Tunisia - Southern Irrigation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7576 PROJECT COMPLETION REPORT TUNISIA SOUTHERN IRRIGATION PROJECT (LOAN 1796-TUN) DECEMBER 30, 1988 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Tunisian Dinars (D) USS1.00 D a 0.82 D 1.00 - USS1.21 WEIGHTS AND MEASURES The metric system is used throughout this report GLOSSARY OF ABBREVIATIONS CI - Continental Intercalaire CT - Complex Terminal CNEA - National Center for Agricultural Studies ORE - Water Resources Department ORES - Water and Soil Resources Oepartment GR - Rural Development Oepartment INRAT - National Institute of Agricultural Research of Tunisia IRA - Institut de Recherche des Zones Arides MOA - Ministry of Agriculture (Mv - Agricultural Development Authority OMYPI - Agricultural Development Authority for Irrigated Perimeters OMVPIGJ - Agricultural Development Authority for Irrigated Perimeters of Gafsa Djerid OMVPIGM - Agricultural Development Agency for Irrigation Perimeters of Gabes and Medenine PCR - Project Completion Report SAR - Staff Appraisal Report STEG - Tunisian Company for Electricity and Gas FISCAL YEAR January 1 - Oecember 31  FOR OICIA USE OY THE WORLD BANK Washington. U C. 20433 U.S.A. OVke td O ,.ctw.cewai Opuatwe tvalaata#n December 30, 1988 EMORANDUE TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Tunisia Southern Irrigation Proiect (Loan 1796-TUN) Attached, for information, is a copy of the report entitled "Project Completion Report: Tunliia Southern Irrigation Project (Loan 1796-TUN)" prepared by a FAO/CP Cooperative Program mission in colla- boration with Government Officials. No further evaluation of this project by the Opperations Evaluation Department has been made. Attachment This documenl hs a restrtaed disthibufon and maY be used bY r.oUwts onb b the prfomnnce| of theu offlicia duties. Its contents may not otherwise be disclosed witbout World Bank autborition.|  FOR OFFICIL USE ONLY TUNISIA SOUTHERN IRRIGATION PROJECT (Loan 1796-TUN) PROJECT COMPLETION REPORT Table of Contents PaRe No. PREFACE ...)................................................ KEY PROJECT DATA . .............................................. (ii) EVALUATION SUHHLIRY . . ............... (iv) PROJECT COMPLETION REPORT I. BACCGROUND .. 1 II. PROJECT FORMULATION .. 2 Identification and Preparation . . 2 Project Objectives . . 2 Project Description . . 2 III. IMPLEMENTATION.. 4 Effectiveness. 4 Revision. . 4 Implementation Schedule . . 4 Reporting . . 8 Procurement . . 9 Cost.. 9 Disbursements. ... .......... 10 Compliance with Loan Covenants . . 12 IV. PROJECT IMPACT.... 12 General . .12 Irrigation . .12 Area, Yields and Production . .13 Beneficiaries . .15 Markets and Prices . .15 V. ECONOMIC REEVALUATION .. 16 Sensitivity Analysis . .18 VI. PERFORMANCE .. 19 Project Execution and Management . .19 Supplies and Contractors . .19 Consultants . .20 The Bank . . 20 Cost Recovery . .20 This document has a restricted distrbution and may be used by fecipkents only in the performiance of their offcial duties. Its contents may not otherwise be disclosed without World Bank: authorization.  Table of Contents (cont'd) Page No. VII. SPECIAL ISSUES AND LESSONS LEARNED ................... 22 General..... .... .. *..q....**.. . ...**. . .. .. . 22 Infrastructure* .............. . 22 The Pilot Role of the Project ...................... 23 Monitoring and Evaluation ........... ................ 23 Sustainability ............. ................................ 23 CHARTS 1. Implementation Schedule 2. Irrigation Implementation Schedule ANNEXES 1. Irrigation Infrastructures - Key Indicators 2. Irrigation Schemes - Key Indicators 3. Actual Project Cost and Schedule of Expenditure 4. Project Cost 5. Actual Base Infrastructure Costs 6. Buildings - Actual Investm;nt Cost 7. Summary of Actual Agricultural Development and Operating Cost 8. Financial and Economic Analysis ATTACHMENT I: Borrower Comments MAP: IBRD 14435  - 1. - TUNISIA SOUTHERN IRRIGATION PROJECT (Loan 1796-TUN) PROJECT COMPLETION REPORT PREFACE This is a Project Completion Report (PCR) of the Southern Irrigation Project, for which Loan 1796-TUN, in the sum of US$25.0 million was approved in February 1980. The loan was closed on June 30, 1987, one year later than estimated at appraisal. The account was kept open till December 31, 1987. Final Loan disbursement is US$18.6 million and the unused balance is can- celled. The PCR was prepared in collaboration with the Government Officials by a FAOICP Cooperative Program mission which visited Tunisia from 7th of September to 18th of September 1987. No completion report was prepared by the Borrower but all the required information was provided by project officials. The PCR is based on a review of the President's Report (-. 2681-TUN) dated December 26, 1979, the Staff Appraisal Report (2681-TUN) dated December 19, 1979, the Loan Agreement and internal Bank memoranda and reports on project implementation and issues as contained in relevant files. In accordance with the revised procedures for project performance reporting, this PCR was read by the Operations Evaluation Department (OLD) but the project was not audited by OED staff. A copy of the draft report was sent to the Government of Tunisia for comments on September 15, 1988. Those comments have been appended (see Attachment 1) and Incorporated into the final report.  - ii - TUNLSIA SOUTHERN IRRIGATION PROJECT (Loan 1796-TUN) PROJECT COMPLETION REPORT Key Project Data Appraisal Actual as Estimate Actual of SAR estimate t oject cost (US$ million) 72.5 47.5 65.5 "van Amount (US$ million) 25.0 18.6 74.0 Loan Amount Cancelled - 6.4 - Date Board Approval 01/22/80 01/22/80 Date Effectiveness 09/30/80 09/30/80 Date Physical Components Completed 12/31/85 06/30/86 Closing Date 06/30/86 06/30/87 Economic Rate of Return (2) 13 19 Institutional Performance satisfactory Agronomic Performance satisfactory CUMULATIVE DISBURSEMENTS Fiscal Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 Appraisal Estimate (US$ m) 0.2 4.5 11.4 19.9 22.8 23.7 25.0 25.0 25.0 Actual (US$ million) - 0.1 1.0 3.8 6.4 11.0 15.3 17.9 18.6 Actual as 2 of Estimate - 2.2 8.8 19.1 18.1 46.4 61.2 71.6 74.4 Date of Final Disburs. January 27, 1988  - ili - TUNISA SOUTHERN IRRIGATION PROJECT (Loan 1796-TUN) PROJECT COMPLETION REPORT Keyv Project Data (continued) MISSION DATA Supervision Month/ Staff Man-Days Specializ. Performance Trend Type of Year a/ Rating b/ c/ Problem d/ 1 07/80 1 3 E 1 2 - 2 04/81 2 12 I/F 1 2 3 3 12/81 2 20 I/H 1 2 - 4 06/82 1 7 I 1 1 - 5 12/82 1 10 I 1 1 - 6 04/83 3 24 I/A/F 1 1 M 7 10/83 3 24 I/A/P 2 2 F/M 8 04/84 3 24 I/A/F 2 1 M 9 10/84 2 14 I/A 1 1 0 10 03/85 2 14 I/A 1 1 - 11 03/86 1 7 I 1 1 - a/ A - Agriculturalist; E - Economist; I - Engineer; H - Hydrologeologist; F - Financial Analysis b/ 1 = Problem-free or minor problems; 2 = Moderate problems; 3 = Major problems. c/ 1 = Improving; 2 = Stationary; 3 = Deteriorating. d/ F Financial; M = Managerial; P = Political; T = Technical; 0 = Other. OTHER PROJECT DATA Borrower Government of Republic of Tunisia Executing Agencies GR-OMVPI Djerid and Gafsa OMVPI Gabes/Medenine Fiscal year of Borrower January 1 to December 31 Name of Currency (abbreviation) Tunisian Dinar (D) Currency Exchange Rate Appraisal year average US$ 1.00 = 0.408 D Completion year average US$ 1.00 = 0.82 D Follow-up Project Gabes Irrigation (Loan 2605-TUN)  - iv - TUNISIA SOUTHERN IRRIGATION PROJECT (Low 1796-TUN) PROJECT COMPLETION REPORT Evaluation Summary 1. Objectives. The project supports the Government's investment p ..gram of the Master Plan for Water Resourc-s Development in Southern Tunisia. Its objectives were to develop groundwater resources in the southern region, increase production of dates and vegetables and raise living conditions of smallholders in the existing oases. 2. Implementation Experience and Pesuilts. After experiencing lengthy delays due to the late creation of the Agricultural Development Agencies (OMV) for two project areas, Djerid/Tozeur and Kebili/Gabes, project implementation progressed according to the approved schedule of implementation laid down by different Bank supervision missions. Consequently at the official closing date almost all civil works were completed. Infrastructure is now operational while agricultural objectives will soon reach the expected development, and as a consequence, it may be concluded that project objectives have been met and an important impact on regional and local development has been achieved. 3. In general, rehabilitated oases and new plantations are almost fully in operation: farmers are dynamic, fully participating in the project and satisfied. 4. Land protection against sand intrusion has been carried out; water is adequately distributed up to the tertiary canals and farmers participate in water management. 5. Project ccst, in dinar terms, is now D 36.1 million compared with D 29.6 million estimated at appraisal, implying an overrun in Dinars of about 212. In Dollar terms the cost amounted to only US$47.5 million, 34S below the appraisal estimate of US$72.5 million. 6. Increased costs, in Dinar terms, above those projected at appraisal caused by the combined effect of higher costs of irrigation infrastructure, building construction, establishment of new perimeters and strengthening of the technical assistance, were largely offset by the effect of the rise of the US$ vis-a-vis the Tunisian Dinar. In spite of this, at the closing date, US$0.9 million of the Bank loan of US$25.0 million remained undisbursed in addition to US$5.5 million which had already been cancelled since May 23, 1986. 7. The technical assistance provided for under the project played a useful role in the works supervision in the fields of irrigation equipment  - v - maintenance and the agricultural extension program. Studies undertaken of the groundwater situation were generally comprehensive, well documented, and consistent with project requirements. 8. Implementation of a program to recover the costs of irrigation services, as required under Schedule 5 of the Loan Agreement, has been delayed. However, in the framework of the Irrigation Management Improvement Project (Loan 2573 TUN) Government is committed to reach by January 1, 1995 full cost recovery of irrigation operation and maintenance and measures have already been taken to decentralize and render more flexible the operating procedures of the Water Users Association (AIC) to permit them to recover those costs from their members. 9. The financial and economic reevaluation shows rates of return that are somewhat higher than those estimated at appraisal. This favourable result is a reflection of implementation that went broadly as planned together with higher-than-expected date prices. Financial rates of return ranged between 9Z and 30% according to the type of investment and farm enterprise, while economic rates were somewhat higher from 14% to 37%. For the project as a whole, the re-estimated economic rate of return is 19%. The project also had significant institutional benefits for the sub-sector in the creation of the two OMV's. 10. Sustainability. The prospect of being able to sustain the improvements brought about under the project are good. The creation of two Offices has provided the institutional basis for maintaining the existing structures and investing in new developments. Financing these Offices to ensure proper maintenance and operation has been an issue in the past, due to low contribution from producers to those expenses and to meager budget allocations from Gov rnment. The situation is , however, improving supported by the Bank-financed Irrigation Management Improvement Project (Loan 2573-TUN) and the ASAL-I (Loaa 2754-TUN) which contain a package of measures aiming at strengthening farmers associations t increasing water charges, improving management control of the Offices, strengthening their accounting procedures, all with the objective of making the Offices financially self-sufficient. Recent progress made in these several fields creates good prospects of reaching that objective. 11. On a long run, doubt.s about water availability could exist. However, currently there is a good knowledge of aquifers potential and behavior for which the project has made a contribution, and the Government is committed (Gabes Irrigation Project - Loan 2605-TUN) to keep a balanced allocation of water resources among the competitive users (irrigation, industry, human consumption). In addition, the general acceptance (by authorities and population) that water resources are limited and should be exploited adequately and parsimoniously, and the level of the monitoring system which is being used give extra assurances that the issue of water availability might only be raised in the context of international implications, i.e., through excessive withdrawals in Algeria. Even this aspect has been taken care of with the setting up of a joint international committee (Algeria-Tunisia) on hydraulics and environment. 12. Findings and Lessons. The project has generated some important lessons which later have been applied in similar projects with visible success  - vi - and advantage: they are related particularly to the need for complete design as early as possible in the project preparation and appraisal process, to the advantage of bulking contracts avoiding repetition of long administrative procedures, and to the importance of having future beneficiaries involved in the project preparation. The project has also permitted us to know better the local market of contractors, leading to a more appropriate selection for future projects.  TUNSA SOUTHERN IRRIGATION PROJECT (Loan 1796-TUN) PROJECT COMPLETION REPORT I. BACKGROUND 1.1 Tunisia has a total land area of 16.4 million ha of which 8.4 million ha are suitable for agriculture and grazing. The country can be divided into three main ecological zones: the Northern zone (25%) is the most fertile receiving adequate rainfall for a range of crops (400-1,000mm); the central zone (152) receives between 200 and 400 mm of rainfall and the southern zone (602) which is a semi-desert zone receiving less than 200 mm of rainfall. Of the 5.0 million ha of cultivable land, 342 is planted to cereals, 352 to fruit trees and the remainder to forage crops, vegetables, grain, legumes, and industrial crops; 20% is normally left fallow. Given the high variability in rainfall, major efforcs have been made to develop irrigated agriculture. 1.2 The mobilization and efficient use of scarce water resources for irrigation has been and remains a major Government preoccupation. Since the early 1960's, substantial shares of public and private investments in agriculture have been allocated for this purpose: 30% between 1962 and 1971, 232 from 1972 to 1976 and 44% from 1977 to 1981. Government invested heavily in irrigation infrastructure (9 major dams, 20 smaller dams, more than 800 deep wells and about 250 pumping stations have been constructed), where the private sector invested mostly in shallow wells (about 23,000) and related equipment. Currently, some 205,000 ha are equipped for irrigation (1983/85) against 120,000 ha in 1972. 1.3 Groundwater resources of Southern Tunisia are covered by two major aquifers: the Complex Terminal (CT) cal,ed Djeffara in the coastal area of Gabes, and Continental Intercalaire (CI) which is mostly used in the Djerid and Nefzaoua areas. In 1974, Government requested the French engineering firm, Sogreah, to prepare a Master Plan for Water Resources Development in Southern Tunisia, based on the UNESCO/UNDP survey and on the results of the simulation models which defined for different areas the level of exploitation of the aquifers within acceptable salinity levels. The result of the plan defined a water resources development program for southern Tunisia to be implemented over 20 years. Consequently, the Government decided on a long term development strategy to be implemented over several four year Plans (1974-1996). The Southern Irrigation Project represents one phase of the Master Plan. 1.4 Bank group lending for agriculture in Tunisia commenced in 1967 and to date 17 projects have been approved at a total of US$407.9 uillion of Bank/IDA Zunds. Directly related to the development of the irrigation sub-sector are the following: (a) First Irrigation Rehabilitation Project (Loan 1068-TUN); (b) Sidi Salem Multipurpose Project (Loan 1431-TUN); (c) Medjerda/Nebhana Irrigation Project (Loan 2157-TUN); (d) Irrigation Management Improvement Project (Loan 2573-TUN); (e) Gabes Irrigation Project (Loan 2605-TUN). All those have been operating satisfactorily.  - 2 - H. PROJECT FORMULATION Identification and Preparation 2.1 The Project was jointly prepared by the National Center for Agricultural Studies (CNEA) and the Rural Development Department (GR) of the MOA assisted by consultants. The consultant services amounted to US$180.000 and were financed under the Bank Project Preparation Facility Funds. The preparation was supervised by the WB/FAO Cooperative Program (CP) and the project was appraised in December 1979. After appraisal major issues were raised relating to: (a) low financial rate of return; (b) cost recovery and water charges; and (c) water quality. The low financial rate tf return was mainly attributed to the lorig maturing period of the palm trees and increase in the cost of civil engineering. On the cost recovery issue, The Bank felt that the Government should determine and implement a cost recovery strategy to be applied to various beneficiaries of the project investments. The water quality issue was related to the recommendation made up by the Southern Tunisia Water Resource Development Master Plan which established that (a) water levels in the aquifer will continue to sink and as a result pumping costs will increase due to increased depth of water; and (b) the degree of water salinity will progressively increase. In this respect the Government agreed to study the problem and prepare a mathematical model for the monitoring of the aquifer. Negotiations were completed in February 1980, and agreement reached on all the above issues. The loan became effective on September 30, 1980. Proiect Obiectives 2.2 The specific objectives of the project were to develop the potential groundwater resources of Southern Tunisia and improve agricultural practices and services in order to: (i) increase present prod action of dates, vegetables, and forage; (ii) provide employment opiF-rtunities for farm labor in the new date palm plantations and improve the living standards of the smallholders in t..e existing oases. These objectives were in line with Government efforts to reduce its deficit in the trade balance for food and to improve rural incomes in the poorest regions of Tunisia. The development of groundwater potential were to be accomplished through rehabilitation of existing oases (upgrading their irrigation and drainage networks and drilling of new wells for the creating of new irrigation perimeters in areas with good production potential). Better agricultural practices were also to be introduced by reinforced extension services, equipment and research. As a result of the project, some 6,200 farmers' families were expected to increase income. Project Description 2.3 The major trust of the project was: (i) the rehabilitation of 7 existing oases on 3,040 ha in the Djerid, Kebili and Gabes areas; (ii) the creation of 9 new date palm plantations and date palm/forage plantations on 2,100 ha in Djerid, Nefzaoua and Kebili; (iii) the creation of a date processing facility; and (iv) the provision of equipment facilities and personnel for agricultural services, technical assistance and research in  - 3 - drip irrigation for date palm trees. The extent of the rehabilitation works consisted of: (a) improving the water supply where required by drilling additional deep wells; (b) equipping the new and existing wells with pumps where the artesian flow has diminished or disappeared; (c) changing the irrigation network from the present irrigation ditches into cement pipes so as to limit water losses; and (d) improving or creating drainage canals. Four new plantations were to be created on Government-owned land and five on collective land. Investments in the new plantations included: (a) tita creation of 27 new deep wells and related equipment; (b) land leveling; (c) establishment of wind breaks; (d) building of irrigation and drainage infrastructure; (e) construction of access roads and tracks; and (f) agricultural machinery and equipment. In some of the new oases to be created the forage area would be about 580 ha. The expected alfalfa production on this acreage was adequate to cover the urgent needs of the existing livestock in the area and ensure survival of flocks during drought years. 2.4 The project also provided one date processing facility to be built in the vicinity of Nefta or Tozeur in the Djerid. This facility was to have a capacity of 10 t/day for dehydration, 45 t/day for disinsectization and 12 t/day for date processing which would be adequate for processing the additional crop until about year 15 of the project. Two agricultural development authorities "Office de Mise en Valeur" (OMV) were to be established by the Government in the project area, one in the Governorate of Gafsa with an office in Tozeur, and the second in Gabes with offices in Gabes and Kebili. In addition, the project also provided equipment for the agricultural research on: (i) drip irrigation for date palms; (ii) sprinkler irrigation for forage; and (iii) various systems of drainage. As a Technical Assistance component, the project provided 48 man-months of consultants' services to assist GR in the preparation of tender documents, bid evaluation and project supervision and 12 man-months to Water and Soil Resources Department (DRES) for preparation of a mathematical simulation model for the Southern area of Tunisia. 2.5 The total Project cost was estimated at US$72.5 million, with a foreign exchange component of US$25.3 million. The Bank loan of US$25.0 million was to finance the foreign exchange component relating to (a) * irrigation infrastructures, buildings and vehicles; and (b) technical assistance and training. 2.6 The Project was expected to be completed over a period of six years (1980-1985). All irrigation engineering works were to be completed by the first quarter of the year 1985. Full development was expected to take place by 1990. The completion date was scheduled for December 1985 and the closing date for June 1986. The closing date was in fact extended by 12 months to June 1987.  - 4 - ilL I4PLEMIENTATION Effectiveness 3.1 The project became effective on September 30, 1980, some 4 months later than scheduled. The reasons for the delay were administrative and related to: creation of the Agricultural Development Authorities (OMV's for the two project areas and furnishing the Bank with the standard legal opinions. However, it is worth noting that delays in loan effectiveness did not have a negative impact on the implementation schedule of most of the components financed under the project. Revision 3.2 The Loan was amended twice. On June 13, 1983, to respond to the need for improvement of implementation performance and to Government decisions regarding the operation and maintenance of new piilm trees plantations in the South. As a result, it was decided (1) that the agricultural development of the new plantations would be the responsibility of farmers assisted by the OMV's and financed by Government through special credit and subsidy lines foreseen in the law; (2) the construction of buildings and the setting up and operation of the research activities would be the responsibility of the OMV's with the assistance of the GR and of the related research institution if needed. 3.3 The second amendment took place on January 12, 1984, and it is related to the changes of the percentages of expenditures to be financed under categories (1) and (2) of the Loan Agreement. This change has been made to reflect higher percentages of foreign exchange for the components financed under those categories than anticipated at appraisal. 3.4 Finally, at Government's request the closing date was extended one year from June 30, 1986, to June 30, 1987, to allow for payments still pending in on-going works and supplies particularly related to contract completion. Implementation Schedule 3.5 Irrigation and drainage. Despite a prompt call for bidding, the project experienced lengthy delays in its start up. From the beginning civil works were spread over an implementation time of 5 years instead of 4 as anticipated during appraisal. Chart 1 compares the actual with the estimated schedule of implementation for the major components of the Project under World Bank financing. Chart 2 shows actual implementation of irrigation infrastructures for each sub-project area, Annex 1 shows key-indicators of civil works, while Annex 2 gives details of physical works regarding irrigation and drainage infrastructures. 3.6 While design of irrigation infrastructures, including tender documents, and bids progressed satisfactorily, delays in the construction of the irrigation infrastructure were mainly due to: (i) well-drilling taking longer than expected; (ii) delays in performing proper pumping tests  (iii) poor organization by the contractors in obtaining materials for construction; (iv) ill-adapted equipment for the boring of deep wells; and (v) lack of accessories which did not permit contractors to lay *rrigation pipes as scheduled. Main features of the constructed irrigation system consisted of: a buried pipe distribution system parallel to feeder roads of asbestos cement pipes distributing water to the irrigation sections. The rehabilitation system included 150 km of pipes which have been replaced with the old earth canal system. Hydrants have been installed along the buried pipeline each hydrant serving units of oout 4 hectares through seguias of ?,O0 m of maximum length. The creation of new plantations has entailed 150 km of buried pipes with same characteristics as above. The new plantations have been divided in blocks of 20 ha served by a 20 1/sec. water delivery each. Summary of area under irrigation and length of canals is given below: SAR Actual Actual as of SAR estimate Area under irrigation ha 5,174 4,884 94 Length of canals km 224 300 133 The implementation of drainage work, compared with appraisal planning gives the following result: Drainage Work SAR Actual Actual as ---- m3 - - of SAR estimate New excavation 572,000 220,000 38 Improvement 92,000 164,700 179 Construction of new drains has been spaced at a distance of about 200 m and at a depth of 2 m. 3.7 The large difference in new excavation volume is due to the decision to postpone the construction of the drainage network in some of the new plantations. Drainage works in the oases to relabilitate have been made and the reconstructed networks are operational with noticeable impact on soil aeration and leaching. However, the drainage networks for newly created oases have been limited to those where there would be no danger of the ditches being easily filled up with sand because of lack of proper soil stabilization with crops and protection with windbreaks. This is the case of Rejim Maatoug, Hazoua, and Draa Nord. The continuation of the relations with the OMVGJ within the framework of the Irrigation Management Improvement Project gives an opportunity to follow up on this issue and to assure that these drainage networks will be made in time. The implemented roads program, compared with appraisal estimate, indicates that: (i) for oases rehabilitation, only 1 km of access road has been constructed instead of 31 km; and (ii) for new plantations only 362 of the program has been completed (see Annex 1). Major problems observed regarding this low performance are: over estimation by SAR regarding access roads for oases rehabilitation and low need for the time being of road infrastructure in new plantations. 3.8 Quality and performance of irrigation and drainage infrastructure have been done in accordance with good engineering practices and are generally suitable for local conditions. However, the design of some irrigation schemes could have included tertiary canals.  - 6 - 3.9 Buildings. The adequacy of the buildings as foreseen at appraisal time was analyzed by the supervision missions and compared with actual needs. OMVPIGJ suggested a reduction of the storage area and increasing workshop facilities, while OMVPIGM's main proposal was the creation of extension center. Bids were invited in April 1981 for all buildings and work was expected to he completed by May 1983. Although commitment for all buildings was made, they were in some cases poorly executed and some contracts were terminated because of low quality and delays by the contractors. A supervision mission which examined the building issues with the Genie Rural and the Offices concluded that one of the reasons for the delays was the lack of an adequate supervision of works done by the "Service des Batiments" of the Ministry of Agriculture. As a result, the practical aspects of the execution of the works were reviewed and new procedures were agreed upon by the Bank and Ministry of Agriculture (Loan Agreement 6.13.83). With the transfer to the Offices of the responsibility for executing this component and the strict adherence to the programs previously agreed upon by the Bank and the Offices, these components made good progress, and all the works were completed by end of 1985 (see Anrex 6). Summary of implemented work compared with appraisal estimates gives the following result: Buildings SAR Actual Actual as of SAR estimate Tozeur Office headquarters m2 600 560 93 Warehouse, hangar m2 14,500 4,780 33 Kebili/Gabes Office headquarters m2 600 1,044 174 Warehouse, m2 5,800 3,800 65 3.10 Research. A detailed applied research program was prepared by both offices and submitted to the Bank for review and approval. The research program in cooperation with the INRAT and IRA was mainly directed to he following terms: - irrigation methods, including drip irrigation for dates; - cultural practices, including weed control in existing date orchards, and the use of fertilizers; and, - rehabilitation of irrigation and drainage infrastructure with M'Dakkar date variety collection in the Tozeur oasis. The Offices have been assisted with the design of the trials, observations, measurements and data analysis. In addition, two new sub-stations were established and budget increased for both Offices. This component was satisfactorily implemented without major delays. 3.11 Water Resources and Monitoring. Groundwater resources of Southern Tunisia are in two major aquifers: the Complex Terminal (CT), called Djeffara in the coastal area of Gabes, and the deeper Continental Intercalaire (CI). The Djeffara aquifer is fed from the CI through the geologic fault of El Hamma. The general groundwater flow is towards the sea where it outcrops a few kilometers from the coast. Traditionally surface water has been available for use from naturally occurring springs with substantial flow rates at the outcrops. With the introduction of deep well drilling techniques, numerous  wells were sunk close to these existing springs in order to increase the volume of water available for traditional date palm, fruit and vegetable cultivations; subsequently wells were also sunk outside the traditional perimeters for the development of modern date palm plantations. A consequence of this increased exploitation of the water resources has been a decrease in the flow or drying out of natural springs and a decrease or disappearance of the artesian flow of the deep wells indicating a need for a more carefully planned approach to water development. 3.12 The water resources development potential of the project area has been assessed in studies financed by UNDP, starting with a study of the Algerian and Tunisian Northern Sahara region by UNESCO in 1968-72, which included mathematical simulation models of the aquifers and an electrical analogic model of the coastal Djeffara aquifer. In 1976, a Master Plan for Water and Soil Resources Development in Southern Tunisia (WMP) was subsequently prepared and updated simulation models defined the limits of exploitation of the aquifers within acceptable salinity levels. Water resource estimates of the WMP have since been systematically updated and refined as more detailed data became available. This has confirmed that the findings of the basic studies are robust. Monitoring of groundwater abstraction, water level fluctuations and quality is systematically carried out by the regional branches of the Water Department (DRE) of the MOA. Water abstraction for Djerid a!d Nefzaoua areas has increased from 5.7 m3/sec. during 1981 to 9.1 m3/sec. for the year 1986. This is less than anticipated by the mathematical model on the results of which the Water Master Plan (WMP) was based. The model indicated that in the year 2010 a maximum abstraction would be 11 m3/sec. The decline of water level, estimated in year 2010, may be between 20 and 45 meters in the Djerid area and between 5 and 13 meters in the Nefzaoua area. Present monitoring shows that little variation has occurred as predicted by the model. For the coastal project area, there was little variation of the total water discharge as foreseen by the WMP. Rowever, the water level is reported to have been lower than anticipated, although a certain stability has been observed during the past 2 to 3 years. The table below shows year by year water abstraction for Djerid and Nefzaoua regions: Region Actual Model 1981 1982 1983 1984 1985 1986 2010 --l1/sec----- Djerid 2,652 3,200 3,522 3,637 3,818 3,963 4,890 Nefzaoua 3,118 3,500 4,188 4,585 4.655 5,130 6,620 Total 5,770 6,700 7,710 8,222 8,473 9,093 11,510 3.13 Rehabilitation of Existing Oasis. Progress of thinning and rejuvenation continues to be slow, although meetings had been organized by the Offices to encourage farmers to renew old date palms. Delays of this program were mainly due to: (1) land tenure: the small size of holdings in the project area is not so much of a constraint to the agriculture development, because of the cropping patterns (vegetables and fruit trees). However, the true issue is that the large percentage of absentees and of share cropping lead to difficulties in convincing owners (sometimes hard to be reached) and share croppers (too many in the same farm) about the benefits of the reconversion programs and make them accept and execute those programs; (2) poor drainage: improvement of drainage conditions in existing oases with  - 8 - excessive farm fragmentation and tree density is difficult; therefore, in those areas where these constraints exist, vegetable intercropping, which is needed to compensate for initial reduction of increase following removal of old or low productive palm trees, was also difficult; (3) insufficiently staffed extension services; (4) reliable and available water: farmers have waited until th- water supply is improved before embarking in a reconversion investment; and (5) reluctance to cut trees (traditional value). 3.14 New Plantations. Progress of this program has proceeded satisfactorily. The farmers participate intensively in all the operations of agricultural implementation. The role of the Offices is to provide extension services, to prepare and follow-up the credit demands, to give techuical assistance, and to provide and distribute agricultural inputs. Farmers are selected from a list of applicants, with priority given to young people who just left the agriculture training school, followed by laborers with extensive agriculture experience; preference is also given to candidates from the local population. On the average, about 80X belong to the first category. Government also provides housing facilities by creating villages itl the vicinity of these newly created oases. Farmers use their own transportation means or those made available by Government during the installation period. The financial support provided by Government is based on a 15% subsidy, 15% of "pioneer bonus" and 70% of credit of an estimated cost per hectare. This support is estimated to cover the cost of offshoots, manure, NPK, labor mechanized services, and protective covers, and is managed by the Offices which pass it to farmers in accordance with a given schedule. Farmers provide labor for all agricultural activities. Repayment conditions are 7 years, one year of grace and 61 interest. Farmers with good records would become full owners of the 2 ha plot. 3.15 Other Components. Other project components, such as technical assistance and purchase of equipment, were implemented satisfactorily and completed on time. Reporting 3.16 The execution of the major project components was the object of quarterly and annual progress reports prepared by the Offices (OMVGO and OMVGM) and by the Genie Rural. Frequent supervision missions during the project implementation period were made and full information was reported detailing progress of the civil works. Although overall progress reporting can be considered satisfactory, the situation differs as far as financial reporting is concerned. Audited financial statements for different years were available but the auditors always qualified their opinion because they were unable to obtain adequate evidence of all transactions made by the different Offices. Recommendations were made to improve the accounting situation, inclbiding the recruitment of a qualified consultant for both Offices in order to design and set up a more adequate accounting system for their activities and project components. The new system was set up at the beginning of 1985 and current situation is satisfactory. Accounts referring to 1986 for both Offices have been audited and submitted to the Bank.  -9- Procurement 3.17 Pumpsets with related equipment and pipes for irrigation valued at about D 0.970 million were tendered and awarded under International Competitive Bidding (ICB). This represents about 4% of the total cost of the irrigation component. Deep wells were executed by a specialized agency of the MOA. Total cost of the above works made in accordance with local competitive bidding was D 3.657 million or about 162 of the irrigation component. 3.18 Irrigation and drainage network construction were awarded to Tunisian firms under several contracts through local competitive bidding procedures. Total cost of this work was D 10.871 million or about 482 of the total of the irrigation component. Procurement for vehicles and agricultural equipment totalling about D 0.728 million were procurred also through competitive bidding in accordance with local procedures. 3.19 After wide international consultation, the studies for groundwater resources were awarded to a French consulting firm, while power-line connections were designed and executed by the Government-owned Tunisian Electricity Company (STEG) under special negotiated contract. Cost 3.20 The actual cost of the project was D 36.10 million instead of D 29.62 million as estimated at appraisal, implying an overrun in Dinar terms of 222. In Dollar terms, however, project cost amounted to only US$47.5 million compared with US$72.5 million at appraisal, a decrease of 342. Annual breakdown of costs by different components in terms of current price is given in Annexes 3 to 7. Comparative statements of estimate and actual costs and percentage of overrun are given below: SAR 1 Actual Actual as SAR 1 Actual Actual as estimate Cost 2 of SAR estimate Cost X of SAR ---D million-- Estimate -US$million-- Estimate Irrigation and Drainage 19.37 22.89 118 47.4 30.4 64 Buildings 1.87 2.28 121 4.2 6.0 71 Vehicles & Agri- cultural equipment 0.73 0.71 97 1.6 1.6 24 Establishment of new perimeters 2.76 6.37 230 6.8 8.0 118 Other investment 0.31 0.31 - 0.8 0.4 53 Rehabilitation works 1.97 1.14 57 5.1 1.5 29 Technical Assistance 0.24 0.36 150 0.7 1.0 141 Capitalized Operating Cost 2.30 1.97 85 5.7 2.2 38 Project Preparation Facility 0.07 0.07 - 0.2 0.2 100 Total 29.62 36.10 122 72.5 47.5 66 1/ Including price and physical contingencies.  - 10 - 3.21 The establishment of new perimeters and civil works is mainly responsible for the Dinar cost overrun. The higher cost for the establishment of new perimeters is due to insufficient basic data available at appraisal. Detailed plans showed the need for much higher investments in land levelling, service roads, and wind barriers, tertiary canals, as well as higher unit costs. The cost overrun of the civil works components is about 202 and is the result of a combination of price escalation and fluctuation of foreign currencies. In general, the higher than estimated domestic inflation rates were mitigated by the lower than estimated increase in international prices and as a result, overall project costs overrun has been only 22%. The decline in Dinar, from D 0.408 = US$1 at appraisal to D 0.825 = US$1 in 1986, is the main reason for the reduced dollar cost of the project. Disbursements 3.22 The Bank loan was to be disbursed over six years (1980-85) and to cover the following: Category Amount Disbursement Percentage (Us$ '000) (1) Civil works 8,800 40% a/ (2) Vehicles and agricul- 12,600 55% b/ of local rural and irrigation expenditures and 100X equipment of foreign expenditures (3) Consultants' services 420 100% of foreign and studies expenditures (4) Refunding of Project 180 100% Preparation Advance (5) Unallocated 3,000 TOTAL: 25,000 Statements of total disbursement as of December 31, 1987 for different categories are given below: Disbursed US$ 1. Civil Works 12,230,032.73 2. Vehicles and equipment 6,020,372.26 3. Consultant services 208,949.85 4. Refunding of Project (PPF) 156,753.51 TOTAL at June 30, 1987 18,616,108.35 a/ 602 after 01-27-84. b/ 65 after 01-27-84. In addition, cumulative disbursement at end of each quarter, compared with appraisal estimates is as follows:  - 11 - IBRD Fiscal Year SAR Actual Actual as and Quarter Cumulative Disbursement Disbursement at X of SAR at End of Quarter End of Quarter Estimate