India - Narmada River Development Gujarat. Sardar Sarovar Dam and Power Project (Vol. 1 of 2) : PCR

Docntnt of The World Bank FOR OMFCLAL USE ONLY Report No. 14159 PROJECT COMPLETION REPORT INDIA NARMADA RIVER DEVELOPMENT - GUJARAT SARDAR SAROVAR DAlI AND POWER PROJECT (CREDIT 1552-IN/LWAN 2497-IN) MARCH 29, 1995 FILE COPY| Agricultural Operations Division Country Department II South Asia Regional Office This document has a restricted distribution and may be used by; recipients only in the performance of their official doties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Equivalents Name of Currency: - Rupee (Rp./Rs.) Rate of Exchange: - At Appraisal (August 1984) USS 1.00 = Rs. 12.00 - During Implementation, (FY 1988 - FY 1993) US$ 1.00 = Rs. 18.72 - At Completion (Closing Date March 29, 1993) US$ 1.00 = Rs. 30.00 Fiscal Year of Borrower: April I to March 31 Abbreviations CEA Central Electricity Authority NCA Narmada Control Authority CHPH Canal Head Powerhouse NDD Nanmada Development Department CICFRI Central Inland Capture Fisheries Research NGO Non-Govemmental Organization Institute NPG Narmada Planning Group CWC Central Water Commission NRD Narmada River Development CWPRS Central Water and Power Research Stations NRC Narmada Review Committee DCA Development Credit Agreement NSP Narmada Sagar Project ERR Economic Rate of Retum NWDT Narmada Water Disputes Tribunal FY Fiscal Year ODA Overseas Development Agency GERI Gujarat Engineering Research Institute OECF Overseas Economic Corporation Fund of GOG Govemment of Gujarat Japan GOI Govemment of India O&M Operations and Maintenance GOMP Govemment of Madhya Pradesh PAF Project Affected Families GOM Govemment of Maharashtra PCR Project Completion Report GOR Govemment of Rajasthan QC/QA Quality Control/Quality Assurance IBRD Intemational Bank for Reconstruction and RAP Resettlement Action Plan Development R&R Resettlement & Rehabilitation ICB Intemal Competitive Bidding RBPH Riverbed Powerhouse IDA Intemational Development Agency RIS Revised Implementation Schedule KV Kilo Volt SAR Staff Appraisal Report 'MDDL Minimum Draw Down Level SDV Supplementary Data Volumes of the SAR M&E Monitoring and Evaluation SSCAC Sardar Sarovar Construction Advisory MIS Management Information System Committee MP Madhya Pradesh SSP Sardar Sarovar Project MOEF Ministry of Environment and Forests SSNNL Sardar Sarovar Narmada Nigam Limited MOWR Ministry of Water Resources UNDP United Nations Development Program MW Megawatt WALMI Water and Land Management Institute NABARD National Bank for Agriculture & Rural Development Glossary Chak - Irrigation service area of about 40 ha in size below the outlet from the minor Cusec - Cubic Food per Second (0.0283 m3/s) Cumec - Cubic. Meter per Second (m3/s) Distributary - Irrigation channel, offtaking from the main or branch canal, with capacity greater than 700 liters/second Field Channel - Irrigation channel, offtaking from the main or branch canal, with capacity greater than 700 liters/second Hot Season - April to June Kharif - Wet season; June to October MAF - Million Acre Foot (1235 Mm3) Minor - Irrigation channels with capacity less than 700 I/s and serving chaks Nigam - Sardar Sarovar Narmada Nigam Limited Rabi - Winter season/dry season; November to March Taluka - Sub-division of a district  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation March 29, 1995 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THIE PRESIDENT Subject: Project Completion Report on India - Narmada River Development (Gujarat) Sardar Sarovar Dam and Power Project (Credit 1552-IN/Loan 2497-IN) 1. Attached are Parts I and II of the Project Completion Report on the Sardar Sarovar Darn and Power Project (SSDPP Credit 1552-IN/Loan 2497-IN). Part I was prepared by the South Asia Regional Office. Part II was contributed by the Borrower who, while supporting most of the analysis in Part I, disagreed with some of its interpretations and conclusions. Supporting annexes and Part III (228 additional pages) are not included but are available on request. The PCR should be read in conjunction with the PCR on the parallel Water Delivery and Drainage Project (Credit 1553-IN). 2. The SSDPP and the Water Delivery and Drainage Project were part (the first phase) of the Narmada River Development Plan, which aimed to harness the Narmada River through a series of dams and associated investments for irrigation, energy and domestic/municipality/industry (DMI) benefits in three states - Gujarat, Maharashtra and Madhya Pradesh. SSDPP was approved in March 1985 and was due to close in June 1995. From 1989, many national and international non- govermmental organizations expressed serious concem regarding unsatisfactory arrangements for the resettlement and rehabilitation (R&R) of the project affected families (PAFs) displaced by the project as well as for the project's broad environmental implications. The President of the Bank commissioned an independent review (IR) of the project in September 1991. The ensuing report in June 1992 was critical of the Bank's and the Borrower's performance, especially with respect to R&R and environmental planning. The IR pointed out that the Bank had not followed its own guidelines, and recommended that the Bank "step back" from the project rather than continue with financing of its planned implementation. Following a review mission by the Bank in July 1992, Management endorsed most of the IR findings, but considered that the most promising course of action would be to take advantage of Govemment of India (GOI) agreement to link progress of dam construction to associated R&R requirements. In October 1993, Management presented for the Board's approval a GOI action plan which would address the issues raised in the IR. The Board endorsed the plan which included a commitment by Management to suspend disbursements if the GOI failed to meet specific performance benchmarks by March 31, 1993. However, progress was uneven and on March 29, 1993, GOI requested the Bank to cancel the remaining Loan amount (US$181.5 million of US$200 million). The IDA Credit (US$133.3 million) had been fully utilized by September 1992. At the same time, the Executive Director representing India reaffirmed GOI's continued commitment to complete the project and to meet agreed R&R and environmental standards. Performance under the action plan, as reported 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.  2 by GOI in August 1993 and in subsequent communications, indicates that significant progress has been made in meeting benchmarks but that important R&R requirements have not yet been met (mostly due to difficulties in Maharashtra and Madhya Pradesh). The project implementation schedule, revised in 1989, is unlikely to be met. 3. The basic rationale for the project is sound. The arrangements for basic development of the largest unexploited water resource in India, involving three riparian states, had evolved over a 10-year period through submissions to the Narmada Water Disputes Tribunal (NWDT) of GOI. The comprehensive basin development and management plan that resulted, with its binding inter-state agreements for water allocation and institutional and financial arrangements for program execution, was a substantial achievement. The scheme promises to make an important hydroelectric energy contribution to India's western grid and to provide water for irrigation and DMI consumption to about 30 million people in the severely drought-prone state of Gujarat, where a wide array of endemic diseases is traceable to malnutrition and unsafe domestic water supply. 4. Although delayed and incomplete, the project has made substantial progress in terms of civil works, not only in quantity of construction but also in the quality of work; achievements are described in detail in the PCR. A slow start-up associated with delayed GOI environmental and forestry clearances and the need to import and mobilize major construction equipment led to a revised construction schedule in 1989 with a completion date of 1998. 5. Positive aspects of physical implementation have been overshadowed by major deficiencies in planning and management of R&R and environmental impact analysis. In brief, the Bank did not follow its own R&R guidelines (OMS 2.33 of 1980 and OMS 2.34 of 1982) designed to ensure appropriate treatment of landed and landless PAFs. The NWDT agreement had obliged Gujarat to pay to Madhya Pradesh and Maharashtra all costs of R&R for oustees (persons cultivating, residing or working in the submerged area), with replacement agricultural land being provided for 'landed" oustee families. An R&R plan was prepared and approved at negotiations but it did not meet the requirements of existing Bank guidelines. Insufficient attention was afforded to R&R during project preparation, appraisal and early implementation. The absence of appropriate R&R plans by the participating states led to a drawn-out process of trying to rectify basically unsatisfactory arrangements. A Bank mission provided increased attention to R&R in 1989, and progress picked up after 1990, with further advances after the IR was issued in 1992. Approximately 41,000 oustee families were identified against 10,700 in the SAR which did not have the benefit of adjusted surveys and had excluded certain categories of oustees (adult sons, landless and encroachers). However, substantial obstacles still remain. While Maharashtra has recently adopted satisfactory policies, implementation problems persist in that about half of the oustee villages refuse to cooperate to allow final definition of numbers and R&R arrangements. In Madhya Pradesh, the rehabilitation grant to landless families and adult sons is less attractive than in the other states and implementation capacity is weak. An earlier assumption that most PAFs from this state would move to Gujarat is now in question, possibly obliging considerable additional land procurement, a process which has been cumbersome in the past. NGOs have been usefully involved in the Gujarat R&R program, but in the other two states confrontation continues between project authorities and some local NGOs. The persistence of difficulties is likely to affect the pace at which the infrastructure program (and subsequent reservoir filling) can proceed.  3 6. The Bank did not follow its own environmental guidelines which came into existence before the final appraisal mission in August 1984 (OMS 2.36 of May 1984). This OMS required environmental impact studies to have been done and an evaluation made at appraisal of measures to be taken to avoid or mitigate serious environmental risks. The SAR included a brief description of the anticipated environmental consequences, and indicated that a work program for assessing and managing fisheries, forestry, wildlife, and public health effects would be undertaken and submitted to the Bank for its approval. Project costs did not appear to specifically include any environmental program except as a training component and as a watershed management study, and environmental measures were not financed under the loan/credit. The Board approved the project in March 1985 with legal documents requiring the Environmental Work Plan to be submitted for Bank approval by December 1985. The formal GOI forestry clearance had not been obtained at that time. The forestry clearance was obtained only in September 1987 and an environmental clearance (which became necessary by a GOI 1986 Conservation Act) was obtained in June 1987; both clearances were given subject to a number of important conditions in view of the unavailability of appropriate plans. Deadlines in 1985 and 1989 for completion of the Environmental Work Plan were allowed to lapse and ultimately the Plan was submitted in August 1993 following severe criticism in the IR of 1992 and subsequent studies by ODA-funded consultants. 7. Following the IR, the Borrower made significant efforts on a number of environmental fronts. The compensatory forestry program has progressed, catchment area treatment is underway, and plans for preserving cultural sites and protecting wildlife are in various stages of implementation. After a long delay, each of the states has carried out in-depth baseline health surveys in the project area and set up health care facilities for resettled and permanent populations; state programs for malaria control have been strengthened, although staffing and funding of these operations is not yet satisfactory. Prompted by the IR, consultants reexamined the projected sedimentation rate in the Sardar Sarovar Reservoir. This study confirmed that sedimentation would be greater than originally calculated, but that it would not be a major problem for the combined Sardar Sarovar and Narmada Sagar complex. Concerns about the impact on the estuary downstream of the dam were investigated by the ODA-funded consultants in 1993. This indicated that changed flow patterns are likely to affect the spawning of hilsa, but further work is needed to determine the significance of hilsa in marine catches by fishermen; a local institute continues to work on this matter. Continued implementation of the Environmental Work Plan, vigilance in monitoring and responding to fisheries and socioeconomic developments in estuarine areas, and increased support for the health program could yet help avoid significant detrimental effects. 8. The PCR reestimates the economic rate of return (ERR) on the projects' irrigation, power and DMI water investments to be 12 percent, compared with 13 percent in the SAR. The analysis includes the costs and benefits of the Gujarat Water Delivery and Drainage Project as an integral part of the first phase in the basin development as in the SAR. It also includes environmental costs and benefits and R&R costs which were not adequately covered in the SAR, adjustments for actual construction costs and updated future costs, a share of the costs of upstream Narmada Sagar Dam which is required to enable regulation of water for irrigation and power generation up to the quantities projected (but with an assumed 5-year delay in construction and consequent reduced power generation), a higher (more realistic) value for DMI water delivery, and an assumption that some irrigation and (very minor) energy benefits would commence in 1995. However, despite the approximate adherence to the 1989 construction schedule so far, further delays of at least two years in both the irrigation and energy generation schedules are likely. The pace of construction must be  4 adjusted to progress in the R&R program which has encountered persistent difficulties (para. 5). Floods in 1994 damaged the stilling basin which will need major reconstruction. There are uncertainties in financing arrangements for the overall development and for the foreign exchange purchase of turbine generators for the riverbed powerhouse (after the cancellation of an OECF loan by the Government of Japan). Gujarat and Madhya Pradesh have not yet agreed on the invert level for the irrigation bypass tunnel (lowering it would benefit Gujarat's diversions, particularly in drought years, but at the expense of Madhya Pradesh's rights), which has delayed initiation of tunnel construction. This has meant that the base case ERR scenario prepared for the PCR is already out of date. Sensitivity analysis shows that a delay of four years in the commissioning of the riverbed powerhouse would reduce the ERR by a further one percent, and some other delay scenarios continue to provide a return in excess of 10 percent (see attached sheet). The stability of the ERR projections in the PCR scenarios is due to the multi-purpose nature of the investment and to benefit delays being associated with investment cost delays. Nevertheless, the robustness of the ERR calculations is clouded by many uncertainties. 9. The PCR is based on a hydrological model which a team of experts recently appointed by the GOI has not endorsed in full (see Memorandum on the Water Delivery and Drainage Project). PCR scenarios do not examine the economic implications of a failure to construct the complementary Narmada Sagar Dam. This dam is an integral part of the basic development package agreed by the three states, and the construction contract has already been let (May 1992), but the fiscal implications of its development are substantial and its resettlement dimensions even larger than those of Sardar Sarovar. Delays in the completion of Narmada Sagar due to financing and/or R&R difficulties cannot be ruled out. To examine the implications of the omission of Narmada Sagar Dam, a new water modelling exercise would have to be undertaken in which the alternative of a series of upstream smaller dams to complement the Sardar Sarovar investment would have to be considered; major changes could be expected in the amount of water available for energy and for the command area in Gujarat which would, of course, influence the scale of the water distribution investment which could be made in that area. In the absence of such a model, the PCR uses a proxy to reflect the implications of extended delays in the completion of Narmada Sagar-25 percent reduction in power and 30 percent reduction in irrigation benefits throughout the project life. Consequently, while the alternative scenarios appear to confirm the economic viability of the overall investment, uncertainty remains concerning the hydrological assumptions and the scale and sequencing of project benefits. 10. Institutional improvements were substantial in some areas of the project but weak in others. Overall, the institutional development impact is rated as modest. Certainly, advances in engineering design and construction quality control were significant, and an effective management information system to monitor the civil works component was established and is being expanded to financial and administrative aspects. Good progress has been made in operation and maintenance (O&M) plans, although these will need to be updated when the remote control and monitoring system for the operation of the main canal is available (the consultancy contract had not been signed at Loan cancellation, and bilateral technical assistance is being sought) and there is no evidence of institutional development in terms of formation of local irrigation groups or of providing such groups with financial autonomy. While the planning and implementation capacity of R&R has been improved, implementation still needs fundamental improvement in Maharashtra and Madhya Pradesh, and health services continue to be affected by inadequate funding and staffing.  5 11. Bank appraisal and supervision performance has been unsatisfactory. Adherence to the Bank's guidelines could have avoided many of the negative consequences of the project-social unrest, diversion of resources (by GOI and the Bank) to address the consequences of inadequate early attention to environmental and R&R requirements (especially in PAF consultation), delayed benefits, and funding difficulties including the cancellation of the Bank and OECF loans. As a development investment, however, the project outcome is rated as marginally satisfactory based on PCR assumptions. This rating is affected by more than the usual uncertainties. It assumes that the hydrological parameters of the project are firm and that despite delays in completion of the scheme (and the associated cost escalations), the project will be fully funded and the complementary Narmada Sagar dam constructed. On this basis, the ERR is likely to be in excess of 10 percent. The substantial benefits to be obtained from this major investment of over US$1.5 billion through energy generation and DMI distribution, as well as likely irrigation benefits in the command area (see Memorandum on the Water Delivery and Drainage project), should be sufficient to outweigh the significant negative aspects of the projects and to compensate for all resettlement costs based on Bank guidelines. It is emphasized, however, that the likely outcome is less favorable than anticipated at appraisal, and has been affected by many avoidable social costs and deficiencies, especially in the areas of resettlement and of environmental planning, on both of which decisive action is still pending. 12. The sustainability of the project achievements is rated as uncertain. The project has adhered to high construction standards and the institutional capability in this regard is now well established. But much will depend on effective O&M for which India does not have a good track record. Action is needed to staff, equip and train an appropriate O&M unit in advance of the dam and power complex operation. The hydrometerological monitoring network which is needed for dam safety, flood control and efficient reservoir operation had not been tendered at the time of the PCR. Realization of the Environmental Management Plan will be crucial for sustainability, especially with respect to monitoring, and responding to, the effects of the scheme on downstream fisheries and communities. These effects, inter alia, will need to be addressed in the revision of the NWDT award in 2024. The Borrower is adamant that it will continue with the Narmada River Basin Development Plan, but, as previously noted, the rate of progress will depend on the Borrower's ability to deal with the social dimensions of the Plan and to allocate to it the necessary managerial, financial and technical resources. 13. The PCR provides a detailed assessment of project implementation and shortcomings. With few exceptions (noted below), it is comprehensive, and it acknowledges major performance shortfalls. Concerns of the EDs at the 1985 Board presentation are noted, as is the commitment by Management to keep the Board informed on the social and environmental aspects of the project through written reports and briefings. The PCR deals with the major issues raised by the IR. The extent of compliance by GOI with the action plan agreed in late 1992 (as a basis for continued Bank support) is elaborated. As indicated earlier, significant uncertainty about the rate at which investments will be completed, and possible variations in hydrological parameters and water use scenarios, limit the robustness of PCR estimates of the ERR. The PCR fails to assess the scope or usefulness of M&E data and socioeconomic surveys as baseline information for impact analysis. In the discussion on "Bank Performance," the PCR does not address the missed opportunities in potential use of selected, reputable NGOs to assist it in meeting the Bank's guidelines in this aspect of the project. While the PCR indicates that the Bank should have taken "stronger action" to correct the R&R and environmental deficiencies during implementation, it does not make a forthright judgment that the Bank's enforcement of covenants was delinquent.  6 14. In its part of the PCR, the Borrower is more confident than the Bank in predicting some aspects of future performance and scheduling, and highlights the high socioeconomic benefits which will be obtained by the intended provision of both irrigation and DM1 water in the drought prone areas of Gujarat. 15. Considering the extraordinary amount of investigation and lesson learning which has taken place with respect to environmental and resettlement dimensions of the project, there would be little value in carrying out further evaluation of these aspects at this stage. A performance audit is planned, however, in order to assess the realism and the sensitivity to risks of the reestimation of project costs and benefits. In due course, OED will undertake impact evaluations of socioeconomic effects (including health aspects) on PAFs and the impact of basin development on command area populations.  7 Note on the Calculation of Economic Rate of Returns for Investments Under the First Phase of the Narmada Development Plan 1. PCR base case scenario. A: Yielding 12 percent ERR Actual costs for completed investments are used, and projected costs and benefits are revised. Seventeen percent of the costs of the upstream Narmada Sagar Dam are included, as at appraisal. A 1989 revision of the construction schedule was further adjusted to allow for the consequences of delays which were apparent in 1993 at the time of the recalculation of the ERR. The projection assumes some irrigation and DMI will commence in 1995 in a small area, with full development of the 1.79 million hectares of irrigation in the command area program by 2006. Significant power benefits would commence in 1997. In view of existing and likely delays in the construction of the Narmada Sagar dam, a 25 percent reduction in power supply for the first five years is introduced to compensate for reduced flows available to the riverbed power house (RBPH). Comment: At least one more year (after 1995) will be needed before irrigation commences, so that part of the sensitivity calculation for irrigation delay (see below) must be consumed in the actual base case. The 25 percent reduction in power for five years is likely to be on the low side considering the progress in construction of the Sardar Sarovar and anticipated future constraints. On the positive side, however, energy and DMI values could be conservative (see below), and the Bank commodity price projections for the 1995-2000 period are higher than that assumed in the PCR analysis. 2. Scenario B This examines the impact on Scenario A of delaying the RBPH for up to four years. Assuming that investment costs in the RBPH and transmission systems are delayed accordingly, this reduces the ERR by less than one percentage point. Comment: Delays may occur in the RBPH as financing of the necessary turbines is still in question. 3. Scenario C This assumes that the Narmada Sagar Dam is substantially delayed (or not completed) so that it does not contribute to the scheme. In this event, some suboptimal alternative investments in upstream storage would probably occur, requiring a new hydrological modelling exercise to determine water availabilities. In the absence of this, a proxy was used: the 25 percent reduction in power generation which is assumed for the first five years in the base case scenario is extended through the project life; similarly, the command area irrigation/DMI benefits are reduced by 30 percent, with the main canal being fully costed but with branch canals and other development investments being reduced by 15 percent and 25 percent respectively. The 17 percent of the Narmada Sagar costs previously allocated to the project is removed. This reduces the ERR by a little over 1 percent.  8 Comment: Although construction of the Narmada Sagar Dam has commenced, there are many uncertainties (in funding and resettlement requirements) concerning its progress, despite the government's stated commitment to its completion. Construction costs are likely to be progressively incurred but any benefits may be seriously delayed. The rationale for the proxy assumption is not explained in the PCR: the same proxy at the time of appraisal was apparently based on simulation studies. While planning for resettlement related to Narmada Sagar has been elaborate, implementation problems may well arise given the sheer scale of the effort needed. 4. Scenario D This examines delays in the command area development compared to scenario A, with simultaneous reduction in benefits and costs, but with the main canal being completed as planned. A two year delay reduces the ERR by 0.7 percentage points, a four-year delay by 1.4 percentage points, and a six-year delay by 2 percentage points. Comment: Significant delays in the command area development appear likely, and at least a one- year delay in the commencement of irrigation development is certain. The total plan, however, envisages development of some areas with a poor benefit/cost ratio (for social/equity reasons) and a relatively traditional cropping pattern. In practice, restricted water availability (see below) and farmer practices may force more profitable investment and water use than envisaged in the model. 5. Scenario E This assumes that the command area would be reduced by up to 40 percent. On the assumption that this makes the equivalent amount of water available for power, this increases the rate of return slightly, again allowing for reduced command area development costs excepting the main canal. Comment: A reduced availability of water for irrigation/DMI need not make the equivalent water available for energy. First, there is still some doubt about the total water availability in the system, and second the actual water consumed by irrigators is likely to be more than anticipated in the plan. Concerning total water availability, the most recent hydrological model (in 1993 by the Central Water Commission-CWC) estimates a 75 percent dependable flow of 27 MAF. This is based on "observed" flows in the basin from 1948 to 1990 (43 years) and "generated" flows from 1891 to 1947 (56 years). Although CWC insists on the validity of these calculations, there is some question concerning the reliability of 'hindcasting' to generate flow data from available rainfall records in the period to 1947. Use of only the period with "observed" flows lowers the 75 percent dependable volume by about 18 percent. Within Madhya Pradesh, there is political pressure not to fill the reservoir to its "full reservoir level'-FRL of 138.7m by some groups who will lose good cropping land when this level is reached; this, despite the NWDT agreement to the 138.7m FRL. This issue was heavily debated and eventually resolved during the NWDT proceedings. Recently,  9 however, renewed pressure for review of the FRL has been very strong in Madhya Pradesh, in part encouraged by a Supreme Court Bench of Justices, which accused the GOI of not responding adequately to a review at the project by the expert Patil Committee. For the volume of water actually diverted at Sardar Sarovar for irrigation and DMI, the planned water use per hectare may not eventuate, and more water is likely to be used on less hectares than intended in the plan. The PCR calculation assumes reasonable crop yields (e.g. 4 tons paddy HYV and 3.5 tons wheat HYV on irrigated higher potential soils), an average cropping intensity of 1.37, an irrigation intensity of 1.06, an irrigation efficiency of 48 percent at headworks, and a five-year adoption curve for enhanced inputs and outputs on each block to receive irrigation; all of these coefficients are acceptable considering experience in India. However, the PCR (and the SAR) assumes that the crop water requirement will be reduced by 10 percent "because of water scarcity;" in practice, this is unlikely, as farmers in the earlier serviced areas are likely to assume higher irrigation intensity and use much more water than envisaged in the plan. This implies that less of the command area will be irrigated, but it also suggests that investment in the least productive areas may be avoided. The latter is made even more likely in the Rann of Kutch where a recent study by the Wildlife Institute of India has indicated that the proposed irrigation canals would endanger the habitat of the wild ass (an endangered mammal), particularly in waterlogged and saline areas. A more rational irrigation plan and the adoption of a higher-value cropping pattern would be conducive to increasing the rate of return. Consequently, while reduced total water availability would have a negative effect on the scheme benefits through reduced energy generation (scenario C), the likely pattern of development and water use in the command area under circumstances of reduced supply may not reduce the returns to irrigation investment. 6. Unit Value of Benefits DMI water values can decrease by 19 percent or power energy values by 6.6 percent without taking scenario A to below 10 percent ERR. Comment: The economic price of power (at about 4.6 US cents/kWh) is conservative and is based on a "willingness to pay" concept using a methodology which adds the economic value of the average tariff for each consumer category to half the additional cost of the alternative of private supply to account for a consumer surplus. This methodology appears somewhat arbitrary, but is said to be conservative and has been used in the appraisal of other recent projects in India. Account is not taken of the higher peaking power value which would increase the ERR if it were included. The DMI value at about 15 US cents/m3 is 60 percent higher than that assumed at appraisal. With one exception, the SAR methodology was adopted, in which demand from different categories of consumers was calculated and the DMI water was valued as the savings in cost realized by supplying estimated demand from the project rather than other sources; the latter were individual water facility investments, except for some more difficult areas in the later stages of development where the cost of trucked water was used.  10 The PCR assumed one third of the alternative source water would have to come from desalinization (which causes the increased DM1 value) on the grounds that the value previously ascribed was extremely conservative considering the impact of recent droughts in the command area. Although appearing reasonable, this valuation warrants further investigation, as the contribution of DMI to the benefit stream in the first 15 years after DMI commences increases from 4 percent at appraisal to 11 percent in the PCR ERR analysis. 7. Component Analysis The PCR states that the ERR (using scenario A assumptions) for investment in power alone is 14.2 percent, in irrigation alone is 10.8 percent and in irrigation and DMI is 12.4 percent. Comment: The methodology used to separate out benefits and costs to attain these estimates is not presented, but it is assumed that the PCR uses the same dissections as those made at the time of appraisal.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT INDIA NARMADA RIVER DEVELOPMENT - GUJARAT SARDAR SAROVAR DAM AND POWER PROJECT (Credit 1552-IN/Loan 2497-IN) TABLE OF CONTENTS PREFACE . ......................................................... EVALUATION SUMMARY ..................... ....................... Attachment I Relevant Bank Guidelines and Project-Specific Covenants on Environment and R&R Attachment 2 Key GOI/State Environment - and R&R - Related Decisions Attachment 3 Selected Bank and Govemment Documented Actions on Environment and R&R (July 1983-June 1991) PART I. PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity .I 2. Background .I 3. Project Objectives and Description. 3 4. Project Design and Organization .5.......... S 5. Project Implementation .13 6. Environment .24 7. Resettlement and Rehabilitation .32 8. Project Achievements .48 9. Project Benefits and Revised Economic Analysis .50 10. Project Sustainability ............................................ 52 11. The Bank Performance ........................................... 54 12. The Borrower Performance ........................................ 57 13. Project Relationships ............................................ 59 14. Consulting Services ............................................. 60 15. Project Documentation and Data .................................... 61 16. Lessons Leaned ............................................... 61 PART II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .... ......... 67 The above parts of the PCR have been dutributed to the Board and to the President. The following parts are available to authorized persons on request. Thus measure has been adopted because of the length of the report. The three annexes pertain to Part I. ANNEX 1: Environmental Impacts and Management .......... ................. 85 ANNEX 2: Resetlement and Rehabilitation . ................................ 125 ANNEX 3: Revised Cost-Benefits Analysis (April 1993) ........ ................ 187 1Ws document ha a resicted distinbution and may be used by recipient only in the pfoarmn their offiei duois. Its contents may not otherwise be disclosed without World Bank author ta  Table of Contents (continued) PART m. STATISTICAL TABLES 1. Related Bank Loans ............................................. 260 2. Project Time Table ............................................. 267 3. Schedule of Cumulative Disbursements .......... ...................... 268 4. Project Implementation Status (Main Milestones) ......................... 270 5. Physical and Financial Implementation Status ........................... 271 6. Total Project Costs ............................................. 274 7. Project Cost (components eligible for disbursement) ....................... 275 8. Project Financing ............................................. 276 9. Economic Impact Indicators (AppraisallPCR) ........................... 278 10. Status of Priority Studies of NPG ............ ....................... 280 I1. Status of Covenants ............................................. 284 12. Bank Missions ............................................ . 295 13. Staff Inputs (SWS) ............................................. 308 14. Salient Technical Features of Dam and Power Complex .................... 309 MAPS: IBRD 17691 and 17694  i PROJECT COMPLETION REPORT INDIA NARMADA RIVER DEVELOPMENT - GUJARAT SARDAR SAROVAR DAM AND POWER PROJECT (Credit 1552-IN/Loan 2497-IN) PREFACE This is the Project Completion Report (PCR) for the Narmada (Gujarat) Dam and Power Project for which an IDA Credit of SDR 99.7 million (Credit 1552-IN) and an IBRD Loan of US $ 200 million (Loan 2497-IN) were signed on May 10, 1985. The Credit was fully disbursed on September 17, 1992 while only US$ 18.5 million were disbursed from the Loan. The Loan was closed on March 29, 1993, two years and three months ahead of the agreed Closing Date, at the Borrower's request. The undisbursed Loan amount of US$165.54 million was canceled on March 29, 1993 and the balance amount under the Special Account of US$ 15.96 million was refunded on August 10, 1993. This report is not a project completion report (PCR) in the traditional sense. It reviews a special case where Bank funding has been terminated, but the project remains under implementation. Tlhe PCR was prepared by the Agriculture Unit in New Delhi of the Agriculture Operations Division of the India Department, South Asia Regional Office (Preface, Evaluation Summary, Parts I and IE). The Borrower prepared Part II. In April 1991, the Bank commissioned an Independent Review of the resettlement and rehabilitation (R&R) and environmental aspects of the project, and in June 1992 the report was submitted. In July 1992, the Bank mounted a major review mission to determine the status of project implementation and actions to be taken in the light of the Independent Review report findings and, on October 23, 1992, the Board indicated that the Bank's continued support of the project will be subject to the Borrower's meeting a number of benchmarks by March 31, 1993. The Borrower, in their letter of March 29, 1993 to the Bank and statement to the Board the following day, requested the cancellation of the balance funds under the Loan and reaffirmed the continued commitment of the Govemment of India (GOI) and State Govemments to fully meet the R&R and environmental standards of this important project. The Borrower also indicated that good progress had been made on the benchmarks and that they were confident these will be met. The present PCR was initiated in September 1993 after the Borrower had provided the basic technical and financial data and formally submitted the status of compliance with the benchmarks on August 5, 1993. The PCR is based, inter alia, on the Staff Appraisal Report (SAR), legal documents, supervision reports, correspondence between the Bank and the Borrower, discussions with the Sardar Sarovar Narmada Nigam Limited (SSNNL) engineers, the Independent Review Report, GOI's compliance with the benchmark documents, intemal Bank memoranda and reports, and various non-Bank documents.  I  iii PROJECT COMPLETION REPORT INDIA NARMADA RIVER DEVELOPMENT - GUJARAT SARDAR SAROVAR DAM AND POWER PROJECT (Credit 1552-IN/Loan 2497-IN) EVALUATION SUMMARY Background and Objectives 1. The Sardar Sarovar Dam and Power Project and the Gujarat Water Delivery and Drainage Project form part of the Narmada River Development Plan, whose overall objective is to harness the Narmada River through a series of dams, for irrigation, water supply and energy. The arrangements for sharing and utilizing water by the four benefitting states (Madhya Pradesh, Gujarat, Maharashtra and Rajasthan) were defined by the Narmada Water Disputes Tribunal (NWDT) in December 1979. Under this award, Gujarat was allocated 1 1,100 Mm3 representing about one-third of the 75% dependable usable annual water flow, and was authorized to implement a project comprising: (i) the Sardar Sarovar Dam, (ii) a 1,200 megawatt (MW) riverbed powerhouse (RBPH), (iii) a 250 MW canal head powerhouse (CHPH), (iv) a canal system to irrigate 1.87 M ha in Gujarat and 70,000 ha in Rajasthan, and (v) a water supply system for about 30 millon people in the drought-prone areas of Saurashtra and Kutch. On that basis, Gujarat prepared the Sardar Sarovar Project in 1980, which was to be implemented in various phases over a period of about 20 years. Phase I comprised: (i) the Sardar Sarovar Dam, (ii) the RBPH, (iii) the CHPH, (iv) the first 144 km of the main canal up to the Mahi River, and (v) a network of branch and distribution canals and drainage system to irrigate about 450,000 ha. 2. The original components of the Sardar Sarovar Dam and Power Project (Cr.1552-IN/Ln. 2497-IN), to be financed within 1 10 months, included: (i) the Sardar Sarovar concrete gravity dam and its spillway gates, (ii) the underground riverbed powerhouse and selected electro-mechanical equipment, (iii) the irrigation bypass tunnel, (iv) the Narmada Basin hydro-meteorological network, (v) a management information system, (vi) training, and (vii) technical assistance. In the same period, the Borrower's own resources were to finance: (a) the canal head powerhouse and its five 50 MW turbine generating sets, (b) the Garudeshwar Weir, (c) the Vadgam saddle dam, (d) the headworks reservoir regulation system, (e) the resettlement and rehabilitation (R&R) of about 10,758 project affected families (PAFs), and (f) a monitoring and evaluation system for the R&R activities. The six 200 MW reversible turbine generating sets were to be financed through a separate credit arrangement with the Government of Japan. The project did not finance any environmental components, nor did the Credit/Loan finance any of the R&R activities that became so critical during project implementation. 3. The Water Delivery and Drainage Project (Credit 1553-IN) was processed in paallel with this one and is the subject of a separate Project Completion Report. The two projects were presented to the Board concurrently on March 7, 1985. The Staff presentation highlighted the R&R program for the projects. The Directors queried the institutional arrangements for that program and the relatively undefined state of the environmental studies. Their other concerns related to the project size, future Narmada Basin development, and being kept informed (during implementation) about the projects' social and environmental effects. Taken together, these Board concerns revealed the early exposure of all parties in the Bank to the R&R and environmental issues, and the attention afforded to them by the EDs. Management agreed and complied to a specific Board request to keep it informed of the projects' progress on social and environmental issues through many written responses to questions and a number of briefings of EDs.  iv Project Design and Organization 4. Project preparation took four years from identification in 1979 to pre-appraisal in 1983. The project was prepared by the Narmada Planning Group (NPG) with assistance from the United Nations Development Program (UNDP) and the Bank. Project concept and design closely follows the NWDT award. NPG conducted supporting studies and analyzed the project's financial and economic benefits. The Narmada Development Department, in charge of project implementation, prepared detailed designs and cost estimates for the major project structures. 5. Appraisal took a lengthy 17 months (March 1983 to August 1984) and several Bank missions. Negotiations took place in November 1984 and Board Presentation in March 1985. R&R policies and related institutional, monitoring and evaluation arrangements were described in the SAR. The Legal Documents included three covenants on health, 16 dealing with R&R, and three with environment -- including the party states' obligation to implement an R&R plan satisfactory to the Bank, plus a work plan on the project's environmental effects (see Evaluation Summary, Attachment 1). 6. In May 1988, responsibility for project implementation was transferred from the Narmada Development Department, a government agency, to the Sardar Sarovar Narmada Nigam Ltd. (SSNNL), a parastatal corporation organized along functional lines. Hydrology 7. Bank and Borrower reviews deemed the basic hydrological data used for project design to be satisfactory. The NWDT has set the annual 75% dependable water availability for the project at 28 million acre feet (MAF) (34,580 Mm3) with 65.2% allocated to MP, 32.1% to Gujarat, 1.8% to Rajasthan, and 0.9% to Maharashtra. With first priority given to water supply, second to irrigation and third to power generation. Water availability for firm power generation at the riverbed powerhouse will decline sharply - and could drop to practically nil when MP will use its full water allocation. However, the riverbed powerhouse will still be able to produce peaking power generation due to its reversible turbine generators. Revised estimates show that MP is likely to use only 70% of its allocation by 2024, when the NWDT award will be reviewed. The canalhead powerhouse will continue to produce 50 MW of power generation throughout the life of the project. Project Implementation 8. GeneraL The Credit became effective in January 1986, nine months after Board approval, but construction was delayed till July 1987, pending environmental clearance from India's Ministry of Environment and Forests (MOEF). The project implementation schedule was revised in December 1989 -- with irrigation and power generation expected to start in July 1995, after dam construction had reached 112.5 m. The dam, with its spiUlway gates, was then expected to be fully completed by January 1998. However, the Credit/Loan closed on March 29, 1993, two years and three months ahead of time, at the Borrower's request. Civil Engineering 9. The Sardar Sarovar Dam was to be completed in 110 months (by June 1996), but was initially slowed by difficulties in importing and commissioning key construction equipment, especially a 330 m3/hour concrete batching plant and two 1,600 m, 28 ton capacity cable ways. Procurement, installation and commissioning of this equipment took about 42 mont rther tn 26 as stipulated in the contract. Thereafter, concrete placement increased considerably, reaching a peak of 1.0 Mm3 in FY 1990/91. High standards of construction and quality were maintained  v throughout due to the establishment by SSNNL of an Expert Committee on Cement and Concrete, the creation of a Quality Control-Quality Assurance organization, and an effective Management Information System. 10. The Riverbed Powerhouse (RBPH), the second largest civil works component financed under the project, was to be completed in 93 months, i.e., by April 1995. Though the construction of this exceptionally large underground powerhouse had a good start, it suffered delays due to unexpected physical problems. The first was unstable slopes in the collection pool, followed by the development of cracks in the machine haLl walls. The latter problem required the assistance of international consultants provided by the Bank. The completion of the RBPH now depends on procurement of six 200 MW reversible turbine generating sets that were to be provided by a Japanese consortium under a credit agreement with Overseas Economic Cooperation Fund of Japan (OECF). Though three turbine generating sets were being manufactured in Japan, they could not be delivered because the Government of Japan withdrew its support for the project in 1991 - citing deficiencies in R&R. The Borrower has, since then, been actively negotiating an alternative financing arrangement with the supplier. However, the financing issue is stiWl unresolved and the date of completion of the RBPH with its turbine generating sets remains uncertain. 11. Construction has not begun on the Irrigation Bypass Tunnel, which is to supplement the discharge of the CHPH to provide water to the main canal. Its invert level was originally fixed at reservoir level 93.6 m, but Bank appraisal and supervision missions recommended lowering it to reservoir level 86.00 m to optimize Gujarat's diversions, particularly in drought years. The Government of Madhya Pradesh (GOMP) opposed lowering the invert level to preserve its own rights over power generation and to prevent Gujarat from using more than its share of water. Because the invert level has still not been decided, the designs for this key project component cannot be finalized. This structure will require a minimum of three years to complete, and any further delay will cause serious construction problems. 12. The Narmada Basin hydro-meteorological (hydromet) network for flood forecasting and reservoir operation is another important project component to be financed under the Credit/Loan, but which has not yet been implemented. In 1988, international experts recommended meteor- burst -- a system not previously used in India -- as a viable dedicated telecommunication system. This new technology was endorsed by the Telecom Commission, GOI, and a two-stage bidding procedure was initiated in 1991 to procure the required equipment. However, just as price bids were being sought, the National Informatics Center, GOI, operator of a nationwide satellite telecommunication system, declared that its system would be cheaper and more reliable under Indian conditions. As a result, the bidding process was halted and the Bank agreed to change the specifications so that satellite telecommunications could compete with meteor-burst 13. The SSNNL established an efficient Management Information System to monitor the progress of civil works, and prepared an Oetion and Maintenance manual satisfactory to the Bank. 14. The Canal Head Powerhouse though not financed under the CreditJLoan, made good progress and its first 50 MW conventional T/G set will be ready for commissioning by August 1995. However, the construction of the Garudeshwar We had not been initiated at the time of the PCR. Environment and R&R - Background 15. Board approval was granted in 1985, in the absence of formal forest clearance from the MOEF. Forest clearance and an environmental conditional clearance were issued in 1987. As discussed in Annexes 1 and 2, the Bank's dialogue with GOI/States on environmental and R&R issues which started as early as 1985 and continuing through credit closure, including a major  vi R&R mission in 1989, resulted in substantial strides being achieved on these two fronts. The project's R&R and environmental aspects had come under heavy criticism from national and international entities, including non-governmental agencies (NGOs). In response, in September 1991 the Bank commissioned an Independent Review. The resulting report (June 1992) questioned both the project's economic viability and the Bank's ability to follow its guidelines. It highlighted potential environmental problems relating to sedimentation, back water effects and downstream impacts, and drew attention to specific R&R inadequacies. 16. Id deReview. In June 1992, the Independent Review report criticized the Bank, the three party-states, and the Central Government for poor implementation of the R&R program. The report offered three main criticisms of the Bank: a. despite the existence of explicit operational guidelines with respect to involuntary resettlement and tribal people, the Bank failed to insist on proper preparation of R&R plans by the Borrower and, accordingly, failed to appraise adequately the resettlement components of the Sardar Sarovar Project (SSP); b. the appraisal team and the legal documents did not address adequately the special needs of tribal people affected by the project, because they were mostly encroachers on government land and therefore legally treated as landless; and c. during the last few years of project implementation, Bank efforts to compensate for the lack of an adequate appraisal have helped to bring about some improvements, particularly in Gujarat; however this "incremental approach" failed to achieve all the changes needed, particularly in Madhya Pradesh (MP). 17. On the Borrower's side, the principal criticisms related to: a. the lack of sufficient baseline data gathered on the affected population, which made it impossible to prepare effective resettlement plans; b. the lack of consultation with the affected population, and failure to inform them of their resettlement options and rehabilitation packages; c. the lack of compliance with the provisions of the NWDT and the Bank's legal agreements; and d. institutional weaknesses, poor implementation particularly in MP, and inadequate linkage between dam construction and R&R implementation. 18. The Independent Review report also gave a detailed description of R&R implementation in the three states and drew attention to specific issues. In its concluding remarks, the report indicated that R&R could not be implemented as planned and recommended that the Bank "step back" from the project to re-evaluate the situation and institute improvements. 19. Management Response to the Independent Review. The Bank's Management, in its response of June 23, 1992, generally agreed with the description of R&R experience in the states, and also agreed that: (i) adequate R&R plans had not been prepared by the Borrower for appraisal by the Bank, (ii) while the development of the resettlement policy in Gujarat was indeed an achievement, R&R policy in the other two states - Maharashtra and Madhya Pradesh - needed urgent improvement, and (iii) implementation needed to be further strengthened in all three states. The Management Response explained that the Bank's supervision strategy had focused on obtaining incremental progress through: (a) improvements in resettlement policy, planning and implementation in Gujarat, (b) efforts to replicate Gujarat's R&R policy and standards in the other  vii two states, and (c) concentrating its supervision efforts on MP during the remaining years up to 1994, when R&R will commence in that state (see Evaluation Summary, Attachment 3 for a selected list of some of the key steps in the incremental approach followed). Nevertheless, Management concluded that the incremental approach did not yield the results expected and was too slow in the light of the time before submergence. It supported a new approach embodied in a monitorable action plan which became the benchmarks subsequently approved by the Board. Finally, the Bank believed that the establishment of these measurable benchmarks for addressing the situation was preferable to stepping back, as recommended by the Independent Review. In retrospect, the incremental approach proved to be a necessary process toward the Borrower's adoption of the changes in R&R policies and implementation that were so strongly advocated by the Independent Review and the Board but was not a sufficient step to achieve the desired result soon enough. Stronger actions to enforce the Bank guidelines would have been warranted in the earlier stages of project implementation. 20. At the time of setting of the benchmarks the Bank secured the Borrower's assurance that a comprehensive environmental action plan would be prepared, and that GOI would promptly correct the weaknesses in its R&R program. In October 1992 the Board agreed to continue support for the project, subject to Borrower's compliance by March 31, 1993 with performance benchmarks related to environmental and R&R issues. On March 29, 1993, however, the Borrower requested cancellation of the outstanding Loan amount of US$ 181.5 million - while reiterating at the same time its commitment to meeting the benchmarks and agreed standards for R&R and environmental implementation. Environment 21. After the Independent Review, the Borrower made concerted efforts on a number of environmental fronts. Compensatory afforestation has progressed well and is expected to be completed prior to submergence. Catchment area treatment is underway and, for selected priority areas, should be completed on time. Plans for preserving cultural sites and protecting wildlife are in various stages of implementation. 22. The Consultants recruited to assist the Borrower in meeting the benchmarks believe the remaining environmental matters cited by the Independent Review do not pose serious threats to either the environment or local residents, except in the estuary downstream of the dam where some fishing communities may need R&R and water may need to be released for environmental control at a later stage. Resettlement and Rehabilitation 23. The Borrower now estimates that the Sardar Sarovar Dam will affect about 41,014 families/131,245 persons in 245 villages (compared with SAR estimates of 10,758 families/67,340 persons). However, about 20,000 families (of which 45% major sons) will lose only houses and/or no land and would therefore be able to remain within or close to the village area beside the reservoir. The balance would be resettled mostly in Gujarat in the command area of SSP. The new figures count adult sons as separate families, and also reflect population growth and better surveys. About 82% of all project-affected families (PAFs) are in MP, 11 % in Gujarat, and about 7% in Maharashtra. Of these PAF, 97% are tribal people in Gujarat, 100% in Maharashtra, and 29% in MP mostly living at subsistence levels. The project's impact on tribals in all thiree states as well as the Nimad Plains of Madhya Pradesh are discussed in detail in Annex 2 Section V. About 23% PAFs in Gujarat and up to 47% in MP are estimated to be landless. 24. Because this was the first time that such high standards of R&R had been applied to a project in India, all concerned underestimated the complexity and time required to resettle and rehabilitate over 100,000 people. Ultimately, however, due to the efforts by the Bank and also the  viii role played by State Governments, Government of India, project authorities, independent M&E agencies, NGOs and the Independent Review, this project has been the source of many improvements in R&R. With respect to R&R policies, the principle of land-for-land was applied on a large scale, adult sons (and daughters in Maharashtra) were recognized as separate families, tribal people on government forest lands were treated as landed families, and additional assistance was provided for subsistence and housing construction. On the implementation side, Gujarat developed a unique mechanism for acquiring replacement agricultural land at market price through Land Purchase Committees. State R&R units were established, as well as a central project coordinating unit and monitoring mechanism. In MP, progress was made with the help of technical assistance and a computerized management system for R&R. 25. The R&R component had to face a number of difficulties in part due to the Bank's failure to follow its own guidelines at appraisal such as the lack of early consultation with oustees and the preparation of detailed R&R plans by the states or to other reasons which became known only during project implementation. However, the lack of consultation is probably one of the major reasons for problems encountered in carrying out socio-economic surveys, preparing satisfactory R&R policies and plans and implementing them in a timely manner. Some other difficulties encountered were: (i) estimating the precise number of PAFs through house-to-house socio- economic surveys; (ii) applying the principle of land-for-land where land markets are limited, and without creating secondary displacement; (iii) linking dam construction with R&R without incurring huge costs through construction delays, and defining when R&R has been completed; (iv) predicting permanent and temporary submergence levels years in advance, in areas with highly variable rainfall; (v) deciding the size and location of resettlement centers; and (vi) integrating resettlement centers into host communities. Most of these issues were resolved satisfactorily except for the survey of oustees of some villages of the Akrani Taluka in Maharashtra whose resolution continues to be hampered by dam opponents. In particular, Land Purchase Committees were established in Gujarat, a Submergence Schedule for the 1 in a 100-year flood was prepared by the Narmada Control Authority (NCA) on the basis of the revised construction schedule of December 1989, approved by the Sardar Sarovar Construction Advisory Committee a certification process was established to link dam construction with R&R implementation, resettlement site selection and development was improved, and steps were taken to integrate resettlement centers into host communities with assistance of NGOs. 26. A long learning process led to what can now be considered a reasonably well-structured program. Although implementation still exhibits weakness and further improvements will be required in the selection and construction of resettlement sites, the acquisition of replacement land, and overall program management, the SSP R&R program has set new policy and implementation standards which can be applied in future resettlement programs. There remain concerns about the extent of land options being offered for Madhya Pradesh oustees who wish to remain in Madhya Pradesh rather than take the Gujarat package. 27. The Board's performance benchmarks on R&R required the Borrower to: (i) assess the number of PAFs and analysis of tribal people affected, (ii) prepare comprehensive R&R plans in each state, (iii) strengthen institutional arrangements and the role of NGOs, and (iv) acquire land in Maharashtra and MP. The Board agreed to continue its support for the project subject to Borrower compliance with the benchmarks by March 31, 1993. Based on documentation submitted by GOI in August 1993, the Borrower appears to have met a substantial part of the benchmarks. The benchmarks still to fully met are: (i) the completion of socio-economic surveys in Maharashtra, (ii) the acquisition of 2,000 ha of land in MP (about 1,892 ha have been identified but not acquired), and (iii) an inter-state agreement on the sharing of R&R cost. In addition, the R&R plan for Maharashtra is still based on a provisional number of oustees, and that of MP requires improvements with regard to the total number of oustees and those willing to resettle in Gujarat  ix Project Achievements 28. Physical Achievements. The Credit/Loan closed 27 months ahead of schedule, on March 29, 1993. By then, the Sardar Sarovar Dam was about 50% complete and the riverbed powerhouse about 55% complete, but construction had still not begun on the irrigation bypass tunnel. The Narmada Basin hydro-meteorological network was to be retendered so the national satellite communication system could compete with the meteor-burst system. Satisfactory operation and maintenance (O&M) manuals had been prepared and an efficient computerized management information system was in place. As for project components not eligible for Bank financing, good progress had been made on the canal head powerhouse and the main canal head- works. However, financing had not been secured for the turbine generating sets for the RBPH, and construction of the Garudeshwar Weir had not yet begun. According to the Revised Implementation Schedule of December 1989, irrigation and power generation could start in monsoon of 1995. However, this date is likely to slip for the RBPH due to slow R&R implementation in Maharashtra and MP, and delays in financing the turbine generating sets. 29. Notwithstanding some shortfalls in SAR targets, the project set excellent engineering, construction, and management standards by introducing many innovative features. Highlights include the use of a modern concrete plant and two high capacity cable ways, the development and implementation of a comprehensive computerized management information system (MIS), and SSNNL's establishment of a Dam Safety Panel and an Expert Committee on Cement and Concrete. 30. FinancialResults. At appraisal, the cost of the entire Sardar Sarovar Project, including physical and price contingencies, was estimated at Rs. 136,407.0 M (US$ 11,367.2 M) at 1985 price levels, while the estimated cost approved by the Planning Commission, GOI in October 1988, was Rs. 64,060.4 M, at FY 1986-87 price levels. During project implementation, the total cost of SSP was re-estimated at Rs. 145,985.1 million in 1992 prices, i.e., a 128% increase over the cost approved by the Planning Commission, but only 7% above the appraisal estimate. In US Dollar terms, the revised cost of SSP is estimated at US$ 5,576.5 million in 1992 prices, compared to the appraisal cost of US$ 11,367.2 million. The reduction in cost is due to the large devaluation of the Rupee against the US Dollar, which fell from Rs. 12 at appraisal to about Rs. 26 in 1992. 31. The IDA Credit of SDR 99.7 M (US$ 100.0 M) and the IBRD Loan (2497-IN) of US$ 200 M (equivalent to a total Credit/Loan amount of US$ 300 M) were signed on May 10, 1985. Bank Group financing amounted to about 18% of total project costs, net of taxes and duties. No co-financing arrangements were made but it was expected that the six turbine generating sets of the RBPH would be financed through a separate credit arrangement with the Government of Japan. 32. Disbursements started two years late in 1987 after the project had obtained enviromnental clearance from GOL Thereafter, disbursements continued to be slow for another two years but picked up momentum in 1990 when the concreting plant and cable ways became operational. The Credit was fully disbursed in September 1992. Only US$ 18.49 M (9%) of the Loan had been disbursed when the Borrower decided to terminate the Loan. Thus, only US$ 151.79 M (51%) had been disbursed against the total Credit/Loan amount of US$ 300 M, by the date the Loan was canceled. Revised Economic Analysis 33. The economic analysis was revised in 1990 and updated again in 1993 for this PCR. Like the SAR, it covers the project's irrigation, power and D,M&I components. It reflects changes in quantities, prices and phasing since 1984 and pays particular attention to environmental costs and benefits (such as estuary changes, fisheries costs and benefits, fuelwood, and wildlife) which might have been underestimated or omitted in the original analysis. The revised analysis has an  x Economic Rate of Return (ERR) of 12% -- slightly lower than the 13% in the original SAR, but within the acceptable range for a project of this type. The scale of benefits is large, relative to any feasible alternatives, with substantial multiplier effects as well. Had the SSP project been conceived as a power project alone, the ERR would have been 14%. The command area, taken alone, exhibits a somewhat lower ERR. If expenditure to date is treated as a sunk cost, the ERR is 17%. The ERR estimate of 12% incorporates a five-year delay in the Narmada Sagar Dam's coming on stream. Sustainability 34. The Dam and Power Project has adhered to high construction standards. If the Nigam can maintain present levels of quality control/quality assurance, the project should attain the 100-year- plus life expectancy for such projects. However, ultimate sustainability depends upon adequacy of O&M. Though India's track record in this area is not good, the exceptional nature of this project and the standard of excellence developed by SSNNL may be able to chart new directions for O&M. 35. The preparation and implementation of the Narmada Basin Environmental Management Plan are crucial for the long-term sustainability of the project. As part of this plan, the impact of the dam on the downstream communities, fisheries and Bay of Khambat are to be further investigated. Though the Borrower has so far rejected the option of releasing a minimum flow of water in the lower Narmada, the PCR feels strongly that this option should be thoroughly studied and possibly considered prior to the revision of the NWDT award in 2024. Unless this is done, the environmental sustainability in the Gulf of Khambat, immediately downstream of the dam, can not be guaranteed. The Bank's and the Borrower's Performance 36. Overall, both Bank and Borrower performance were excellent in the field of engineering, but mixed or poor in the R&R, enviromnental and health fields at the preparation and in the early stages of implementation. The Bank responded to emerging problems by appointing an Independent Review. Though its findings and recommendations were not fullv accepted by either the Bank or the Borrower, the Independent Review Report had beneficial effects on their respective efforts, and they each acknowledged and addressed a number of shortcomings cited in the Report. The Bank improved its policy on disclosure of information while the Borrower improved to a large extent its policies and performance on R&R and environment. However, there remains some inadequacies in R&R planning and implementation particularly in MP. The Bank could have taken a stronger stand in the earlier stages of project implementation to enforce conditionalities in these two fields. Lessons Learned A. General Lssons 37. The fij lesson is the need to ensure that all Government clearances have been obtained before negotiations are finalized, particularly in a sensitive area such as environment. The project had not been cleared by the Planning Commission nor by the Ministry of Environment and Forsts at the time of Board approval (see Evaluation Summary, Attachment 2). As a result, the lack of clearance led to at lase a two-year delay in project implementation. . 38. The scnd lesson is the need for the Bank to apply more rigorously its guidelines on environment and R&R during the preparation, appraisal and supervision stages. One of the major criticisms that emerged from the Independent Review was that the project had been approved without a proper Environmental Impact Assessment of the dam and power complex, and also  xi without adequate policies and plans for the R&R of project-affected persons. Bank policies on the environment and R&R were still relatively new at the time of project formulation and appraisal and much less stringent than current requirements with respect to operational requirements. Clearly, the Bank's performance was wanting in terms of quality at appraisal of the R&R and environmental plans. The Bank should have taken a stronger stand in the application of its guidelines during the early stages of project implementation. Legal covenants on R&R and environment should be strong and specific and the Bank must also be willing to enforce rigorously its conditionalities, which it failed to do early enoughunder the projecL 39. The third lesson concerns the need to be cautious when financing a large multi-purpose project with a development period exceeding 10 to 15 years. In view of the difficulties in predicting performance of such projects, it would be wise for the appraisal mission to select smaller, self- contained portions of the overall program, such as the dam and power complex, or at least to recommend, as is the Bank's current practice, a thorough mid-term review at an appropriate point to enable updating of data on the basis of actual performance and to enable required adjustments to be made. It is difficult to predict the final outcome of a project so far in advance. In the case of SSP, the Bank was over-confident throughout project design and implementation that this project would be implemented as planned. However, this outcome was--and remains-uncertain: (i) there are always unforseen delays due to technical and financial constraints, (ii) R&R and environmental issues have and will continue to hamper project implementation, (iii) there is still uncertainty about adequate funding for the Narmada Sagar Dam in MP and its pace of implementation, the final size of the command and the important role that the domestic, municipal and industrial component is likely to play in the future. B. Lessons on Restlement an Rehablitadon 40. The fjfj lesson concerns the need to ensure the quality of the R&R process at project outset. The R&R component could have been improved early on through prior consultations with PAFs to gain a better understanding of land acquisition issues, transaction costs and the special needs of tribal people. The R&R training program should have been developed with more input from NGOs which had local knowledge of the PAFs. Additionally, a detailed review of the R&R process itself in the project's early stages would have improved performance. 41. The secon lesson relates the need to empower the Borrower and executing agencies to take greater ownership for implementation of the R&R process. The Bank should have confirmed that the Borrower and executing states would assume greater ownership of the R&R implementation process. In the case of the SSP, this would have required GOI to supervise the execution of R&R policies while the Bank played an "arms-length" role, simply holding the Borrower to the terms of legal agreements. The SSP operated in a particularly difficult context, however, because GOI entered into financial agreements with the Bank, while the states actually executed the R&R policies. The alternative of establishing a common authority which in turn would have taken charge of all operational issues as regards R&R was not considered under the NWDT award and was not possible under the Indian Constitution. 42. The thiX lesson is with regard to the need for the Bank to develop better communication and decision-making policies for R&R. There were major political difficulties to be faced in achieving R&R objectives across three states. Facilitating communications among the states should have been set as an early priority; decision-making should have been made more explicit and timely. In addition, alternative views should have been both recognized and encouraged. A qualified sociologistlanthropologist should have been hired to handle R&R issues for the Bank. The SSP lacked this needed expertise and authority at the early stages of appraisal and supervision. 43. The fourth lesson concerns the importance of maintaining strong ties with NGOs. Through the development of the R&R policy for the SSP, the Bank recognized the important contribution that NGOs could make towards devising a more acceptable policy. During the early years of project implementation in Gujarat, NGOs played an increasingly useful role. NGO complaints should have been responded to by the Borrower rather than the Bank.  xii 44. The fifh lesson concerns the need to go through a lengthy and sometime complex learning period. In the case of SSP, neither the Bank nor the Borrower had anticipated the complexity and magnitude of issues that emerged during implementation. Even if the R&R component had been prepared to the standards prevailing at the time of appraisal, it is likely that further adjustments would have been required during implementation. NGOs played an important role in drawing the attention of the Borrower and the Bank to the inadequacies of implementation, and particularly to the importance of assuring equitable treatment for all categories of oustees, whether they be landed, landless or tribal. The legal covenants must therefore be flexible enough to accommodate any improvements to the policies and plans. 45. Finally, the hi1h and last lesson relates to the means and procedures required for satisfactory R&R implementation. This project has been the source of many improvements in R&R policies and implementation, which are now being put into practice in other projects. With respect to R&R policies, the principle of land-for-land was implemented on a large scale, adult sons were recognized as separate families, tribal people living in government forest lands were considered as landed families, and the need for additional assistance for subsistence and house construction was recognized. On the implementation side, Gujarat developed a unique mechanism for acquiring replacement agricultural land, at market prices through Land Purchase Committees. Well- developed R&R units with central monitoring cells were established. Specific lessons on means and procedures required for satisfactory R&R implementation are given in Part I, paras. 16.11 to 16.16 46. In summary, all future projects with major R&R aspects should conform to the upgraded standards that ensure: (i) baseline studies are adequately completed, (ii) specific project policies are agmred upon, (iii) institutional arrangements have been made for project implementation, and (iv) proper monitoring and evaluation arrangements through independent agencies have been made. Such projects should have a separate R&R component financed under the Credit/Loan. Precise legal covenants should be agreed and enforced. The Bank should use highly qualified R&R specialists to supervise implementation and provide recommendation to implementing agencies. Current Bank guidelines require such rigor. C. Lenn imel 47. While there is increasing evidence that many of the possible negative environmental impacts have been exaggerated by critics and a number of secondary environmental benefits ignored, there are still several important lessons. 48. The AM lesson is that the Bank should not approve a project, particularly one that involves a large dam, without a proper Environmental Impact Assessment and management plan. Strict adherence to the Bank's Operational Directive No. 4.01 on Environmental Assessment should now ensure that environmental issues are addressed more thoroughly and at a much earlier stage. 49. The second lesson is that no project should be approved until a formal environmental clearance is obtained from the Borrower. 50. The thiEd lesson is that, in the case of a project with a large environmental impact, a mitigatory environmental component should be made an integral part of the project supported by strong legal covenants. 51. The fourth lesson relates to the need for the Bank to use highly qualified environmental specialists to supervise the environmental component and, as needed, to provide guidance to the Borrower in the resolution of special environmental issues. 52. The fifth lesson is that ample use should be made of remote sensing and computer modeling technologies for assessing environmental impacts of large projects such as SSP.  xiii Attachment I Page 1 of S INDIA NARMADA RIVER DEVELOPMENT (GUJARAT) SARDAR SAROVAR DAM AND POWER PROJECTI Relevant Bank Guidelines and Project-Specific Covenants on Environment and R&R Guideline/Covenant CompliancelStatus OMS 2.33 (Involuntary Resettlement) February 1980 At project identification, magnitude of The Bank received a copy of the Sardar resettlement efforts needed and population Sarovar Project R&R Program Supplementary affected should be identified. Affected groups Report dated October 1984 prepared by the and host communities should be consulted. A NCA. This report contained a detailed plan resettlement policy and a development strategy for Stage I (up to June 30, 1987) covering 52 should be formulated based on the principle that out of 224 villages. At negotiations, this affected persons should recover a living standard report and plan were found acceptable, with at least equal to that enjoyed before resettlement. clarifications given in the Agreed Minutes of Preparation of resettlement plans and component November 21, 1984. In retrospect, the R&R should keep pace with other preparation efforns. plans approved did not conform with OMS Appraisal should ascertain whether resettlement 2.33: (i) consultation, if any, was minimal; (ii) plans are adequate and feasible, including state R&R policies were not provided; and (iii) organizational and legal framework. At total number of affected villages was not negotiations, a workable plan must be agreed, covered. However, after some delay, including borrower's obligation to implement consultation, policies and state R&R plans During implementation, Bank missions should have improved to a large extent particularly in pay careful attention to sociological and technical GujaraL Maharashtra's policy is satisfactory aspects of resettlement. but plan is still partial and implementation hampered by activists. Mls policy is, in general, satisfactory except for cash compensation to landless families. Quality of plan remains uncertain and implementation is sluggish. I Tbough the title of the project mentions only Gujarat, Attachments 1, 2, and 3 Also Apply tD Maharshtra and Madhys Pradesh.  xiv Atahment I Page 2 of 5 OMS 2.34 (Tribal Peoples) February 1982 During project identification, the approximate Project implementation was preceded by a numbers, location and degree of acculturation of number of baseline anthropological studies of tribal people in project area should be ascertained tribal populations in Gujarat. These studies and the status of demarcation of tribal lands and described the situation before resettlement but their enforcement should be outlined. Pre- did not propose any well defined resettlement feasibility and/or anthropological studies should policies or plans. No such studies had been be prepared and include consultative procedures prepared in the other two states . In to ensure the participation of the affected people. retrospect, the project did not conform with The Tribal component should be designed before OMS 2.33 as it did not contain any tribal or during project preparation and include component per se, nor any tribal-specific adequate health safeguards as well as the Loan/Credit conditionality. While states' strengthening of relevant government agencies. R&R policies did not initially contain special Project appraisal should assess the adequacy and provision for tribal populations, this was appropriateness of tribal component, the need for rectified in later revisions mostly through the legislation and capability of designated agency to recognition of landless and encroachers. implement component. During implementation Training programs for tribal populations and and supervision, information about tribal their implementation have remained weak component should be updated. Specialists should throughout project implementation. be included as necessary. Investment Agency should monitor progress. OMS 2.36 (Environment) May 1984 Projects with unavoidable adverse effects on the During project identification and preparation, environment should contain a compensatory Guidelines were being formulated and in early component adequate to mitigate these effects. At stages of implementation. However, some identification a review detenrines what studies on adverse effects and mitigating investigations are needed to ensure prevention or measures were prepared by the Borrower but mitigation of serious adverse effects. During did not contain the type of detail and preparation the Borrower carries out necessary assessment necessary for a project of this environmental inquiries and outlines the magnitude. The SAR contained a brief measures needed to avoid or mitigate serious description of the impacts and the legal environmental risks. At appraisal, Bank staff documents required that an Environmental assess environmental findings and evaluates the Work Plan be prepared by December 31, future magnitude and timing of adverse effects. 1985. Project was approved by Bank's Board The SAR describes the environmental measures without the required forest and planning provided in the project's design. At negotiations clearances within India. In retrospect, OMS the Bank and Borrower discuss environmental 2.36 was not followed and the Environmental requirements and loan agreements may contain Work Plan poorly defined. Ultimately the covenants or other provisions concerned with Work Plan was submitted on August 5, 1993 environment. after the closure of the Loan/Credit as part of the Borrower' compliance with the Bank's benchmarks. IDA Credit DCA The Borrower to take all such actions as Partial compliance. Availability of forest necessary, including the provision of forest land for resettlement proved contentious. land for enabling Gujarat, MP and Maharashtra Forest lands were released in Maharashtra to implement the project within their state with great difficulty. Gujarat has purchased boundaries including R&R programs (Article private agricultural land at market prices 3, Section 3.02). through Land Purchase Committees. MP has identified but not yet purchased agricultural land.  xv Auabhment1 Page 3 of S By September 30, 1985, the Borrower shall Partial compliance. NCA hired a local firm to employ or cause to be employed and thereafter oversee M&E of R&R activities within thre assign to NCA a qualified social scientist to states, and the states did the same at a later assist in carrying out the R&R M&E of the date to monitor and evaluate their own project (Article 3, Section 3.04). activities with the assistance of Social Scientists. The Borrower to funish to IDA semi-annual Full compliance. NCA is submitting and annual reports of R&R of oustees in regularly R&R Quarterly Progress reports to Gujarat, Maharashtra and MP through the BankL Quality of reports needs further June 1, 1995 (Article 3, Section 3.05). improvements. DCA Conditions of Effectiveness Gujarat to take all necessary governmental action Full compliance. GOG Resolution (November required for adopting and implementing its R&R 1985) accepted as fulfilling condition of plan (Article 5, Section 5.02(d)). effectiveness. Madhya Pradesh to take all necessary Paal conpliance. GOI clarified that existing governmental action required for adopting and legislation would allow Madhya Pradesh to implementing its R&R plan (Article 5, comply with agreements reached at negotia- Section 5.02(e)). tion. No separate work plan submitted as evidence of compliance. Maharashtra to take all necessary governmental Partial compliance GOI clarified that existing action required for adopting and implementing its legislation would allow Maharashtra to comply R&R plan (Article 5, Section 5.02(f)). with agreements reached at negotiation. No separate work plan submitted as evidence of compliance. GUlJarat Project Agreement GOG to provide NCA facilities and resources to Full compliance. In fact, NCA was enable it to assist the Borrower in carrying out established at Indore (MP). M&E of R&R (Article 2, Section 2.01(c)). GOG to implement a satisfactory R&R plan for Partial compliance. Though Gujarat has a oustees to include the principles and objectives good policy, has involved NGOs and has set out in Schedule 3 of the DCA (Article 2, continued to give good performance in Section 2.10). resettlement of PAFs, plans for resettlement of MP oustees are not final. By December 31, 1985, GOG to furnish a work Partial compliance. Deadline for compliance plan for environmental effects derived from amended to December 31, 1989, and thereafter implementing project (Article 2, Section lapsed. A number of studies were prepared. 2.11 (a(i))). Compensatory afforestation and catchment area plans were initiated. Enviromnental work plan was submitted by NCA on August 5, 1993 as part of benchmarks fixed by the Board including: (a) a prioritized environmental overview of SSP; (b) TORs for preparation of a Nanmada Basin Environmental Management Plan; and (c) a malaria control program at the SSP site.  xvi AttachmentI Page 4 of 5 By December 31, 1985, GOG to develop a training program on R&R of oustees for staff of Gujarat, MP and Maharashtra (Article 2, Section 2.1 1(a(iii))). Partial compliance. Deadline for compliance amended to December 31, 1989, and thereafter lapsed. Some training programs have been caried out, but more needs to be planned and implemented GOG to implement an agreed work plan and Partial compliance. Some training programs training programs in collaboration with MP and have been carried out, but more needs to be Maharashtra (Article 2, Section 2.11(b)). planned and implemented. GOG to take measures to minimize the risk of Parial compliance. Work plan for control of malaria, filaria, schistosomiasis and other water- malaria and other diseases finalized. Malaria related diseases (Article 2, Section 2.17). control program has been initiated in areas impacted by the project but staffing and funding remains inadequate Msharbahtra Project Agreement GOM to implement within its state boundaries a Patial Compliance. Plan submitted late and is satisfactory R&R plan for oustees to include the still incomplete. Severe implementation principles and objectives set out in Schedule 3 of problems persist in about half of the 33 the DCA (Article 2, Section 2.07). affected villages due pardy to inadequate R&R consultation and grievance procedures. By December 31, 1985, GOM to furnish a work Partial compliance. Deadline for compliance plan for the environmental effects derived from amended to December 31, 1989, and thereafter implementing project (Article 2, lapsed. A number of studies were prepared. Section 2.08(a(i))). Compensatory afforestation and catchment area plans were prepared and implementation initiated Environmental work plan was submitted by NCA on August 5, 1993 as part of benchmarks fixed by the Board. By December 31, 1985, GOM with Gujarat and Partial compliance. Deadline for compliance MP to furnish a suitable training program on amended to December 31, 1989, and thereafter R&R of oustees (Article 2, Section 2.08(a(iii))). lapsed. Some training programs conducted, but more need to be planned and implemented. GOM to take measures to minimize the risk of Partial compliance. GOM has finalized plans malaria, filaria, schistosomiasis and other water- to strengthen state and distnct health facilities related diseases (Article 2, Section 2.14). in villages and resettlement areas through additional public health units, mobile units and a floating dispensary as well as for villages within 10 km of the submergence zone, but adequate staffing and funding remain an issue.  xvii Attachmnt Page S of S Madhya Pradesh Projeet Agreement GOMP to implement within its state boundaries Partial compliance. R&R plan revised in 1993 an R&R plan for oustees to include the principles but are based on partial land acquisition and objectives set out in Schedule 3 of the DCA records and are unclear regarding the number (Article 2, Section 2.07). of oustees wanting to move to Gujarat R&R policy has improved, but questions remain about cash compensation for landless arnd adult sons. Implementation remains sluggish in spite of some progress on streamlining grievance and appeals processes, as well as staffing and consultation with project-affected people. Land purchase remains inadequate. By December 31, 1985, GOMP to furnish a Partial compliance. Deadline for compliance work plan for the environmental effects derived amended to December 31, 1989, and from implementing project (Article 2, thereafter lapsed. Work plans on Section 2.08(a(i))). compensatory afforestation and catchment treatment formulated, and implementation underway. Studies and action plans on flora and fauna made. Environmental and health management plans have been prepared. Environmental work plan was submitted by NCA on August 5, 1993 as part of benchmarks fixed by the Board. By December 31, 1985, GOMP with Gujarat Partial compliance. Deadline for compliance and Maharashtra to furnish a suitable training amended to December 31, 1989, and programn on R&R of oustees (Article 2, Section thereafter lapsed. Some training programs 2.08(a(iii))). conducted, but more need to be planned and implemented GOMP to take measures to minimize the risk of Not yet due. Detailed work plan to be malaria, filaria, schistosomiasis and other prepared to address impacts of project water-related diseases (Article 2, Section through strengthening of health facilities, 2.14). establishment of monitoring cell and creation of additional facilities by 1994/95 when submergence in MP commences.  xviii AtahrnKt Page I of 2 INDIA NARMADA RIVER DEVELOPMENT (GUJARAT) SARDAR SAROVAR DAM AND POWER PROJECT Key GOIVState Environment- and R&R-Related Decisions December 1979 Narmada Water Dispute Tribunal final award. 1983 Project referred to Department of Environment for clearance. July 1985 Legal Opinion issued by GOI Solicitor-General that project legal documents are consistent with Indian law. March 1985 World Bank Board approval of project. 1985 GOG extends the NWDT policy decisions of 1979 to include oustees from Gujarat. UP Project Displaced Persons (Resettlement) Act. Ministry of Environment and Forests established and charged, :er-alia, with clearance of selected development projects 1986 GOI passes Environmental (Protection) Act. 1987 Secretary (MOEF) included in the NCA to head the Environmental Sub-Group and the Minister (MOEF) in the Review Committee of NCA. September 1987 MOEF clearance for submergence of 13,000 ha of forest land for the Sardar Sarovar Dam, subject to conditions. December 1987 GOG expanded its R&R policy to include both encroachers and landless within the definition of project-affected persons. late-1987 GOG extends its R&R policy to include major sons of both landless and landed as project-affected persons. October 1988 GOI Planning Commission gives formal endorsement for project subject to conditions. 1989 NW revises R&R policy, maling it consistent with NWDT decisions. Gujarat Land Purchase Committee established to assist with land purchases and valuation process. NCA Chairman inforned by MOEF hat failure to submit Environmental Action Plans by end-November 1989 would invoke action under the Environment (Protection) Act of 1986.  xix ~~~~~~Page 2 of 2 June 1989 GOM adopts its first R&R policy related to inter-state projects as a government resolution. December 1989 SSCAC approves the Revised Implementation Schedule (RIS 12/89) with linkage to submergence and envisaging partial irrigation and power benefits by August 1995 and completion of SSP dam with full submergence by January 1998. July 1990 With Prime Ministerial intervention, MOEF gives final clearance for Maharashtra to take 2,700 ha of forest land at Taloda for resettlement March 1991 On basis of RIS 12/89 NCA issues a submergence schedule ("The Blue Book") to assist the phasing of dam construction with R&R. September 1991 The Supreme Court of India in a public interest petition has directed the R&R Sub-Group of NCA to monitor, inspect and submit reports on R&R implementation in the three implementing states. January 1992 MP produces an R&R action plan updated in December 1993. February 1992 GOM amends R&R Government Resolution giving major sons of landed oustees a claim to land. September 1992 GOI assures the Bank that it would address with urgency the concems raised by the Independent Review and the recent Bank review mission and that management and organizational weaknesses in its R&R program would be addressed. December 1992 GOM releases a revised R&R plan including provisions for tribals March 1993 GOI decides to cancel the balance of Ln. 2497-IN for the project, but reaffirms its commitment to sound environmental and R&R practices. August 1993 NCA complies by letter with the Board's benchmarks with key environmental reports attached; shortly therafter NCA requests until December 31, 1994 to complete the command area Environmental Impact Assessment to incorporate the results of ongoing studies. January 1994 GOI reaffirms to synchronize construction with R&R of affected persons. February 1994 MOEF gives Maharashtra the final environmental clearance to take an additional 1,500 ha of forest land adjacent to Taloda for resettlement.  xx A1hmnt I Page I of 9 INDIA NARMADA RIVER DEVELOPMENT (GUJARAT) SARDAR SAROVAR DAM AND POWER PROJECT Selected Bank and Government Documented Actions on Environment and R&R (July 1983 - June 1991) Date Bank Action Government Action 7/1/83 Letter to GOI re need for R&R Plan /5/83 Post-mission letter to GOI, GOG, GOMP & GOM re R&R /25/83 Letter to GOI on need for R&R Plan 10/83 Consultant Report on R&R 1984 Letter to GOI on R&R policies/plans 1984 Minutes of Meeting with GOT on R&R 4/12184 Letter to GOI re R&R information for negotiations 6/22184 Telex re R&R Plan preparation 7/21/84 R&R Aide Memoire for GOI re requirements for negotiations 7/23/84 Consultant R&R Report 8/21/84 R&R Aide Memoire 10/84 R&R Supplementary Report Supplementary to the R&R Plan to incorporate information required by the WB mission. Include updated figures of oustee famiLies from three states; revised cost estimates for R&R of all oustees; updated schedule for acquisition of land; compensatory afforestation; and organizational set up for monitoring and evaluation 11/21/84 Agreed Minutes of Negotiations 1984 Socio-Economic Survey 23 MP villages  xxi Atachment3 Page 2 of 9 1/16185 R&R Advisory Group set up by GOI 1/28/85 Letter to GOI with R&R checklist 2/12/85 Staff Appraisal Reports - Dam & Power and Water Delivery and Drainage 3/8/85 Telex to GOI re Boards approval 5/10/85 Legal Agreements - Dam & Power and Water Delivery and Drainage 5/30/85 GOG Resolution on compensation and Land for Encroachers 7/11/85 Report of Supreme Court Commission re R&R - mainly related to Vadgam, criticized GOG for R&R performance related to tribals, makes recommendations for special tribal programs. 9/85 Consultant R&R Report 10(30/85 Letter to GOG re fulfilling R&R agreements with Bank 11/1/85 Resolution RHB-1085D re GOG R&R policy on land allocation and sources. (Did not meet Bank's conditions since excluded major sons and encroachers.) 11/18/85 Supervision Mission Report 11/19/85 Telexes to GOI & GOG re R&R conditions of effectiveness and Resolution 1085 in relation to oustee definition, encroacher entitlements, landless and tribals 12/85 First GOG R&R M&E report from Center for Social Studies 1985 Report on R&R and planning for oustees, GOG 1985 Madhya Pradesh Bill No. 10 on R&R (but not considered sufficient by Bank) 1/6/86 Telexes re loan effectiveness 2t7/86 Letter to GOI re MP M&E Agency  xxii Attaen Page 3 of 9 2/21/86 GOG R&R Resolution MISC 1086 increasing loan subsidy level for tribals. 6/12/86 Supervision Report including R&R (concern expressed about GOMP progress, M&E, proposed redesign of plans, commendable GOG progress reported 2/16/87 Telex advising that satisfactory R&R plans needed to closing date extension of Canal Project 2119/87 Letter to GOI on R&R reporting requirements 3123187 Letter to GOI re land provision and tribal oustees 4/10/87 GOG report on R&R training 4/26/87 Aide Memoire R&R Supervision re land allocation, tribals, M&E, NGOs, host populations, etc. 5/87 GOG Land Acquisition and Rehabilitation Report 6116/87 Letter to GOG on tribal plans 7/1/87 Letter from WB Director to GOI re R&R issues 10/2187 Letter from WB Director to GOI expressing concem about failure to provide the agreed 2 ha, with threat of suspension. 11/87 WB President meets NGOs in Delhi 12/4/87 GOG Resolution specifying the minimum 2 ha 12/4/87 Aide Memoire R&R Supervision including agreements on definition of tribal target group and plan revision 12/10/87 Letter from WB Director to GOI re R&R 12/14/87 Two GOG Resolutions on R&R: one accepting encroachers as eligible, the other increasing the level of grant.  xxii ,Attachment Page 4 of 9 1217/87 GOG Resolution on R&R: gave landless 2 ha 3/88 GOG Pamphlet on R&R Package 4/4/88 GOM Resolution on minimum 2 ha, and limited conditions for granting to encroachers. (later relaxed) 5/11/88 GOG response on R&R actions taken following supervision mission 5/88 GOG revised tribal development plan 6/6/88 R&R Review Mission Aide Memoire 610/88 WB comments on revised GOG tribal plan 6/88 GOG Resolution (amending Resolution of 8/86) on R&R Advisory Committee purpose & membership 8110/88 Letters to GOMP/GOM/GOG re R&R concerns 9/88 GOM Note on strategies for MaharAshtra oustees moving to Gujarat 11/88 WB Vice President visits SSP 11/28/88 Vice President's letter to State Chief Ministers: Bank had serious concems regarding management, planning, design and execution aspects of the Project. 1216/88 GOMP Note on R&R responding to WB Vice President's letter on policies and management 1214/88 GOMP response to Bank supervision letter - Comments in details on almost every paragraph of the letter. Main points covering: (i) R&R issues pointed by the WB would be handled on priority; (ii) special policies regarding oustees who wish to live in MP was being formulated; (iii) relationship between GOG and  Auachmenat 3 xxiv Page 5 of 9 MP in respect of R&R of MP oustees; etc.. 1988 GOM Report on R&R 1988 GOMP Socio-economic profile of first seven villages 1/89 GOG Status Report on R&R early 89 Land Purchase Committees established by GOG 2/10/89 Letter from WB Director re forest land for R&R needed for extension of Canal Project 2/89 GOI R&R Status Report 3/29/89 Extension of closing date of Crdit 1553 to end June 89 5/18/89 Supervision Report and letters. SPN report notes that: for Gujarat, while elements of comprehensive R&R plan exist, need to bring aU together in one document (Land Purchase Committees function) for MP, preliminary, but inadequate, Phase I R&R plan prepared; Maharashtra plan not made due uncertainty about forest clearance. 5/28/89 Consultant report on R&R recommending suspension 6/8/89 Post mission letters on R&R to GOG, GOM, GOMP, and GOI (1) Response to the Memorandum of Understanding: (i) action plan was insufficiently responsive; (ii) the preliminary draft of SSNNL's Org. & Manag. Proposal contained litte detail; (2) Project progress; (3) Extension of Cr. 1553 closing date. 6/17/89 GOG R&R semi-annual progress report 6/29/89 GOM Resolution on overall policy for Maharashtra oustees including land eligibility and other benefits. 6/29/89 GOI clarification on GOG, GOM,  xxv A na=me3nt Page 6 of 9 and GOMP policies on R&R to India Department Director. 6/30/89 Approval of extension of Cr. 1553 to July 2, 1990 6/89 Summary of socio-economic report for 6 first phase villages in Maharashtra 7/89 GOG Progress Report on R&R 8/6/89 GOMP Revised R&R policy note increasing grant in aid, providing for transportation of materials, providing three years income support on declining basis. 8/10/89 R&R supervision report and letters to GOM, GOG, & GOMP 9/12J89 Corrgendum to GOM R&R Policy on R&R 11/89 GOMP report on R&R progress plus work schedules by village 12131/89 R&R review mission report and letters (still concern re lack of forest land clearance in *Maharastra, progress in MP but need for detailed plan for first 17 villages 12/21/89 GOG Policy Order on Employment Opportunities 1989 . GOG Work Planning and Monitoring Table for R&R provided 12189 Supervision Mission 12189 GOG reports on: (i) R&R; (ii) Environment; (iii) Implementation Schedule 1989 Draft National R&R Policy by National Working Group on Displacement (draws substantially on Gujarat experience) 215/90 GOM Resolution on Acquisition of Marooned (tapu) land 3/12/90 GOM Resolution on cut-off date for major sons and encroachers  xXvi AaQad 3La Page 7 of 9 (major daughters added later) 3/21/90 GOI Report on R&R Action talen 3/90 Reports from all three states on R&R status 4/90 Minutes of Ninth Meeting of GOI (NCA) R&R Sub-group. (These meetings were held regularly to review policies and implementation progress - they are not all listed here) 4/90 GOMP (NVDA) Work Plan for the first 16 villages scheduled for submergence 92-94 (now delayed to 94-96) 5/10/90 Revised Economic Analysis of SSP 5/29/90 Letter to GOI re non-compliance with extension conditions 5/31/90 Post mission letter and report, esp. re still lack of Maharashtra land clearance and need for more ealistic submergence schedule. 6/7/90 Interstate GOG/GOMP Task Force Meeting (Minutes of 6/15/90 GOG Policy modification on Acquisition of Marooned Land 6/18/90 GOI letter to WB regarding conditions for closing date 6119/90 GOG Policy Modification on major sons cut-off date 1/1/87 6/29190 Telex to GOI re Closing Date extension issues 6/29J90 GOI letter re extension of closing date and release of forest land at Taloda (Maharashtra) 7/1290 Extension of Closing Date of Canal Project approved to July 91. 7/20.90 GOI letter releasing 2700 ha forest land at Taloda (aarashtra) 8/27/90 LeAers to MOWR, GOM and  xxvii A=brnIII.3 Page 8 of 9 GOMP re R&R 9/10/90 R&R Supervision 9/10/90 GOMP report on status of actions remaining from Dec 89 and May 90 missions 9/90 GOG R&R Status Report 10/31/90 GOMP Documentation on Amended Policy - Questions and answers village data, local language. Translation (3 pamphlets) compensation procedures, etc. 10/90 Consultants Report on Laws and Regulations on R&R in India 11111/90 GOM response to Bank's post- mission letter (August 1990) 11190 Consultant Report on R&R following field trip through valley 11/90 GOI R&R Status Report 12/90 R&R Supervision Report 12/5/90 GOMP response to Bank's post- supervision mission letter of August 90 advising of completion of detailed surveys of 141 villages, outlining problems in completing surveys due activists, outlining status of R&R staffing and plans for future. 12/20/90 Letter to GOM and GOMP on R&R planning issues 1290 R&R Supervision Mission, plus letters to states esp. re Maharashtra and planning for Taloda site. Good progress Gujarat. Weak MP implementation. 2/8/91 GOMP response to Bank's post- mission letter to December 90. 2/25/91 Meeting by Bank staff with Chief Minister on R&R issues. 3/14/91 Letter from WB Director to Chief Minister MP re R&R.  xxviii Athment3 Page 9 of 9 3/18/91 GOG letter proposing providing common facilities to host villages 3/91 GOG Rehabilitation Action Plan covering idendfication of PAPs, land availability, planning, NGO working Action Plan etc., including MP oustees. 4/2/91 Post mission letters to GOG and GOMP re R&R 4/9/91 Report on meeting between GOMP and GOG on R&R. 4/11/91 GOMP response to letter from WB Director to Chief Minister about land identification in MP and survey problems due to activists. 4/30/91 GOMP response to Dec 90 mission recommendations. 5/13/91 R&R Supervision letter & report to GOI (MOWR). Progress in updating annual and long term R&R plans but policy issues Maharashtra and MP. 5/28/91 Letter to MOWR re R&R policy issues. Not find. But there was a letter to MOWR on 5/17/91, discussing about upgrading R&R policy in Maharashtra and MP. 5/91 WB Review Mission for extension of credit beyond June 1991. 6/17/91 WB President commissions review of projecL  PROJECT COMPLETION REPORT INDIA NARMADA RIVER DEVELOPMENT - GUJARAT SARDAR SAROVAR DAM AND POWER PROJECT (Credit 1552-IN/Loan 2497-IN) PART I. POJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identity Project Name : Narmada (Gujarat) Sardar Sarovar Dam & Power Project Credit NoJLoan No. : Credit 1552-IN; Loan 2497-IN RVP Unit : South Asia Region Country India State : Gujarat Sector : Agriculture Sub-sector Irrigation 2. Background 2.1 At the time of Appraisal, India had a population of over 700 M, growing at an annual rate of about 2.4%. More than two-thirds of the labor force was employed in agriculture, which accounted for about 40% of the Gross Domestic Product. Agricultural growth remained rather sluggish, averaging only 2.3% a year, and India was experiencing a small deficit in food production, mostly wheat and edible oils. With regard to power generation, India had made impressive progress. From a mere 1,362 megawatt (MW) at the time of Independence, the installed generating capacity had risen to 63,275 MW by the end of the Seventh Plan (March 31, 1990), corresponding to an annual growth of 11%. Between 1970-75, the annual growth decreased to 5%, but the situation improved again in the 1975-80 period. At Appraisal (March 1983) the installed capacity was 35,363 MW and was increasing at the rate of 9% per year. However, power generation still fell considerably below demand. At the end of the Seventh Plan, there was a deficit of about 8,000 MW in pealing power, and about 18,000 M kwh in energy nation-wide. Power generation remained about 30% below requirements. 2.2 India's development objectives at that time included substantial resource deployment to the development of irrigation, agriculture, water supply to drought prone areas, energy and infrastructure facilities for raising the levels of economic growth and alleviating poverty. Particular importance and priority were given to investments in irrigation, storage reservoirs and power generation, with special emphasis on improving efficiency of the water conveyance systems and power generation to ensure reliable delivery to water and power users. In addition, investment in the development of large river basins was considered essential for the expansion of irrigation and power. Accordingly, expansion of irrigation and power facilities, as well as agricultural and industrial growth, became the cornerstones in the development strategy of India's Five Year Economic Plans. 2.3 Today, almost ten years later, India's population has increased to about 870 M and the annual rate of population in growth has dropped to 2.0%. Agriculture's share of the Gross Domestic Product has decreased to about 30%, while agricultural growth has risen to 3.2% per year. However, growth in per capita food production Is still sluggish at 1.6%. During the Eighth Plan (1992-1997) about 38,369 MW of additional power is targeted to be installed. Even after this significant expansion, however, India will still be short of power and energy at the end of that  2 Plan. Hydro-power represents about 29% of the country's power generation. In its development objectives, India continues to give priority to agriculture, irrigation, rural development and energy. 2.4 The State of Gujarat covers an area of 19.6 M ha and, at Appraisal, had a population of about 36 M that was growing at an annual rate of 2.5%. Although Gujarat was relatively urbanized and had a large manufacturing sector, its economy was also highly influenced by agriculture. In a normal rainfall year, agriculture contributed some 33-35% of the State's income and employed about 60% of its labor force. With many regions experiencing low and highly variable rainfall and with only about 18-20% of the cultivated area under irrigation, Gujarat had long been susceptible to drought and famines. For example, from 1900 to Appraisal (1983/84), the state suffered at least 25 severe food shortages and water scarcity due to drought. The economic costs of dealing with these droughts constituted an increasing drain on Gujarat's budget. 2.5 Gujarat's population has now grown to about 45 M, but the share of its labor force employed in agriculture has declined--thus allowing the consolidation of holdings and the release of some land for resettlement activities. Gujarat's investments in irrigation declined in the 80s as older projects were being completed and new areas (other than the Narmada River Basin) were becoming scarce-whereas investments in base and peak power generation have increased. 2.6 The Sardar Sarovar hydro-power complex forms part of the Western Region grid, which comprises Gujarat, Goa, Madhya Pradesh and Maharashtra. This region had an installed capacity of 1 1,640 MW at the end of the Seventh Plan, representing about 18% of India's total capacity. At the end of the same period, this region had a peak power deficit of about 1,250 MW and an energy deficit of 330 M kwh. The Worling Group on Power, GOI estimated that the peaking power deficit would be 8% at the end of the Eighth Plan (March 1995), and 3% at the turn of the century. The installation of 1,450 MW under the project will substantially improve the hydrothermal mix of the Western Region grid, though this mix will still be below the all-India average. 2.7 At Appraisal, the Government of Gujarat (GOG) estimated that it would exhaust the potential for all further surface water irrigation schemes, with the exception of the Narmada Basin, within the next ten years or so. Thereafter, the development of the Narmada Basin would become the only feasible means of simultaneously assuring sustainable agricultural growth, and meeting the pressing domestic, municipal and industrial needs for water. Consequently, GOG accorded high priority to irrigation development programs, including construction of storage reservoirs through the implementation of major and medium projects, in line with the priorities fixed by GOI. 2.8 It was against this background that GOG began to plan the Sardar Sarovar Project (SSP), one of the most ambitious water resources development projects ever attempted. It accorded the highest priority to Narmada River Development (NRD), beginning with the construction of the Sardar Sarovar Dam and power complex (SSP), and the canal network. In view of SSP's immensity and complexity, the Government of India (GOI) sought the Bank Group assistance in financing this first stage of NRD-Gujarat. This project was to be among the first in a series of some 30 major projects planned to develop the Narmada Basin. Given the project's potential for benefitting the basin region and the entire nation, plus the Bank's desire to assist and guide GOG in project preparation and implementation, the Bank agreed to finance simultaneously two key components of SSP: a. a Bank Loan/International Development Association (IDA) Credit of US$ 300 M toward the cost of constructing the dam and power complex; and b. an IDA Credit of US$ 150 M towards the cost of constructing the water delivery and drainage networks, constituting the first time slice (3 years) of Phase I.  3 3. Project Objectives and Description 3.1 The Narmada (Gujarat) Sardar Sarovar Dam and Power Project (Credit 1552-IN/Loan 2497-IN) is interdependent with the Narmada (Gujarat) Water Delivery and Drainage Project (Credit 1553-IN), Phase I. The latter has been covered under a separate Project Completion Report (PCR). The overall long-term objectives of these projects, together with the subsequent phases of the Water Delivery and Drainage Project up to the Rajasthan border are to create a modem multi-purpose agricultural and power production system for the welfare of the growing rural population and economic growth of the Gujarat State as a whole. More precisely, the objectives of the Narmada Sardar Sarovar Projects were to: a. provide storage and regulation of Narmada River flows for establishing a reliable and efficient generation capacity of 1450 MW through the Riverbed Powerhouse (1200 MW) and Canal Head Power House (250 MW) and distribution of hydro- electric energy, including peaking capacity, to the western region power grid serving the States of Gujarat, Madhya Pradesh and Maharashtra; b. provide storage and regulation of the Narmada River flows for establishing a reliable, efficient, and equitable supply of: (i) irrigation water to about 1.79 million hectares of command area in Gujarat; and (ii) municipal, industrial, and domestic water in Gujarat; and c. provide annuaUy 0.5 million acre feet (MAP) of water to irrigate about 70,000 hectares of command area in Rajasthan and/or provide municipal, industrial and domestic water in Rajasthan. 3.2 The components of the Narmada Sardar Sarovar Dam and Power Complex were sub- divided in the Legal Documents into 16 Parts lettered from A to P: (A) Construction of: (i) the Sardar Sarovar concrete gravity dam 128.5 meters high (above the riverbed) and 1,210 meters long, with a gated spillway and a gated auxiliary spillway, creating a reservoir with a storage capacity of 5800 Mm3 and extending about 210 km upstream, (ii) the water intake facilities for the underground riverbed powerhouse, and (iii) the related structures and equipment; (B) Construction of: (i) an underground riverbed powerhouse located in the right abutment of the Sardar Sarovar Dam, with an installed capacity of 1,200 MW and housing six 200 MW reversible turbine-generator units, (ii) a two-way access tunnel 850 meters long, (iii) a sequentially aligned water conductor system extending from the intake facilities through the tail race returning to the Narmada River, (iv) the related structures, and (v) provision of the required electro- mechanical facilites and equipment, including a surface transformer deck, a switch yard for transmission connection, cable shafts and other miscellaneous works; (C) Provision of six 200 MW reversible turbine-generator units to be installed and operated in the riverbed powerhouse; (D) Construction of the GaudeswarWeir about 23 meters high, to be located downstream of the dam across the Narmada River, designed to provide about 26 million cubic meters of water storage for use during hydro-electric pumpback generation operations;  4 (E) Construction of the Vadgam saddle dam. about 60 meters high, to be located about 800 meters upstream of the axis of the Sardar Sarovar Dam, that would secure the reservoir impoundment near the dam site on the right rim and provide the structural base for canal head power house intake and penstock arrangements; (F) Construction of the canal head power house located on the right rim of the reservoir about 800 meters upstream of the axis of the Sardar Sarovar Darn, with an installed capacity of 250 MW and housing five 50 MW conventional turbine generator units; (G) Provision of five 50 MW conventional turbine-generator units to be installed and operated in the canal head power house; (H) Cbnstruction of an irrigation byass tunnel, together with an intake to be located about 75 meters upstream of the axis of the Sardar Sarovar Dam; (I) Completion of a headworks reservoir regulation system to control mismatches between releases from the canal head power house and diversions into the Narmada Main Canal, including four interlinked reservoirs created by four rock-fill dams and three inter-linking open channels and one spillway structure for flood protection; n) Installation of 400 kilo volt (kv) double-circuit transmission lines to evacuate the power generated at the riverbed and canal head power houses; (K) Implementation of a suitable training program for Gujarat, Madhya Pradesh and Maharashtra staff assigned to the carrying out of the project as well as to the future operation and maintenance of the facilities included in the project; (L) Establishment of a management infrmaion system for the various activities under the project, other than the resettlement and rehabilitation of the oustees; (M) Provision of tehnical assistance for the project's overall design, construction, and quality control; design and construction of the underground riverbed power house; operation and maintenance of the Sardar Sarovar Project, including the dams, spillway and related equipment, hydroelectric power plants, power supply systems and water delivery and drainage systems; carrying out of the hydro-meteorological network; the Dam Safety Panel; and monitoring and evaluation of the resettlement and rehabilitation program; (N) Establishment, operation and maintenance of a basin-wide hydro-meteorological network for flood warning and the day-to-day operation of the project, including civil works, equipment and technical assistance therefor, (0) Implementation, monitoring, and evaluation of a comprehensive resettlement and rehabilitation Dpan for the oustees within Gujarat, Madhya Pradesh and Maharshtra States boundaries; and (P) Provision of an overall monitoring and evaluation system for the resettlement and rehabilitation of the project oustees. 3.3 The Sardar Sarovar Dam and Power Project (Credit 1552-IN/Loan 2497-IN) consisted of selected components of the SSP Dam and Power Complex described above, over a 1 10-month period - i.e., 9 years and 2 months from June 1985 to August 1994. Using the same lettering as indicated in the previous paragraph, the components eligible for financing were: (A) the S&rd Sarovar Dam including instruments, gates, pumps, elevators, etc.; (B) the y= = =  5 power house including civil works excavation, tunnelling and concreting, the water conductor systems including the intake to the tail race and related equipment, the transformer deck and switch yard and selected electro-mechanical equipment (400 kv geographical information system equipment, power transformer, isolated phase gas duct, control and relay panels, and power and control cables); (H) the irriat bypass unel; (K) the trining for project design, implementation and quality control quality control as well as future operational and maintenance (O&M) of the project facilities; (L) the computerized management information system (MIS) to monitor construction activities; (M) technical assistance for the project's overall design, construction and implementation; and (N) the basin-wide hydro-meteorological network for flood control and real time reservoir operation. 3.4 It is noteworthy that the Credit/Loan did not finance any environmental component, nor any of the resettlement and rehabilitation activities which became so critical during project implementation. In retrospect, these turned out to be serious omissions. 4. Project Design and Organization Narnada Water Disp Tribunal 4.1 In 1965, GOI appointed a committee to prepare a master plan to develop the Narmada Basin and, when the riparian states failed to accept its recommendations, GOI - as per the Inter State Water Dispute Act, 1956 - appointed the Narmada Water Dispute Tribunal (NWDT) to adjudicate. Following ten years of deliberations, the NWDT gave its final award in December 1979. According to estimates on available data at that time, the annual 75% dependable quantum of water available for the project was estimated at 28 MAF, of which approximately two-thirds was alocated to MP, and one third to Gujarat. Rajasthan and Maharashtra were allocated minor amounts. NWDT issued orders regarding the main features of the projects, including the following: a. The full reservoir level of Sardar Sarovar Dam at Navagam was fixed at 455 ft. (138.68 m), thus setting the reservoir gross storage volume at 7.7 MAF (9,500 Mm3); it also stipulated the maximum water level at 460 ft. (140.21 m); b . The ful supply level of Narnada Main Canal was set at 300 ft (91.44 m); c. The sharing of water amongst the four party states was established on the basis of the 75% dependable utilizable Narmada flow of 28 MAF: AIIwQnQfWatCr Sham (MAF) (Mm3) (%) Gujarat 9.00 11,100 32.14 Madhya Pradesh 18.25 22,500 65.18 Rajasthan 0.50 600 1.79 Maharashtra 025 30 089 Total: 280 34.5 100.00 d. A riverbed power house (RBPH) and a canal head power house (CHPH) were to be constructed; e. The inter-state sharing of costs for the Sardar Sarovar Project was fixed as follows: i. Sardar Sarorm: Power 56.1%, Irrigation 43.9%;  6 ii. Power Component: Gujarat 16%, Madhya Pradesh 57%, and Maharashtra 27%; iii. rrigaton: - Dam: Gujarat 94.74%, Rajasthan 5.26% - Main Canal: Gujarat 88.97%, Rajasthan 11.03% - Distribution Network: Gujarat 100% f. The sharing of costs for the Sardar Sarovar Dam was fixed at Gujarat 50.57%, Madhya Pradesh 31.98%, Maharashtra 15.15%, and Rajasthan 2.30%; g. Gujarat was to bear the cost for the R&R of project oustees in the command area, with benefits allocated according to certain rules'; h. The Narmada Control Authority (NCA) was to be set up to co-ordinate the implementation of the NWDT award; and i. The Sardar Sarovar Construction Advisory Committee (SSCAC) was to be set up to advise on civil works and approve programs for the construction of the dam and power complex. 4.2 In addition to the above, the NWDT also ruled that Narmada Sagar Dam in Madhya Pradesh should be completed at the same time as the Sardar Sarovar Dam, in order to regulate releases for power generation at Sardar Sarovar Dam and, to a lesser extent, irrigation in Gujarat and Rajasthan. Thus, the NWDT award created the basic framework and parameters for the subsequent planning and design. EW&ehri andArisal 4.3 Following the award of the Narmada Water Dispute Tribunal and GOI's proposal to the Bank for financing the SSP, GOG sought the Bank's assistance in the project preparation and planning efforL In response, the Bank mounted a special mission in August/September 1980 which led to the introduction of a multi-disciplinary planning approach and the establishment by GOG of a high-level Narmada Planning Group (NPG). The objective of this permanent planing organization was to provide comprehensive studies and analyses on the design, construction and operational aspects of the project The major characteristics of project design with regard to water allocation, height and storage capacity of the Sardar Sarovar Dam, power generation, length and elevation of the main canal, and size of the command area had already been determined directly or indirectly by the NWDT or were part of its basic assumptions. Under these circumstances, the major role of the NPG consisted in carrying out a number of supporting studies which became part of project preparation and appraisal of the Phase I project. These included studies on the modeling of water availability, the determination of the optimal size of the two power houses, and the amount of energy generated. 1 However, the povisions of the NWDT award regarding shaing cost of R&R have been interproed in diffaent ways by the diffent paty state. As a rult, the opinion of the Union Ministry of law on this issue wa obtained. According to it, al coste incurred by Gujuat on acquisition of land rnd rehabilitation of oustees in poct of Sard Saovar all be cbarged to Sr Sova Dam timate, Unit-L Dam nd appurtenat wodu as spulated by NWDT vlde Clause-X(, Sub-claue V (12). As the party states wer not agreeable to the conclusion drwn by the Ministry, they wer advised by the RCNCA to settle this matter amongst themslves tbrough muta dicusion. In cas of no agreement, the matter is likely to be refred to the Atorney Genl of India. RhR activity in the State of Madhya Padesh, Maharhabtra A Gujat is progesing in spite of this issue being uwrsolvod.  7 4.4 The NPG comprised a multi-disciplinary team of national experts to which the United Nations Development Program (UNDP) and the Bank provided extensive technical and financial assistance. The Narmada Development Department (NDD), in charge of project implementation, had the task of preparing the detailed designs and cost estimates of the major components such as Sardar Sarovar Dam and the two power houses. In this work, the NDD was assisted by the Central Water and Power Commission and the Central Electricity Authority (CEA), among others. The NPG and NDD also made extensive use of local research institutes such as the Central Water and Power Research Station (CWPRS) and the Gujarat Engineering Research Institute (GERI), as well as consulting firms and specialists in the fields of system planning and scheduling, hydrology and hydro-power. All this collaboration resulted in high quality designs and specifications. Another important task for NPG, to which the Bank staff contributed actively, was the analysis of the financial and economic benefits of the project. 4.5 Project preparation took four years from identification in 1979 to the beginning of appraisal in 1983. The identification mission made several important recommendations, including the creation of a Narmada Planning Group for project preparation. Due to the complexity and size of the project, appraisal was carried out in 17 months by several missions: in March, June and September 1983; a post-appraisal mission took place in August 1984 to review R&R aspects. The project was negotiated in November 1984 and approved by the Board in March 1985. 4.6 The Staff Appraisal Report (SAR). together with the two Supplementary Data Volumes (SDV), provide a comprehensive description of the project components, economic analysis, and organizational and institutional arrangements for project implementation. and to a lesser extent of the R&R, environment and O&M aspects. Annex 3 provides information on the project's hydrology and water resources, while Annex 9 gives a complete technical description of the Sardar Sarovar Dam and Power Complex. However, the Staff Appraisal Report (SAR) and Annex 1 give a sketchy description of the project's probable environmental impacts and benefits. The SAR and Annex 1 also describe the land acquisition and resettlement aspects of the project, but did not include detailed state R&R plans whose implementation could easily be supervised and monitored as required by OMS 2.33. Schedules A and B of the SAR set forth the resettlement policy as well as the institutional, monitoring and evaluation arrangements under which the resettlement and rehabilitation of project-affected persons (PAPs) was to be carried out during implementation. Table 22 of the SAR lists the priority studies to be carried out by NPG with regard to resettlement and rehabilitation, watershed management, computer needs, the management information system, the communication and operational control system, and project-wide manpower requirements. The civil engineering aspects of the project were well understood by the Borrower but the complexities and issues associated to large-scale R&R operations were not adequately appreciated by the participating states and the Bank. 4.7 The Legal Documents with GOL GOG, GOM and GOMP also gave a thorough description of the project and the components eligible for financing. These documents included some 95 covenants relating to availability of funds, timely implementation, adequate staffing, proper O&M plans, supply of irrigation water, water supply for domestic, municipal and industrial use, supply of hydro-electric power to beneficiary states, training of staff, establishment of MIS, establishment of a Central Procurement Unit, establishment, operation and maintenance of a Narmada Basin hydro-meteorological network, maintenance of NPG as well as the other inter-state agencies such as NCA, the Sardar Sarovar Construction Advisory Committee (SSCAC) and the Narmada Review Committee (NRC), monitoring and evaluation and reporting. The covenants also covered the preparation and implementation of detailed R&R plans for each participating state, and the preparation of an environmental work plan including the training programs for project staff in all three states and implementation of mitigating measures. However, the description of the environmental work plan and its implementation were not clearly stated in the SAR and Legal Documents.  8 Board Presentation 4.8 On March 7, 1985 Bank staff presented the Water Delivery and Drainage Project in conjunction with the Dam and Power Project to the Board, referring to them as one of the largest multi-purpose schemes ever planned and designed as one unit, and making special note of the R&R program for Sardar Sarovar Dam and Reservoir. They argued that the objectives and principles embodied in this R&R program were a significant improvement on standard Indian practice: (i) the program's intended provision of land and employment was superior to the practice of cash compensation; (ii) its emphasis on resettling communities wa communities would accelerate oustees' rehabilitation; and (iii) its planned intensive follow-up M&E by independent agencies would set the standard for similar schemes in the future. Staff pointed out how well the two projects supported the Bank's lending strategy for India and how their innovative concepts in design, construction, and management practices would serve to catalyze progress in these areas as well. 4.9 Four Executive Directors spoke and raised issues, though each supported the proposals. Their main issues related to project size, the prospects for Bank involvement in future Narmada catchment projects, and social and environmental effects. 4.10 Regarding roect si, one Director asked why the Bank had divided an obviously unified investment into two projects? Was it because of the customary limit of US$300 M on Bank loans/credits? Management's response assured the Board that the preference for two projects had nothing to do with such limits which were in any case, flexible. A single project would have simplified Board documentation, but would have complicated implementation, which involved different agencies. Staff added that a further consideration in the choice of two projects was the distribution of benefits among the states. The set of beneficiary- states for power differed from that for irTigation. 4.11 Regarding future Narmada Basin DevelopmeM, a question was asked whether the Bank was considering additional projects, given the large size of these first two. Staff responded by referring to one large and two smaUer dams then under appraisal in Madhya Pradesh; only the construction of the large Narmada Sagar wservoir in Madhya Pradesh upstream would optimize the power benefits of Sardar Sarovar. In addition, the Bank was considering involvements in power transmission and in the canal network. 4.12 Regarding soial and enxinm3 na1 effects, a Director queried: (i) whether there were still any ill-defined areas of responsibility among states and GOI for implementing and monitoring resettlement that could cause delays in resolving problems; and (ii) whether the relatively undefined environmental studies and potential problems arising made future consideration and implementation of study recommendations too uncertain. He also asked if the Bank's semi-annual reports on project status and execution could note the state of progress with these aspects. Another Director supported this sentiment to keep the Board informed. Yet another Director, voicing similar concerns about social and environmental effects, expressed concern that the Bank was paying insufficient attention to issues like resettlement at the earlier stages of project preparation. 4.13 Management responded that each state had established a resettlement wing, staffed with responsible and experienced officers, to conduct the program. The states were also expected to contract with independent research institutions that would monitor and evaluate its implementation. Furthermore, the Central Government and the interstate Narmada Control Authority would coordinate overall monitoring and evaluation of the resettlement plan. Management also indicated that although a full environmental impact assessment had not been completed, a comprehensive first-stage assessment had been conducted by the University of Baroda and then examined by members of the Bank appraisal team. That study had covered public health, flora and fauna, fisheries, wildlife and archeology and had determined that there were no endangered species in the  9 area. Management said that by the end of the calendar year, each state government was expected to prepare an environmental work program, which would be submitted to the Bank for approval. Under covenants in the Loan/Credit Agreements, these programs would include training for environmental staff. Sufficient time (15-18 months) would be available before the commencement of construction to remedy any defects in the environmental work program. 4.14 Management also promised to cover the social and environmental aspects explicitly in the semi-annual reports and to keep the Board informed of progress - especially if difficulties in need of remedy emerged2. Staff expressed the view that institutional arrangements and responsibilities for resetdement were firm enough at that point. They admitted that there was no full environmental impact assessment, but they felt that legal covenants covered these aspects adequately. In this view, there was sufficient time to complete studies before construction commenced. 4.15 Other issues discussed were electricity tariffs for satisfactory ERRs, financial analysis of power projects and the sensitivity of the economic analysis to cost estimates. After a thorough discussion by Board members, the two projects were approved unanimously. The discussion flagged significant concerns about R&R and the environment. 4.16 In sum, these Board concerns are important because they reveal the early exposure of all parties in the Bank to the R&R and environmental issues, and the attention afforded to them. The Bank not only kept the Board informed through regular semi-annual reports, but as critics were becoming more vocal, it held briefing meetings from 1990 onwards at the request of the most concerned EDs, in particular those of Netherlands, UK, US and Germany. In addition, Bank staff responded to a large number of queries by many EDs throughout implementation. j Design 4.17 Hydrolgy. The Narmada River hydrological series were reviewed during appraisal, and again in 1992 by the Borrower's Central Water Commission (CWC) and consultants3, after the Independent Review report raised some doubts about their accuracy. All reviews have concluded that the basic hydrological data used for the design of the project are satisfactory. The annual 75% dependable water availability for the project has been determined by the NWDT to be 34,580 Mm3 ( 28 MAF), of which MP has been allocated 22,500 Mm3 (18.25 MAF) or 65.2%, Gujarat 11,100 Mm3 (9.0 MAF) or 32.1%, Rajasthan 600 Mm3 (0.5 MAF) or 1.8%, and Maharashtra 300 Mm3 (0,25 MAF) or 0.9%. According to the NWDT, first priority is to be given to water supply, second to irrigation, and third to power generation. No provision of water was made for environmental protection downstream of the SSP dam. The NWDT envisaged that the development of the Narmada Basin would be completed in three stages over 45 years, and that at the end of the third stage, i.e., in 2024, the NWDT award could be revised. At Stage 1 (10 years after start of construction) the Sardar Sarovar and the Narmada Sagar Dams would be completed. SSP would be in its initial stage of development, with low water requirements for irrigation and high water availability for power generation. At Stage 2 (30 years after start of construction) Gujarat would make full use of its water allocation for irrigation, MP would increase its water consumption, and power generation would decline. At Stage 3 (45 years after start of construction) Gujarat and MP would make full use of their shares of water, and base power generation of the RBPH would be reduced to practically nil. However, the dam and power 2 Reference to this promise wu found in the verbatm transcript of the March 7, 1985 Board meeting, but wa not specifically indicated in the Summary of Board DiWusions (SD85-10) of March 21, 1985) 3 MIe consultants wer reranted to asist the Borrower in meeting the benchmarks set by the Board by March 31, 1993. The conaultancy wu financed by n Oversea Development Agency (United Kingdom) Trust Fund managed by the Bank.  10 complex as well as the canal head powerhouse (50 MW) would continue to generate mostly peak power. At the present rate of development, it is likely that the Sardar Sarovar Dam will not be completed before 1998 and the Narmada Sagar Dam, before 2003. The late completion of the Narmada Sagar Dam will reduce the amount of regulated flows available for power generation. It also appears unlikely that MP will use more than 16,000 Mm3 or 70% of its share by 2024 and, therefore, the NWDT predictions may not apply at the end of Stage 2 and during part of Stage 3. It is difficult to predict how the water will be distributed among domestic, municipal, and industrial users, and irrigation and power in 2024, when the NWDT award may be reviewed. However, on the basis of current trends throughout the world it is likely that a higher proportion of water will be allocated to domestic, municipal and industrial use, and also that some water will need to be put aside for environmental protection downstream from the dam. 4.18 The darmdesign was drawn up by the Narmada Project Dam and Design Circle of NDD, with a comprehensive overview by the Dam Review Panel. The salient technical features of the dam and power complex are summarized in Part IH, Table 14. GOG appointed CWC as their Design Consultant for both the riverbed power house and the canal head power house. Five dam sites were investigated and four dam types were evaluated for the selected dam site. The geology was thoroughly investigated and analyzed, and corrective measures were taken for the final dam site and design. The fault zone encountered in the bed of the present site was treated through deep excavation and backfiling with reinforced concrete. Comprehensive geologic investigations were also conducted on the right abutment of the main dam, to determine its suitability for construction of the riverbed underground power house. 4.19 The final design specifications and bid package for the dam were reviewed at appraisal by expatriate consultants. A Dam Review Panel was established by Government of Gujarat in June 1981, to ensure the adequacy of foundations and the overall design, safety of the main dam and appurtenances, including the reservoir, spillways, underground riverbed power house, canal head power house and river diversion facilities. This panel comprised of five national and two expatriate experts. 4.20 Special attention was paid to flood hydrology and the size of the spillway. Extensive studies were made to determine 1/1,000 year flood and the probable maximum flood, which might take place only if all aggravating factors occurred simultaneously. The probable maximum flood was found to be 169,923 m3/s. To accommodate the possibility of such an exceptional flood, the size of the initial spillway was increased by adding an auxiliary spillway on the left flank of the dam. As a result, the spillway of the Sardar Sarovar Dam is one of the largest in the world. The overall layout and configuration of the spillways were checked through extensive hydraulic model- ling studies carried out at CWPRS, Pune, and at the GERI, Vadodara. These tests and results were duly reviewed by the Dam Review Panel during design preparation, and by the Bank's expatriate consultants during appraisal. The Dam Review Panel accepted the layout, design, and dimensions of the facilities, while the Bank's consultants concurred with the Panel's conclusions and confirmed the adequacy of the design data, criteria, and safety factors and the resultant integri- ty of the main dam, spillways, intake and oudet works and other structures. 4.21 GOG had stipulated that the Dam Review Panel would be maintained only through the design stage. However, the Bank appraisal team argued that review functions should remain under the auspices of a reconstituted Dam Safety Panel throughout project implementation, and GOG agreed. Accordingly, a national Dam Safety Panel was constituted in February 1985 and it has since been conducting periodic reviews of the overall designs and construction of the dam and hydropower components, through visits to the project sites and research stations. The Dam Review Panel's findings and recommendations have helped in modifying and improving the designs wherever site conditions and hydraulic model tests warrant. The Dam Safety Panel has also helped in the resolution of many design and construction issues affecting the project from time to time.  11 4.22 The underground riverbed power house was envisaged by NWDT as a conventional plant However, based on studies carried out jointly by GOG and the CEA, the design was modified by including a pump-back capability with reversible turbines. A comparison of the economic cost streams for three power generation alternatives-that is, (i) with Sardar Sarovar - conventional; (ii) with Sardar Sarovar - reversible; and (iii) with thermal peaking capacity--indicated that the "Sardar Sarovar - reversible" option was the least costly. Moreover, the installation of reversible turbine generating sets appeared attractive when considering that (i) the project site offered the possibility of creating a tail pool through the construction of the Garudeshwar Weir, about 12 Ikm downstream of SSP Dam, (ii) the flows for conventional hydropower generation would decrease overtime, and (iii) there would be shortages of peaking capacity in the predominantly thermal grid of the Western region at the end of the Eighth and Ninth Five Year Plans. 4.23 The impact of sedimentation on the 'feasible service life" of the Sardar Sarovar reservoir, and its influence on projected benefits, was assessed by the Narmada Project Dam Designs Circle in a document entitled: "Sedimentation Studies and Life of Reservoir " dated June 1982. Based on suspended sediment data from 1962 to 1981, and the bed load and trap efficiency projections, a sediment rate of 5.34 ham/100 an 2/year was adopted and the life of Sardar Sarovar Reservoir was estimated to vary from 180 years to 233 years, depending on when the upstream Narmada Sagar Dam would be completed. Cases Sudied Feasible ServiceL of SSP (Years) (a) i SSP and Narmada Sagar Project (NSP) completed together .233 ii. NSP completed 5 years after SSP ....................... 222 iii. NSP completed 10 years after SSP ....................... 212 iv. NSP completed 15 years after SSP ....................... 201 V. NSP completed 20 years after SSP ....................... 191 vi. NSP completed 25 years after SSP ....................... 180 a. Empirical Area Reduction Method 4.24 NWDT had directed Madhya Pradesh to complete the Narmada Sagar Dam (NSP) at the same time as the Sardar Sarovar Dam, because the NSP is crucial for the operation of Sardar Sarovar. In reality, however, SSP construction began in 1987, whereas the contract for the construction of NSP was awarded only in 1992. Assuming a five-year delay, i.e., with completion of NSP around 2003, Borrower the estimated the life of Sardar Sarovar Dam to be 222 years -- more than four times the conventional service life of 50 years considered for the cost- benefit analysis of such projects. This estimate also fulfilled the Borrower's standards under the Indian Standard IS 12182-1987 which stipulates that the service life of a dam should not be less than 100 years after the start of operation. 4.25 The project design provides three outlets to release water for hydro-power, irrigation and emergency depletion of reservoir, respectively. Their types and elevations are as follows: Typ of Outlet Desi gmd bottom level i. Penstocks for riverbed power house 93.69 m ii. Penstocks for irrigation and canal head power house 98.13 m i$i. River sluices (for emergency depletion of reservoir) 53.00 m  12 4.26 NPG determined in its June 1982 study that the riverbed power house, canal head power house and irrigation outlets would continue to function with enough water for irrigation and power generation even after 200 years impoundment and despite some loss of live storage by sedimentation. 4.27 Closely related to the pattem of sediment dynamics is the "backwater effect" of the dam on water levels upstream of the dam during high floods. Long and narrow reservoirs, as in the case of SSP, tend to behave like a river during high floods and to develop a slope upstream of the dam. The NWDT had specified that "the back water level at the highest flood level in Sardar Sarovar shall be worked out by the CWC in consultation with Madhya Pradesh and Gujarat". Accordingly, back water studies were carried out by CWC, and documented in a report dated August 1984, to determine the submergence in the reservoir due to back water effect. Back-water profiles were estimated for the following conditions: a. Water level at full reservoir level (138.68 m) at dam and a peak flood of 69,376 cumecs (1 in 100 year flood); and b. Water level at maximum water level (140.21 m) at dam and a peak flood of 86,933 cumecs (1 in 1,000 year flood). 4.28 The R&R policy set forth by NWDT requires the acquisition of all lands and property below full reservoir level (138.68 m/455 ft.) and all buildings with their appurtenant plots of land between full reservoir level and maximum water level (140.21 m/460 ft). In view of the fact that the highest observed and recorded flood in 1970 was the 1 in a 100 year flood, the party states agreed that the acquisition of property - i.e., houses and structures but not land - would not be limited to maximum water level at dam site but extended to the backwater profile of this flood. Thus, acquisition of houses and structures would be extended to the areas between maximum water level (140.21 m) and the water profile for a 1 in 100 year flood over the entire length of the reservoir. iect Oroan nat 4.29 Initially, the Narmada Development Department of the Government of Gujarat was the main implementing agency for the project, with primary responsibility for planning, designs, implementation, and operation and maintenance of SSP. About one year after construction had begun, a number of deficiencies and delays became apparent in construction management, execution of works, and establishment of the critically needed MIS. Fundamental institutional changes were needed in order to meet the challenges of this large and complex project. Accordingly, Gujarat decided to create the Sardar Sarovar Narmada Nigam Limited (SSNNL) as a para-statal company under the Indian Companies Act on March 24, 1988. In so doing, GOG's objectives were to: (i) significantly improve the efficiency of planning, designing and construction of SSP by reducing the cumbersome procedural requirements to which NDD was submitted, and (ii) supplement government financing through the issuance of debt and equity instrments to raise funds. GOG indicated that it was not intending, through the formation of the Sardar Sarovar Narmada Nigam Limited (SSNNL), to transfer its responsibilities to another agency, and confirmed that GOG would continue to be directly responsible to the Bank, GOI, GOM and GOMP for all obligations set out in the Legal documents. The change of implementing agency was formalized through an amendment of the Development Credit Agreement. 4.30 However, it was not until September 1988 that the detailed functions and organizational and financial structure of SSNNL had been finalized to the point where it could effectively take over NDD's responsibilities. At the Bank's suggestion, the management and administrative structure of SSNNL were organized on a functional basis, with separate divisions for: (i) planning,  13 designs and surveys; (ii) procurement; (iii) construction; (iv) quality control; (v) evaluation and monitoring, (vi) administration, finance, budgeting, personnel and legal, and (vii) R&R. In addition, the Nigam expedited the establishment of a comprehensive computerized MIS able to prepare implementation schedules, performance reports, and management reports, and to monitor and evaluate SSNNL's activities from planning to implementation, in addition to serving the accounts and finance wing. SSNNL's organization is depicted in Attachment 1. 4.31 In view of the multi-state nature of SSP and its unusual magnitude and complexity, requiring a high level of technical standards and monitoring, and in compliance with the orders of NWDT, a number of interstate agencies were set up: (i) the Narmada Control Authority (NCA) to ensure compliance with and implementation of the decisions and directions of the NWDT; (ii) the Sardar Sarovar Construction Advisory Committee (SSCAC) to review and make recommendations concerning the planning, design, and construction of the dam and power complex, including funding requirements and recommendations to the concerned states; and (iii) the Review Committee for Narmada Control Authority (RCNCA)to review and rule on any decision of NCA. The composition, powers and functions of these Institutional Agencies have been detailed by the NWDT and are outlined in Annex 2 of Supplementary Data Volume of the Staff Appraisal ReporL Because of the statewide importance of SSP, many of Gujarat's own state-wide departments and agencies were also involved (including Agriculture, Health, Water Supply and Sewerage Board, State Electricity Boards, GERI, the Water and Land Management Institute [WALMI], and Communications). 53. Project Implementation eneral 5.1 The Credit became effective in January 1986 after a delay of eight months. However, the awards of international competitive bidding contracts on Sardar Sarovar main dam and riverbed power house civil works were delayed by about two years for lack of environmental clearance by the Ministry of Environment and Forests (MOEF). The lowest bidder for the main dam contract, an Indian contractor, accepted to extend his bid validity and was awarded the contract. However, the lowest bidder for the riverbed power house works, a Japanese contractor, refused to do so, resulting in the award of the contract to the next lowest bidder who happened to be the same Indian contractor as for the dam. The contract for the dam was awarded in April 1987 in anticipation of GOrs environmental clearance, and that for the riverbed power house civil works in July 1987. The contract schedules envisaged the completion of dam and riverbed power house civil works within 110 months and 93 months of the award of contracts, i.e., by June 1996 and April 1995, respectively. 5.2 The project made a promising start after the contracts were awarded and the contractor had initiated the works. However, slippages started occurring in construction works and the NDD was unable to take the requisite managerial and technical steps to ensure timely implementation and adequate quality control. Several critical issues slowed down implementation. The main issue was the high variability of cement quality, which resulted in inadequate concrete strength. In addition, construction management, mobilization of skilled manpower, and use of proper construction equipment all needed substantial improvements by the contractor. Delay in establishing the proposed computer-based MIS was adversely affecting the planning, scheduling, and monitoring of project implementation, and GOG appeared reluctant to utilize the critically needed and experienced consultants. Another issue was the need to expand the Dam Safety Panel through the recruitment of an expert of international stature, to enhance its ability to carry out independent technical reviews.  14 5.3 Concerned by persistent implementation deficiencies and continuous slippages, the Bank communicated to GOG on August 31, 1988, a list of phased "critical implementation steps" to be taken on priority basis. These included: a. implementing a Comprehensive Management Plan to demonstrate SSNNL's institutional and technical capability for carrying out SSP; b. establishing an adequately staffed and computerized MIS, including a fully operational multi-calendar scheduling package; C. preparing a Project Evaluation and Review Technique (PERT)-type Revised Implemnentation Schedule for the entire SSP reflecting realistic physical and financial implementation schedules; d. strengthening the independent technical review capability of Dam Safety Panel; e. establishing remedial procedures to review deficiencies and areas of immediate concern throughout the SSP; f. reviewing the suitability of contractors' acquisition of equipment and their equipment planning; g. creating a cadre of competent quality control and construction supervision inspectors in all relevant construction activities, through appropriate training; and h. constituting a team of experts to furnish a detailed technical report covering all aspects of the cement production process and concrete placement practices, extending from the basic mining operation through the manufacturing of Portland Cement up to and including sampling, testing and placement of concrete at site. 5.4 The Ministry of Water Resources, GOI, set up a six-member Indian Team of Experts (TOE) in October 1988 to address the various technical, organizational, implementational and quality control problems highlighted by the Bank. A Bank team met with officials of GOI (Ministry of Water Resources [MOWR], CWC, Department of Economic Affairs [DEA] and NCA), GOG, GOMP and SSNNL in Delhi from December 5 to 8, 1988 to review issues concerning SSP implementation. This meeting resulted in a Memorandum of Understanding regarding future implementation of SSP. One important outcome of the Memorandum of Understanding was that GOI enlarged the Team of Experts to include three expatiiate consultants. Broadly, their terms of reference were to: a. examine construction quality, adequacy of quality control and supervision arrangements; b. review construction methods, adequacy of construction equipment used by contractors and their capability of achieving the desired progress; c. identify bottlenecks and suggest measures for accelerating progress; d. examine the fulfillment of stipulations made in the Bank letter of August 31, 1988; e. recommend organizational and institutional improvements;