Romania - Irrigation Projects

Document of The World Bank 1A1 Lopy FOR OFFICIAL USE ONLY Report No. 8509 PROJECT COMPLETION REPORT ROMANIA MOSTISTEA-CALMATUI (LOAN 1670-RO) COVURLUI (LOAN 1795-RO) BBSP (LOAN 1938-RO) CARACAL-TITU (LOAN 1971-RO) IRRIGATION PROJECTS APRIL 13, 1990 FILE COPY Agriculture Operations Division Country Department IV Europe, Middle East and North africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  LIST OF ACRONYMS BAFI Bank for Agriculture and Food Industry ERR Economic Rate of Return GDP Gross Domestic Product ICB International Competitive Bidding MAFI Ministry for Agriculture and Food Industry PCR Project Completion Report DGEIFCA Economic General Directorate for Land Reclamation and Agriculture Construction IEFLIF Enterprise for Execution and Exploitation of Land Reclamation Works  FOR OmFCIL USE ONLY THE WORLD BANK Washington. D.C. 20433 U.S.A. OtfKe of Directot-General Ope.atviils Evakuatmn April 13, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Romania Mostistea-Calmatui (Loan 1670-RO); Covurlui (Loan 1795-RO); BBSP (Loan 1938-RO); Caracal-Titu (Loan 1971-RO) Irrigation Proiects Attached, for information, is a copy of a report: entitled "Project Completion Report on Romania Mostistea-Calmatui (Loan 1670-RO); Covurlui (Loan 1795-RO); BBSP (Loan 1938-RO); Caracal-Titu (Loan 1971-RO) Irrigation Projects" prepared by the Europe, Middle East and North Africa Regional Office. No audit of these projects has been made by the Operations Evaluation Department at this time. Attachment L This document has a restricted distribution and may be used by recipients only in the performance | of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT ROMANIA Mostistea-Calmatui (Loan 1670-RO); Covurlui (Loan 1795-RO) BBSP (Loan 1938-RO); Caracal-Titu (Loan 1971-RO) Irrigation Projects Table of Contents Page No. PREFACE BASIC DATA SHEETS EVALUATION SUMMARY i-viii I. INTRODUCTION The Agricultural Sector 1 The Bank Involvement in Irrigation 1 II. PROJECT PROCESSING Project Identification and Preparation 2 Appraisal, Negotiations and Effectiveness 2 III. PROJECT IMPLEMENTATION The Mostistea Calmatui Irrigation and Drainage Project 2 The Covurlui Irrigation Project 3 The Bucsani, Buzat, Siret, Prut (BBSP) Irrigation Project 3 The Caracal-Titu Irrigation Project 4 Disbursement 4 Procurement 4 IV. AGRICULTURAL AND ECONOMIC IMPACT Performance of the Bank 6 V. CONCLUSIONS AND RECOMMENDATIONS 6 ANNEXES Annex I - Project Costs, Loan Amounts, Closing Dates, Final Disbursement Dates Maps of Project Area: IBRD - 13933, 13934, 14577, 15176, 15177, 15178, 15407, 15408 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.   PROJECT CONPLETION REPORT ROMANIA - MOSTISTEA-CALMATUI (LOAN 1670-RO): COVTRLUI (LOAN 1795-RO): BBSP (LOAN 1938 RO): CARACAL-TITU (LOAN 1971-RO) PREFACE This is a Project Completion Report (PCR) of four irrigation projects, for which loans were made to Romania from July, 1979 to June 1981, for a total amount of US$ 315.0 million. The loans were closed as scheduled respectively; Loan 1670-RO, on June 30, 1986; Loan 1795-RO, on December 31, 1987; Loan 1938-RO, on June 30, 1988; and Loan 1971-RO, on June 30, 1986. The loans were almost fully disbursed; the only exception was the BBSP Irrigation loan for which a residual of US$ 1.0 m. was cancelled. The PCR was prepared by the Europe, Middle East and North Africa Regional Office. Romania stopped borrowing from the Bank in 1982. Between May 1988 and November 1989, it paid back in advance all outstanding loan amounits, including those relating to the present projects. The last supervision of the projects included in this PCR was in November 1986. Official contacts with agricultural staff and technicians were suspended in February 1987 and they have not yet been resumed. This is a desk work exercise based in part on a review of the staff appraisal reports; the loan agreements; the economic memorandum (No. 5832-RO) dated May 6, 1986, internal Bank memoranda on project issues as contained in relevant Bank files, minutes of the Board discussions, Bank supervision reports, quarterly progress reports prepared by the borrower as well as interviews with staff in the Bank who have been associated with these projects. The PCR is also based on a review of the PCR Report No. 6558, dated January 22, 1987, for the Viisoara Irrigation Project, (Loan 1509-RO). With regard to project implementation the PCR is mainly based on information contained in supervision reports up to November 1986, the time of the last Bank supervision report. The four projects were the following: (i) Mostistea-Calmatui, Irrigation and Drainage Project for which loan 1670-RO, in the amount of US$ 70.0 million was approved on March 13, 1979; (ii) the Covurlui Irrigation Project for which loan 1795-RO was approved on January 22, 1980, in the amount of US$ 90.0 million; (iii) the BBSP Irrigation Project for which loan 1930-RO, was approved on December 23, 1980, in the amount of US$ 75.0 million; and (iv) the Caracal-Titu Irrigation Project for which loan 1971-RO was approved on April 21, 1981, in the amount of US$ 80.0 million.   PROJECT COMPLETION REPORT ROMAN IA MOSTISTEA AND CALMATUI IRRICATION ANO DRAINAGE PROJECT (LOAN 1670-ROI BASIC DATA SHEET KL( PROJECT OATA Actual or Actual as 7 of Appraisal Estimated Appraisal Estimate Actual Estimates Total Project Cost (US$ million) 409.2 439.2 107.3 Total Project Cost (lei million) 7,364.5 6,324.4 86.0 Loan Amount WuS$ million) 70.0 70.0 loO.o Date Board Approval 03/20/79i Loan Agreement Date 04/16/79' Date Effectiveness 07/31/79 07/16/79 100.0 A/ Date Physical Components Completed 12/31/85 12/31/88 153.0 1' Closing Date 06/30/86 06/30/86 100.0 1/ Economic Rate of Return (7) IS Institutional Performance good good Technical Performance good good STAFF INPUT a EXZ FY78 fY79 fY80 FYJI El" FY83 FY84 FY85 FY86 FY87 TOTAL Identification/Prep. 5.5 17.4 - - - - - - - 2 22.9 Appraisal - 20.0 46.6 - - - - - - - - 66.6 Negotiations - - 0.9 - - - - - - - .9 Supervision - 10.7 45 3.1 2L7 4,.9 1.9 2L L 3 .L TOTAL 5.5 37.4 . 47.5 0.7 4.5 3.1 2.7 4.9 1.9 2.0 1.2 121.4 CUMULATIVE DISBURSEMENTS FY80 FY81 FY02 FY83 FY84 FY83 FY86 Appraisal Estimate (US$ millon) 17.9 47.3 61.0 68.0 70.0 70.0 70.0 Actual (US$ million) 1.3 20.2 59.9 63.6 70.0 Actual as S of Appraisal Estimate (S1 7 42 98 94 100 100 Date of Final Disbursement Feb. 28, 1984 Principal Repaid as of 12/31/89 (US$ mil.) 70.0 MISSION DATA Mission Mandays Speciali- Performance Ratina/d Dates Persons in Field zations /c Status Trend Identification 04/77 2 48 Le a, b Preparation 08/77 2 6 a. b Appraisal 06/78 4 84 a,b,c.d Supervision I 05/80 2 30 _ a, b 1 1 Supervision II 04/81 2 34 Le a. b 2 Supervision III 05/82 2 26 L a. b 0 3 Supervision IV 13/82 2 28 L o. b 2 2 Supervision V 05/83 2 26 b. b 2 1 Supervision VI 10/83 2 12 a. b 2 2 Supervision VII 04/84 2 18 L 8, c I I Supervision VIII 10/84 2 28 Le b.c 2 I Supervision IX 12/85 3 12 LI a. b. b Z 2 Supervision X 10/86 2 22 a, b I 2 OTHER PROJECT DATA Borrower Bank for Agriculture and Food Industry (BAFI) Guarantor The Socialist Republic of Romania Executing Agency Ministry of Agriculture and Food Industry iMAIA). Fiscal Year of Borrower January I to December 31 Currency Name (abbrev.) lei (1ei) Currency Exchange Rate (US$1 = le1): Appraisal Year Average USS . 00 lei 38.0 Intervening Years Average USS 1.00 lei 16.2 Completion Year Average uS$ 1.00 lei 14.4 Follow-on Prolect Name Covurlui Irrigation Project Loan Number 1795-RO Loan Amount (USS million) 90.0 Date of Loan Agreement April 08, 3980 LA Calculated in terms of months from date of Board approval. L, Input as staff weeks. Source: World Bank Planning and Budgeting Department. , Specialists: a = economist, b = engineer, c = agriculturist, d - drainage specialist. l Status: I problem free or minor problems, 2 = moderate problems, 3 = major problems: Trend: I improving, 2 = stationary, 3 = det6riorating. L4: Includes mandays in field sPent concurrently on suoervision/preParatiOn of other ongoing projects  - iii - PROJECT COMPLETION REPORT ROMANIA COVURLUI IRRIGATION PROJECT (LOAN 1795-RO) BASIC OATA SHEET KEY PROJECT DATA Actual or Actual as3 of Appraisal Estimated Apora,sal Estimate Actual Estimates Total Project Cost tUSS million) 354.6 406.9 Iii.7 Total Project Cost (lel million) 6,384.1 6,125.5 97.5 Loan Amount (USS million) 90.0 90.0 100.o Date Board Approva1 01/22/as Loan Agreement Oate 04/08/80 Date Effectiveness 07/08/0a 07/08/80 100.0 a/ Date Physical Comnonents Completed 12/31,87 12/31/91 150.0 a/ Closing late 12/31/87 12/31/87 100.0 a/ Economic Rate of Return (t) 14 Institutional Performance good good Technical Performance gOOd good STAFF INPUT Li LUI LUr ELM LF EL Y8U LU LUY8 L8 EL" FY8 TOTAL Identification/Prep. 0.8 20.3 4.0 - - - - - - - 25,1 Appraisal - 7.0 16.0 - - - - - - - - 23.0 Negotiations - - - 4.0 - - - - - - - 4.o Supervision - .6 a LA L_ 4.1 L 8 L L TOTAL 0.8 27.3 20.0 5.6 8.4 2,8 2.0 4.1 1.0 2.8 3.3 78.6 CUMULATIVE OISBURSEMENTS fY81 FY8 FY83 FY84 FY85 FY86 Appraisal Estimate (USS million) 12.0 30.0 57.0 70.0 80.0 90.0 Actual (USS million) 4.1 43.8 67.1 84.5 90.0 90.0 Actual as % of Appraisal Estimate (I) 34 146 118 121 113 COd Date of Final Disbursement Dec. 20, 1984 Principal Repaid as of 12/31/89 (US$ mil.) 90.0 MISSION DATA Mission Mandays Speciali- Performance Rating/d Dlates Persons in Field zations /c Status Trend Identification 85/77 2 42 a, b - Preparation 08/78 2 6 a, b Appraisal 0C/79 3 63 a,b,c,d Supervision I 07/80 1 06 L b 1 2 Supervision II 05/81 2 12 Li a,b 3 2 Supervision III 06/82 2 26 Le b c 2 2 Supervision IV 12/82 2 28 a a, b 2 2 Supervision v 05/83 2 26 Li A, b 2 1 Supervision VI 10/83 2 24 Li a. b 1 2 Supervision VII 04/84 2 16 Lg a a 3 2 Supervision VIII 13/84 2 24 L a b 2 1 Supervision IX 12/85 3 12 La a. b, b 3 Supervision x 11/86 2 la a.b 1 2 OTHER PROJECT DATA Borrower BanK for Agriculture and Food Industry (BAFI) Guarantor The Socialist Republic of Romania Executing Agency Ministry of Agriculture and Food Industry (MAIA) Fiscal lear of Borrower January 1 to December 31 Currency Naano (abbre.) lei (lei) Currency Exchange Rate (USt v lii): Appraisal Year Average USS 1.00 = lei 18.0 Intervening Years Average USS 1.0O = lei 16.2 Completion Year Average US$ 1.00 = lei 14.4 Name BBSP Irrigation Project Loan Number 1938-RO Loan Amount tUSS million) 75.o Date of Loan Agreement January 09. 1981 La Calculated in terms of months from date of Board approval. al Input as staff weeKs. Source: World Bank Planning and Budgeting Department. aI Specialists: a v econoeiist, b = engineer, c = agriculturist, d = drainage specialist. Li Status: 1 p problem free or minor problems, 2 v moderate problems, 3 = major problems: Trend: I = improving. 2 = stationary, 3 v deteriorating. L. Includes mandays in field spent concurrently on supervision/preparation of other ongoing projects. ID4153Z/P7O  - iv - PROJECT COMPLETION REPORT ROMANIA BUCSANI-.UZAU6 SRET-PRUT I8BSP) IRRIGATION PROJECT (LOAN 1938-ROI BASIC DATA SHEET Actual or ACtual as r DF Apprsi ;al Estimated APPr3,sal Estimate Actual Est1mates Total Project Cost (USS million) 375.3 319.4 65.1 Total Project Cost (lei millionl) 5627.7 5,556.3 98.7 Loan Amount (USS million) 75.0 74. 98.7 Date Board Approval 12/23/80 Loan Agreement Date I/09ia81 Date Effectiveness 04/30/81 10/14/81 106.8 1 Date Physical Components Completed 12/31/87 12/31/88 114 3 _/ Closing Date 06/30/58 06/30/88 D00 0 a Economic Rate of Return )22 Institutional Performance goOd good Technical Performance good good STAFF INPUT LI 1 EL F(1 LoZ FY74 FYao FLL8 FY FY87 Lol TOAL Identification/Prep. 0.6 13.0 - - - - - - - 13.6 Appraisal - - 44.7 - - - - - - - 44.7 Negotiations - - 4.9 - - - - - - - 4.9 Supervision - A 4.7 4 2 f1 1.4 La La I L1 TOTAL 0.6 13.0 53.4 4.7 4.2 6.3 1.4 2.9 2.9 .1 89.5 CU.aLATIVE DISBURSEMENTS EZ F ra F Ia 4 El" FYB7 Appraisal Estimate (US$ million) lao. 38.0 S3.0 63.0 69.0 75.0 Actual (USS million) 7.1 41.4 56.5 65.8 73.6 74.0 Actual as S of Appraisal Estimate (s) 39 109 107 104 107 98 Oate of Final Disbursiannt June 30, 1987 Principal Repaid as of 12/31/89 (USS mil.) 74.0 MtISSION DATA Mission Mlandays Special)- Performance Ratina/d D t si Persons in Field zations /c Statu Trend Identification 02/79 4 84 a,b.c.d - Preparation 10/79 2 6 a, b AppraIsal 04/80 4 88 a,b,c,d - Supervision I OS/81 2 24 LI b c 1 2 Supernision II 05/82 2 26 LI a.b 2 3 Supernision III 11/82 2 28 Li bb 2 2 Supervision IV 35/83 2 36 Lg b b 2 1 Supervision V 10,83 2 24 a. I 2 Supervision VI 04/84 2 17 a. b 1 2 Supervision VII 10/84 2 a L b. c 1 2 SuPervision VIII 10/85 3 24 La a, b, c 1 2 Supervision IX 01/86 2 24 LI b c 1 2 Supervision X 11/86 2 12 b c 1 2 SINCE PROJECT DATA Borroer Bank for Agriculture and Food Industry (BAFI) Guarantor The Socialist Republic of Romnia ExecutIng Aency Ministry of Agriculture and Food Industry (MAIA) Fiscal Year of borrowr January I to December 31 Currency Name (abbremv. lei (lii Currency Exchange Rate (US$1 = lei): Appraisal Year Average USS 1.08 oO 1 IS.0 Intervening Years Average uSS 1.00 z lei 14.7 ComAlgtion Year Average uSS 1.00 = lel 14.4 Fol lo"-o Praitet Name Caracal Titu Irrioation Project Loan Number 1971-RO Loan Amount (US$ million) 85.0 oate of Loan Agreement June 24, 1981 La Calculated in terms of months from date of Board approval. Lb Input as staff ueekS. Source: world Bank Planning and Budgeting Department. aI Specialists: a z conomist, b engineer, c = agriculturist, d = drainage specialist. La Status: I = problem free or minor problems. 2 = moderate problem. 3 z nmjor problem: Trend: I a Improving. 2 = stationary. 3 deteriorating. a Includes mandays In field spent concurrently on supervision/preparation of other ongoing projects. I04183z/P72  v PROJECT COMPLETION REPORT ROMANIA CARACAL TITU IRRIGATION PROJECT (LOAN 1971-RO) BASIC DATA SHEET KEY PROJECT DATA Actual or Actual as 'O of Appraisal Estimated Appraisal Estimate Actual Estimates Total Project Cost (US$ million) 379.3 318.2 d3.8 Total Project Cost (lei million) S,689.9 5,567.9 97. 8 Loan Amount (US$ million) 80.0 80.0 100.0 Date Board Approval 04/21/81 Loan Agreement Date 06/24/81 Date Effectiveness 07/31,/81 33/26/82 104.8 a/ Oate Physical Components Completed 2/31/8S 12/31/88 164.3 3/ Closing Date 06/30/86 06/30/86 100.0 a/ Economic Rate of Return (i) 20 Institutional Performance good good Tecnnical Performance good good STAFF INPUT L_ FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 TOTAL Identification/Prep. 2.3 16.9 - - - - - 19.2 Appraisal - 33.1 - - - - - 33.1 Negotiations - - 2.6 - - - - - 2.6 Supervision _ j.6 5.0 7.3 3.7 1.7 1.7 1.0 21.0 TOTAL 2.3 50.6 7.6 7.3 3.7 1.7 1.7 1.0 75.9 CUMULATIVE DISBURSEMENTS FY82 FY83 FY84 FY85 FY86 FY87 Appraisal Estimate (US$ million) 2.0 24.0 45.0 66.0 76.0 80.0 Actual (US$ million) - 12.6 54.4 72.2 80.0 80.0 Actual as % of Appraisal Estimate (%) - 52 123 109 105 100 Date of Final Disbursement March 30, 1986 Principal Repaid as of 10/31/89 (US$ mil.) 80.0 MISSION DATA Mission Mandays Speciali- Performance Ratino/d Dates Persons in Field zations /c Status Trend Identification 02/80 4 84 LB a,b,c,d - Preparation 06/80 2 6 a, 0 - Appraisal I0/80 4 88 a,b,c,d Supervision I 05/82 2 26 LB a, b 2 3 Supervision II 11/82 2 28 L_ b, b 2 2 Supervision III 10/83 2 34 L_ a, b 1 2 Supervision IV 04/84 2 52 L_ a, b 1 2 Supervision V 10/84 2 24 b, c 1 1 Supervision VI 12/85 2 29 a,b,b 2 2 Supervision VII 11/86 2 22 L_ a, b 2 1 OTHER PROJECT DATA Borrower Bank for Agriculture and Food Industry (BAFI) Guarantor The Socialist Republic of Romania Executing Agency Ministry of Agriculture and Food Industry (MAIA) Fiscal Year of Borrower January 1 to December 31 Currency Name (abbrev.) lei (lei) Currency Exchange Rate (US$l lei): Appraisal Year Average US3 1.00 = lei 15.0 Intervening Years Average uS$ 1.00 = lei 14.7 Completion Year Average USS 1.00 = lei 14.4 La Calculated in terms of,months from date of Board approval. Lb Input as staff weeks. Source: World Bank Planning and Budgeting Department. EL Specialists: a = economist, b = engineer, c = agriculturist, d = drainage specialist. * d Status: 1 = problem free or minor problems, 2 = moderate problems, 3 = major problems; Trend: 1 improving, 2 = stationary 3 = deteriorating. LB Includes mandays in field spent concurrently on supervision/preparation of other ongoing projects. I04153Z/P74  - vi - PROJECT COMPLETION REPORT ROMANIA - MOSTISTEA-CALMATUI (LOAN 1670-RO): COVURLUI (LOAN 1795-RO): BBSP (LOAN 1938 RO): CARACAL-TITU (LOAN 1971-RO) EVALUATION SUMMARY Introduction The four projects which are the subject of this completion report were the tenth, twelfth, fifteen and sixteenth in the agriculture sector in Romania, and the fifth, sixth, seventh and eighth in a series of eight loans made between 1974 and 1981, to develop irrigation and drainage infrastructure. The eight loans totalling US$ 545 million were made during this period to help develop irrigation over approximately 1.1 million hectares. Objectives The main objectives of the projects were to increase and stabilize agricultural production over a project area of about 650,000 hectares. This was expected in turn to have helped increase national income, food supply for internal consumption and export of primary or agroprocessed production. It was also expected to increase foreign exchange earnings through export or through the production of import substitutes such as sugar and pr-tein feeds/oil crops. These objectives were considered in line with both country and Bank development strategies. Implementation Experience In all four projects, construction started soon after effectiveness but slowed down almost immediately due partly to technical and administrative, but mostly to budgetary difficulties. Budget allocations under the projects were not sufficient to meet financial needs, as the Government was giving priority to a variety of construction activities outside agriculture. By the time of the last supervision (12/86), despite the fact that the loan funds had been completely drawn down, only 28% of the irrigation works had been completed, and only 24% of the drainage works. However, on the basis of the experience of the former irrigation projects in Romania it was expected that the four projects would be satisfactorily completed, though with considerable delay. Consequently, full development benefits were not expected until the late eighties and the early nineties. The aggregate final cost of the projects (Annex 1) has been estimated to be US$ 1,484 million or about 98% of the SAR's estimates of USS 1,512 million. Except for US$ 1 million under the BBSP Irrigation Project all Bank loan amounts were disbursed.  - vii -- Results Substantial delays were experienced in project implementation. By December 1986, the time of the last supervision mission, only about 25% of the irrigation and drainage works had been completed. We do not have final and factual information as to the advancement of works and to the technical, financial and economic impact of these projects. However, based on experience with previous irrigation projects in Romania, and discussions with staff responsible for appraisal and supervision of the projects, it is expected that the projects' main irrigation, drainage and flood control components would be satisfactorily completed and that the projects' objectives would be accomplished. Further, considering the high yield increases experienced under former similar irrigation projects, in the same general project areas it is possible that the projects would achieve satisfactory FRRs and ERRs. However, this is obviously only an assumption. Considering the delay experienced in project implementation, that lower priority was assigned to drainage and on- farm development, and that the provision for inputs was not consistent, actual calculations may differ substantially. Only after a visit to Romania and the collection of actual data, will it be possible to assess real economic and financial benefits, if any, achieved by the projects. Sustainabilitv Under the preceding projects inl the subsector assisted by the World Bank, Romania has been able to demonstrate suitable capability for operating and maintaining similar project infrastructure. The organizational changes introduced in the recent past have enabled the Ministry for Agriculture and Food Industry (MAFI) to operate and maintain these projects more efficiently and with better response to local conditions than it had been capable in the past. However regarding sustainability of the agricultural benefits at or above the anticipated levels,file information indicates that for several crops, comparison with yields achieved in other European countries with similar agricultural characteristics is disappointing. Substantial improvement is still possible in this regard. Findings and lessons learned The projects benefitted from lessons learned in the design and preparation of previous irrigation projects. They were based on least cost alternatives and improved designs made possible by experience learned from former projects. Large imbalances between loan disbursements and physical implementation persisted during the implementation of these projects. On the average, the loans were fully disbursed when only about 25% of project work was completed, indicating little relationship between disbursements and physical progress of project activities. In the future, a stronger link should be sought between planned loan disbursements and execution of works. The Bank should insist that precise timetables be submitted by the Government at appraisal, indicating a strict relationship between procurement operations and progress in the physical implementation of the project.  - viii - Despite substantial improvement in the bidding documents used for ICB to increase competition and foreign participation, only about 10% of contracts awarded after ICB were assigned to foreign firms. In the future, more opportunities for equipment of more advanced technology, increased cost effectiveness and energy efficiency should be encouraged. To avoid almost exclusive award of contracts under ICB to the domestic industry, as in the present projects and to avoid suspicion of under-bidding by domestic bidders or other irregularities, as expressed by foreign bidders on some occasions, the Bank should: (i) require the preparation of technical specifications implying the use of technologically advanced equipment, requiring direct foreign exchange financing; and (ii) prefer financing of projects where a high level of direct foreign exchange financing would be required.   PROJECT COMPLETION REPORT ROMANRIA - MOSTISTEA-CALUATUI (LOAN 1670-RO): COVURLUI (LOAN 1795-RO): BBSP (LOAN 1938 RO): CARACAL-TITU (LOAN 1971-RO) I. INTRODUCTION 1.01 The Agricultural Sector. Agriculture represents an important share of the economy of Romania, contributing in 1987 about 27% of GDP and with three million people employed in the sector, to about 28% of total employment. Agriculture's share in total export earning was about 12%. More than 50% of agricultural exports were in convertible currency. Since 1977, Romania maintained an agricultural trade surplus till 1987, upto which year information is available. About 63% of 15 million hectares of Romania's land is under agriculture, of which 10 million are arable. Sectoral growth depends heavily on intensified irrigation and drainage in the fertile Danube basin, and increased agricultural activity. 1.02 The agricultural sector is organized in primarily two field categories: (a) cooperatives for agricultural production (CAP) and (b) state owned agricultural farms (IAS). The former produced about one third of agricultural production and the latter one fourth. A small part - 13% of the arable land is cultivated in small individual plots, primarily for vegetable, fruits and livestock production. The rest is cultivated by farmers for subsistence. 1.03 The projects were part of a program for agricultural development, especially irrigation works, over an aggregate area of 602,000 ha and drainage over an aggregate area of about 441,000 ha. It also included soil erosion control on irrigated and non-irrigated lands. The areas affected by the projects were mainly in the Mostistea area and valley, where in addition to irrigation and drainage works four dual purpose, hydropower and irrigation reservoirs were built. Areas affected were also in the Covurlui plateau, and in the plains and in the foothill zones of Romania, where most of the arable land is located, but average rainfall is limited to about 450 mm. per annum. The potential irrigable land in Romania is about 5.5 million ha. out of which works totalling 3.1 million ha were completed by the end of 1986. The present projects were estimated to bring the total to 3.5 million ha. by completion. The projects were expected to provide a stable base for production and indirectly to have an impact on social and commercial activity. 1.04 Bank involvement in irrigation. Bank assisted irrigation projects accounit for about 35% of Romania's total investment allocations for agricultural development. The projects were partially financed by the fifth, sixth,, seventh and eighth loans for irrigation made by the Bank in the agricultural sector. The four loans together amounted to US$ 315.0 million. They brought agricultural lending to about US$ 686.0 million, or half the Bank's total commitments to Romania. Between 1974 and 1981 the Bank made a series of eight loans for the development of irrigated agriculture totalling US$545.0 million. The Bank's involvement contributed significantly to the advancement of Romania's irrigated areas and irrigation technology. The  -2- projects introduced important technical concepts or implemented innovative concepts, introduced under previous projects, relating to the need for alternative designs, criteria for selection of least cost alternatives, improved designs of canals, drainage, maintenance, land reclamation and desalinization. II. PROJECT PROCESSING 2.01 Proiect Identification and Preparation. The four projects were identified and prepared by MAFI between 1978 and 1980, within the framework of studies undertaken for the development of the national irrigation subsector. The MAFI's Institute for Studies and Designs of Land Reclamation did most of the preparatory engineering work. Because of the high professional level and experience of Romanian specialists the need for Bank assistance during preparation was minimal. 2.02 Appraisal. Negotiations and Effectiveness. Appraisals of the four projects, based on the preparation reports, were carried out in the following order: the Mostistea-Calmatui project in June 1978, the Covurlui Irrigation Project in June 1979, the BBSP project in April 1980 and the Caracal-Titu project in October 1980. Negotiations of the four projects were carried out between 1978 and 1980 without any major issues being raised. The most controversial point related to the limited amount (10-15%) of foreign equipment that would be procured through ICB. However, recognizing the considerable amount of indirect foreign exchange used in manufacturing Romanian equipment, the Bank accepted the possibility that the largest part of contracts, as in previous projects, would be awarded to Romanian manufacturers. The projects were brought to the Board in the following sequence: (i) Mostistea-Calmatui (US$ 70.0 m) in March 1979; (ii) Covurlui (US$ 90.0 m) in January 1980; (iii) BBSP (US$ 75.0 m) on December 1980; and (iv) Caracal-Titu (US$ 80.0 m) on April 1981. They became effective soon after Board presentation. III. PROJECT IMPLEMENTATION The Directorate General for Land Reclamation of the Ministry of Agriculture (DGEIFCA) was responsible for the implementation of the four projects. It did it mainly through its operation and maintenance enterprises (IEELIF). Following are the highlights of project implementation for each of the four projects: 3.01 The Mostistea-Calmatui Irrigation and Drainage Project. The project consists of two irrigation and drainage schemes; Mostistea (158,540 ha. irrigation, 82,680 ha. drainage) and Calmatui (24,840 ha. irrigation and 66,930 ha. drainage). Construction under the Mostistea-Calmatui project started soon after effectiveness, in 1979, but slowed down substantially in 1981. Delays occurred because of a combination of factors: technical difficulties, budgetary constraints, and shortages of fuel and other materials. During implementation, construction equipment procured under the project was removed to be used under the rice crash program. Further, it is not clear whether the full capacity of available equipment was indeed utilized to implement the project. Budgetary allocations were also prioritized towards  - 3 - other projects and programs in different sectors. By December 1986, when the last supervision mission visited Romania, only about 60,000 ha. or 40% of the irrigation program of the Mostistea component was completed, but no drainage work had been undertaken. Under the Calmatui component the progress was some what better as 20,000 ha. or about 80% of the irrigation program had been completed, and about 34,000 ha. or about 50% of drainage. Originally the project was expected to be completed by 12/84 (Mostistea) and by 12/85, respectively. (Calmatui). However, as a result of the above mentioned difficulties experienced, by December 1986 it was estimated that full implementation would require eight to nine years, instead of the five to six estimated at appraisal, with a 46% delay on the estimated completion date. Consequently, full development benefits were expected to start in 1989 instead of 1986 as estimated at appraisal. 3.02 The estimated final cost of the project, based on the 11/86 information, is US$ 439.2 million, which represents an overrun in US$ terms of about 7.3% over the appraisal estimate. In Lei terms the actual cost is about 14% less than the appraisal estimate, due partially to the official revaluation of the Lei vis a vis the US$ during the implementation period. 3.03 The Covurlui Irrigation Proiect The project includes a system of irrigation of 144,660 ha. by pumping water from the Danube, surface drainage of 8,660 ha., subsurface drainage of 919 ha., valley draining along 267 km. and soil erosion control on 55,981 ha. Construction under the Covurlui irrigation project started also soon after effectiveness (04/80), but its progress was soon hampered by the same problems, as those mentioned in the case of the former project. By December 1986 only about 25,000 ha. or 28% of the project irrigation program had been completed and about 700 ha. or 7% of the drainage works. The most significant negative impact of these problems was the serious delay in the construction of the Suhurlui dam and reservoir which directly affects the irrigation of about 60,000 ha. The delay was in part caused by technical problems related to the original design of the earth dam. A series of technical defects were detected and in addition there was an institutional dispute on land acquisition needed for borrow pits for the construction of the body of the dam. Several construction experts expressed reservations regarding stability of the earth fill during construction. It is not clear today whether the construction was eventually completed. DGEIFCA was considering substantial changes in the work program to expedite construction and had promised to send to the Bank in early 1987 a detailed new action plan including a time schedule. The project was estimated at appraisal to be completed by December 1987. At the time of the last supervision (12/86) the estimated deadline had been shifted to 12/1991, four years later than the SAR estimate. 3.04 The estimated final cost of the project is US$ 406.9 million with cost overruns of about 14.5% over the foreign exchange SAR estimate. In lei terms the actual cost is estimated to be about 2.5% less than SAR's estimates. 3.05 The Bucsani. Buzau. Siret. Prut (BBSP) Irrigation Proiect The project consists of four irrigation and drainage schemes; Bucsani (irrigation 36,800 ha., drainage 43,060 ha.); Buzau (irrigation 59,780 ha., drainage  40,630ha.); Siret (irrigation 15,687 ha., drainage 17,175 ha.); Prut (irrigation 31,082 ha., drainage 23,386 ha.). Various subsurface drainage, soil erosion control and other ancillary works are also included. Under this project construction works experienced the isame delays caused by the technical and budgetary problems mentioned above. By the time of the last supervision report (12/86) only the Bucsani component was substantially completed. The Buzau component estimated at appraisal to be completed by 12/87 had achieved 4% of the irrigation program and the drainage works had not yet started. At that time the project was expected to be completed by 1989/90. Under the Siret component priority had been given to drainage works, 70% of which had been executed by December 1986. However only 5,800 ha. or 37% of the irrigation works had been completed. Under the Prut component only about 10,900 ha. or 32% of the irrigation works and about 50% of the drainage works had been completed. This component, estimated at appraisal to be completed by December 1987, was now expected to be completed by December 1988, with a 16% delay on the original time estimate. Finally, the surface drainage and soil erosion components were only 53% completed. 3.06 The estimated final cost of the project is US$ 319.4 million equivalent, or 15% less than SAR estimates both in US$ and in leis. 3.07 The Caracal-Titu Irrigation Proiect. The project consists of two irrigation and drainage subproject; Caracal (irrigation 88,000 ha., drainage 38,500 ha.) and Titu (irrigation 42,912 ha., drainage 36,640 ha.). Construction under the Caracal-Titu Irrigation Project also experienced extreme delays in project implementation. By December 1986, the project was three years behind schedule or experiencing about 80% delays in project implementation. By that date, under the Caracal subproject, only 6,500 ha. or 7% of the irrigation program had been completed and none of the drainage program; while under the Titu component about 4,800 ha of the irrigation program and 4,300 ha. of the drainage program or about 11% of total had been executed. 3.08 The estimated final cost of the project was US$ 318.2 million equivalent or about 16% less than SAR estimates. 3.09 Disbursements. For all the four projects, by the time of the last supervision (11/86) a total of about 28% of the irrigation works had been executed and about 24% of the drainage works. Loan funds had been completely drawn down far ahead of schedule as follows: Mostistea-Calmatui, last disbursement was in February 1984, two years and four months before the closing date and about four years before the last estimated completion date. In the case of the Covurlui irrigation project the last disbursement was in December 1984, three years before the closing date and about seven years before the completion date estimated during the last supervision (12/91). BBSP was fully disbursed one year before the closing date and one and a half year before the completion date. Finally, the Caracal-Titu Project was fully disbursed by March 1986, one month before the closing date, and about 2 years before the estimated completion date (12/88). In the future, disbursements should be made proportional to civil works constructions, hence the Bank may;  -5 (i) consider the practicability of ICB contracts for civil works, (ii) tranche disbursements depending on progress in civil works implementation. 3.10 Procurement. No major issues about procurement was raised, although as in the past, only a relatively small part of ICB contracts was awarded to foreign firms. Foreign suppliers were awarded contracts for about US$ 30.0 million out of a total of US$ 315 million. The Romanian project specialists justified this situation by arguing that a substantial amount of indirect foreign exchange was involved in the procurement of domestic equipment. There is evidence in the files that the Bank was never happy about the status of the procurement operations, though no specific action was ever considered in this regard. 3.11 BAFI's accounts were audited regularly by its internal auditing department and by inspectors of the Ministry of Finance, in accordance with Romanian law which was found to satisfy Bank's auditing requirements. BAFI has also regularly furnished quarterly progress reports up to December 1986 in accordance with the formats agreed at negotiations and periodically improved in agreement between the Bank and the Borrower. IV. AGRICULTURAL AND ECONOMIC IMPACT 4.01 The areas of the projects are in the region of the Danube basin in the south of the country were other Bank financed irrigation projects have been undertaken. The two most representative of these projects are The Giurgiu-Razimiresti (Loan 1082-RO) and the Viisoara (Loan 1509-RO) Irrigation Projects. It was expected that the four irrigation projects, object of the present PCR, would achieve the same results of the two above mentioned projects described in their PCRs of December 1986, provided that the supply of fertilizers and other inputs and improved cultivation practices were kept at acceptable levels. The main agricultural results of these projects point to a decrease after irrigation of cereal production and an increase in the production of soybeans, sugarbeet and alfalfa and more profitable crops as cash crops and animal feeds. In general, increases in crop intensities were largely restricted to early harvested winter cereals. As expected, on the average, all irrigated crops including wheat and barley had shown improved yields as compared to the before project situation, but disappointing when compared with those of other European countries of similar agricultural characteristics. Consequently,under the present projects, it would be reasonable to assume that a continuous build up in yields would have taken place because of irrigation, improved soil conditions and due to improved cultural practices and fertilization. Production of cereals and major crops has increased availability for domestic consumption. As a consequence of the irrigation projects, Romania has also increased exports, mainly of edible oils, fruits and vegetables and meat. Incremental production of sugarbeet has helped reduce import of sugar. From the institutional view point the projects had a significant direct and indirect impact on the reorganization of the institutions supervising irrigation activities. Before the projects, design, construction, O&M were carried out by different institutions, which made coordination and supervision of activities difficult. Under the projects  -6- coordination of all irrigation activities were concentrated under DGEIFCA, increasing operational efficiency. Also another positive impact was the demonstration effect that drainage activities had on independent government projects. These did not usually include drainage before the Bank financed projects. Because of the demonstration effect that drainage works were having under Bank financed projects, drainage was gradually introduced under all irrigation projects in Romania. Further research activity under Bank financed projects was substantially strengthened, especially at the research stations of Braila and Funduleae, which became the focal points of all research being done to find practical solutions to agricultural problems countrywide. 4.02. The four projects were expected to generate economic benefits in the form of increased employment of technicians and higher skill laborers operating the irrigation systems and of workers in the agricultural and agroprocessing facilities and increased production of cash crops and other tradable outputs. Though lack of recent technical data does not allow the recalculation of FRRs and ERRs for the projects under review, rates of return calculated at completion for similar projects in the project areas were found to be compatible with SARs estimates. It would be reasonable to assume that similar results will be forthcoming from the present projects. However, more detailed field analysis and performance data are required for a valid assessment of the benefits, if any, achieved by the projects, if indeed they have been completed. 4.03 Performance of the Bank. The Mostistea-Calmatui Project with 121.4 staff weeks required for appraisal and implementation needed substantially more (32%) manpower than the average of the four projects (92.3%) This was basically due to the fact that the project area had more reservoirs and irrigation areas to supervise. The frequency of supervision (1.5) per year was less than the normal 2 per year average (see basic data sheet). The composition of the missions was reasonable, although agriculturalists participated only in six of the fifty six supervision missions. Advice given and comments made by the Bank were usually welcome and useful. Supervision reports fairly reflect: the progress of execution and the issues encountered. V. CONCLUSIONS AND RECOMMENDATIONS By December 1989, the Government of Romania had completely paid back to the Bank the full amount of the four loans. Since contacts with BAFI and MAFI have been completely suspended in early 1987, no supervision evidence and no relevant information exist since the last supervision report in December 1986 with regard to project implementation. On the basis of the available evidence in the EMENA documentation center, discussions with staff responsible for project implementation and performance under previous irrigation projects in the project areas, it is assumed that projects' works have progressed satisfactorily, since December 1986. The agricultural and economic impact of the projects are also expected to be in line with SARs' expectations. Available evidence and assumptions will eventually have to be reviewed with the Romanian authorities and technicians during a field mission,  -7- as no substantive ex-post assessment of these projects is possible only through a desk review. While considering to resume lending for agriculture to Romania, which after the recent political events may be a possibility, a Bank mission should visit the country to review the findings of the PCR and to assess more directly the progress in implementation of the irrigation projects and their economic, financial, institutional and agricultural impact.  -8- ANNEX I PROJECT COMPLETION REPORT ROMANIA IRRIGATION AND DRAINAGE PROJECTS PROJECT COSTS. LOAN AMOUNTS. CLOSING DATES. FINAL DISBURSEMENTS DATES Project Name Prit Costs US$ m. Loan Amnt USS m. Closing Date Final Dsb Date SAR Actual SAR Actual SAR Actual Mostistea-Calmatui Irrigation & Drng 409.2 439.2 70.0 70.0 6/30/86 6/30/86 2/84 Project Covurlui Irri. 354.6 406.9 90.0 90.0 12/21/87 12/31/87 21/84 Project BBSP Irr. Project 375.3 319.4 75.0 74.0 6/30/88 6/30/88 6/87 Caracal-Titu Irr. Project 379.3 318.2 80.0 80.0 6/30/86 6/30/86 3/86 TOTAL 1,518.4 1,483.7 315.0 314.0  MAP SECTION   L. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4 _ '__,,________s =e, < , $\ : li?/ b.->6- <-, - - ~~~~~~~~~~~ 1X~~~~~~~~~~~~~~~~~1 Mosi$ta ad Clmaui WFk1:I.A?tLr-22/ FlS Fe 5 Irrigution~~~~~~ anVriaePoet%rt~~\ _t2 32 i9 fs/efI lo; MSITA);-' o\F .1Y 2 X 1 Qd g Prqectaeu( gotloo2sstem)boundury ll~~~~~~~~~~~~~~~i Y zz'.! 2r CA u9frdtrsfcn95 f55B ls _ __ .@ ' 7> " -Is; ,~5~^ \ i ^~~~~~~~~ ~ D1CO9F5 . ( L y ,s;gylSt X1 oi A Iriato aNd ppdorainges hn rms/jX A D-nq ing \/ ... .... FlddonayDsrc on:y ~ _ ~ Ss ~ _>i. iCT ... U E-_._ . 5roWol budo-y !-.1__=_yfgt,i; 'F f>tnj,F;5 h;! :E~t. d_I,u ,,-I=,a . ; r 2 W >W zi,P   IBRD 13934 ROMAN IA NOVEMBER 1978 Ovitesti Mostistea & CilmWtui Irrigotion & Drainage Project CALMATUI Project area boundary Water delivery canals '''' A