financed the construction and equipping of one veterinary center (instead of 3) and of one of two proposed milk collection centers. Monitoring and Evaluation 6.23 Each office hired an agro-economist to lead its monitoring and evaluation unit and to analyze the information collected by the technical services. In addition, fifteen man-months (SAR estimates 12) of short-term consultancy were provided to assist them in monitoring progress and the impact of project activities. Despite the attention given to monitoring and evaluation, there was insufficient information concerning the cropping patterns, yields and water consumption of the irrigation schemes. Mainly due to shortage of staff, the monitoring and evaluation system was not able to provide an analysis of the evaluation data based on the monitoring information collected. Although the Water Resources Department set up a monitoring system of the deep aquifers, systematic monitoring of shallow groundwater levels was not carried out. Furthermore, monitoring and evaluation as to type of irrigation equipment used was absent and the use of over powered pumping equipment by the shallow well farmers was not even noticed.  -9 - Economic Analysis 6.24 Reliable project impact data were not readily available. Based on discussions with farmers and project staff, The PCR mission was able to make reasonable estimates of production increases in the rehabilitated and new PPIs. On that basis, an economic analysis was carried out on the rehabilitated and new PPI components. Production benefits included in the analysis consisted of increased production of fruits, vegetables and forage. They were projected on the basis of representative farm models described in Table 9E. The project benefits were valued at economic prices described in Table 9C. The incremental analysis includes the direct benefits obtained from the PPIs, and the costs of rehabilitating and creating new PPIs. Overall project costs, such as extension, strengthening of the offices, etc. were not included in the economic analysis. 6.25 Increased water availability and security and the gains in income provided sufficient incentives to the farmers to participate in the Project. The analysis shows that farmers had the necessary financial incentives to produce summer vegetables and fruits in particular, but that benefits from winter vegetables were smaller and those of forage crops were low. The analysis results in an ERR of 15%' compared to an estimated 16% at the time of appraisal. The lower than expected yields of crops planted on the additional area under production was the main factor contributing to a slightly lower ERR. However, this decrease was largely compensated by the additional area rehabilitated (at a much lower unit cost than estimated in the SAR) as well as the additional acreage under new PPIs. 7. Project Sustainability 7.1 Monitoring of the deep aquifer has shown that a significant change in water levels has not occurred despite increased pumping compared to the pre-project situation. Therefore, it is expected that benefits from deep tubewells would be maintained at an acceptable level throughout the economic life of the project. Since no corresponding monitoring was made for shallow wells, the sustainability of agricultural production based on irrigation water from surface wells is less certain, as experience has already shown. Nevertheless, rainfall does replenish the surface wells but it is not known to what extent. The risk of a total disappearance of water resources from shallow wells is, however, remote. 7.2 The creation of new WUAs and the maintenance of the existing ones will continue to be a difficult task although as long as the CRDAs are responsible for water distribution and management, water delivery to the PPIs will be assured. Good progress has been made recently with establishment of associations for village water supply which are much easier to create and which will help pave the way for the establishment of WUAs responsible for the O&M of irrigated areas. The Irrigation Management Improvement Project (loan 2573-TUN) will help ensure the sustainability of agricultural development in public irrigation schemes through maintenance and rehabilitation operations and through the training of staff in irrigation O&M. 7.3 Given that the two CRDAs are well established, activities undertaken under the institutional development/support services component are expected to be sustained. Nevertheless, improvements in agricultural extension, monitoring and evaluation systems and credit repayment are still needed. Those / Basic assumptions, methodology and results are presented in Part III, Table 9. The results are summarized in Part III, Table 6.  - 10 - issues will continue to be addressed through the Bank's involvement in the on-going Research and Extension Project and through future lending operations. 7.4 Prior to the take-over of irrigation O&M by the farmers, the two CRDAs need to improve their financial management and accountability in order to allow mobilization of the required resources to maintain the irrigation systems. Water tariffs, currently set at 0.034 and 0.027 D/m3 in Kairouan and Kasserine respectively, do not yet reflect the economic cost of providing water. The Government needs to increase water charges on a regular basis to provide for full O&M cost recovery. A system of recovery measures is being monitored under the Irrigation Management Improvement Project (loan 2573- TUN) and ASAL II (loan 3078-TUN). 8. Bank Performance 8.1 As mentioned in chapter 4, Bank performance during preparation and appraisal was satisfactory except for the overly optimistic expectation that WUAs could manage public irrigation schemes autonomously in a short period of time. Generally, Bank supervision missions identified implementation problems and brought them to the attention of the Government and the Agencies. However, the supervision missions did not identify and address the issue of the excess capacity of the pumping equipment. Furthermore, even though problems of monitoring and evaluation were addressed during supervision, the Offices appeared to need additional technical assistance to understand what the task involved. The 12 months of technical assistance provided by the project did not produce the anticipated results. 8.2 The major lessons learned from the project are the following: (a) the establishment of WUAs is likely to require more time than the standard five year period of project implementation; (b) supervision missions should address key technical issues (such as the size of pumping equipment), even if this is only indirectly related to project financing; (c) the constant reminders by supervision missions to improve monitoring and evaluation should be supported by an important and sustained technical assistance effort. 9. Borrower Performance 9.1 The Borrower's greatest strength on this project was its commitment to increase agricultural production through irrigation. Consequently, considerable efforts were made to improve water availability and distribution. Start-up problems were easily overcome once project managers became familiar with Bank procedures. Similarly, other problems such as the level of counterpart funds, import permits, provision of letters of credit, were resolved during project implementation. In order to support the formation of WUAs countrywide, Government passed the relevant legislation in 1987, which provided an added impetus to the project. The Borrower also took the initiative to utilize loan savings to expand the physical infrastructure beyond that foreseen in the SAR. 9.2 On the other hand, the Borrower had problems implementing the extension service in the field, despite the existence of a well structured institution. Similarly, the monitoring and evaluation system did  - 11 - not function as foreseen even though considerable support (including from USAID for Kasserine) had been provided. The organization of farmers into WUAs proved to be difficult but this is not unexpected when considering experiences from elsewhere. Credit delivery by the Borrower was generally satisfactory but a greater effort is needed to ensure timely repayment of loans. 10. Project Documentation and Data 10.1 The SAR and the Preparation Report were used by the Agencies as a guide during project implementation and proved to be useful. The Aide-Memoires and annexes prepared during project supervision were also useful. 10.2 The data required for preparation of the PCR were not readily available despite repeated requests by Bank supervision missions. The data finally provided was not organized or consistent and had not been analyzed or evaluated. The lessons learned from this experience are mentioned in Section 8 concerning the need for long-term technical assistance.  - 12 - PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE Project Analysis (Kairouan component) We are in general agreement with Part III of the Project Completion Report, except for some corrections which should be made, namely: Part III - Table 4 27 PPIs have been rehabilitated, not 28 as indicated in Table 4, as the Rakkada PPI rehabilitation was cancelled. With respect to the Additional Program, two new PPIs were established and five were rehabilitated as a new irrigation scheme was implemented, i.e. pipes, construction of bridges, opening of feeder roads, etc.. (Bir Djedid, Draa Tammar = new creation, Chiha-ZaAfrana II, V, VI, Jlassi, Trabelsia = rehabilitation). Part I As for Part III, some corrections should be made to certain points covered by the PCR: 1) the analysis presented in the report relates to the Kairouan and Kasserine Governorates; perhaps it would have been better to present it by Governorate; 2) a project midterm review would have been helpful; 3) the Bank's clearance procedures for bidding documents should be revised in order to reduce time span between the preparation of bidding documents and the establishment of contracts. Standard specifications should be established for each type of bid (pipes, works, pumping equipment, etc..) and selection criteria and bid evaluation should be defined for approval by the Bank's first mission, each contract then being reviewed during the following supervision missions; 4) for payment of foreign exchange to local suppliers, it would be desirable to have an account with the Central Bank rather than systematically make the request to the Bank. Borrower's Performance Despite problems encountered at project start-up, the former OMIVAK has successfully achieved the various project components. The start-up delay is due to the lack of familiarity with Bank procedures and guidelines, and also to insufficient level of counterpart funds. The closing date was extended by six months because of a dispute with a contractor and delay in the establishment of the PPIs under the additional program. It should be noted, however, that most of the physical components of the project have been successfully executed. Savings on project funds have allowed implementation of the additional program. - The former OMIVAK has encountered many difficulties in the establishment of WUAs  - 13 - even though major efforts were put into this activity; - technical problems mentioned in the PCR concern only some surface wells and not the PPIs. The large size of motor pumps on PSs is explained by the fact that the level of the aquifer often varies. In fact, during the long drought periods of the project, there was an aquifer drawdown, therefore water had to be pumped from a deeper level and electric engines therefore needed to be more powerful. It should also be noted that the Borrower's greatest strength was its full commitment to increase agricultural production through irrigation. Consequently, water resource development was increased through efficiency improvement. However, the following remarks should be made: 1) the new CRDA needs the same management flexibility as the former OMIVAK; 2) staff in charge of project execution should be rewarded in consideration of the efforts made throughout the execution; 3) systematic recruitment of expensive foreign consultants should be avoided, especially when project management and follow-up is the responsibility of OMIVAK's technicians. Relationship between Bank and Borrower The relationship between OMIVAK and the Bank can be described as one of cooperation, assistance and guidance throughout the project period. Conclusion The project has been very successful in achieving its objectives, namely agricultural production increase, water resource mobilization and rational use of water, delivery of credit and agricultural services, and increase in cropped areas. Yields of the various crops have increased through the efforts made by OMIVAK to provide extension and credit to farmers. However, the establishment of WUAs continues to be a difficult task which will require further considerable effort. Project Design and Organization (Kasserine component) The Project design at appraisal and during the establishment of the additional program, was appropriate and it satisfies the needs of the Tunisian Government and the farmers in Central Tunisia. The project contributes efficiently and directly to the achievement of the VIth Plan objectives of economic and social development in Tunisia. Its activities are in line with the Tunisian Government's agricultural development strategy and they satisfy the specific needs of irrigating farmers in Central Tunisia. As a result, the impact of the project on increased agricultural production at farm, regional and national level, as well as on the improvement of farmers incomes and new employment opportunities, has been rapidly felt by the project beneficiaries, and the regional and national authorities of the Ministry of  - 14 - Agriculture. The designation of the former ODTC - endowed with financial autonomy and management flexibility for executing and managing the project, in collaboration with the directorates of the Ministries of Agriculture, Finance, Equipment and Housing (DGPC) - has greatly contributed to the successful achievements of the project. Other rural development projects and projects for institutional strengthening of planning, management and evaluation of rural development projects, financed by USAID (strengthening of potable water institutions in rural areas, and an extension project), and the Bank (Irrigation Management Improvement Project, First and Second Agricultural Sector Adjustment Loans, etc.), have largely contributed to the adequate design and execution of the project. The low level of counterpart funds allocated in 1983 affected project start-up. Project execution did not encounter major difficulties, except for the issuance of letters of credit required for the import of hydro-mechanical equipment for the Sbiba PPI rehabilitation (Sbiba Dam water conveyance). This rehabilitation did not take place due to the complex administrative procedures and bureaucratic constraints. The regular supervision missions made by the Bank and the Ministry of Agriculture were very useful in ensuring smooth project execution. Project Results and Impact The project has been successful. It has achieved its major objectives and has largely contributed to rural development in the project area. Its direct impact on the agricultural sector, and indirect impact on other sectors, were very positive, and can be translated into: a) an increase in irrigated areas following rehabilitation of PPIs and replacement of six wells; b) improved irrigation management following rehabilitation of PPIs and deepening and cleaning of surface wells; c) an increase in number of farmers benefitting from extension of agricultural techniques following the construction of extension centers, two veterinary centers and one mechanized farming unit; d) increased agricultural production and higher farmer incomes as a result of strengthened extension, marketing and animal production services. These positive results encourage promotion and development of the irrigated sector in Central Tunisia. All project activities foreseen (except for the Sbiba Dam water conveyance as mentioned above) have been fully executed and completed in accordance with the conditions in the Loan Agreement. The project proceeded slower than expected in 1983 due to budgetary constraints (only TD  - 15 - 400,000 were available to the former ODTC to start the project). The project was at full development in 1985. Its initial program was completed in 1987, a year ahead of schedule. The following was achieved ahead of schedule: - creation of PPIs at Ain Hedia, Mziral I and II; - construction of reserve tubewells; - procurement of maintenance equipment; and - construction of two extension centers. The costs of those activities were lower than appraisal estimates. The savings realized from the Bank loan (US$ 0,874 million) and the Tunisian Government allocation (TD 0,700 million) were reallocated, in agreement with the Bank, for the financing of activities which completed and strengthened the initial activities of the project. The new activities financed from savings are also in line with the project objectives and Tunisia's economic and social development plans. They consist of: - extension of the Feriana PPI (80 ha); - creation of a PPI at El Hchim (80 ha); - creation of a PPI at Rohia III (100 ha); - creation of two reserve tubewells at Sbiba; - construction of two extension centers; and - rehabilitation of the Sbiba dam water conveyance system. The drought which affected Tunisia during 1987, 1988 and 1989 had a slightly negative impact on the project, mainly at the level of incentive measures. All the activities realized under the project are efficient, cost-effective and have achieved their intended objectives. - The rehabilitation of nine PPIs has reinforced water supplies and led to production increases in these PPIs. Water flow efficiency measures in the rehabilitated irrigation networks have shown that the efficiency rate has increased from 60 to 85%. - The five newly constructed PPIs are currently fully operational. - The five reserve tubewells constructed during the project have been equipped and activated. - All newly constructed centers (five extension centers, two veterinary centers and one mechanized farming unit) are operational, staffed and equipped with necessary materials, and provide efficient support to farmers. - The purchase of repair and maintenance equipment has enabled the replacement of the equipment of the maintenance unit, created in 1990 in the context of the reorganization  - 16 - of regional agricultural services at Kasserine. The breakdowns of irrigation pumping stations have considerably diminished. The intervention of maintenance teams (whose number increased from one team in 1983 to four teams in 1990) has clearly improved. They are becoming quick and efficient. - The equipment and accessories for shallow wells are operational since 1985 and are operated by farmers. This equipment enabled the cleaning and deepening of about 800 wells until the end of 1990. The 41 km of rehabilitated feeder roads are currently operational and are used by farmers for inputs supply and marketing. These roads have broken the isolation of eight PPIs (900 ha) and about 520 surface wells irrigating 1050 ha. Bank Performance During project preparation, appraisal and execution, Bank performance has been satisfactory and very positive. As mentioned previously, the regular follow-up provided by supervision missions was very useful to project managers. Bank missions identified problems and constraints, participated in the establishment of practical and appropriate solutions, assisted and advised Tunisian authorities in their decision-making. However, the cost of some activities was underestimated at appraisal. This is the case for the extension centers, veterinary centers and feeder roads. This led to delays in execution and difficulties encountered by the former ODTC to justify to the Ministry of Plan and Finance the authorization of additional funds to cover the local costs of the Project. Borrower derformance During project preparation, appraisal and execution, the Borrower, convinced of the necessity to increase agricultural production in the irrigated areas through the project, was strongly committed to achieving the project and completing it within the deadline and within the estimated costs. Problems and difficulties encountered at project start-up were resolved (import licenses, disputes with contractors,etc.). The Borrower also made considerable efforts to fulfill the conditions of the loan and project agreements. Several additional and incentive measures were taken by the Tunisian authorities to: achieve the project objectives within the anticipated schedule; ensure the project success; alleviate Government financial and other obligations; promote and encourage private sector activities in various fields; promote farmers and private sector participation in the development effort;  - 17 - - develop institutional and community spirit in the region. The main incentive measures already in effect are as follows: 1) streamlining of procedures concerning the creation of service cooperatives and farmers' associations; 2) four service cooperatives were created and assisted by the Government in Sbeitla, Foussana, Fefiana and Sbiba; 3) reduction of state subsidies and alignment of the tariffs of the former ODTC and the CRDA of Kasserine with the ones from SONAM for mechanized services, which allows the recovery of the hourly cost of mechanization services; 4) gradual transfer of activities of the CRDA of Kasserine with respect to marketing input supplies and management of milk collection centers, cold storage facilities and mechanized farming units. For example, transfer of the CRDA cold storage facility to the Sbiba agricultural services cooperative through a rental agreement and transfer of input supplies and mechanized farming services to the Sbeitla agricultural services cooperative; 5) transfer through rental agreement of the management and operation of three surface wells deepening and cleaning units, acquired under the project, to three private enterprises located in Thala, Sbeitla and Feriana; 6) formal establishment of and training and technical assistance to 100 WUAs (79 for water supply, 21 for irrigation) for management and operation of irrigation networks (including pumping stations) and potable water points in rural areas; 7) streamlining and shortening of administrative procedures for the creation of WUAs, by decentralizing and delegating to the Governor the Minister of Agriculture's responsibilities for creation of WUAs. 8) progressive irrigation water tariff increases in PPIs managed by the Kasserine CRDA (yearly rate of increase of 12%), with the approval of the Kasserine CRDA advisory committee (replacing the ODTC Board) of the yearly increase schedule, and the program for full recovery by 1995 of network operating and maintenance costs. The sale price of a m3 of irrigation water for the Kasserine PPIs will be 56 millimes in 1995. The current sales price is between 24 and 27 millimes/m3, depending on PPIs; 9) decentralization of the Ministry of Agriculture responsibilities to each Governorate, aiming at strengthening regional authorities, increasing responsibilities of the Ministry of Agriculture regional staff, developing and reinforcing agricultural planning at the regional level by restructuring regional services of the Ministry of Agriculture in each Governorate and creating a unique regional structure by Governorate which will be called CRDA and will have the same management autonomy as the former OMVs; 10) transfer of some powers from Government to Governors to strengthen and develop regional administration, increase responsibilities at the regional level, improve public  - 18 - services and accelerate Tunisia's rural and regional development (see Decree No. 89-457 of March 24, 1989); 11) progressive reduction of budgetary allocations and state subsidies to FOSDA and increase in interest rates for agricultural credit, with the mobilization of other credit sources for farmers (for instance the IBRD 4th Credit project, etc..). This has allowed the elimination of comparative advantages of state subsidized services; 12) Because of debt rescheduling measures taken by Government during t}e severe droughts of 1987 to 1989, farmers were able to use the IBRD Fourth line of Credit. Relationship between the Bank and the Borrower During preparation, appraisal and implementation of this project, and all other Bank-financed projects (Irrigation Management Improvement Project, ASAL I, ASAL II, etc..), the relationship between the Bank and the Borrower has always been excellent. It is a relation of collaboration and mutual assistance and understanding. Both parties have always maintained a relationship aiming at the success of the project. Comments on Part I of the PCR and the Statistical Data contained in Part III T'he contents of Parts I and III of the Project Completion Report are accurate, except for some information missing in Table 4 of Part III: Project Implementation, as follows: - -construction of extension centers: five centers were projected and executed under the basic program and two under the additional program, i.e., seven in total; reserve wells: three projected and executed under the basic program and two executed under the additional program, i.e. five in total; construction of veterinary stations: two stations were constructed and not one as mentioned in Table 4.  - 19 - PART III 1. Related Bank Loans Loan Number Year of Purpose Loan Status approval Amount (US$ millions) 2502 -TUN 1985 Northwest Agricultural 8.8 Closed 12/30/91 Production Project 2573 - TUN 1985 Irrigation Management and 22.0 Under Improvement Project implementation 2605 - TUN 1985 Gabes Irrigation Project 21.7 Under implementation 2865 - TUN 1987 Fourth Agricultural Credit 30.0 Closed 11/19/91 Project 2870 - TUN 1987 Forestry Development 20.0 Under Project implementation 2754 - TUN 1988 Sector Adjustment Loan 150.0 Closed 6/30/89 3078 - TUN 1989 Second Sector Adjustment 84.0 Under Loan implementation 3217 - TUN 1990 Research and Extension 17.0 Under Project Implementation  - 20 - 2. Project Timetable Item | Planned Date Revised Date Actual Date Reconnaissance Oct. 1980 Identification Jan. 1981 Preparation May 1982 Pre-appraisal Jun. 1982 Appraisal Jan. 1983 - Jan. 1983 Negotiations Dec. 1982 - Dec. 1982 Board Approval Jan. 1983 - Jan. 1983 Loan Signature Feb. 1983 - Feb. 1983 Loan Effectiveness Sept. 1983 Jun. 1983 Nov. 1983 Project Completion Jun. 1989 - Jun. 1989 Loan Closing Jun. 1990 - Dec. 1990  - 21 - 3. Loan Disbursements A. Cumulative Estimated and Actual Disbursements BIRD SAR Estimates Actual Actual as % Fiscal Initial Adjusted disbursement of Estimates Year Semester l Ending US$ million 1984 XII 1983 0.4 0.4 0.3 75 VI 1984 1.2 1.2 0.6 50 1985 XI 1984 1.8 1.8 1.8 100 VI 1985 3.5 3.5 3.5 100 1986 XII 1985 4.5 4.5 4.5 100 VI 1986 8.4 8.4 5.5 65 1987 XII 1986 10.4 10.4 6.2 60 VI 1987 11.9 11.9 6.4 54 1988 XII 1987 13.4 11.1 6.7 60 VI 1988 14.7 12.2 7.2 59 1989 XII 1988 15.7 13.0 8.3 64 VI 1989 16.5 13.7 8.8 64 1990 XII 1989 16.5 13.7 9.6 70 IV 1990 16.5 13.7 10.0 73 1991 XII 1990 16.5 13.7 10.0 73 IV 1991 16.5 10.3 10.3 100 Cancellation of US$2.8 million on Oct. 9, 1987 Cancellation of US$3.4 million on May 15, 1991, date of the last disbursement  - 22 - 4. Project Implementation Indicators Unit Appraisal Actual or PCR Estimate ' Estimate BASIC PROGRAMME Rehabilitation of PPIs: . Kairouan (28) ha 3,200 3,200 . Kasserine (9) ha 1,500 1,500 Establishment of new PPIs: . Kairouan (I) ha 210 450 . Kasserine (4) ha 345 345 Installation of piezometers . Kairouan unit 20 18 Provision of mechanized farming units Kairouan unit 2 3 . Kasserine unit I I Construction and equipment of collecting and distribution centres . Kairouan unit 2 2 . Kasserine unit 3 3 Construction and equipment of milk collection centres . Kairouan unit 2 1 Establishment of pilot schemes for integrated rainfed/irrigated fodder roduction . Kairouan unit 2 2 Carry out feasibility studies for future investment . Kairouan unit 1 I . Kasserine unit I 0 1 Provision of shallow wells support units . Kairouan unit 4 2 . Kasserine unit 3 3 Construction of veterinary stations . Kairouan unit I O . Kasserine unit 2 1 Rehabilitation of roads . Kairouan km 90 90 Kasserine km 40 40 DDITIONAL PROGRAMME Rehabilitation of PPIs . Kairouan (5) ha 710 710 Establishment of new PPIs . Kairouan (1) ha 240 240 . Kasserine (2) ha 220 220 Construction and equipment of a cold storage facility . Kairouan unit 1 I f The Additional Programme was appraised in October 1989. Y Made without total cost increase. f Not needed; no demand. & Financed from another source. f 2 financed from TUN budget.  - 23 - 5. Project Costs and Financing A. Project Costs SAR Actual I Actual Costs as % of SAR Project Components Estimate Estimates D million Irrigation Rehabilitation . Kairouan 2.8 3.16 112 . Kasserine 0.8 1.43 178 New Irrigation Schemes . Kairouan 1.1 3.4 309 . Kasserine 1.7 2.63 154 On-Farm Investments . Kairouan 2.0 2.48 124 . Kasserine 1.3 4.35 334 Research and Extension Kairouan 2.2 0.59 26 Kasserine 0.8 0.26 32 Roads and Buildings Kairouan 2.1 1.84 87 Kasserine 0.7 0.8 114 Institutional Development and Technical Assistance Kairouan 2.4 2.19 91 Kasserine 0.8 0.33 41 Contingencies Physical 1.7 - Prices 3.8 - TOTAL BASE COSTS 24.2 23.46 97 B. Financing Source IPlanned Loan Agreemeni Revised I Actual Actual as % of Planned US$ million equivalent IBRD 16.5 13.7 10.5 63 BNA/Farmers 7.6 7.6 8.13 106 Government 19.7 19.7 10.8 54 TOTAL 43.8 41.0 29.43 67 Cancelled 2.8 million September 1987. Balance of 3.4 million cancelled at loan closing.  - 24 - 6. Project Results A. Crop Area and Production in the PPIs Item Pre-Project SAR Estimate at Full Development PCR Estimate at Full Development 1991 Area Yield Production Area Yield Production Area Yield Production ha t/ha t ha t/ha t ha t/ha t Fruit Trees . Olives 1,250 2.8 3,500 1,350 7.5 10,130 2,028 5 10,140 . Apricots 340 4.5 1,530 400 9.0 3,600 570 7 3,990 . Almonds 250 0.7 180 250 1.4 350 370 1.5 555 . OthersfV 240 8.0 1,930 260 12 3,080 609 8 4,872 Sub-total 2,080 7,140 2,260 17,160 3,577 19,557 Summer Vegetables . Hot pepper 240 7.0 1,650 250 11.0 2,750 473 10 4,730 . Tomatoes 120 11.7 1,350 190 20.0 3,780 354 18 6,372 Potatoes 20 12.0 240 70 18.0 1,300 227 14 3,178 Others 60 13.0 770 60 20.0 1,150 483 14 6,762 Mel./Water melon 320 15.0 4,730 160 23.0 3,700 324 18 5,832 Sub-total 760 8,740 730 12,700 1,861 26,874 Winter Vegetables Broad beans 380 7.7 2,910 360 11.0 3,690 442 9 3,978 Others 150 13.0 1,950 350 20.0 7,000 845 18 15,210 Sub-total 530 4,860 710 10,690 1,287 19,188 Forage Crops Vetchoat (dry) 160 4.5 730 330 6.5 2,150 521 6.5 3,386 Alfalfa 120 19.6 2,320 300 45.0 13,500 311 24 7,464 Sorgho 40 21.0 860 240 41.0 9,840 89 25.5 2,269 Barley 180 19.0 3,500 380 30.0 11,400 311 22.8 7,090 Sub-total 510 7,410 1,250 36,890 1,232 20,209 Cereals 900 1.1 990 470 2.3 1,080 1,639 2.2 3,605 Industrial Crops - - - 120 2.0 230 135 2 270 T O T A L 4,780 5,540 9,731 ' Apples and Pears.  - 25 - 6. Project Results B. Economic Impact Economic Rate of Return Project Life SAR Estimate PCR Estimate 2' 20 years 16 15 !/ See Economic Analysis, Table 9 F. The main assumptions forming the basis of the calculation of the ERR are summarized hereunder: a. SAR Assumptions Estimated average life of investments: 20 years Value of net incremental production on PPIs (new and rehabilitated) and private irrigation schemes. Economic benefits equal the incremental value of crop production projected to result from the Project, valued at economic prices. Costs include incremental farm input costs, project investment costs and operating costs valued at economic prices. b. PCR Assumptions Estimated average life of investments: 20 years Value of net incremental production of only PPIs (new and rehabilitated) have been accounted for. The capital cost of the irrigation rehabilitation and the new irrigation schemes, the construction of roads and buildings have been accounted for in the analysis. The capital cost of on-farm investments (mainly for the private irrigation schemes), research and extension and institutional development have not been accounted for. The benefits from these investments have benefited all producers in the area. These benefits cannot be fully captured in the analysis. Economic prices have been based on prices indicated in Table 9C. Operation and maintenance costs have been estimated to be about 30% of the annual cost of the CRDAs during the last years.  - 26 - 7. Compliance with Loan Covenants Agreement| Section Deadline for Description of Covenant Status I I Compliance T Loan 3.01(a) Government to take all actions to enable ODTC, OMIVAK, BNT & Done DGPC to perform their obligations Loan 3.02 Gov. to cause BNT to provide agriculture credit Done under terms & conditions satisfactory to Bank Loan 3.03 Gov. to allocate to DGPC in each year funds to maintain the roads Done improved under the Project Loan 3.04 June 1984 Gov. to employ experts in agr. input supply, marketing & coop. Done develop. and in rural road engineering Loan 3.05(a) DGPC to furnish to the Bank, plans, spec., reports, referring to Part Done C of the project Loan 3.05(b) DGPC to maintain records on progress, cost and benefits of Part C o Done the project Loan 3.05(c) Dec. 1990 DGPC to prepare a completion report of Part C of the project Done Loan 3.06 Dec. 1984 OMIVAK & ODTC to establish cost accounting and cost allocation Done systems Loan 3.07 Sep. 1986 Gov. to review with the Bank the annual budgets for O&M of Done OMIVAK and ODTC Loan 3.08 Jan. 1985 Gov. to make special alloc. of funds in OMIVAK & ODTC ann. Done budgets for O&M of irrig. systems Loan 3.09(a) Gov. to define max. land holdings & farmers contributions to Done irrigation investments Loan 3.09(b) Gov. to complete before start of irrig. in the new PPIs the Done delimitation of plots Loan 3.10 Dec. 1986 Gov. to establish a framework to set up water users associations Done Loan 3.12 June 1984 Gov. to propose different rates of water charges System tested without success. New approach agreed under IMIP Project Loan 3.13 Gov. to monitor aquifers of the project area and inform Bank of its Done for deep tubewells only findings  - 27- 7. Compliance with Loan Covenants (page 2) PA 2.04(b) OMIVAK & ODTC to maintain records & supply Bank with reports Done on the execution of the Project PA 2.04(d) Dec. 1990 OMIVAK & ODTC to prepare a completion report of Part B of the Done partly Project PA 2.06(d) Sep. 1984 OMIVAK & ODTC to furnish Bank draft terms & conditions of Main principles discussed agreements between them and project PPIs farmers and applied on actual contracts PA 2.08 Sep. 1985 OMIVAK to implement integrated rainfed/irrig. pilot schemes for Done fodder production PA 2.09 June 1985 OMIVAK to submit to Bank a long-term agreement input supply & Done financial plan PA 2.11 OMIVAK to establish fees for use of collection centers & veter. Done for collection centres. stations so as to recover O&M costs No veter. station built. PA 2.10 ODTC to establish fees for use of collection centers & veter. stations Done. Prophylactic veter. so as to recover O&M costs services free of charge PA 2.12 June 1986 OMIVAK to submit to Bank plan of management of collection Done centers by coop. and private operators PA 2.11 June 1986 ODTC to submit to Bank plan of manag. of collection centers by Done coop. and private operators PA 2.13 Dec. 1989 OMIVAK to increase water charges aiming at full recovering O&M Not fully complied costs of PPIs PA 2.12 Dec. 1989 ODTC to increase water charges aiming at full recovering O&M Not fully complied costs of PPIs PA 4.01 June 1987 OMIVAK to maintain fin. records & separate accounts & sub. acc. Done for Project & audit them PA 4.02 June 1987 ODTC to maintain financial records & separate accounts & sub- Done accounts for Project and audit them PA 2.10 Dec. 1983 OMIVAK to furnish Bank a plan to establish a marketing unit for Not needed under new agr. products policy PA 2.09 Dec. 1983 ODTC to furnish Bank a plan for establ. a marketing unit for agr. Not needed under new products policy PA 2.08 June 1985 ODTC to submit to Bank a long-term agric. Covenant included in the input supply & financial plan framework of irrigation management project. No detailed plan provided  - 28 - 8. Use of Bank Resources A. Staff Inputs (staff weeks per FY) TO TASK FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 Total Preparation 82.5 0.7 - - - - - - - - - 83.2 Appraisat 25.8 31.1 - - - - - - - - - 56.9 Negotiations/Board - 3.1 - - - - - - - - - 3.1 Loan Processing (LOP) 6.0 9.3 - - - - - - - - - 15.3 Sub-total 114.3 4.2 - - - - - - - - - 158.5 Supervision - 5.5 14.1 16.2 3.7 3.1 4.5 2.5 6.9 0.3 0.0 56.8 Anrvual ilaplentation - - - - - - 0.2 - - - - 0.2 Review Project Administration - 0.7 0.2 - - 0.3 - - - - - 1.2 Project Completion - - - - - - - - 0.3 - 8.0 8.3 Report - _ _ _ Sub-total 0.0 6.2 14.3 16.2 3.7 3.4 4.7 2.5 7.2 0.3 8.0 66.5 TOTAL 114.3 50.4 14.3 16.2 3.7 3.4 4.7 2.5 7.2 0.3 8.0 225.0  - 29 - 8. Use of Bank Resources B- Mission Data Stage of Project Year Number of Period in Specialization Performance Trend c/ Type of Cycle Persons FieLd Represented a/ Rating Status b/ Problem n/ (day) raisaL 1983 7 n.a. I,H,A,E,C,F - - - Supervision 1 1983 2 3 I,A 2 1 N,F 2 1983 3 7 I,A,F 2 1 - 3 1984 3 8 I,A,F 1 1 - 4 1984 2 5 I,A 1 1 F,O 5 1987 n.a. n-a. n.a. 1 - - 6 1988 n.a. n.a. n.a. 1 - - 7 1988 n.a. n.a. n.a. 1 - - 8 1989 n.a. n.a. n.a. 1 - - |1 9 1989 2 n.a. I,E 1 - - 1: Irrigation Engineer. H: Highway Engineer. A: Agronomist. E: Economist. C: Credit Specialist F: Financial Analyst. l 1: ProbLem free or minor problems. 2: Moderate probLems. 2 1: Improving. 2 N: Kanagerial. F: Financial. 0: Others. N Not recorded on Form 590.  - 30 - 9. Economic Analysis A. Economic Prices of Cereals!/ (in 1991 constant prices) Unit Hard Soft Wheat Barley Wheat 199112000 199112000 199112000 Projected International Market Price b'C' US $/t 151 225 138 205 821 123 Adjustment for quality d' US $/t - - - 28 - 38 - - International Freight & Insurance Costs US $/t 23 23 23 23 23 23 Border price e/ US $/t 174 248 133 190 105 146 D/t 160 228 122 175 96 134 Port, Handling & Local Transport Costs D/t 13 13 13 13 13 13 Import Party Price at Depot D/t 173 241 135 188 109 147 Transport, Handling & Marketing Costs (Depot - D/t 12 12 12 12 12 12 Farm) f' Economic Price at Farm-gate D/t 161 229 123 176 97 133 -J Tunisia is a net importer of cereals. b/ Commodity Prices and Price Projections - June 1991. International Commodity Markets Division World Bank for wheat n