Morocco - Emergency Drought Recovery Project

Document of The World Bank Report No. T-6673-MOR THE KINGDOM OF MOROCCO EMERGENCY DROUGHT RECOVERY PROJECT TECHNICAL ANE AUGUST 8, 1995  CURRENCY EQUIVALENTS Currency Unit = Dirhams (Dh) U$1 = Dh 8.5 US$1 = French francs (FRF) 4.8 FISCAL YEAR January 1 - December 31 WEIGHT AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CNCA National Agriculture Credit Bank DCEC Department of Roads and Road Transport DDF Forestry Department DE Department of Livestock, Ministry of Agriculture DGH Department of Hydraulics, Ministry of Public Works DGR Department of Rural Works, Ministry of Agriculture DPA Provincial Office of Agriculture DRCR Directorate of Roads and Road Traffic DRTP Regional Office for Public Works FRSCL Fixed Rate Single Currency Loan GOM Government of Morocco MAMVA Ministry of Agriculture MTP Ministry of Public Works MSP Ministry of Public Health OCC Opportunity Cost of Capital ODEP National Port Authority ONCF National Railways Office ONEP National Water Supply Authority ONICL National Cereals Office ORMVA Regional Irrigation Authority RF Special Fund for Road Maintenance SONACOS Moroccan National Seeds Marketing Company SPTP Regional Services for Public Works, MTP UF Unite Fourragere (each UF is equivalent to 1 Kg of barley)  MOROCCO - EMERGENCY DROUGHT RECOVERY PROJECT TECHNICAL ANNEX CONTENTS Page No. A. BACKGROUND ........................................ I General ........................................... 1 Nature of tLe Emergency ................................ I Impact of the Drought ................................ I Government's Response to the Drought ....................... 2 Seeds ......................................... 3 Livestock ....................................... 3 Water Supply .................................... 4 Other Public Works ................................ 4 Rescheduling of Debts .............................. 4 B. BANK RESPONSE AND STRATEGY .......................... 4 C. DETAILED PROJECT DESCRIPTION ......................... 5 Sustaining Livestock .................................. 5 Feed and Water ................................... 5 Animal Health ................................... 5 Agricultural Inputs .................................... 5 Rural Water Supply to Small and Remote Villages ............. 6 Water Supply to Small Centers and Villages ................. 6 Rural Works - Roads .................................. 7 Drought Preparedness .................................. 7 D. PROJECT IMPLEMENTATION PLAN ......................... 9 Implementation Responsibilities ........................... 9 Agricultural Inputs ................................. 9 Livestock ....................................... 9 Water Supply ................................... 10 Rural Roads .................................... 10 Procurement ....................................... 11 Rural Works .................................... I I Animal Feed and Seeds ............................. I I Disbursement ...................................... 12 Audit ........................................... 12 Monitoring and Evaluation .............................. 12 Supervision Plan .................................... 12 List of Working Papers in Project Files . .......................... 13 Map ...................................................... 14 This report is based on the findings of an Appraisal Mission which visited Morocco in July 1995, comprising Mmes[Mess;rs. T. Sinha (Principal Operations Officer and Mission Leader), I. Tsakok (Senior Economnist), A. Bichara (Senior Irrigation Engineer), M. Gress (Procurement Specialist), C. de Haan (Livestock Advisor), and F. Le Gall (Consultant). Contribution to the Appraisal mission was also made by Mr. F. Dauphin (Agronomist FAO/CP), and by Mmes. C. Gad and L. de Georgio for document preparation. Ms. S. Creger was responsible for the processing of the final Grey Cover Report. Messrs. M. Wilson and D. Ritchie are the Division Chief and the Department Director respectively for the operation.   TECHNICAL ANNEX A. BACKGROUND General 1. After the remarkable growth of the agricultural sector in the late 1980's, triggered by the reform programs introduced by the Govemment in 1985 and by the impact of irrigation, Morocco is experiencing difficulties in its agriculture in the 1990's due to frequent droughts. The droughts of 1992 and 1993 had seriously affected the economy, and before agriculture had fully recovered, it was hit even harder by the 1994/95 drought, one of the worst of the century. The emergency nature of the drought and its effects to the agricultural sector in particular and to the economy in general are discussed below. Nature of the Emergency 2. The rainfall pattern for 1994/95 season was erratic. Although the rains were normal in September/October 1994, they suddenly declined in November 1994, when only about a third of normal precipitation was recorded. Because of this drop only about 60% of the usual cereal area was sown. There were no rains in December 1994 and January 1995. This resulted in considerable losses in rainfed crops sown in November 1994, and hindered the cultivation of additional areas in December 1994. 3. The rains during the following months were also erratic. About 25 % of the average rains were recorded in February 1995. While between March 1995 and May 1995, there were some rainfalls in a few areas especially in the Oriental region, they were too late to be of much use to the rainfed crops. Not only was the rainfall pattern erratic, but the total precipitation was also very low. Total precipitation until the end of May was about 50% of normal. In some areas deficits of over 60% were recorded. This lack of rainfall has resulted in the 1995 drought whose effects are analyzed in the following paragraphs. Impact of the Drought 4. The occurrence of a major drought in late 1994/95 has been specially devastating because the rural areas were already weakened financially by the previous droughts. In 1992 and 1993 agricultural output had already dropped by 36% and 6%, respectively. Following normal crops in 1994, the agricultural GDP declined again in 1995 by 45%. The impact of the drought was therefore particularly severe and has affected practically the entire country, with a minor exception in the Oriental region. 5. The severity of the drought is being felt mostly in predominantly rainfed areas and in the traditional livestock production sector. Cereals and pulses which occupy the bulk of the rainfed areas are the hardest hit crops. Of the 5 million ha normally cultivated under cereals, only 3 million ha were sown in 1995, and of the latter 1.3 million ha were completely lost. The remaining 1.7 million ha provided only a meager production of about 0.9 million tons, based on a low yield of about 0.5 ton/ha. Total cereal harvest for 1995 is estimated at 1.6 million tons, i.e. 17% of the 9.4 million tons harvested in 1994, or 29% of the average annual harvest of the last five years. Even this meager harvest would have been unattainable if it were not for the contribution of 0.3 million ha of irrigated wheat.  2 6. The livestock subsector, which is dominated by traditional production systems, is also suffering from the drought because of a lack of sufficient vegetation on the rangelands and a shortage of drinking water. The 1995 drought has had a major negative impact on livestock feed availability. This deficit is primarily in cereal areas (north-west part of the country) where livestock is dependent for cereals and their by-products (40-70 % of the feed requirement depending on the production system). In the more pastoral areas (steppes), the negative impact of the drought is less severe because overall reduction in range production is estimated at -35 % compared to a non-drought year. The total forage availability is estimated at 9 billion Unite Fourragere (UF), and the estimates of the deficit range between one and two billion UF. The livestock population, which has not yet fully recovered from the reductions caused by 1992 and 1993 droughts, is now exposed to a risk of considerable decline of populations and productive capacity. 7. The irrigated areas are also affected by the drought as a result of the reduced inflow of water in the reservoirs. At the end of May 1995, the rate of rain water inflow to the 20 main reservoirs amounted to about 2,350 million m3 for the 1994/95 cropping season, which is only 28% of the average annual inflow. Reduction of water allocations for irrigation ranged from 30-80% of the normal level depending on the specific situation of each reservoir (Working paper 1, Appendix 1). The crops affected by the reduction in irrigation are the industrial crops such as sugar cane and sugar beets, and the fodder/feed crops such as maize. 8. The impact of the drought in the rural areas is specially severe as the bulk of the population depends on rainfed farming, and traditional livestock rearing. Most of the country's poor are found in the rural areas. They have limited assets and food reserves. Therefore they become the first victims of drought. Not only have the people foregone their annual crop production, but also their other main source of income from agricultural employment. About 100 million work days are estimated to have been lost in 1994/95 in the rural areas due to drought. Another serious difficulty is the shortage of safe drinking water for both human and livestock consumption. This problem has induced some people to temporarily abandon their villages to travel to cities where water can be found. Even important cities like Tanger and Taza are suffering from lack of water and are currently supplied with water by sea by tankers which haul the water over long distances. 9. The drought has also increased the level of indebtedness of rainfed farmers who borrowed for agricultural production purposes. Lack of harvestable crops has resulted in their inability to repay loans as planned, and this in turns put the Caisse Nationale de Credit Agricole (CNCA) in serious financial difficulties as its capital adequacy ratio will decline. The CNCA is now obliged to reschedule the repayment of farmers' loans and for this it will require substantial resources. It also creates problems for the farmers as they will not have the capacity to take new loans and invest in agriculture. Under Bank assisted Rural Finance Project (Loan 3662-MOR) a calamity insurance scheme is being developed to meet such problems in the longer-term. Also as a part of Bank's supervision of the loan, possible restructuring of the project to meet the current emergency is being discussed. Government's Response to the Drought 10. The Government's response to the 1995 drought was first of all to establish a commission known as Permanent Commission Interminist6rielle, chaired by the Prime Minister, to prepare and take charge of the emergency drought recovery program. At the regional level  3 the Provincial Vigilance Commissions have been activated. The recovery program defined by the government consists of four major activities. * provision of livestock feed and seeds; * water supply to people and animals; * public works for income generation and building assets; and * debt rescheduling of CNCA. 11. Seeds. Availability of seeds will be crucial for the start of the 1995/96 agricultural season and the MAMVA is preparing a program to increase the availability of cereal seeds, mainly wheat and barley. The program includes (i) provision of a drought premium to certified seed producers to ensure maximum delivery to the seed company (the premium is not transmitted to seed users); (ii) procurement of seeds of good quality ("bon a semer") from farmers having used certified seeds (wheat) or good quality seeds of local cultivars (barley) so as to increase seed availability; (iii) provision of a similar premium to farmers for "bon a semer" seeds; and (iv) imports of barley seeds from countries with similar climatic conditions. Some 70,000 tons of seed, sufficient to sow about 0.6 million ha, are expected to be procured under the program. 12. Livestock. The severe drought experienced in 1981-82 resulted in massive destocking of livestock: 25 % of the cattle, and 39% of the sheep were sold or died, with dire consequences for owners as prices fell drastically, and for the economy, as it took over 5 years to restock to previous levels. The lessons of this experience have been used by the Government to devise a strategy to reduce losses to an acceptable level. The worthiness of this strategy was tested during the 92-93 droughts, during which losses were indeed much reduced, at least for sheep. The strategy includes estimation of available feed resources, which is regularly updated, and a simulation of herd/flock composition and numbers as well as of the future livestock production as a result of different levels of intervention. Based on the estimated requirements, measures are taken to import feeds, and to reduce the price of imported and locally produced feeds through exemption from import duties and by providing transport of feed to remote locations. Prices of feeds and meats are regularly collected on the main markets to monitor the impact of these measures. 13. The Government intends to supply one billion UF of livestock feed. If no action were to be taken, there would be a further reduction of the national sheep and cattle population similar to the 1981-82 drought (para. 12). This fall in animal numbers would be in addition to the considerable decline already experienced in 1992 and 1993. The decline would seriously erode valuable genetic stock, and deplete reproductive capital. This would thus undermine the earning capabilities of a large number of small herders, who depend on their flocks and herds for their livelihood. Therefore, the GOM's drought relief and recovery program for the livestock sector, the Programme de sauvegarde de cheptel, consists of a short-term program to prevent drought - induced animal losses so as to: (a) Maintain the income of a vulnerable group of the rural population; and (b) Preserve the country's livestock genetic resources; The program (para. 10) would fund the cost of partially closing the feed deficit, supplying water (para. 20) and dispensing veterinary treatments (para. 21) to arrest a further reduction of the national herds.  4 14. Water Supply. The drought has resulted in critical potable water shortages in different parts of the country. Not only has the yield from springs and ponds been depleted, but some shallow wells have dried up and deep aquifers have receded due to drop of water table by as much as 10 meters. Despite this, aquifers can still supplement surface water resources during drought if wells are deepened and/or new ones are established. These works have been adopted as part of the drought recovery program in the rural areas and in major centers such as Tanger and Taza, where wells and springs have dried up. The works will generate income in the drought stricken areas. 15. Other Public Works. Execution of public works for creating employment in the rural areas, while building useful assets for the future, is one of GOM's strategy to provide rapid relief to the drought affected population. Within the Ministry of Public Works an emergency drought recovery program has been drawn up from the medium to long-term roads and water development programs. These works include improvement and maintenance of rural roads and establishment and rehabilitation of water supply sources and distribution systems. 16. Within the MAMVA, employment creating activities have been prepared within the Directorates of Forestry and Rural Works. In the forest area silvicultural treatment of forests and improvement of forest roads have been incorporated in the drought recovery program. With such works the MAMVA intends to reduce its backlog of silvicultural works and at the same time to generate income in the rural areas (about US$11.6 million). Under the MAMVA, substantial rural works are also foreseen to take place in destoning of agricultural lands, rehabilitation of medium-scale irrigation projects and repairs of small-scale traditional irrigation schemes (about US$ 73.6 million). 17. Rescheduling of Debts. An important element of GOM's strategy against the effects of drought is to support the rescheduling of the debt of farmers affected by the drought. The CNCA has been particularly strained by the inability of farmers to repay their loans because of the droughts in 1992 and 1993, where some debts had to be cancelled and others to be rescheduled at lower interest rate. The extra burden placed on CNCA by the 1995 drought is considered by GOM as extremely heavy, and GOM is considering an allocation of Dh 1.65 billion (US$ 194 million) to CNCA to assist in the rescheduling of farmers' debt. The proper mechanism and quantum of assistance is being discussed under the Bank-assisted Rural Finance Project (Loan 3663-MOR). B. BANK RESPONSE AND STRATEGY 18. The Bank has been supporting the agricultural sector since 1965. Twenty nine loans and credits have been made to the agricultural sector. Of these, eight were irrigation projects aimed at reducing the country's dependence on the drought prone rainfed agriculture. These irrigation projects were generally successful, and have assisted the country mitigate the negative effects of the recurring droughts. Of the four rainfed agricultural development projects supported by the Bank (Loans 1602, 1848, 2082, 2217 - MOR) three had satisfactory outcomes as measured by their economic rates of return at completion. 19. While the Bank's support to the agricultural sector in general and to the water sub- sector in particular is continuing, its positive response to the call for assistance in the rural areas during one of the worst drought of the century, would be consistent with country assistance  5 strategy, which emphasizes natural resource management and assistance to the rural populations. This drought is also affecting the economy because of the negative impact on current account and fiscal deficit, both of which have deteriorated. Bank's strategy is to provide financing for a portion of the Government's drought recovery program in critical areas of the agricultural/rural sector in order to speed up recovery. The agricultural sector is important in terms of its contribution to the GDP (23%), Government revenue, foreign exchange earning (30% of exports) and employment (40%). Bank's assistance will focus on areas that will build assets and restore productivity, hence facilitate recovery of the agricultural sector and rural economy. Further, Bank involvement will be important in that it will assist GOM to develop the country's capacity to meet future drought emergencies. C. DETAILED PROJECT DESCRIPTION Sustaining Livestock 20. Feed and Water. To maintain productivity of the important livestock sector, Morocco normally imports only about 264,000 tons of feed (less than 5% of total annual requirement), since it has ample local production of barley and also availability of rangeland forage. However, because of drought, local production of feed has fallen by more than 35% (para. 6). There is a serious danger that the national livestock inventory will be severely depleted and rebuilding of household flocks take several years. Therefore Morocco intends to increase feed imports to limit destocking to a maximum of 10 percent. The project will provide for the imports of about 500,000 tons of incremental feed imports, of which about 350,000 tons will be Bank financed. Alternative sources of financing are available for the balance. The project will also improve water availability for livestock by providing about 150 new water points and providing about 10 water tanker trucks and about 100 mobile water tanks. 21. Animnal Health. This program consists of the vaccination against enterotoxemia and anti-parasitic treatment and the provision of vitamins and minerals to the most critical part of the livestock population most affected by the drought and of the highest importance for herd reconstitution after the drought, i. e., the sheep and local cattle breeding herds. Vaccination against enterotoxemia and anti-parasitic treatment will be carried out on an estimated 4 million heads of sheep and goat. This action is implemented by the Livestock Department. Priority is to be given to the most drought-affected areas, as well as to the remoter areas where the delivery of animal health services is normally low. Agricultural Inputs 22. The drought has drastically reduced supplies of certified seeds for cereal cultivation during the next agricultural campaign (para. 11). The project will provide for acquisition of about 70,000 tons of barley and wheat seeds. Local distribution will be facilitated through 350 selling points of the national seed company (SONACOS). Rural Works - Water Supply 23. The main objective of this project component is to provide as quickly as possible safe water supply to the most-drought affected areas in the country, as well as providing the  6 rural population with an additional source of income, largely through the provision of labor to contractors. Relatively high per capita investment costs in the rural areas and budgetary constraints have thus so far directed most of the investments in the sector to the densely populated urban areas. In rural areas, only 14% of the population has access to safe drinking water. Government policy is to increase this figure to about 80% by the year 2010. 24. The MTP through its DGH and the ONEP have identified in each province those localities where drought effects are most serious. The identification was based on surveys carried out in late 1994 and early 1995. These surveys provided a sound basis for the formulation of emergency programs. For example, the DGH identification process was based on a number of criteria, each of varying weight, such as available resources (quantity and quality), sanitary conditions, access to water, population, social infrastructure and vulnerability to drought. 25. All large aquifers, as well as a number of smaller ones, have been studied by MTP with the assistance of foreign and local consultants and the physical and chemical characteristics of the aquifers identified. As all the proposed new wells and boreholes will be for potable water supply, the pumping of water from aquifers will be limited. In order to ensure that any new well or borehole will be a productive one, the implementing agencies such as the ONEP and DGH will systematically drill exploratory boreholes (max. 6 inch in diameter) at new locations (for 20% of the wells and 100% of the boreholes) prior to final drilling. 26. Community participation in the proposed rural works will be ensured through direct employment of the beneficiaries in all civil works contracts. These contracts have and will stipulate in their articles, a requirement whereby local contractors are required to employ the local population and, in the case of rural roads, to use labor intensive techniques as far as possible. The estimated work days to be generated by the rural works component of the project will be in the range of 3.50 million. 27. Rural Water Supply to Small and Remote Villages. For small and remote villages, the project will finance the construction of approximately 1,850 new wells (average depth 35 m, unit cost about US$108,000), the drilling of about 650 boreholes (average depth 175 m, unit cost about US$400,000), and the rehabilitation of about 500 existing springs (unit cost US$56,000) The project will also construct about 170 rain water harvesting points in rural areas (unit cost US$150,000) in locations where groundwater resources are not sufficient or of poor quality. Pumping equipment and hydromechanical/electrical equipment for boreholes and some of the wells will also be financed by the project. These proposed works will be targeted at the worst-affected areas, especially in the North-West and the North-Central regions of the county (total cost US$88.6 million). 28. Water Supply to Small Centers and Villages. In the most drought affected areas, the projept will improve potable water supply to a number of small centers and villages. To improve potable water supply in 41 small centers covered by ONEP: 240 new equipped wells will be constructed, four wells will be deepened, four wells will be equipped with pumping equipment, 16 new boreholes will be drilled and equipped and about 71.7 km of new pipelines will be installed (total cost US$6.50 million). In addition, the project will finance the improvement of water supply (cost US$29.1 million) to: about 150 villages, by tapping existing water supply pipelines; another 50 villages, by drilling new boreholes and wells; and 15 small  7 centers, by installing additional pipelines. These villages and small centers are also covered by ONEP and are located in the worst-affected areas. Rural Wbrks - Roads 29. In 1995, the GOM adopted a national program of construction of 10,000 km of rural roads over a seven year period starting in 1996. Several studies have been carried out under Bank-assisted Highway Sector Project (Loan 3168-MOR) to facilitate the program, in particular the study of unpaved rural roads improvement and maintenance. Economic studies done by Direction des Routes et Circulation Routiere (DRCR) show high economic rates of return ranging from 33 to 80% for this type of rural road improvement activities. Specific cost/benefit calculations for each proposed rural road has been prepared. The technical studies and surveys have reviewed about 38,000 km of unpaved rural roads and identified a sequence of upgrading requirements. About a third of these roads (10,000 km) have been identified as a national priority program. .In order to ensure an adequate start for this priority program, the project will finance the upgrading of about 883 km of existing tracks to a low-volume road standard in conformity with a slightly modified type REFT (Route Economique a Faible Trafic) of the MTP, i.e., 3.30 m of platform composed of natural gravel over approximately 7.00 m formation with 2 shoulders of 1.00 m each. In addition the proposed project will finance the rehabilitation of about 590 km of existing rural roads to all-weather standards. The improvement works will include earthworks to correct bad spots, construction of drainage infrastructure and laying a base/surfacing layer of natural gravel. All the country's 54 provinces will be included, but a large part of the works will be in those provinces that have been hardest hit by the drought. The average unit cost for the upgrading is around US$70,000/km, while the average for rehabilitation will be around US$25,000/km (total cost US$84.4 million). 30. These technical specifications and unit costs (para. 29) are in conformity with those already defined for the on-going Secondary, Tertiary and Rural Roads Project (Loan 3901- MOR). For example, average base costs for the rehabilitation of rural roads under the previous project ranged between US$22,500 and US$96,100/km respectively, and the unit costs for the proposed project is within this range. Local contractors are capable of executing most of this component (except for rehabilitation of roads at remote locations which will be carried out by force account) over the next 18 to 24 months as sufficient construction capacity exists due to current recession. About 15% of the program has been executed by June 30, 1995. Drought Preparedness 31. As droughts in Morocco are occuring with increasing frequency, there is a growing recognition that drought preparedness needs to be improved to mitigate the effects of future droughts more quickly and systematically. To this end, the project will assist GOM to establish an institutional framework capable of responding promptly by preparing and managing cost effective relief and emergency programs. Also, the acquisition of technical skills that can maximize the efficiency of water use, conserve soil moisture and produce more drought resistant crop varieties will be facilitated. 32. Some drought preparedness activities are taking place within different Government agencies. For instance, the Directorate of Hydraulics has a program on how to distribute water  8 for different uses in case of drought. Possible interventions during drought are also prepared by the different units of MAMVA and Agricultural Research has started producing varieties of crops, in particular barley, that resist drought. Recently, a remote sensing unit has been installed within MAMVA to provide an early warning on the evolution and growth of major crops in order to forecast production. These activities need to be further strengthened and better coordinated. For this purpose a monitoring unit has been set-up under the Secretary General of MAMVA. This unit also provides secretarial support to the Inter-Ministerial commission on drought, and could act as the focus for future drought preparedness activities. 33. The project will strengthen the drought monitoring and remote sensing units in MAMVA to become fully responsible for the national drought preparedness, by providing technical assistance (TA), and goods. The TA will assist in designing a suitable institutional framework for drought preparedness including its system of operations and linkages with the relevant institutions. Office equipment including computers, printers and photocopier as well as materials such as satellite imagery will be provided by the project for the remote sensing and monitoring units in MAMVA. The total cost of this component will be about US $ 2 million. 34. In the context of a national drought preparedness strategy, the project will assist in: i) preparitig strategies that mitigate the adverse effects of droughts; ii) developing an institutional framewoik best suited for drought preparedness; and iii) up-grading the existing embryonic early remote sensing unit in MAMVA to become an efficient national crop forecasting system. 35. With regard to managing livestock during droughts, the Livestock Department has already initiated the development of a long-term strategy. The key thrusts of this strategy, which need to be further elaborated in a master plan are: (a) The development of early warning and market information systems; (b) Increased flexibility in destocking in times of drought and in restocking after droughts. This will include the identification of incentives for early destocking, stratification of the production through the promotion of permanent or temporary feedlots for intensive fattening, improvement of the capacity of the market, processing and storage infrastructure and transport facilities. Such selective destocking, to some extent already practiced by the producers, increases overall long-term productivity and efficiency of range use; (c) The introduction of insurance and saving schemes for herders, especially those in the more fragile areas; (d) The overall improvement of animal health and production advice, and for the rangeland areas the introduction of more sustainable range management through the strengthening of herders organizations; (e) Environmental monitoring by strengthening the ecological monitoring (vegetation cover, bio-mass production, ratio annual/perennial vegetation in rangelands, vigor of plants, soil structure, etc.) recently initiated by the Range Division of DE, and linking that closely with the feed inputs and herd/flock structure; and  9 (f) Socio-economic monitoring by analyzing the distribution patterns (characteristics of the beneficiaries, their production systems, herd/flock size and household size) of a representative sample of feed distribution centers (both formal and informal). 36. The national strategy will emerge as a result of consultations and discussions with the main ministries and other concerned institutions including the ministries of Agriculture, Public Works, Finance, Public Health, Population, Interior, Incitation Economique as well as local authorities, the CNCA, Agricultural Research and the universities. Based on these consultations, as well as on experience gained in other countries, a national strategy for drought preparedness will be formulated. The TA provided under this project will assist GOM in making greater use of remote sensing technology and modelling to improve the quality the strategy. It will also assist in developing further the institutional framework for drought preparedness. D. PROJECT IMPLEMENTATION PLAN 37. The proposed project will be implemented under the supervision of a high level Inter-ministerial Commission chaired by the Prime Minister with key Ministers as its members, including those for Finance, Agriculture, Public works, Public Health and Interior (para 10). The Commission has already been constituted and has met several times. The Ministry of Agriculture (MAMVA) will provide a Secretariat for the Commission. The Secretariat has already been constituted with adequate staff. A special supervision and monitoring unit has been set up to follow the progress of the EDRRP directly under the MAMVA's Secretary General (para 33). The unit will also be responsible for monitoring of all components of the project except rural water supply and rural roads components, which will be managed by the Ministry of Public Works (MTP) and ONEP. The unit will also be responsible for drought preparedness component of the project (para. 32 to 36). Implementation Responsibilities 38. Agricultural Inputs. The National Seed Company, (SONACOS), will implement this component under the supervision of MAMVA, and will procure seeds. SONACOS will follow GOM's standard procedures of quality control and certification under the supervision of MAMVA. Procurement actions have already been launched and will be completed by September 1995. Seeds distribution will start October 1995 and be completed by December 31, 1995. The seeds and their distribution will be locally financed. Local distribution will be facilitated through 350 selling points of SONACOS. 39. Livestock. The National Cereals Marketing Agency (ONICL) is responsible for coordination and overall monitoring of livestock feed imports into the country. ONICL has long experience in this field and is guided by MAMVA. Alfalfa, bran, and dehydrated sugarbeet pulp will be imported. In order to assure delivery to remote rural areas during this drought, GOM has agreed to cover ONT and ONCF's cost of transportation to 210 existing retail centers. The local distribution will be carried out by farmers' cooperatives, to ensure that needy farmers are given access to the feed. GOM will share 50% of the cost of mixed feed, whose ingredients will largely be imported. Government will cover part of (about 10%) the cost of other feed, by paying for local distribution. This is justified because farmers' incomes have been severely  10 affected by the drought. The higher cost sharing for mixed feed, which is relatively new to Morocco, is justified only for the short term until farmers become familiar with higher benefits of this type of feed, which includes vitamin additives and is therefore better for animal health. The Bank will finance the direct import cost of about 350,000 tons of feed. In addition, the MAMVA's Livestock Directorate (DE) will be responsible for procurement related to the provision of the water . DGR will assist DE on technical matters, including supervision of works. Operation and maintenance will be carried out by farmer's association. 40. Water Supply. ONEP will be responsible for the implementation of the water supply component to be financed by the Bank. ONEP was established in 1972 in an effort to mobilize managerial, technical and financial resources for water production. It is owned by GOM and operates under the supervision of the MTP. It has the status of a financially autonomous public enterprise managed in accordance with principles applicable to a commercial undertaking. In addition, to ensure water supply to the Regies (autonomous municipal utilities), GOM has entrusted ONEP with the construction of water supply systems in 167 small towns and centers The improvement of water supply in 41 of these centers are to be supported through the proposed project. 41. Study and development of water resources for all users is the responsibility of the DGH-MTP. Management responsibilities, procurement activities and supervision of construction for water supply to towns and small centers/agglomerations are vested with the ONEP (on behalf of the respective municipalities). There are carried out by ONEP which bills its customers for the volume of water sold and charges a fixed rate fee to cover meters rentals and connection maintenance. ONEP is required to fully recover all O&M costs, in addition to partial recovery of investnents costs. 42. Rural Roads. The MTP through its DRCR will be responsible for the planning, construction and maintenance of the rural roads component. DRCR is only responsible for general planning, coordination and overall supervision. The regional and provincial offices (DPTP and SPTP) are largely autonomous and will program all road works, award contracts, and manage and supervise the project works. The field organization consists of 40 provincial and 7 regional offices. This decentralization will enable efficient implementation of the rural roads component. 43. Consultations and coordinations with the local communities are essential in formulating roads component of the project and for assuring adequate maintenance. These procedures have been agreed under Loan 3901. Similar procedures will also be adopted under the proposed project. 44. Proper maintenance of project roads is essential. The Special Fund for Road Maintenance (RF) was created in December 1988 to provide funding for road maintenance. In 1995, RF has been increased substantially, through higher fuel taxes, to reach Dh 1,090 million. An understanding has been reached under Loan 3901-MOR that GOM will give high priority to funding maintenance.  11 Procurement 45. The proposed procurement arrangements for the project are depicted in Schedule B to the MOP. Procurement will be carried out in accordance with the Bank's Guidelines. (a) Rural Works. The rural works contracts comprise rural roads and water supply works in rural areas. The rural roads are dispersed throughout remote locations and are difficult to package for ICB. Contract amounts for rural roads will range from US$0.3 million to US$2.0 million, and bids will be launched by the Provincial Directorates in accordance with NCB procedures. It is anticipated that small contractors will carry out such works. Bids for rural water works will be launched by ONEP following NCB procedures. Such contracts are for new wells or deepening of existing wells, boreholes, supply and installation of water pipes, and civil works for pumping stations. Given the relatively low cost and wide dispersion of these works, no foreign contractors will be interested to bid. Equipment contracts (mainly pumps and hydro-mechanical equipment) will also be contracted by ONEP. Such equipment is readily available in Morocco and many foreign suppliers are represented in the country. Equipment procured through such contracts valued at US$500,000 or more each will be awarded through ICB. Contracts for equipment ranging in size from US$50,000 to US$500,000 will be awarded under NCB procedures up to a maximum in aggregate of US$1.5 million. This will result in a relatively low percentage of the contracts awarded under the Bank financing being subject to Bank's prior review. However, this is considered acceptable due to the urgency, and the Bank's recent experience with this type of procurement in the country. The Bank has extensive experience with working with the GOM and specifically ONEP and the MTP. Local procurement procedures are generally acceptable to the Bank. Hence the Bank's prior review will be for works contracts of US$3 million and above and goods contracts of US$500,000 and above. There are some small rehabilitation works in remote locations, which up to a maximum in aggregate of US$3.8 million, may be carried out under force account, since past experience has shown that contractors are not interested in such bids. (b) Animal Feed and Seeds. The main imports for animal feeds are barley, bran, alfalfa and dried sugar beet pulp. Contracts not exceeding US$5.0 million will be procured in accordance with local commercial practice, which is well established and are acceptable to the Bank. Contracts above US$5.0 million will be awarded through ICB. This approach has been selected in view of the emergency nature of the project and the fact that the supply of livestock feed through established private sector channels is the most cost efficient approach to meet local demands. Seeds are locally procured and will be locally financed. In the event that seeds are imported, they will follow same procedures as feeds.  12 Disbursement 46. The Bank loan will be disbursed against: (a) 80 percent of expenditures for rural works; (b) 80 percent of expenditures for equipment, imported or procured locally; and (c) 100 percent of the CIF price of livestock feed and seeds imports. In order to make prompt payments to contractors and importers/suppliers, the Bank will advance funds for the establishment of a revolving fund in Morocco and replenish the fund on a regular basis. The Special Account will be established with an initial deposit of Dh 150 million (equivalent to US$18 million), which will cover the Bank's share of eligible expenditures over a period of four months, and takes into account the quick disbursing nature of the project. Applications with appropriate documentation, if required, covering the use of the fund should be submitted when approximately half of the maximum allowed amount in the fund has been disbursed. Audit 47. Bank Al-Maghrib will be responsible for maintaining all records and transactions for the livestock feed component. The Ministry of Public Works and ONEP will be responsible for ensuring the project accounts are maintained for the rural roads and water components respectively. All accounts will be audited within six months after the end of the Borrower's fiscal year. The audits will be performed by independent auditors acceptable to the Bank. The audits will include a separate opinion with regard to claims submitted to the Bank on the basis of SOEs. Monitoring and Evaluation 48. The monitoring unit under the Secretary-General, MAMVA (para 33 and 37), will be responsible for monitoring overall project implementation. The unit is already functional and detailed monthly progress reports are already being prepared. The unit will conduct an evaluation of the project. The evaluation will measure both the physical progress of the project as well as its impact especially with regard to recovery of crop production and preservation of livestock. Supervision Plan 49. Because of the short but intensive nature of project implementation, the Bank will provide three supervision missions during the first year of the project. The missions will include a livestock specialist, a road engineer, a water engineer, an agronomist, and a remote sensing specialist with in-depth experience in drought monitoring and planning of mitigation measures. The total supervision resource during FY96 will be 29sw. A mid-term review will be launched early in FY97, followed by another supervision mission in March 1997. Resource requirement in the second year will be 20sw followed by l5sw in FY98.  13 MOROCCO - EMERGENCY DROUGHT RECOVERY PROJECT List of Working Papers in Project Files Working Paper No. Title I Economic and Social Effects of the Drought. II Agricultural Components II-A Seeds Supply 11-B Livestock Production III Water Supply IV Rural Roads V Improving Drought Preparedness VI Project Cost Tables   12' 8 MOROCCO K- . 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