China - Irrigated Agriculture Intensification Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 19493 IMPLEMENTATION COMPLETION REPORT CHINA IRRIGATED AGRICULTURE INTENSIFICATION PROJECT (LOAN 3337/CREDIT 2256-CHA) June 30, 1999 Rural Development and Natural Resources Sector Unit East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their of-ficial duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Yuan (Y) Y 1.00 =US$0.121 (1999) 1989 US$1 = Y 3.71 1990 US$1 = Y 4.72 1991 US$1 = Y 5.22 1992 US$1 = Y 5.38 1993 US$1 = Y 5.45 1994 US$1 = Y 8.70 1995 US$1 = Y 8.31 1996 US$1 =Y 8.30 1997 US$1 = Y 8.27 1998 US$1 = Y 8.27 1999 US$1 = Y 8.27 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CIIEC - China Instruments Import & Export Corporation CMIEC - China Machinery Import & Export Corporation CNTIC - China National Technology Import Corporation DAP - Di-ammonium Phosphate ERR - Economic Rate of Return ICB - International Competitive Bidding ICR - Implementation Completion Report NCB - National Competitive Bidding O&M - Operation and Maintenance SAR - Staff Appraisal Report Vice President Jean-Michel Severino, EAPVP Sector Manager : Geoffrey B. Fox, EASRD Country Director: Yukon Huang, EACCF Task Managers : Lang S. Tay, EACCF and Qun Li, EASRD  FOR OFFICIAL USE ONLY - ii - CONTENTS PREFACE ............................................................ iii EVALUATION SUMMARY .................... ........................................ iv PART I. IMPLEMENTATION ASSESSMENT ................................................. 1 A. Project Objectives and Description ............................................................. 1 B. Implementation Experience and Results ...................................................... 1 C. Project Impact ............................................................. 7 D. Major Factors Affecting The Project ........................................................... 8 E. Project Sustainability ............................................................ 10 F. IDA Performance ............................................................ 11 G. Borrower Performance ............................................................ 11 H. Assessment of Outcome ............................................................ 12 I. Future Operation ............................................................ 12 J. Key Lessons Learned ............................................................ 13 PART II. ST ATISTICAL TABLES ............................................................. 14 Table 1: Summary of Assessment ..............................................................-. 14 Table 2: Related Bank Loans/Credits ............................................................ 15 Table 3: Project Timetables. ............................................................. 16 Table 4: Credit Disbursement: Cumulative Estimated and Actual ................ 16 Table 5: Key Indicators of Project Implementation ....................................... 17 Table 6: Key Indicators for Project Operations ............................................. 19 Table 7: Studies included in Project ............................................................. 20 Table 8a: Project Costs ............... 21 Table 8b: Project Financing . . ........................................................ 22 Table 9: Economic Costs aind Benefits ........................................................ 23 Table 10: Status of Legal Covenants ........................................................ 24 Table 11: Compliance with Operational Manual Statements ............ .............. 25 Table 12: Bank Resources: Staff inputs ........................................................ 25 Table 13: Bank Resources: Mvissions ........................................................ 26 ANNEX A: BORROWER'S COMMENTS TO THE ICR .............. .................. 27 ANNEX B: MISSION AIDE MEMOIRE ............................................................. 35 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.   - 111 - CHINA IRRIGATED AGRICULTURE INTENSIFICATION PROJECT (LOAN 3337-CHA/CREDIT 2256-CHA) PREFACE This is the Implementation Completion Report (ICR) for the Irrigated Agriculture Intensification Project in China, ifor which a loan in the amount of US$147.1 million and a credit in the amount of SDR 139 million ($187.9 million equivalent) were approved on June 4, 1991, and made effective on September 9, 1991. The loan and credit were fully disbursed, with the final disbursement taking place on December 28, 1998. Total disbursements amounted to $139 million and SDR 147.1 million. The ICR was prepared by rnissions comprising Lang S. Tay (Task Manager), Qun Li (Consultant, Economist), Naoya Fujimoto (Consultant, Irrigation Engineer) and Peter Ting (Consultant, Agronomist) during 1997. However, completion of the final ICR was deferred so that Jiangsu could complete its component, which was extended for 18 months. The Anhui and Shandong Components were completed earlier in 1997. The ICR was reviewed by Geoffrey B. Fox, Sector Manager, EASRD. The Borrower provided comments, which are included as Annex A to the ICR. Preparation of the ICR was based on materials in the project files and meetings with project staff in the field. The Borrower contributed with views and data requested, its own evaluation of the project's execution, and comments on the draft ICR.   - iv - CHINA IRRIGATED AG:RICULTURE INTENSIFICATION PROJECT (LOAN 3337-CHA/CREDIT 2256-CHA) EVALUATION SUMMARY Project Objectives 1. The main objectives of the project were to increase agricultural production and incomes of some 2.8 million famning households in Anhui, Jiangsu and Shandong provinces. These objectives were achieved through: (a) improvement and expansion of irrigation and drainage facilities to some 1.17 million hectares (1.14 million ha at appraisal) of low- and medium-yield cropland covering sections of 76 counties (73 counties at appraisal) in Anhui, Jiangsu and Shandong provinces; (b) provision of agricultural inputs and support services to increase production; (c) provision of institutional strengthening and development in technical skills, project implementation and management through technical assistance, operational research and training programs; and (d) implementation of an environmental monitoring and management program to sustain the project's agricultural productivity Implementation Experiences and Results 2. The whole project was successfully completed by the end of 1998. The Anhui and Shandong components were completed before the end of 1997 and the Jiangsu component was completed at the end of 1998 after two extensions of the closing date of nine months each. The Anhui component and, to a smaller extent, the Jiangsu component were affected by floods in 1991 and 1996. The total project cost was estimated at $643.7 million at completion compared to $593.1 million at appraisal. The overall economic rate of return (ERR) was estimated at 26.6 percent at completion compared to 26.5 percent estimated at appraisal. 3. Irrigation and drainage facilities were provided to a total of 1,166,859 ha (632,449) ha improvement and 534,410 ha expansion) compared to 1,143,400 ha at appraisal, an increase of 23,459 ha or 2.0 percent. Four major pumping stations and a computerized water management monitoring-system were completed to upgrade water transfer and irrigation management for the Grand Canal under the Jiangsu component. 4. Each project province completed satisfactorily its package of complementary agricultural support services, thereby strengthening and expanding the agricultural  - v - support service systems in the project areas. These included upgrading and new construction of 96 county centers and 358 township stations for agricultural extension, quality seed processing facilities for supplying 477,756 tons of seeds for various main crops, 22,080 sets of agricultural machinery and equipment for county and township agricultural machinery services centers and stations, leveling of 372,699 ha and deep plowing of 433,889 ha of existing cropland, and supply of 788,800 tons of Di-ammonium Phosphate (DAP) and urea fertilizers. 5. The investment in the irrigated agriculture intensification project has brought benefits in terms of increased agricultural yields, production and farming household income. The project was successful in rehabilitating and expanding about 18 main irrigation schemes in three provinces, improving and expanding irrigation areas totaling 1,166,859 ha (319,942 ha in Anhui, 438,485 ha in Shandong and 408,432ha in Jiangsu). At project completion, agricultural output and yields for major crops on the newly irrigated land have exceeded substantially the SAR-projected yields and production at the full development year 2002. The annual crop output increased by 3,863,400 tons during 1997/1998. The annual net value of incremental production was estimated at about Y 1,717 million in Anhui, Y 944.5 million in Jiangsu and Y 769.4 million in Shandong. The increased outputs from various crops resulted in higher incomes for about 2.8 million farming households in Anhui, Jiangsu and Shandong project areas. The average per capita income of the households engaging in crop production was raised from Y 713 to Y 1,712 in Anhui, Y 603 to Y 2,269 in Jiangsu and Y 684 to Y 1,820 in Shandong, respectively (the average per capita incomes estimated at appraisal were based on 1990 prices and that at project completion were based on 1998 prices). In real terms (1998 prices) the incomes achieved have exceeded the SAR-projected income for the full development year by 18 percent in Anhui, 92 percent in Jiangsu and 30 percent in Shandong. Overall, the project benefits has been achieved or exceeded the anticipated economic and social benefit targets. Summary of Findings, Future Operations, and Key Lessons Learned 6. Overall Finding. The project's overall outcome is considered to be "Satisfactory" despite the 18-month extension given to the Jiangsu component to complete its computerized water management system on the Grand Canal, which was delayed due to the complexity of design, International Competitive Bidding (ICB) bidding, processing and evaluation. Physical targets projected were achieved and were exceeded slightly in the irrigation and drainage, and the agricultural support services subcomponents. The projected agricultural production and farm incomes were also generally achieved. 7. Project Impacts. The increased production and incomes from the project areas have generated great interest and demands for similar project facilities among the neighboring nonproject counties. This has led to Bank financing of another similar project (Irrigated Agriculture Intensification Project II, Loan No.4354-CHA) in May 1998, covering some 1.5 million ha of low- and medium-yield cropland in Anhui, Jiangsu, Shandong, Hebei and Henan provinces. The project activities and increased incomes generated also induced development and growth of the local economy through various service and supply sectors, increased demands for consumer goods, construction  - vi - of new and renovation of housing, shops and office buildings. The increased revenue derived from increased agricultural and production taxes from the project areas enable the local governments to invest in basic infrastructure and other social amenities, all of which contributed to the overall improvement of the quality of life of the project beneficiaries. The improved and expanded irrigation and drainage facilities, land and soil improvement, and afforestation enhanced the general ecological environment of the project areas. 8 Sustainability. The project is rated as "Likely Sustainable." The project continues to have the commitment and support of the government at all levels. The project works were well planned, designed and constructed to the desired standards. Operation and maintenance (O&M) systems are in place with adequate resources provided by the governments. Project beneficiaries (farmers) are actively participating in the operation and maintenance of the lower levels of the irrigation systems through contribution of labor for undertaking annual communal works. Projected agricultural yields and production have already been achieved and these would continue to increase with the strengthened and expanded agricultural support services established under the project. 9. Future Operations. The future operations will focus essentially on efficient operation and maintenance of the completed works and facilities to achieve the project's full development. The existing project management offices and staff are being maintained for this purpose and O&M responsibilities will be defined for different levels of management, including initiating turnover of works and facilities. Agricultural production will be progressively adapted toward a market-oriented economy with a self- supporting operation mechanism, responsible for its own profits and losses. Each province will recover project costs from the project beneficiaries,. mainly through the collection of appropriate irrigation charges and service fees. 10. Lessons Learned. The key lesson learned are: (a) improvement and expansion of irrigation and drainage facilities to existing low- and medium-yield cropland proved to be cost-effective and achieved benefits in a relatively short period; (b) firm commitment and support by government at all levels, and active participation by stakeholders and project beneficiaries are essential for the smooth implementation, success and sustainability of the project; (c) keeping project sub-components to a minimum avoids complexity in project preparation and implementation, and optimizes use of resources of the Borrower and the Bank; (d) presetting of investment and unit cost ceilings by government prevents achievement of greater project benefits; and (e) participating counties should be selected based on their ability to contribute capital construction funds, and willingness to recover project cost, repay loans and undertake O&M of completed works and facilities.   CHINA IRRIGATED AGRICULTURE INTENSIFICATION PROJECT (LOAN 3337-CHA/CREDIT 2256-CHA) PART 1: PROJEICT IMPLEMENTATION ASSESSMENT A. Project Objectives and Description 1. The principal objective of the project was to assist the Government in increasing agricultural production and thereby increasing farm incomes for some 2.8 million rural families in Anhui, Jiangsu and Shandong Provinces. This was achieved through: (a) improvement and expansion of irrigation and drainage facilities to some 1.17 million ha (1. 14 million ha at appraisal) of low- and medium-yield land covering sections of 76 counties' in the provinces of Anhui, Jiangsu and Shandong; (b) provision of a complementary package of integrated agricultural inputs and support services to increase production; (c) provision of institutional strengthening and development in technical skills, project implementation arnd management through technical assistance, operational research and training programs; and (d) implementation of an environmental monitoring management program to sustain the projected agricultural productivity. 2. The project concept and objectives were essentially based on the earlier successful IDA-financed project., the North China Plain Agriculture Project (NCAP) (Cr. 1261-CHA), which covered three counties each in the provinces of Anhui, Shandong and Henan. Many of the successful NCAP features were duplicated in the overall project planning and design of this project. B. Implementation Experiences and Results 3. General. The project was implemented without encountering any major problems and completed according to schedule. The Anhui and Shandong components were virtually completed by the end of 1997 except for the Jiangsu component. The Jiangsu component was extended 18 months to enable it to complete its only outstanding item on the Grand Canal Water Management Monitoring System, which was delayed due to the complexity in planning and design and protracted procurement, bid evaluation and award. The project achieved its objectives in the three project provinces with many of the physical targets exceeding the original estimates. The overall project economic rate of return (ERR) achieved at completion was re-estimated at 26.6 percent which Three counties were added to the Jiangsu Component during the Mid-Term Review (MTR), making a total of 76 counties.  compared favorably to 26.5 percent estimated at appraisal. The respective ERRs for the three provinces are: Anhui 24.6 percent (SAR 26.4 percent), Jiangsu 28.1 percent (SAR 28.7 percent) and Shandong 29.6 percent (SAR 24 percent). Due primarily to inflation and devaluation of the local currency Yuan against the Dollar, the total project cost expressed in Dollar, increased by $50.6 million or 8.5 percent from $593.1 million estimated at appraisal to $643.7 million at completion. Total Project Cost in US$ (million) $ (million) SAR Estimate At Completion Increment At Completion Anhui 218.2 228.7 10.5 Jiangsu 175.2 209.4 34.2 Shandong 199.7 205.6 5.9 TOTAL 593.1 643.7 50.6 Tables 8A show total project costs in Dollar estimated at SAR and at project completion for each province by major components. Physical Results 4. (a) Irrigation and Drainage. The irrigation and drainage works constructed in the three provinces under the project resulted in improving 632,449 ha of existing and expanding 534,410 ha of new irrigation areas, making a total of 1,166,859 ha (compared to an SAR total estimate of 1,143,400 ha), an increase of 23,459 ha or 2.0 percent. The breakdown by province is summarized in the following table. SAR Estimate (ha) Completed at Closing (ha) Improve New Total Improve New Total Anhui 92,170 227,830 320,000 93,202 226,740 319,942 Jiangsu 156,500 233,500 390,000 169,473 238,958 408,431 Shandong 366,200 67,200 433,400 369,773 68,712 438,485 TOTAL 614,870 537,530 1,143,400 632,449 534,410 1,166,859 Detailed breakdown of irrigation areas completed for each province by irrigation areas or counties are given in project file.  - 3 - 5. The improved and newly constructed irrigation facilities have improved irrigation efficiency and water management by reducing the irrigation cycle days through more positive and assured water supply, reducing seepage losses through canal lining, and providing more resistance to drought conditions. Notably, under the Jiangsu component, the upgrading and the new construction of four major pumping stations on the Grand Canal System reduced the water deficit in northern Jiangsu from about 660 to 200 million cubic meters (m3) per year, with more water being diverted northward from the Yangtze River. The increased water diversion also improved inland navigation along the Grand Canal. In Shandong Province, the rehabilitation and new construction of tubewell irrigation systems benefited about 170,185 ha through more optimum use of groundwater resources. In surface irrigation, Shandong successfully completed the Yellow River water diversion schemes for Changkai Irrigation Area (13,300 ha), Xiezhai Irrigation Area (63,000 ha), Shengli Qu Irrigation Area (32,000 ha) and 160,000 ha around the Nansi Lake. Anhui Province completed construction of 2,164 stage I and II pumping stations, 30 million m3 of earthworks excavation for canal networks, 5,400 new tubewells and rehabilitation of 7,828 existing tubewells, thereby improving a total of about 93,000 ha of existing irrigation area and expanding another 227,000 ha. In addition, Anhui also successfully completed the Beifei and the Qian River Subproject and the Yingshang Zhangou Subproject. During the 1996 flood, the Befei/Qian River Sub- Projects protected 3,000 ha of cropland from flood inundation and prevented flood damages estimated at Y 11.5 million, which exceeded the capital investment cost of the subprojects. Similarly, the Yingshang Zhangou Pumping Scheme completed in 1995 prevented flood damages to about 4,670 ha of cropland during the 1996 flood. 6. (b) Agricultural Support Services. Each province satisfactorily completed its package of complementary agricultural support services, thereby strengthening and expanding the agricultural support services systems in the project areas. In Anhui Province, the agrotechnical extension services system was strengthened with construction of 10 new county centers and 44 township stations, rehabilitation of 16 county centers and 91 township stations, provision of 3,222 sets of extension equipment, including the supply of 48,688 tons of quality seeds and introduction of over 100 new production technologies. Some 800 sets of machinery and equipment were purchased for quality seed processing, drying and grading, and 5,670 tractors of various horsepower were purchased to strengthen the agrimechanization, which resulted in the leveling of 184,000 ha and deep-plowing of 154,000 ha of cropland. In Shandong Province, under the agrotechnical extension, one provincial center, 28 county centers and 223 township stations, and 5 city/prefecture agroenvironmental training centers were established. For agricultural inputs, 28 seed companies, 7 cotton quality seed processing plants, and 5 fertilizer blending plants were constructed. A total of 290,611 tons of quality seeds was produced. A total of 117,600 tons of Di-ammonium Phosphate (DAP) and 28,500 tons of urea were procured and distributed to the project area. Some 6,288 sets of agricultural machinery and equipment were purchased and operated to raise further the level of farm mechanization. On land and soil improvement, some 193,919 ha of cultivated land were deep-plowed and some 75,656 hba leveled. In Jiangsu Province, 12 fertilizer blending plants were constructed to produce blended fertilizer for different crops, using 343,800 tons of urea as the base fertilizer. Land and soil were improved through land leveling of 112,783 ha and deep plowing of 85,856 ha. The agricultural extension system was strengthened by upgrading existing and constructing a total of 298 county centers and  - 4 - township stations with additional facilities and equipment. Some 1,170 new production technologies were introduced. The quality seed production system was also strengthened with construction of 161,400 square meters (mi2) of county seed centers, , stores and drying yards. A total of 112,380 tons quality seeds was produced for major crops. A total of 61 pest forecasting stations was established and 3.3 tons of agrochemicals procured. The agrimechanization was expanded with 10,120 sets of machinery and equipment of various types and sizes. A total of 260 agrimachinery services stations was constructed and upgraded, including provision of 17,742 sets of equipment for machinery service and repair. Agricultural Benefits 7. Together with Government reform policy (free market, production incentives, and promotion of market economy) the project has brought significant benefits in terms of increased agricultural yields and production. The project was successful in rehabilitating and expanding about 18 main irrigation schemes in three provinces, improving and expanding irrigation areas totaling 1,166,859 ha (319,942 ha in Anhui, 438,485 ha in Shandong and 408,432ha in Jiangsu). At project completion major grain crops (wheat, maize and rice) have generally exceeded the SAR-projected yields and production for the full development year 2002. Vegetable crops in Anhui and Shandong have substantially exceeded the SAR targets due to strong domestic market demand. 8. The annual production of major crops for Anhui, Jiangsu and Shandong subproject areas are summarized below: (Unit: '000 tons) SAR Estimate @ Project Full ICR Estimate @ Project Completion Development Crop Anhui Jiangsu Shandong Anhui Jiangsu Shandong Wheat 925.3 1187.1 1376.8 1036.3 1321.6 1779.6 Maize 213.8 210.8 878.9 373.8 695.6 1004.6 Rice 689.5 1413.3 224.4 586.3 1517.1 227.1 Other grain 47.2 13.5 37.6 22.6 2.7 20.8 Sweet 366.6 106.0 200.2 349.3 78.7 158.4 potato Soybean 50.4 51.5 90.0 82.6 62.4 71.1 Rape 37.8 46.0 - 54.7 235.6 - Peanut 23.3 69.6 56.1 80.6 71.0 100.7 Cotton 23.1 57.5 80.9 35.9 68.5 42.6 Vegetables 358.2 - 729.6 1088.2 - 2801.9 Others 17.4 663.9 262.3 21.9 53.8 425.6 Total 2752.6 3919.2 3936.8 3732.2 4107.0 6632.4  - 5 - Table 6 of Part II shows the area cultivated, yields and production achieved for each main crop in three subproject areas. 9. The total annual crop oulput increased by 3,863,400 tons during 1997/1998, in which about 648,300 tons for wheat, 670,500 tons for maize, 3,300 tons for rice, 206,500 tons for rape, 103,300 tons for peanut, and 2,802,300 tons for vegetables. The crop yields currently achieved in the project area are higher than estimated during appraisal. Preliminary data show a further increase in yields and production for cash crops as farmers diversified crop production and increased inputs in response to higher market prices. The increased outputs from various crops resulted in higher incomes for beneficiary farm households. The annual net value of incremental production was estimated at about Y 1,717 million in Anhui, Y 944.5 million in Jiangsu and Y 769.4 million in Shandong. 10. Overall, agricultural procluction has exceeded the benefit targets and economic rates of return. ERRs were recalculated for each subproject and component, using production input costs and output prices provided by each of the project management offices. The consolidated ERR for the whole project amounted to 26.6 percent, slightly higher than the estimated 26.5 percent at appraisal. Table 9 of Part II shows the detailed ERRs for each large irrigation scheme in three provinces. Rural Income and Poverty Reduction 11. The project has increased incomes for about 2.8 million farming households in Anhui, Jiangsu and Shandong subproject areas. The financial analyses, based on survey data from the Rural Socioeconorny Survey Teamn collected from predetermined areas selected for monitoring from 1991 to 1997, show substantial increases in net income per capita as follows: Net Income Per capita (Yuan) Subproject Area SAR Estimate ICR Estimate (a) Full Development () Project Completion (price in 1990/98) (price in 1997/98) Anhui Irrigation Area 713/1455.7 1,712 Jiangsu Irrigation Area 603/1231.1 2,369 Shandong Irrigation Area 684/1396.7 1,820 12. The sampled surveys of farm incomes in the Anhui, Jiangsu and Shandong subproject areas indicate that the income of farmers in the project area has surpassed the poverty line, and the rural per capita income achieved for various farmer groups has exceeded substantially the SAR-projected income level at full development year (2001). The agriculture production gains have helped to raise the income level of the farmers. The average per capita income of the households engaging in crop production was raised  - 6 - from Y 713 to Y 1,712 in Anhui, Y 603 to Y 2,269 in Jiangsu and Y 684 to Y 1,820 in Shandong, respectively. Table 6 of Part II summarized the average household income for each large irrigation schem in three provinces. Other Socioeconomic Benefits 13. Beside increasing rural incomes, other socioeconomic benefits accrued include the following: (a) Due to improved irrigation efficiency and higher level of farm mechanization, both of which effectively reduce the number of days farmers are engaged in irrigation and farning activities, farmers are able to use the available labor2 to engage in off-farm employment such as sideline enterprises, family-operated business, rearing of livestock, and working part time in cities and townships earning extra cash income. (b) The improved rural incomes brought about changes in consumption patterns, better housing and more education for farmers' children. (c) The implementation of the project generated employment opportunities, both short- and long-term, including employment for women. (Shandong reported 280,000 short-term jobs and 65,000 long-term jobs; Jiangsu reported 240,000 short- and 52,000 long-term jobs, and no figures available from Anhui. (d) The project has promoted rational changes for cropping patterns and produce geared for value-added processing and marketing. This has optimized the production structure for accelerating the overall rural economy in the project area. For example, abundant supply of wheat stalk and other dry matters from crops in Mengcheng County, Anhui Province has promoted rearing of beef cattle by a large number of households and turned the county into one of the major production bases of beef cattle in China. (e) The access roads constructed and upgraded in the project areas provided good access for rapid transportation of agricultural inputs and outputs, resulting in a reduction in costs and higher margins of return. These access roads (some of them upgraded to permanent roads by the local governments) also linked the various villages to the various townships and improved the sociocultural life of the project farmers. Institutional Strengthening and Development 14. The project provided institutional strengthening and development mainly through staff training in project implementation and management, upgrading of technical skills and competence through local and overseas technical study tours, and training in the use of microcomputers for use in project management. In all, 240,246 staffs of training were 2 Roughly estimated at 5 person-days per cultivated mu per season.  completed (Anhui 88,979, Jiangsu 73,884, Shandong 77,091 staff-months). In addition, project offices at the provincial, prefecture, city and county levels were provided with the necessary office equipment and vehicles for use during project implementation and in subsequent operation and maintenance. Procurement 15. Project procurement for works and goods was carried out separately by each province with the assistance of various national tendering companies (China National Technology Import Corporation (CNTIC), China Machinery Import & Export Corporation (CMIEC), China Instruments Import & Export Corporation (CIIEC)) acceptable to the Bank Group. Bank procurement guidelines and procedures were generally conformed to, including the use model bidding documents for International Competitive Bidding (ICB) and National Competitive Bidding (NCB) prepared by the Ministry of Finance and reviewed by the World Bank. Contractors for works and suppliers for goods performed their contracts satisfactorily. The centralized procurement of basic construction materials (cement, steel and timber) proved to be less efficient and practicable in coordinating supply and delivery to the numerous counties scattered in each of the three provinces, not counting the added costs for storage and overland transportation. Since these basic construction materials are now readily available in the open market, it is strongly reconimended that, for future similar projects in China, these materials need not be procured centrally but be included in the unit prices for the relevant work items for bidding by contractors who will then be responsible for the supply of these materials. This would also reduce considerably procurement and the associated financial workload and overheacl costs. Disbursement 16. The disbursement of loan and credit for the project was satisfactory and generally according to schedule (see Table 4), except for the Jiangsu component, which was slightly delayed due to delay in completing the Grand Canal Water Management Monitoring System. The loan and credit for Anhui and Shandong were virtually disbursed by the end of 1996, some six months before the original project closing date. The loan and credit proceeds were reallocated in 1994 to adjust for underallocation in some categories due to the increase in work quantities and cost. The disbursement of project expenditures generally adhered to the World Bank disbursement guidelines and procedures. The loan and credit were fully disbursed, with the last disbursement for the project (Jiangsu component) male on December 28, 1998. C. Project Impact 17. Based on the sampled household socioeconomic surveys and project office reports, the project created the following direct and/or induced impacts: (a) The results and performance of the completed project generated great interest among the neighboring nonproj ect counties and demands for similar project facilities. Consequently, the Bank financed a similar project (Irrigated Agriculture Intensification Project II, Loan 4354-CHA, $300 million) in May  - 8 - 1998 covering 131 counties in the provinces of Anhui, Jiangsu, Shandong, Henan and Hebei for a total area of about 1.5 million ha. (b) The project activities and improved rural incomes induced further development and growth of the local economy. This is evidenced from the expansion of various service and supply sectors, increased demands for consumer goods, and construction of new and renovation of buildings for residential homes, shops, stores and offices. (c) The project benefits contributed to an increase in revenues of local governments through the collection of agricultural and production taxes derived from the project areas.3 The local governments, in turn, invested in infrastructure (roads, electricity, water supply, etc.) and other social amenities (health clinics, schools, etc.), all of which contributed to the overall improvement of the quality of life for the project beneficiaries. (d) The completed irrigation and drainage facilities, land and soil improvements, and afforestation (forest belts and windbreaks) improved the land productivity and enhanced the general ecological environment of the project area. (e) For the Jiangsu component, the increased water diversion to northern Jiangsu has not only solved the water shortage problem but it also improved the water environments for agriculture, aquaculture, urban and rural water supply and inland navigation. D. Major Factors Affecting The Project 18. The following major factors contributed toward the smooth and successful implementation and perfonnance of the project: (a) Firm Commitment and Leadership by Government. The three provincial governments (Anhui, Jiangsu and Shandong) provided firm commitment and leadership to the project by providing timely and adequate funds and policy guidelines for project implementation. The respective Provincial Project Leading Groups, under the chairmanship of the Vice Governor in charge of agriculture, met regularly to review project progress and resolve issues and problems confronting project implementation. Similar effective leadership provided by the prefecture/city and county governments also contributed to the successful implementation of the project. 3 Increase was primnarily due to increase in production of higher-valued crops brought about by change of cropping pattern to meet market demands and increased prooduction of animal husbandry produce due to availability of large quantity of crop residues and by-products. However, there are no changes in the agricultural and production tax rates.  - 9 - (b) Past Experiences of Similar Project Works. Anhui and Shandong provinces had participated earlier in the completed North China Plain Agriculture (NCPA) Project and acquired valuable experience in project planning, design, implementation and management. Some of the key staff from NCPA were deployed to form the core staff of the project and help to guide and train the new project staff. This ensured an earlier start of the project and subsequent smooth project implementation. (c) Effective Project Ma nagement Organization of Structure. Each province established its own project management organization at the provincial, prefecture/city and county levels. The organizations were effective in coordinating the various implementing agencies and solving issues and problems encountered during project implementation. The Provincial Project Leading Groups also provided effective leadership and clear policies. Various rules, regulations and guidelines on project management, financial administration, procurement and disbursement were prepared by the Provincial Project Management Offices and issued to project staff for guidance. Staff changes were also kept to a minimum to ensure continuity of staff working on the project. At the gralssroot level, the county chief or his designated deputy played an active role in directing and overseeing project implementation in his county. The quality of the project was ensured through the technical expert groups set up in each province and periodic supervision by local specialists organized by the Ministry of Water Resources, including joint workshops to exchange implementation experience and technical knowledge. (d) Participation and Ownership by Project Beneficiaries. Project beneficiaries (farmers) and stakeholders (villages and townships) participated extensively in the project construction by contributing labor to undertake earthwork construction of irrigation canals, farm roads, tree planting and other labor- intensive work. The project beneficiaries and stakeholders are also responsible for maintenance of the lower levels of the irrigation canal system and irrigation tubewells. This has induced a great sense of ownership and responsibility for the success of the project works among the project beneficiaries and stakeholders. This cornmunal spirit and effort was pivotal in ensuring success of the project in each project county. (e) Simple Engineering Designs and Compactness of Project Activities. Except for the major works on upgrading the water diversion facilities of the Grand Canal under the Jiangsu component, most of the irrigation works were for tertiary canals, tubewells and on-farm works, which are relatively simple in design and easy to construct. Moreover, these irrigation works, together with the agricultural support services, were compact and planned on a county basis so that it could be readily implemented by local construction teams or through force account work. Thus, project benefits accrued within a relatively short period as each subproject area was completed. (f) Obligations for Funding and Debt Servicing. One of the unique features that made project implementation successful was the obligation of  - 10- governments at different levels to raise the agreed funds for the project and also to repay the apportioned loan and credit on the principle of "who borrows who pays", including funds self-raised by project farmers. Agreements on funding arrangements and repayments were signed and made binding on the parties concerned. These funding arrangements ensured a smooth flow and allocation of local counterpart funds for project implementation. However, the following negative factors also affected project implementation: (a) Inherent Low Cost and Inflation: At the initial project preparation stage, the ceiling on investment and the average unit cost (Y 100/mu or Y 1,500/ha) set by the central government as a norm for investment resulted in a comparatively lower investment cost, which in turn affected the quality of works and their subsequent operation and maintenance. This low investment constraint was further compounded by the price escalation, inflation and local currency depreciation that occurred during project implementation. Larger project benefits could have been achieved with optimum investment. (b) Natural Disasters: The project areas are prone to natural disasters of periodic flood and drought, which caused much damage and losses to agricultural production whenever their magnitudes exceeded the design standards. This is evidenced from the floods that occurred in 1991 and 1996, affecting Anhui and Jiangsu provinces in particular. The low level of project investment precluded protection against such major flood and drought events.4 E. Project Sustainability 19. The project is likely to be sustainable in view of the following: (a) Continued Government Commitment and Support for the Project The three project provinces are major grain and commodity production bases in the North China Plain and the Government, both central and provincial, is firmly committed to ensuring that the capital works invested in under the project are yielding the desired results and are sustainable. The Government is also supporting the project areas with preferential policies to further boost agricultural production. (b) Good Quality of Completed Works and Operation and Maintenance System. Good quality of construction for the irrigation works and other project facilities have been maintained through adequate supervision during project implementation. This has ensured that the works and facilities completed would be durable and sustainable for long-term operation and use. Before handing over to the relevant departments for operation and maintenance, these works and facilities were inspected-and tested for final acceptance, with any defects made good. The existing local O&M departments have also strengthened and/or 4 The project designed on irrigation guarantee rate of P=75% for Anhui and Jiangsu and P=50% for Shandong and flood protection of 1 in 15 to 1 in 20 years return period.  - I1 - expanded their capacity tlo undertake the increased O&M workload. The responsibility for operation and maintenance of irrigation systems has been clearly defined and assigned to the different government levels, including project farmers at the village level. Irrigation water charges are being collected based on existing regulations to finance annual O&M costs, while tubewell irrigation systems are mostly operated and self-financed collectively by farmers on a cost-sharing basis. Most of the agricultural support services and facilities are self-financing through sales of products and services (seed companies, agrimachinery service stations, pest control, etc.). (c) Effective Agricultural Support Services System to Sustain Production. The completed complementary agricultural support services package in each province strengthened the existing systems and ensured that production would be achieved as planned and sustained. Facilities and services provided include production and supply of quality seeds for grains and cotton, extension and dissemination to farmers of new production technologies and adaptive research results, pest forecasting and control, agrimachinery services, and supplies of agricultural inputs through the numerous agritechnical centers and stations strengthened and constructed under the project. (d) Continuation of the Project Offices in Post-Project Activities. Although construction the project has been completed, the project continues to receive support from the various implementing agencies in technical advice and inputs for the various post-project activities (testing, commissioning and final acceptance, O&M, cost recovery, performance evaluation) until the project has reached its full development stage and stabilized. This continued support would ensure successful operation and sustainability of the project works and facilities. F. Bank/IDA Performance 20. The World Bank Group's overall performance in project preparation, appraisal and supervision has been rated satisfactory, with the cooperation of the Borrower who contributed substantially to the iinitial project preparation and subsequent project supervision missions with comprehensive data and information. In all, the Bank Group carried out nine missions, including seven supervision missions. The Bank Group supervision missions were supp[emented by internal supervision missions organized by the Ministry of Water Resources. Jointly with the Borrower, the Bank Group conducted a project launch workshop at the start of the project covering topics on procurement, disbursement, and monitoring aind evaluation. The Bank Group also conducted a Mid- Term Review of the project in 1993 to reflect changes deemed necessary to ensure smooth implementation of the project. G. Borrower Performance 21. The performance of the ]Borrower in project preparation, implementation, management and performance monitoring was more than satisfactory, judging by the time taken to complete implementation of the project, the physical targets achieved and control of the project costs. This was achieved through establishment of effective project  - 12 - management offices, provision of timely and adequate resources (funds and personnel) and effective leadership in each of the three provinces. The project staff were generally hardworking and responsive, and cooperated well with the Bank Group to resolve issues and problems. 22. During project implementation, project areas in Anhui and Jiangsu provinces were affected by two major floods (1991 and 1996) and the provincial governments made extra efforts to repair the project works damaged by the floods to ensure that the project was completed as scheduled. Jiangsu Province demonstrated its technical excellence in designing and constructing the four major pumping stations to upgrade the water diversion capacity of the Grand Canal to northern Jiangsu (project areas in Jiangsu Province). The four pumping stations were major civil engineering works requiring technical solutions for difficult site conditions and best configurations for the pumping stations. Shandong Province excelled in the rehabilitation and development of tubewell irrigation for some 170,000 ha, including establishment of the Groundwater Irrigation Research Center at Taian City. 23. In project implementation, the three provinces complied satisfactorily with the overall requirements of the legal covenants, procurement and disbursement, accounting and auditing, and implementation progress reporting and monitoring. II. Assessment of Outcome 24. The overall outcome of the project has been assessed as satisfactory. The project was implemented smoothly and within the time schedule (except for the two 9-month extensions given to Jiangsu component to complete its only outstanding item on the Grand Canal Water Management Monitoring System). The project objectives and physical targets were achieved within reasonable increased project cost caused by inflation. Project benefits (rural incomes and crop production) accrued exceeded the original estimates and continue to be sustained. The project is likely to be sustainable in view of the continued commitment and support by the Government for the project areas, which are major national grain and commodity production bases. Operation and maintenance and agricultural support services systems are in place to ensure sustained operation of the completed facilities and agricultural production. The project promoted growth of the local economy and generated revenue for the local governments that, in return, provided continued support for the project areas. I. Future Operations 25. The future operations will focus on efficient operation and maintenance of the completed project works and facilities so as to achieve the project's full development. The existing project management offices and staff will be maintained to concentrate on O&M aspects of the project. This would include defining O&M responsibilities for the units concerned and initiating turnover of works and facilities. To further enhance the project's economic benefits, the irrigation areas and agricultural support service facilities  - 13 - will be progressively adapted to a market-oriented production economy with a self- supporting operation mechanism, responsible for its own profits and losses. Each province will recover project costs from the beneficiaries, mainly through the collection of appropriate irrigation water charges based on existing government regulations. Each province will also institute administrative and economic measures for the different levels of government to fulfill their respective obligations to repay the loan/credit as agreed under the project. J. Key Lessons Learned 26. The key lessons learned and applicable to future similar projects in China are: (a) Compared to large-scale new irrigation areas, investment to improve and expand existing irrigation facilities for smaller irrigation unit areas, which are simple in design and compact for rapid implementation, is less costly in capital investment and project benefits could be accrued, county by county, in a relatively short period of time. (b) Commitment by governments in providing timely and adequate resources, effective leadership at all project levels, and the active participation of beneficiaries and stakeholders (village, township and county governments) in project implementation ensures smooth implementation, success and sustainability of the project. (c) Keeping the project subcomponents to a minimum (basically irrigation and agricultural support services components in this project) reduce the complexity of the project in preparation and implementation, thereby maximizing the use of resources of the Bank Group and Borrower to achieve the desired project objectives. (d) Pre-setting ceilings for investment and average unit prices constrains project planning and design, resulting in low standards of works and difficult subsequent operation and maintenance. (e) Participating counties should be selected based on their financial capacity and willingness to contribute funds, recover costs from project beneficiaries and repay debts. This ensures smooth project implementation, operation and maintenance and debt servicing. World Bank User O:\EASRD\IAIL ICR\IAIL ICRMaintext.doc 06/30/99 10:10 AM   - 13 - will be progressively adapted to a market-oriented production economy with a self- supporting operation mechanism, responsible for its own profits and losses. Each province will recover project costs from the beneficiaries, mainly through the colle  - 14- TABLE 1: SUMMARY OF ASSESSMENTS A. Achievement of Objectives Substantial Partial Negligible Not Applicable Macroeconomic Policies X7 Sector Policies -X Financial Objectives X Institutional Development X Physical Objectives X Poverty Reduction X Gender Issues X Other Social Objectives X Environmental Objectives X Public Sector Management X Private Sector Development X Other (Specify) B. Project Sustainability Likely Unlikely Uncertain x C. Bank Performance Highly Satisfactory Deficient Satisfactory Identification X Preparation Assistance X Appraisal X Supervision X D. Borrower Performance Highly Satisfactory Deficient Satisfactory Preparation X Implementation X Covenant Compliance X E. Assessment Outcome Highly Satisfactory Unsatisfactory Highly Satisfactory Unsatisfacory Overall Project X  - 15 - TABLE 2: RELATED BANK LOANS/CREDITS Loan/Credit Title Purpose Year of Status Approval Preceding Operations: 1. North China Plain Irrig. Development FY82 Completed Agriculture & Land Improvement (Cr. 126 1-CHA) 2. Pi-Shi-Hang Chaohu Irrigation & Area FY85 Completed Area Development Development (Cr.1606/Ln.2579-CHA) 3. Gansu Provincial Irrigation, Land FY87 Completed Development Dev. & improvemnt, (Cr. 1793fLn.2812-CHA) Settlement Following Operations: 4. Northern Irrigation Irrigation Dev. FY88 Completed (Cr. 1885-CHA) and Improvement, and Settlement 5. Yangtze Basin Irrigation & Area FY95 Closing Water Resources Development 12/2001 (Cr.2710ALn.2874-CHA) 6. Gansu Hexd Irrigation & Land FY96 Closing Corridor Development, and 12/2006 (Ln.4028/Cr.2870-CHA) Settlement 7. Irrigated Agriculture Irrigation and FY98 Closing Intensification II Agriculture Improv. 12/2003 (Ln. 43 54-CHA)  -16- TABLE 3: PROJECT TIMETABLE Steps in Project Cycle Date Planned Date Actual Identification N.A. 08/21/89 Preparation 08/89 11/16/89 Pre-appraisal 10/89 04/25/90 Appraisal 08/90 08/26/90 Negotiations 03/91 04/15/91 Board Presentation 04/91 06/04/91 Signing 06/91 06/20/91 Effectiveness 09/91 09/09/91 Project Completion \a 06/30/97 12/31/98 Loan/Credit Closing 10/30/97 12/31/98 \ Jiangsu component was extended from 06/30/97 to 03/31/98 and to 12/31/98. TABLE 4: LOAN/CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL (US$ million) FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 Actual: Anhui Component 0.0 23.1 38.0 71.1 94.6 107.2 119.7 119.7 119.7 Jiangsu Component 0.0 2.8 29.7 49.6 70.0 89.6 102.6 102.6 107.5 Shandong Component 0.0 36.9 56.7 85.2 93.6 109.8 115.4 115.4 115.4 Total Actual 0.0 62.9 124.4 205.9 258.2 306.5 337.7 337.7 342.6 Appraisal Estimate: \b Anhui Component 0 20.0 50.0 75.0 93.0 107.0 117.0 Jiangsu Component 0 16.0 40.0 64.0 84.0 98.0 104.5 Shandong Component 0 16.6 49.6 80.2 96.2 106.2 113.5 Total Estimate 0 52.6 139.6 219.2 273.2 311.2 335.0 335.0 335.0 Actual as % of Estimate 0 119.5 89.1 93.9 94.5 98.5 100.8 100.8 102.3/b Date of Last Disbursement 12/28/98 \a: Higher actual disbursement in US dollar terms than estimated at appraisal was possible due to depreciation of the US dollar against the SDR. \b: Ref. Staff Appraisal Report Annex 2 Table 4.  Table 5: Key Indicators of Project Implementation Anhui Province Jiangsu Province Shandong Province Item/Description Unit SAR MTR ompleted at Completed as SAR MTR ompleted at Completed as SAR MTR ompleted a Completed as Estimate Estimate proj.closing of SAR/MTR est. Estimate Estimate proj.closing of SAR/MTR est. Estimate Estimate proj.closing of SAR/MTR est. Irrigation: Existing Area Improved: Surface water '000 ha 62.4 - 62.2 99.6 156.5 158.7 169.5 106.8 208.2 - 209.2 100.5 Groundwater '000 ha 29.8 - 31.0 104.3 - - - - 158.0 - 160.6 101.6 New Area Developed: Surface water '000 ha 163.4 - 163.3 100.0 233.5 236.7 239.0 101.0 58.1 - 59.1 101.7 Groundwater '000 ha 64.4 - 63.4 98.4 - - - - 9.1 - 9.6 105.6 Land/SoCn I mnrn-vmnt: Landleveling 'OOOha 201.6 177.1 184.3 104.1 107.3 108.8 112.8 103.7 65.7 69.4 75.7 115.1 Deepplowing 'OOOha 231.5 154.1 154.1 100.0 83.2 83.2 85.9 103.2 192.4 191.8 193.9 100.8 Fertilizer application: DAP 'OOOmt 71.0 41.8 41.8 100.0 218.5 218.7 223.7 102.3 109.6 116.4 117.6 101.1 KCL '000 mt 95.7 1.0 1.5 153.5 - - - - - - - - Urea 'OOOmt 43.5 33.3 33.3 100.0 333.6 340.3 343.8 101.1 - 25.0 28.5 114.0 _ Gypsum mt - - - - - - - . - - - Agro-chemicals mt 528.1 883.0 883.0 100.0 2.4 2.8 3.3 118.2 230.0 239.0 139.0 58.2 Plasticfilm mt 1188.5 1189.0 1353.0 113.8 - - - - - 2000.0 2000.0 100.0 Agro-tech Extension: CATEC (New) No. 10.0 10.0 10.0 100.0 3.0 3.0 3.0 100.0 10.0 - 10.0 100.0 TATES (New) No. 196.0 44.0 44.0 100.0 0.0 0.0 0.0 0.0 67.0 - 66.0 98.5 CATEC(Rehab.) No. 16.0 16.0 16.0 100.0 27.0 31.0 39.0 125.8 18.0 - 18.0 100.0 TATES Rehab.) No. 91.0 91.0 91.0 100.0 - - 0.0 - 156.0 - 157.0 100.6 Technician: Household rat a:b 0.06 0.06 0.06 100.0 0.06 0.06 0.06 100.0 0.04 - 0.04 108.7 Pest forecsating stations No. 48.0 1730.0 1644.0 95.0 59.0 60.0 61.0 101.7 185.0 - 185.0 100.0 New variety releases 000 ton 0.4 12.3 12.3 100.2 1389.1 1389.1 2671.6 192.3 264.3 - 290.6 109.9 Newtechnologiesextende No. 1065.0 99.0 100.0 101.0 1078.0 1091.0 1171.0 107.3 188.0 - 210.0 111.7 Integrated pestmanageme'000 ha 551.0 551.0 563.2 102.2 1265.2 1265.2 578.5 45.7 735.6 - 878.1 119.4 Pamphlet/handout 00 No. 152.0 152.0 170.0 111.8 697.0 697.0 802.8 115.2 1794.7 - 2110.8 117.6 Training: Irrigation Staff: Professional persons 280.0 1415.0 1455.0 102.8 4488.0 4488.0 5400.0 120.3 360.0 - 609.0 169.2 Semi-professional persons 440.0 3020.0 3070.0 101.7 3712.0 3712.0 6987.0 188.2 610.0 - 760.0 124.6 O&M operators persons 140.0 859.0 915.0 106.5 7533.0 7533.0 8655.0 114.9 515.0 - 586.0 113.8 Page I  Table 5: Key Indicators of Project Implementation Anhui Province Jiangsu Province Shandong Province Item/Description Unit SAR MTR ompleted at Completed as SAR MTR ompleted at Completed as SAR MTR ompleted a Completed as Estimate Estimate proj.closing of SAR/MTR est. Estimate Estimate proj.closing of SAR/MTR est. Estimate Estimate proj.closing of SAR/MTR est. Agricultural Staff: Professional persons 5454.0 10093.0 10248.0 101.5 8660.0 8660.0 9304.0 107.4 5610.0 - 7090.0 126.4 Semi-professional persons 100.0 1200.0 1238.0 103.2 7882.0 7882.0 11887.0 150.8 3240.0 - 4109.0 126.8 Agr-technicians persons 35600.0 33610.0 33650.0 100.1 7207.0 7207.0 7315.0 101.5 6600.0 - 8340.0 126.4 Farmer agro-technicians persons 22928.0 37609.0 37866.0 100.7 20058.0 20058.0 21118.0 105.3 36000.0 - 55215.0 153.4 Proj. Magm't Office Staff:persons - - - - 3067.0 3067.0 3067.0 100.0 Provincial staff persons 245.0 240.0 245.0 102.1 103.0 103.0 103.0 100.0 70.0 - 86.0 122.9 Pref/City staff persons - - - - 48.0 48.0 48.0 100.0 54.0 - 67.0 124.1 County staff persons - 292.0 292.0 100.0 - - - - 186.0 - 229.0 123.1 Study Tours: Overseas: Irrigation persons 9.0 11.0 11.0 100.0 35.0 35.0 24.0 68.6 10.0 - 10.0 100.0 I Agriculture persons 5.0 5.0 5.0 100.0 30.0 30.0 26.0 86.7 7.0 - 7.0 100.0 co PMO persons 9.0 4.0 4.0 100.0 - - - - 8.0 - 8.0 100.0 Local: Irrigation persons 40.0 387.0 387.0 100.0 58.0 78.0 61.0 78.2 11.0 - 11.0 100.0 Agriculture persons 25.0 265.0 265.0 100.0 17.0 17.0 17.0 100.0 9.0 - 9.0 100.0 PMO persons 4.0 289.0 289.0 100.0 17.0 17.0 38.0 223.5 6.0 - 6.0 100.0 Page 2  -19- TABLE 6: KEY INDICATORS FOR PROJECT OPERATIONS SAR Estimate (a. Full Development ICR Estimate ai). Proiect Completion % of ICR/SAR Item Description Area Yield Productoion Area Yield Productoion Area Yield Production ('000 ha) (ton/ha) ('000 ton) ('000 ha) (ton/ha) C000 ton) % % - % Anhui Project Area Wheat 220.3 4.2 925.3 227.8 4.6 1036.3 103.4 108.3 112.0 Com 47.5 4.5 213.8 65.9 5.7 373.8 138.8 126.0 174.8 Rice 101.4 6.8 689.5 75.3 7.8 586.3 74.2 114.6 85.0 Othergrain 16.7 1.8 47.2 10.9 2.1 22.6 65.2 115.6 48.0 Sweet potato 70.5 5.2 366.6 53.1 6.6 349.3 75.3 126.5 95.3 Soybean 28.0 1.8 50.4 41.5 2.0 82.6 148.2 110.6 163.8 rape 21.0 1.8 37.8 29.0 1.9 54.7 137.9 105.0 144.8 Sesame 11.2 0.8 9.0 9.4 1.2 11.2 84.0 148.8 124.3 Peanut 9.7 2.4 23,3 18.0 4.5 80.6 185.6 186.7 346.1 Cotton 21.0 1.1 23.1 38.6 0.9 35.9 183.7 84.5- 155.3 Vegetable 11.9 30.1 358.2 33.6 32.4 1088.2 282.7 107.5 303.8 Jute 4.2 2.0 8.4 3.8 2.8 10.7 91.5 139.5 127.7 Jiangsu Project Area Wheat 263.8 4.5 1187.1 280.0 4.7 1321.6 106.1 104.9 111.3 Com 56.5 5.5 310.8 112.2 6.2 695.6 198.6 112.7 223.8 Rice 201.9 7.0 1413.3 197.3 7.7 1517.1 97.7 109.9 107.3 Barley 14.1 3.2 45.1 7.4 4.5 33.4 52.3 141.3 74.0 Other grain 4.1 3.3 13.5 1.0 2.7 2.7 24.1 82.7 20.0 Sweet potato 18.6 5.7 106.0 14.7 5.3 78.7 79.2 93.7 74.2 Soybean 22.4 2.3 51.5 25.8 2.4 62.4 115.1 105.2 121.1 Rape 23.0 2.0 46.0 110.7 2.1 235.6 481.3 106.4 512.1 Peanut 23.2 3.0 69.6 22.1 3.2 71.0 95.3 107.0 102.0 Cotton 52.3 1.1 57.5 59.0 1.2 68.9 112.7 106.3 119.8 Other 22.1 2.8 618.8 6.4 3.2 20.4 28.8 114.3 3.3 Shandong Project Area Wheat 327.8 4.2 1376.8 316.1 5.6 1779.6 96.4 134.0 129.3 Com 159.8 5.5 878.9 179.4 5.6 1004.6 112.3 101.8 114.3 Rice 36.2 6.2 - 224.4 36.8 6.2 227.1 101.7 99.5 101.2 Other grain 17.1 2.2 37.6 10.2 2.0 20.8 59.9 92.3 55.3 Sweet potato 36.4 5.5 200.2 27.7 5.7 158.4 76.1 104.0 79.1 Soybean 45.0 2.0 90.0 32.8 2.2 71.1 72.9 108.5 79.0 Peanut 18.7 3.0 56.1 31.0 3.3 100.7 165.6 108.3 179.4 Cotton 80.9 1.0 80.9 53.2 0.8 42.6 65.8 80.0 52.6 Vegetable 19.2 38.0 729.6 67.1 41.8 2801.9 349.4 109.9 384.0 Mellon 8.3 31.6 262.3 12.3 34.6 425.6 148.2 109.5 162.3 Farmers Income Future with Project SAR Estimate @ Full Development ICR Estimte @ ect Completio Famnily Income (Yuan) Per capita Income Family Income (Yuan) Per capita Income (Yuan) Anhui ProjectArea 2986.0 6096.5 713/1455.7 6847.0 1712.0 Huai River Irrigation 2482.0 5067.5 620/1265.9 6775.0 1694.0 Mid-HuaibeiRiverIrrigation 1885.0 3848.6 4711961.6 6777.0 1694.0 Traditional WellIrrigation 1731.0 3534.2 433/884.1 6666.0 1666.0 Water-saving Well Irrigation 1803.0 3681.2 451/920.8 6447.0 1612.0 Jiangsu Project Area 3013.0 6151.6 603/1231.1 9476.0 2369.0 Paddy Conversion-- Xuzhou 2924.0 5969.9 585/1194.4 11957.0 2989.2 Newlylrrigated--Huaiying 3246.0 6627.4 811/1655.8 8521.3 2130.3 Rehabilitated Irrigation-- Lianyung 2171.0- 4432.5 543/1108.6 10974.5 2743.6 Rehabilitated Irrigation-- Yanchen 3201.0 6535.5 800/1633.4 6451.8 1613.0 ShandongProjectArea 2735.0 5584.0 684/1396.7 7281.0 1820.0 Nansi Lake Yellow R. Diversion 2526.0 5157.3 505/1031.2 6980.0 1745.0 Shengli Canal Irrigation 3431.0 7005.1 686/1400.8 7937.0 1984.0 Xiezhai Yellow R. Diversion 2247.0 4587.7 562/1147.6 5452.0 1363.0 Water-saving Well Irrigation 2926.0 5974.0 731/1492.7 7443.0 1861.0  20 - TABLE 7: STUDIES INCLUDED IN THE PROJECT No specific studies have been included in the project other than groundwater resources monitoring and evaluation by Anhui and Shandong Provinces to be carried out annually and furnish the findings and results to the Bank/IDA by-June 30 (para. 3.40 of the SAR). The studies were carried out annually and reports submitted to the Bank/IDA.  -21- TABLE 8A: PROJECT COSTS (US$ million) SAR Estimates Mid-Term Review Actual at Completion Actual as % of Iten/Description Local Foreign Total Local Foreign Total Local Foreign Total SAR MTR A. IRRIGATION & DRAINAGE 1. Anhui Province 1. Huaihe Irrigation Areas 12.18 10.21 22.39 15.46 9.50 24.96 15.38 9.45 24.83 110.9 99.5 2. Ying River Irrig. Areas 3.65 2.94 6.59 2.96 1.78 4.74 2.91 1.75 4.66 70.7 98.3 3. Cihuai River Irrig. Areas 7.12 5.46 12.58 11.66 7.26 18.92 11.43 7.12 18.55 147.5 98.0 4. Guohe River lrrig. Areas 1.89 1.61 3.50 3.11 2.01 5.12 3.21 2.08 5.29 151.2 103.3 5. Xinbian River Irrig. Area 9.32 5.65 14.97 10.12 5.94 16.06 11.41 6.72 18.13 121.1 112.9 6. Qianhe River Irrig. Areas 11.70 8.20 19.90 10.93 6.89 17.82 10.26 6.48 16.74 84.1 93.9 7. Beifeihe River Irrig. Area 6.63 5.60 12.22 7.54 4.43 11.97 8.76 5.14 13.9 113.7 116.1 8. Tubewell Irrig. areas 15.31 17.87 33.17 22.06 16.18 38.24 22.28 16.35 38.63 116.5 101.0 Sub-total 67.80 57.53 125.33 83.84 53.99 137.83 85.64 55.09 140.73 112.3 102.1 2. Jiangsu Province 1. Grand canal 12.72 22.97 35.69 14.355 28.393 42.75 16.74 27.89 44.63 104.4 104.4 (a) Xuzhou lrrg. Areas 8.1 7.5 15.6 15.79 8.81 24.60 18.57 10.41 28.98 117.8 117.8 (b) Huaiyin 1mg. Areas 16 14.1 30.1 25.17 16.64 41.81 25.57 15.76 41.34 98.9 98.9 (c) Yangcheng lrrig. Areas 5 4.4 9.4 8.84 5.09 13.92 8.49 7.38 15.87 114.0 114.0 (d) Liangyungang Irrig. Are 5.8 4.6 10.3 8.99 5.42 14.41 7.27 6.79 14.06 97.5 97.5 (e) State Farms 1.5 1.4 2.9 2.46 1.59 4.05 1.97 1.87 3.83 94.5 94.5 (f)Yangzhoulrrig.Areas 2.71 0.40 3.11 1.21 1.91 3.13 100.6 100.6 Sub-total 49.12 54.97 103.99 78.31 66.34 144.65 79.82 72.01 151.83 105.0 105.0 3. Shandong Province l.Nansihu Irrig. Areas 10.73 10.84 21.56 11.49 10.84 22.33 11.35 12.19 23.54 105.4 105.4 2. Chengkai Irrig. Areas 1.82 0.96 2.79 2.00 0.96 2.96 2.23 1.36 3.59 121.3 121.3 3. Xiezhai Irrig. Areas 16.61 10.73 27.34 18.04 10.73 28.77 17.96 12.31 30.27 105.2 105.2 4. Shengli Irrig. Areas 6.25 4.56 10.81 7.03 4.56 11.59 7.37 5.74 13.11 113.1 113.1 5. Tubewell Irrig. Areas 18.25 18.62 36.87 19.45 18.62 38.07 21.47 23.71 45.18 118.7 118.7 Sub-total 53.66 45.71 99.37 58.01 45.71 103.72 60.38 55.31 115.69 111.5 111.5 B. AGRI. INTENSIF. & SERVICES 1. Crop land improvement 21.22 58.90 80.12 35.22 57.23 92.45 37.17 61.36 98.53 335.11 105.07 2. Afforestation 12.01 2.30 14.31 6.09 8.36 14.45 6.10 12.83 18.93 618.71 98.11 3. Quality seeds developmen 8.78 16.04 24.82 13.30 16.48 29.77 13.24 16.61 29.85 338.30 95.72 4. Agrotechnical extension 11.18 23.47 34.65 17.34 25.37 42.71 18.30 23.07 41.37 364.63 91.21 5. Agri. machinery/services 3.61 25.02 28.63 10.48 26.87 37.35 11.35 22.07 33.42 388.90 87.72 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Sub-total 56.80 125.73 182.52 82.43 134.30 216.73 86.16 135.93 222.09 342.01 97.01 C. INSTITUTIONAL DEV. & SUPPORT 1. Training 7.18 1.68 8.86 8.46 1.96 10.42 6.88 3.33 10.21 283.46 97.82 2. Research 1.45 1.45 2.90 1.75 1.31 3.06 1.79 1.26 3.04 294.75 98.15 3. Technical assistance 0.00 0.36 0.36 0.03 0.35 0.38 0.04 0.15 0.19 189.00 125.00 Sub-total 8.63 3.49 12.12 10.24 3.62 13.86 8.71 4.74 13.45 283.35 98.20 TOTAL BASE COSTS 236.14 287.13 523.27 312.83 303.96 616.80 320.71 323.08 643.79 332.78 100.10 Physical contingencies 12.90 16.25 29.15 0.77 5.16 5.93 Price contingencies 9.44 31.24 40.68 3.34 10.10 13.44 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL PROJECT COSTS 258.47 334.62 593.09 316.94 319.22 636.17 320.71 323.08 643.79 308.45 100.10  -22- TABLE 8B: PROJECT FINANCING (US$ million) Appraisal Estimate Estimate at Closing Source Local Foreign Total Local Foreign Total I. ANHUI PROVINCE Bank/IDA 0.0 117.0 117.0 0 119.7 119.7 Central Government 37.0 0.0 37.0 36.7 0 36.7 Provincial Govt. 17.2 0.0 17.2 15.62 0 15.62 Prefecture/Mun. Govt. 2.3 0.0 2.3 1.74 0 1.74 County/Township/ Self-raised funds 43.3 0.0 43.3 54.95 54.95 Sub-totalAnhui 99.8 117.0 216.8 109.0 119.7 228.71 II. JIANGSU PROVINCE Bank/IDA 0.0 104.5 104.5 0 107.5 107.5 Central Government 38.0 0.0 38.0 28.9 0 28.9 Provincial Govt. 11.7 0.0 11.7 24.9 0 24.9 Prefecture/Mun. Govt. 5.0 0.0 5.0 6.5 0 6.5 County/Township/ Self-raised funds 16.7 0.0 16.7 41.6 0 41.6 Sub-total Jiangsu 71.4 104.5 175.9 101.9 107.5 209.4 III. SHANDONG PROVINCE Bank/IDA 0.0 113.5 113.5 0.0 115.4 115.4 Central Government 31.0 0.0 31.0 28.4 0.0 28.4 Provincial Govt. 17.5 0.0 17.5 16.7 0.0 16.7 Prefecture/Mun. Govt. 6.3 0.0 6.3 1.8 0.0 1.8 County/Township/ Self-raised funds 32.0 0.0 32.0 43.3 0.0 43.3 Sub-total Shandong 86.8 113.5 200.3 90.2 115.4 205.6 TOTAL PROJECT: 258.0 335.0 593.0 301.1 342.6 643.7 Bank/IDA 0.0 335.0 335.0 0.0 342.6 342.6 Central Government 106.0 0.0 106.0 94.0 0.0 94.0 Provincial Govt. 46.4 0.0 46.4 57.2 0.0 57.2 Prefecture/Mun. Govt. 13.6 0.0 13.6 10.1 0.0 10.1 County/Township/ Self-raised funds 92.0 0.0 92.0 139.9 0.0 139.9  -23- TABLE 9: ECONOMIC COSTS AND BENEFITS Project/Component Appraisal Estimate Actual Estimate EIRR NPV EIRR NMV (%/0) (Y min) (%) (Y min) Anhui Project Area 26.4 2363.0 24.6 3571.9 Beifei River Drainage/Irrigation 20.8 108.7 36.3 533.7 Qian River Drainage/Irrigation 28.7 231.7 24.8 401.7 Huai River Irrigation 25.0 257.6 21.8 533.5 Mid-Huaibei River Irrigation 41.1 703.3 19.6 841.2 Traditional well Irrigation 21.5 186.3 39.1 778.9 Water-saving well Irrigation 28.1 245.2 26.3 483.0 Jiangsu Project Area 28.7 1933.7 28.1 1338.6 Xuzhou Paddy conversion (Fengxian) 26.9 5.1 15.0 78.6 Huaiyang Newly Irrigated (Sihong) 22.6 29.2 34.9 747.1 Lianyungang Rehabilitated Irrigation (Guanyu 35.7 51.5 31.4 215.3 Yancheng Rehabilitated Irrigation (Xiangshui) 23.5 9.1 34.9 297.6 Shandong Project Area 24.0 982.8 29.6 2252.0 Nansi Lake Yellow River Diversion 21.0 124.4 37.1 1070.3 Shengli Canal Irrigation 26.6 106.4 17.5 69.0 Xiezhai Yellow River Diversion 27.0 338.9 12.7 13.9 Water-saving Well Irrigation 28.6 600.3 33.4 1098.8 Total Project 26.5 5311.2 26.6 7162.6  -24- TABLE10: STATUS OF LEGAL COVENANTS Agree- Section Cove- Status Original Revised ment & nant Fulfillment Fulfillment Schedule Class date date Description of Covenant CREDIT Section 2.02(b) 03 C Open and maintain in USS a Special Account acceptable to IDA. Section 3.01(b) 05 C Maintain a Central Coordination Group in MWR acceptable to IDA. PROJECT Section 3.01(b) 01 C Submission of audited project accounts by each province to IDA not later than June 30. Schedule 2A(1) 06, 05 C Shandong and Anhui shall submit to IDA not later than June 30 results of annual groundwater resources monitoring. Schedule 2A(2) 10 C Each province to submit to IDA by 12/31/91 O&M plans for large irrig.areas. Schedule 2A(3) 02 C Each province shall collect water charges for completed irrigation schemes to meet Annual full O&M costs. Schedule 2B(2) 02 CP Each province shall sell fertilizer and other inputs to farmers at cost plus distributor's margin and operate a revolving fund using proceeds from such sales to finance future purchases of such inputs. Schedule 2B(3) 11 NC Each province shall submit to IDA by Dec. 1 an annual fertilizer plan. Schedule 2B(5) 12 CP Each province shall submit to IDA by March 31 results and analyses of contract and negotiated procurement targets and prices of grain and oil crops, cotton prices and production incentives and sale prices of agricultural inputs. Schedule 2C(3) 06 C Each province shall submit to IDA by Dec 31, 1991 enviromnental management program, review progress of implemen- tation, and submit results of review to IDA by March 31 of the following year, Schedule 2C(4) 06 CD Jiangsu shall maintain and inspect dams and reservoirs periodically for safety under arrangement satisfactory to IDA.  -25- TABLE10: STATUS OF LEGAL COVENANTS Covenant Class: Status:. 01 Account/audit C - Complied with 02 Financial performance/generate revenue from beneficiaries CD - Complied after delay 03 Flow and utilization of project funds NC - Not complied with 04 Counterpart funding SOON - Compliance expected in reasonably short period 05 Management aspects of the projec:t or of its executing agency CP - 6omplied with partially 06 Environmental covenants NYD - Not yet due 07 Involuntary resettlement 08 Indigenous people 09 Monitoring, review and reporting 10 Implementation I Sectoral or cross-sectoral budgetary or other resource allocation 12 Sectoral or cross-sectoral regulatory/institutional action 13 Other TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS OMS 3.80 on Dam/Reseivoir Safety: Jiangsu Province was required to carry out maintenance and periodic safety inspection of 21 identified dams and reservoirs in the project area under arrangements satisfactory to the Bank/IDA (para. 7.1(o) of SAR.). This covenant was complied with but rather belatedly. TABLE 12: BANK/IDA RESOURCES: STAFF INPUTS(ALL COMPONENTS) Planned Actual Stage of Project Cycle Weeks US$'000 Weeks US$'000 Preparation to Appraisal 481.2 Appraisal 125.0 Negotiations to Board approval 29.0 Supervision 348.0 Completion (as of 01/99) 14.3 TOTAL 997.5  -26- Table 13: IDA RESOURCES: MISSIONS Performance Rating/b Stage of project cycle Month/year Number of Days in field Specialized Implementation Development Types of persons staff skills Status Objectives Problems/c represented/a ID Mission through appraisal Apr-90 4 35 IE, A, E Appraisal through Board approv Aug-90 6 24 IE, A, P, ES, E 2 Supervision I May-91 1 13 IE I HS Supervision 2 Oct-91 2 17 IE I HS EGR Supervision 3 Apr-93 1 19 IE 1 HS F Supervision 4 Oct-93 2 14 IE, A I HS - Supervision 5 Apr-95 3 17 IE, A, E 2 HS EGR Supervision 6 Apr-96 3 17 IE, A, E 2 HS - Supervision 7 Apr-97 6 20 IE,A,E,ES,WRE 1 HS EGR /a: IE = Irrigation Engineer, A = Agriculturist, E = Economist, P = Procurement Specialist, ES = Environmental Specialist WRE = Water Resources Engineer /b: 1: Highly Satsifactory, 2: Satisfactory, HS: Highly Satisfactory, S: Sastisfactory, U: Unsatisfactory HU: Highly Unsatisfactory /C: M = Management, EGR = Engineering, F = Counterpart Funding, MS = Material Shortage  - 27 - ANNEX A BORROWER'S CONTRIBUTION TO THE ICR 1. Implementation Completion Reporting of Irrigated Agriculture Intensification Project, by Anhui Province Irrigated Agriculture Intensification Project office, China. 2. Implementation Completion Reporting of Irrigated Agriculture Intensification Project, by Jiangsu Province Irrigated Agriculture Intensification Project office, China. 3. Implementation Completion Reporting of Irrigated Agriculture Intensification Project, by Shandong Province Irrigated Agriculture Intensification Project office, China. Note: The above reports are contained in project files and are available upon request. BORROWER'S COMMENTS 1. Implementation Completion Reporting of Irrigated Agriculture Intensification Project, by Anhui Province Irrigated Agriculture Intensification Project office, China, April 30, 1 999. 2. Modifications on the Complete Report of Irrigated Agriculture Intensification Project, by Jiangsu, Project Managenment Office, Irrigated Agriculture Intensification Project, China, April 29, 1999. 3. Review to the Draift ICR of China Irrigated Agriculture Intensification Project, by Shandong Finance Bureau, Project Management Office of Shandong Agriculture Project with World Bank Loans, China, April 30, 1999.  -28- April 30,1999 Re 'Implementation Completion Reporting of Irrigated Agriculture Intensification Project" Dear Mr lang S.Tay- We have already read the Implementaion CompletLon Reporing of rigared Agnidture Intensification Project which you are responsible for. We think this is a fine report The description of the project completion and its impact are practical. The word 'satisying," in the comment of the result of the project is appropriate. The summary of the experience and lessons is impressing We are tying to provide more information and data requested. We hereby make the following Suggestions for the improvemem of the reporL I. TE the paragraph of the description of IBRDJIDA, the two points should be mentioned: Some project officials sent by the World Bank who took part in the North-China Plain project applied many successful experiences drawn from the North-China Plain project- The World Bank officials made deep investigations in the borrower country and province aad played a big role in the implementation of the project. 2. In the paragraph of the major experience and lessons, it is mentioned that the projects of improving and expanding small-sized irrigation areas are fast effective and priority should be given to those coumties where the local finacial capability is comparatively strong and beneficiaries are willing to pay back the loan. We think more should be added to the above comment The projects of small-sized irrigated area treatment or with less investment and fast effect should be arranged in the places where most of the loan are borne by local farmers, while projects of large and medium sized water conservancy works, more consideration should be given to the local government-s determination and loan recovery capability in the decision mnakmg~ Burden to the farmers should be possibly avoided 3..It is a good way to combine the successfiu experience to fasten the appraisal process for later similar projects- This could be added to the report. 4. It could be menidoned as well that there were other important fators which affected the project. Those were appropriate appraisal and mid-term adjustment The project effEicency was gretly increased by the realization of the proposals made dming the umplementation in terms of the crop structure adjustmen:, irigaton system program, comprehensive atment of ditches, canals, farmland, forestation  -29- and road. The above suggestions are only for reference. We will inform you timely if we have more comments. BestRegads. DirectorA Anhui Province Irrigated Agricultur e Office   -31- SHANDONG FINANCE BUREAIU Project Management Office of Shandong-Agriculture Project With World Bank loans Ni.158,Jingsi Road, Jinan, Shandong,China Fax Tel. No.(0531) 612498 Post Code. 250001- REVIEW TO THE DRAFT ICR OF CHINA IRRIGATED AGRICULTURE INTENSIFICATION PROJECT (2256/3337 CHA) 1. The completion supervision to China Irrigated Agriculture Intensification Project was carried out by the World Bank mission in March of 1997. The preliminary draft of ICR was prepared and completed on schedule. The efficient work of the Bank nmission has ensured the successful completion and evaluation of the project. 2. The draft ICR makes a general summary and modesty evaluation to the project of Shandong Component. The general implementation, the data and material from the component reports and the analysis to the project result described in the draft IICR is to the actual circumstances, the actual description of the experience and lessons gained from the project will be very meaningful for the follow-up project which is already under preparation. 3. The comments which were discussed and appointed in the draft ICR are also hat Shandong PPMO will furtherly summarized and give more attentions. These mainly are:(1 ).1The impact of the incremental rural incomes of the project area to the improveiment of the living quality of the local farmers;(2).the preferential policies to be made by the government to ensure the sustainable development of the project;(3). the measures to be adopted by the PPMO for the future operation and maintenance of the project. 4.The increase of the rural incomes of the project area has a favourable impact to the improvment of the living quality of the local farmers. Based on the  -32- SHANDONG FINANCE BUREAU Project Management Office of Shandong Agriculture Project With World Bank loans No. 158,Jingsi Road, Jinau, Shandong,China Fax Tel No0(0531) 612498 Post Code: 250001 monitoring index of the model household, the consumption expenditures of the local farmers have increased substantially, the consumption structures have tumed to be more reasonable with less cost for the staple food and comparatively more cost for non-staple food, more expenditures for cultural education. The housing condition of the local farmer has been improved greatly, average housing area per capita reaches 20.8 square meters, which is 7 square meters more than that before the project.IAboutd-25% of the project farmer household have rebuilt new houses. In some of the project area, substantial changes have happened to the life of the local farmers. In Laiwu project area, the timely adjustment of the cropping pattems made the incomes of the local farmers increase greatly, the average income per capita of the local farmers increased by RMB 351=3fromi1990-1996. Amof.- the 42000 farmer households of Laiwu project area, about 5382 households were equiped with cable television, the comparatively richer farmer households even bought 1202 new transportationrE---trucks,1818Dnotor bicycles, 812 programme-controlled telephone. Such modem commodities as refrigerator and vedio machine were also come to the local farmers, the difference between the city and the rural area has become less and less. 5.&Continuous attentions and support will be given to the project works from the govemment, the govemment will support the project areas with preferential policies toaboost.-theriragricultural development of the project areas. More financial support will be given to make further agricultural Inputs, additional guidances will be given to the adjustment of the interior cropping patterns, the qualified agriculture with high production and more efficience will  -33- SHANDONG FINANCE' BUREAU Project Management Office of Shandong Agriculture Project With World Bank loans No. 158,Jingsi Road, linan, Shandong,China FIax Tel No.(0531) 612498 Post Code: 250001 be developed,furtherly, the developmen of industralized agriculture will be prompted, so as to get more and more agriculture output. The interest of the farmer who growving grains will be protected furtherly by means of the establishment of Grain Risk Fund and the stipulation of the protection price of grain. The Shandong Government will issue and carry out such measures as Water conveyance Construction Fund and technical extension plan, to make more investment and more technic input to prompt the sustainable development of agriculture steadily. 6.The operation and maintenance in the future time will be strengthened and improved progressively. (1). The responsibilities of the operation and maintenance of project works will be made furtherly. It will be put under the management of the professional departments as the agriculture and the water conservancy at each level based on the character and the size of project works. (2)The operation and maintenance will be ensured. Water charges will be collected by 100% from the project works, and water collection rate will be higher progressively to meet the demand of the normal maintenance of the project works. the financial departments at each level will supply the project works with more investment to increase more and more managerial efficience and economic benefits.(3) More attention will be given to the recovery of project funds, the raisin,, operation and the management of repayment funds will be strengthened to ensure the overall repayment will be completed on schedule. (4)The management will be stressed on the properies and works which were completed and shifted from the project, the state-owned properties will be listed and taken under the state-owned properties management system to ensure the  -34- SHANDONG FINANCE BUREAU Project Management O(fice of Shandong Agriculture Project With World Bank loans No. 158,lingsi Road, Jinan, Shandong,China Fax Tel No.(0531) 612498 Post Code: 250001 responsibilities and the objectives. As for the small -sized project works, such flexible mean1s will be adopted as contract, auction, lease to make the project to play full role in agriculture production. 7.The performance of the World Bank in the project were totally reflected through the efficient hard-work of the task manager and the missions. The good performance not only shown from the Bank missions and the staff input, but also the high productive work and the cooperation with the borrower. The Bank mission have played their role fully and successfully, through their rich experience and the strict and serious spirit, to make an important contribution to the success of the project. 8.The good cooperation with the World Bank is the wish of the borrow .The successful implementation of the project makes a fixed foundation for the further cooperation of the two parts. The follow-up project which is under preparation is a good example for the continued cooperation, which will make more fruitful outcomes. The Provinci iIL I Apnl 30, 1999  - 35 - ANNEXB IRRIGATED AGRICULTURE INTENSIFICATION PROJECT IMPLEMENTATION COMPLETION REPORT MISSION FEBRUARY 27 TO MARCH 2,1997 Aide Memoire 1. A Bank mission comprising Ms. Qun Li, Messrs. Naoya Fujimoto and Peter Ting held a joint meeting with representatives of Provincial Project Management Offices (PMOs) of Shandong, Anhui and Jiangsu, and Foreign Capital Management Office of the Ministry of Water Resources in Jinan, Shandong Province from February 27 to March 2 to discuss the preparation of the Implementation Completion Report (ICR) for the above project. The mission members also reviewed the draft ICRs prepared by Shandong and Anhui Province (Jiangsu Province did not complete the draft in time for review). Messrs. Lang S. Tay and Douglas Olsen joined the ICR mission from March 1 to 2 prior to carry out final supervision of the project and reconnaissance of proposed second phase of the project in the three provinces from March 3 to 22 (see separate aide memoires for the supervision and the reconnaissance missions). The ICR/supervision mission thanked the PMOs and MWR for the cooperation and hospitalities extended to the mission members. 2. The mission briefied the PMO staff from Shandong, Jiangsu and Anhui Provinces on the Bank requirements for preparation of ICR and discussed the following items to be completed before June 30, 1997 including the required tables as per ICR format presented. A brief summary of the required tables and related information discussed is given below: A. Completing and finalizing project cost and benefit analysis for the following: a) The actual investment costs by sub-component and year in Yuan and US$ (with foreign and local costs, and actual annual exchange rate); b) The actual crop budgets (per hi) by year for newly developed and existing improved irrigated land, and rainfed land (including physical quantity and financial price for all inputs and outputs with and without project); c) The actual developed sown area by year and crops for rainfed land, partial and fully irrigated land (newly developed and existing improved irrigated land) with and without project; and e) Freight costs from the farm gate to the nearest port, other port charges, and FOB or CIF for traded commodities in 1996. B. Compiling farm household data from sampled households in pre-determined areas selected for monitoring beneficiary families with low, medium, and high income, including detailed income from crop production, livestock, aquaculture, sideline enterprises and other sources of incomes, and expenditures for self consumption, investment and production costs, taxes, and other charges under "with" and "without project" scenarios;  - 36- ANNEX B C. Finalizing the summary tables on actual investment costs, procurement, disbursement and financing plan for the whole project according to the original SAR estimates and the Mid-Term Review; D. Complete summary tables on training and research studies included in the project (covering all topics, purposes, status, costs and impacts); E. Complete summary tables of Key Indicators for project implementation and operation with the original SAR estimates, the Mid-Term Review, and actual completion. The role of women in project implementation and operation should also be included. 3. Based on the mission's initial assessment of the draft ICRs reviewed, the mission recommended the following sections of the ICR be further strengthened: A. The direct or indirect social and economic impacts resulting from the completion of the project (in addition to the original project's defined objectives and identified benefits), if any, should be presented in the ICR. The following aspects, but not limited to, could be considered: (a). the spinned off impacts from improved agricultural support services (strengthening extension services, farm machinery station and research, and provided agricultural inputs such as fertilizer, plastic mulch and improved seeds for farmers); (b). rural road and electricity supplied to villages/households; (c). Improved labor productivity leading to development of highly profitable sideline enterprises (livestock, aquculture, large-scale off-season vegetables growing under plastic-covered sheds, etc.); (d). ecological-environmental benefit from soil improvement and establishment of forestry belts; and (e). induced impact on neighboring non-project areas. B. Comment on the technical assistance and training provided to the project by domestic and international consultants and experts, and their performance; C. The measures taken or being proposed to ensure "Project Sustainability" should be included in the ICR (an assessment of probability that the achievements generated will be sustainable and/or further enhanced with the planned future operation plan); D Future Operation Plan: providing an operation and maintenance plan for irrigation and drainage facilities and other project sub-components completed; collection of water charges and their periodically revision to ensure that they will meet the full annual O&M costs, or any other relevant financing plans for sustainable operation and maintenance;  - 37 - ANNEX B E. Key experiences and lesson learned: the mission discussed with PMOs the significant positive and negative experiences and lessons learned from the project implementation. Relevant experiences and lessons learned need to be reflected in ICR so as provide useful guidelines for preparation of future projects (e.g. Phase II of the Irrigated Agriculture Intensification Project II being prepared). 4. Time Tables: The three Provincial PMOs will revise their respective draft ICRs (complete with tables) incorporating the above comments, suggestions, and send the final provincial ICRs to the Ministry of Water Resources and the Bank-simultaneously by the end of June. Upon receipt of the final provincial ICRs, MWR will prepare a summary report of the three provincial ICRs and send it to the Bank by the end of July. The Bank would complete the overall draft ICR for the project by September/October and send copies to the three provinces and MWR for comments. The final ICR would be printed and send to the Board of Executive Directors by December 31, 1997 with copies distributed to the three provinces and MWR. Provincial PMOs agreed to adhere to the target date June 30 for completion and submission of their respective final ICRs to MWR and the Bank. March 2, 1997 Jinan, Shandong