India - Second Andhra Pradesh Irrigation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15708 IMPLEMENTATION COMPLETION REPORT INDIA SECOND ANDHRA PRADESH IRRIGATION PROJECT (Loan 2662/Credit 1665-IN) June 11, 1996 Agricultural and Water Operations Division Country Department II South Asia Region This document has a restricted distribution and may be used by recipients only in the performnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS Currency Unit = Indian Rupees (Rs.) Rs.13.0 = US$1.00 (Appraisal-April 1985) Rs.26.1 = US$1.00 (Intervening years average) WEIGHTS AND MEASURES (Metric System) I Meter (m) = 3.28 feet (ft) I kilometer (kim) = 0.62 miles (mi) I hectare (ha) = 2.47 acres (ac) I million cubic metres (m3) = 804 acre-feet (ac-ft) I cubic metre per second (m3/s) = 35.28 cubic feet per second (cusec) I kilogram (kg) = 2.2 pounds (lb) I metric tonne (mt) = 2,205 pounds (lb) I thousand million cubic feet (TMC) = 28.3 million cubic metres (Mm3) FISCAL YEAR OF BORROWER April I - March 31 ABBREVIATIONS AND ACRONYMS AP Andhra Pradesh APAU Andhra Pradesh Agricultural University APM Adjustable Proportional Module CADA Command Area Development Authority CADD Command Area Development Department CCA Cultivable Commanded Area CWC Central Water Commission GCA Gross Commanded Area GOAP Government of Andhra Pradesh GOI Govemment of India ICB Intemational Competitive Bidding ICR Implementation Completion Report I&CADD Irrigation and Command Area Development Department LCB Local Competitive Bidding LMD Lower Manair Dam OC Outlet Committee O&M Operation and Maintenance OFD On-Farm Development PAP Project Affected Person PPM Project Preparation and Monitoring Wing (of I&CADD) PWD Public Works Department RAP Resettlement Action Plan R&R Resettlement and Rehabilitation RD Revenue Department RWS Rotational Water Supply SAR Staff Appraisal Report SIN Structured Irrigation Network SRBC Sfisailam Right Branch Canal SRS Sriramasagar TMC Thousand Million Cubic Feet WALAMTARI Water and Land Management Training and Research Institute GLOSSARY Hot Season March to May Kharif (Monsoon Season) June to September Rabi (Dry Season) October to February Irrigated Dry Irrigated land designated for crops other than rice and sugarcane Irrigated Wet Irrigated land designated for growing rice and sugarcane  FOR OFFICIAL USE,ONLY IMPLEMENTATION COMPLETION REPORT INDIA SECOND ANDHRA PRADESH IRRIGATION PROJECT (Loan 2662/Credit 1483-IN) TABLE OF CONTENTS PREFACE ......................,, i EVALUATION SUMMARY i.. PART I. PROJECT IMPLEMENTATION ASSESSMENT . . A. Project Objectives .1 B. Achievement of Project Objectives .2 C. Major Factors Affecting the Project .4 D. Project Sustainability .9 E. Bank Performance .9 F. Borrower Performance .13 G. Assessment of Outcome .14 H. Future Operations .14 I. Key Lessons Learned .14 PART II. STATISTICAL TABLES ..17 1. Summary of Assessments .17 2. Related Bank Loans/Credits. 19 3. Project Timetables .20 4. Loan/Credit Disbursements .20 5. Key Indicators for Project Implementation. 21 6. Key Indicators for Project Operation .23 7. Studies Included in Project .24 8. Project Costs and Financing .26 A. Project Expenditure .26 B. Project Financing .26 9. Economic Costs and Benefits .27 This document has a restricted distribution and may be used by recipients only in the performance of their oficial duties. Its contents may not otherwisc bc disclosed wiLhout World Bank authorization.  10. Status of Legal Covenants ........................................................... 28 11. Compliance with Operational Manual Statements ............. ........................ 31 12. Bank Resources: Staff Inputs .......................................................... 32 13. Bank Resources: Missions ........................................................... 32 Appendix A. FAO/CP Mission Aide Memoire ......................................................... 33 Appendix B. Resettlement and Rehabilitation ......................................................... 46 Appendix C. Economic Re-evaluation ............................................................ 50 TABLES 1. Cumulative Benefitted Area (ha) Srisailam .55 2. Summary of Financial and Economic Prices. 56 3. Sriramasagar km 0-146 - Expenditures and Completion Costs .57 4. Sriramasagar km 146-234 - Expenditures and Completion Costs .58 5. Sriramasagar km 234-284 - Expenditures and Completion Costs. 59 6. Srisailam RBC - Expenditures and Completion Costs .60 7. Construction Conversion Factor .61 8. Economic Analysis - Sriramasagar .62 9. Economic Analysis - Srisailam Right Bank Canal .63 10. Economic Analysis - Whole Project .64 Appendix D. Final Evaluation Report from the Borrower and Comments on ICR ....... ........ 65 Map IBRD 18986R Map IBRD 18842 Map IBRD 18843  i IMPLEMENTATION COMPLETION REPORT INDIA SECOND ANDHRA PRADESH IRRIGATION PROJECT (Loan 2662-IN/Credit 1665-IN) Preface This is the Implementation Completion Report (ICR) for the Second Andhra Pradesh Irrigation Project in India for which a combined loan (Loan 2662-IN) for US$131 million and credit (Credit 1665-IN) for SDR 127.5 million were approved on March 20, 1986 and made effective on October 2, 1987. During the project period the loan was cancelled in its entirety and SDR 40.8 million from the credit was diverted to finance the Andhra Pradesh Cyclone Emergency Reconstruction Project (Credit 2179-IN). The credit was fully disbursed on August 24, 1994, about two months after the original closing date of June 30, 1994. This ICR was prepared by a mission from the FAO/World Bank Cooperative Program which visited India in July/August 1994. It was finalized by the Mr. J.R. Malhotra, Irrigation Engineer and Task Manager, Agriculture Unit of the Resident Staff in India, and Ms. Teresita N. Estoque, Operations Analyst, Agriculture and Water Operations Division, Country Department 2, South Asia Regional Office, and reviewed by Mr. Theodore Herman, Senior Water Resources Engineer, Mr. Shawki Barghouti, Division Chief, and Ms. Kazuko Uchimura, Project Advisor. The Borrower contributed to the ICR by commenting on the mission's aide memoire and the draft ICR, and by preparing its own evaluation, which are included as appendices to the report. Preparation of the ICR was initiated during the Bank's final supervision mission in May 1994. It is based on a review of materials in the project files, field investigation, and discussions with project staff and officials of the State of Andhra Pradesh, and staff of the Bank associated with the project.   .h IMPLEMENTATION COMPLETION REPORT INDIA SECOND ANDHRA PRADESH IRRIGATION PROJECT (Loan 2662-IN/Credit 1665-IN) Evaluation Summary Introduction 1. Irrigation development in India has been given very high priority since the beginning of the planning era in 1950. It is estimated that the increased production resulting from investment in irrigation has accounted for at least three-quarters of agricultural growth since 1960. However, production levels in much of the irrigated area, especially the area irrigated from surface sources, is considerably lower than the potential for a number of reasons. 2. Pre-independence irrigation systems were in many cases planned for famine relief; they had limited or no storage and did not have sufficient water control structures. Later development in the 1960s provided the main storage and diversion dams and main conveyance system only, leaving the construction of the distribution system to farmers. This resulted in considerable delays in utilization of the water and inefficiencies in water use. 3 . In the 1970s the concept of the Command Area Development Authority (CADA) evolved. CADA's main objectives were to coordinate the activities of the state Irrigation and Agriculture Departments, and to assist farmers with credit and advice for the construction of the minor systems and for land development. For a number of reasons, the CADA approach was not entirely effective. Among these were the farmers' reluctance to invest in irrigation works when the water supply was not reliable, and that no facility or framework for effective group action had been developed in the irrigation sector. Experience indicated that more emphasis was required on improving the efficiency and reliability of the conveyance system from the water source to the irrigation outlets, and that government should assume greater responsibility for conveying water to an outlet closer to the farm gate and to assist in construction of watercourses providing water to individual fields and also to promote the development of effective farner involvement and support for efficient group action and cooperation between irrigators. The indications were that when farmers are fully confident of their water supply they will invest time and money in effective irrigation at farm level. 4. The major constraint to increased crop production in Andhra Pradesh has been limited irrigation supplies. The State traditionally relied upon monsoon rainfed agriculture supplemented by tank irrigation, an option that in most areas is now fully utilized. Further expansion of agricultural production depended on the completion of surface water schemes, and above all on the more efficient use of existing irrigation supplies. It was against the above background that the Second Andhra Pradesh Irrigation Project (Loan 2662/Credit 1665-IN) was designed and implemented. Project Objectives 5. The project aimed to increase agricultural production and farmers' incomes by bringing new and/or improved irrigation to two sub-project areas: (a) Srisailam Right Branch Canal (SRBC) sub-project (65,000 ha), and (b) Sriramasagar (SRS) sub-project, Kakatiya Canal Command (modernization of 165,000 ha above Lower Manair Dam (LMD) and new development  Hi of 163,000 ha below LMD). Common to both of the sub-projects were the following: provision of a feeder road network (1,152 km); irrigation water management development; equipment, especially communications equipment; training of staff and farmers; continued rehabilitation and provision of resettlement village amenities for oustees from existing reservoirs providing water for the sub-projects; monitoring and evaluation, technical services, as well as provision for studies and planning. The SRBC sub-project comprised construction of a main canal (about 143 km long and with a minimum capacity of 750 cusecs (21 cumecs), including a major crossing structure across a valley at Gorakallu), and the necessary irrigation distribution system. The essential feature of the SRS sub-project was to improve the existing main canal and its distributaries (km 0-146); extend it to km 284 and improve the irrigation infrastructure as described above. 6. Loan and Credit Covenants. There were 33 legal covenants of which 13 had been fulfilled by project closure (June 30, 1994). Twenty-two of the legal covenants were drafted to promote achievement of the project objectives; of these eight had been complied with by project closure (see Part II, Table 10). 7. A Resettlement and Rehabilitation (R&R) Program for oustees from dams built by GOAP but to be used by this project had not been agreed at appraisal. Therefore, as a condition of Loan/Credit effectiveness the project was required to submit to the Bank for approval the R&R Program and related Action Plan in respect of these oustees. GOAP was delayed in furnishing revised R&R Action Plan satisfactory to the Bank resulting in a 16-month delay in effectiveness to October 2, 1987. The terms of this condition were waived and not transformed into a dated covenant to enable the project to become effective. Thus a "rolling" Action Plan periodically updated on the basis of changing targets and implementation progress was used, instead of a dated Action Plan Covenant. 8. Evaluation of Project Objectives. The project objectives were sensible and relatively simple to achieve. There was a need to increase agricultural production and farmers' incomes. The engineering works were straightforward and easy to construct. The "structured" irrigation design used for the canalization was a new concept, but should not have provided many difficulties for an efficiently organized irrigation department. The amount of irrigated development depended on persuading farmers in the existing SRS command to change their cropping pattern and to be economical in water usage; this was one of the major problems which caused delays in implementing the project. Also, the preparation and implementation of a proper R&R program for oustees from Srisailam and Lower Manair reservoirs was inadequate causing implementation delays, but most of all, losing sight of the objective of income restoration of all the displaced population and not only its below poverty line members. Implementation Experience and Results 9. Assessment of Project Success. Project benefits were expected to commence in Year One from the improvements to the existing irrigated area. These failed to materialize. The subsequent development of new irrigation areas also failed to materialize because of construction delays and improper construction scheduling. The project failed to achieve any of its major objectives and has not yielded, and is not expected to yield, worthwhile development results without additional investment. The question of the project's sustainability is irrelevant because it never reached the operational status. 10. In the SRBC sub-project the main problems were caused by inadequate design and resulting cost overruns stemming from under-estimating the amount of hard rock excavation needed due to lack of adequate site investigation; providing canal lining in some places where it was not required; poor performance of badly selected contractors; and superficial investigations of  iv revised main canal alignments following the Bank's appraisal decision to omit Gorakallu reservoir from the project. 11. In the SRS sub-project similar problems occurred but were compounded GOAP's decision to reduce water allocation amounts to those suited for non-rice crop cultivation only and thus facilitate the planned extension of the command area. Non-acceptance of this policy by farmers delayed remodelling of the existing irrigation works. 12. Costs. Financing and Timetable. The project was to be financed by Loan 2662-IN of US$131 million and Credit 1665-IN of SDR 127.5 million (US$140 million equivalent), providing a total of US$271 million equivalent. The contribution of the Government of India (GOI) and GOAP was estimated in the SAR to amount to US$204.7 million. The total estimated cost of the project was thus US$475.7 million. 13. Actual total project expenditure in Rupee terms as of June 30, 1994 was Rs.5,548.8 million, or 90 percent of the appraisal cost estimates of Rs.6,185 million. Actual expenditure was Rs.2,218.4 for the SRS sub-project, including Rs.2,122.2 million for the construction works in below the LMD sub-project and Rs.96.2 million for the pilot modernization works in above the LMD sub-project, and Rs.3,330.4 million for the SRBC sub-project, or 74 percent and 104 percent respectively of the appraisal estimates of Rs.2,977 million for the SRS sub-project and Rs.3,208 million for the SRBC sub-project. Due to the devaluation of the Indian Rupee against the US dollar the actual total project expenditure in US dollar terms was only US$213 million, or 45 percent of the appraisal cost estimates of US$475.7 million. 14. The project was to be implemented over a period of 7.5 years from the Loan/Credit signing; irrigation development benefits were to commence in project Year One increasing each year to a total area of 354,000 ha by project completion (the balance of 39,000 ha was to be completed in the five years subsequent to completion). As already noted (para. 9) no irrigation (either modernized or new) was provided by the project. 15. Key Factors Relating to Achievement of Objectives. The main factors leading to the highly unsatisfactory conclusion of this project were: (a) inadequate preparation of the project, in particular lack of designs in sufficient detail for major structures to facilitate accurate estimation of costs, lack of a realistic assessment of actual water resources available combined with a lack of rigorous hydrological analysis with no simulation modelling, unrealistic cost estimates due to cost estimating procedures being based on GOAP guidelines, and unrealistic implementation scheduling; (b) an unsatisfactory appraisal, with several critical aspects of project design not properly dealt with or disregarded (for example: inadequate field investigation, supply reliability, lack of rigorous analysis relating to balancing reservoirs, acceptance of imprecise cost estimates and implementation schedules, lack of appreciation of the consequences of the water management changes required, apparent failure to consider alternative approaches to overall design of the project, and no appreciation of the possibilities created by the many tanks in existence in the SRS sub-project area); (c) failure to plan thoroughly and appraise adequately R&R requirements leading to formulation of annual Action Plans without the availability of properly specified entitlement policy or implementation framework;  v (d) unsatisfactory performance of the initial contractors; (e) lack of a strong project coordinating organization; (f) lack of drive in the Irrigation and Command Area Development Department; (g) unrealistic belief that farmers would readily accept a new cropping pattern and re-designation of their land based on reduced water allocations; (h) improper construction scheduling; and (i) imprecise water supply projections and delays and confrontation caused by the Bank's queries about the adequacy of water allocation for the project. 16. Performance of Bank and Borrower. Both parties under-performed at preparation and appraisal, the Borrower continued to exhibit poor performance during implementation which only gradually improved. Supervision by the Bank proved ineffective. Although the project encountered serious implementation difficulties right from the early years of the project period, the supervision missions failed to come to grips with the emerging implementation problems and offer viable solutions to resolve them. Instead, much of the time was lost in quest.oning the adequacy of water allocated for the SRBC sub-project and confronting the Borrower with threats of suspension of disbursements. Strenuous efforts by the supervision missions in later years to retrieve the poor situation caused by the planning and engineering inadequacies of project preparation and appraisal did not generate the necessary response from the Borrower. The option of restructuring the project was belatedly considered (mid-1992), and decided against. An early realization and a firm warning by the Bank supervision missions that the project was failing could have led to a formal and timely review to restructure the project, which could then have increased the chances of its success. 17. Project Outcome Assessment. The project outcome is rated as "Highly Unsatisfactory". Summary of Findings, Future Operations and Key Lessons Learned 1 8. Findings. The most important finding of the project implementation experience is that a thorough project preparation in the form of a feasibility study, field investigations and detailed designs in conformity with Bank's standards followed by a stringent appraisal to ensure "quality-at- entry" of the project proposals are essential prerequisites to provide implementation success, as subsequent efforts through good supervision, even if strenuous, would not help fully resolve the implementation problems emerging from unsound preparation and appraisal of the project. Also, the lack of a commanding, motivated project coordinating organization, as in this case, would definitely hinder the project achievements. 19. Future Operations. There cannot be any consideration of future project operations and sustainability in the context of this ICR, since the investments under the project have not generated modernized or new irrigation. It is possible that further investment would enable some parts of the project to become operational. To that end, and at the request of the Government, the Bank is currently processing the proposed follow-up Third Andhra Pradesh project to complete the SRBC sub-project and modernize the existing command area of the SRS sub-project. 20. Lessons for Future Projects in this Sector. The main lessons for future projects in the irrigation subsector learnt from the experience of this project are:  vi (a) the Bank should strictly enforce its own guidelines on the quality of project preparation and appraisal; (b) at project appraisal, water supply availability and reliability must be unambiguously established and command areas sized accordingly, and where the project design is changed at appraisal (such as elimination of the Gorakullu and Owk Reservoirs in this case), the appraisal should specifically determine whether the capacity (and cost) of other facilities should be reduced, or left unchanged to facilitate possible system expansion at a later date; (c) detailed designs for major works based on adequate field surveys and sub- surface investigations must be available, cost estimates should be realistic and based on market prices, and introduction of new methods of system design and management - such as structured irrigation networks (SIN) and rotational water supply (RWS) - should be fully documented to ensure their understanding and application by the Borrower; (d) appraisal missions should rigorously review the implementing organization's ability to adequately control construction quality and to include in the project appropriate remedial measures to ensure efficient operation and water management; (e) particular attention should also be paid to establish viable institutional arrangements for involvement of beneficiaries in participatory irrigation management, and particularly where water delivery rights and allocation arrangements are to be changed, an appropriate legal, regulatory and administrative framework must be in place to implement the new system of water allocation; (f) loan/credit effectiveness conditions should be strictly enforced (in this case the submission of a satisfactory R&R Action Plan), and if such conditions are are to be waived, they should be transformed into dated covenants; (g) procurement of work contracts should follow a logical implementation sequence to enable timely realization of benefits as planned and to permit any adjustments needed if and when doubts about adequate water availability occur; (h) as soon as clear symptoms of serious implementation difficulties are visible, Bank supervision missions should come to grips with problems and propose immediate viable solutions, even if they lead to strong action such as a fundamental modification of the appraised project formulation and design; (i) project implementation success depends on establishment of viable institutional arrangements for involvement of beneficiaries in participatory irrigation management, and particularly where water delivery rights and allocation arrangements are to be changed, an appropriate legal, regulatory and administrative framework must be in place to implement the new system of water allocation; and  vii (j) as soon as clear symptoms of serious implementation difficulties are visible, Bank supervision missions should come to grips with problems and propose immediate viable solutions, even if they lead to strong action such as a fundamental modification of the appraised project formulation and design.  1 IMPLEMENTATION COMPLETION REPORT INDIA SECOND ANDHRA PRADESH IRRIGATION PROJECT (Loan 2662-IN/Credit 1665-IN)) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES 1. The main objective of the project was to raise agricultural production and farm incomes through the expansion of irrigated areas and the efficient utilization of available water supplies in two sub-project areas located in the poorest drought-prone areas of Andhra Pradesh. To achieve this objective, the project was to assist with the further development of the Sriramasagar (SRS) scheme; initiate and complete the development of a greater part of the Srisailam Right Branch Canal (SRBC) scheme; and introduce improved design and operation principles as pre-conditions to a reliable and equitable irrigation service. The project was to be implemented over seven and a half years. 2. The project components comprised: (a) Conveyance System Works for: (i) SRBC sub-project (construction of a 146 km long main canal); and (ii) SRS sub-project (upgrading and completion of conveyance works in the Kakatiya Canal Command between km 0 to 146; completion and new conveyance works in the Kakatiya Canal Command between km 146-267; and excavation of a tail section of the Kakatiya Canal to serve as an escape - km 267 to 284). (b) Components Common to both Sub-Projects: (i) block development of about 65,000 ha in the SRBC sub-project, modernization of 165,000 ha and new development of 163,000 ha in the SRS sub-project; (ii) feeder road network; (iii) water management including development of farmers participation; (iv) equipment for project implementation, including telecommunications; (v) provision of training facilities and training of professional and support staff required for project implementation, and training of farmers; (vi) rehabilitation of, and amenities for, oustees from the Srisailam and Manair reservoir sites; and (vii) monitoring and evaluation, technical services and provision for studies and planning. 3. Only minor modifications were made to the project during implementation. These involved a change in the approach to agricultural extension and some modification to the design of the roads component. 4. The objectives were clear and relatively simple to achieve, but physical targets and implementation period were not all realistic. They lacked realism because they did not take note of a critical assumption made as part of the objectives - an enforced change in the cropping pattern due to reduced water allocation. Such a change had already been tried and found to have failed in the  2 same state and in an area adjacent to SRBC in a previous project]. The objectives were important for the country and sector and complemented the Bank's Country Assistance Strategy. B. ACHIEVEMENT OF OBJECTIVES 5. Within the six and three-quarter year period between the delayed credit effectiveness and closing date, the project failed to achieve its implementation targets and any of its major objectives. Whilst some major construction has been completed or in some cases partly constructed for both sub-projects, the scheduling of construction was such that no contiguous portion of new or rehabilitated canal or command area was completed. Thus no irrigation (either modernized or new) was provided by the project (overall project physical progress on SRBC was 38 percent and on SRSP 21 percent as of June 1994).2 6. A condition of Loan/Credit effectiveness was the submission by GOAP of a suitable R&R Action Plan for oustees from the reservoir sites of the dams connected with the project. These dams had earlier been constructed by GOAP with inadequate attention to the R&R needs of oustees from submerged areas. After considerable delay in GOAP's submission of the R&R Action Plan, and waiver by the Bank of the effectiveness condition, the Loan/Credit was declared effective on October 2, 1987. This condition was not transformed into a dated covenant. The time- bound Action Plan submitted by GOAP and approved by the Bank for implementation in 1988 was further revised and incorporated into a new Action Plan in 1991. But still, the pace of implementation of the R&R activities was very slow until 1992-93. Subsequently, however, the implementation progress improved substantially and the R&R activities as envisaged under the current Action Plan have been largely completed (Appendix B).3 Provision of feeder roads amounted to 48 percent of the appraisal target at a cost of about Rs.377 million (72 percent of the appraisal provision). A good deal of training of staff and farmers was well carried out (447 engineers, 4064 contact farmers and 3024 outlet committee chairmen4). Groundwater studies were competently carried out during the years 1990-94 in both SRS and SRBC sub-project areas. 7. Overall water management in SRS has not improved, no new agricultural extension system has been established5, and although 900 outlet committees (OCs) were formed for the existing irrigation area above Lower Manair Dam they have become defunct for lack of the expected new micro-network and lack of leadership from the Irrigation and Command Area Development Department (I&CADD). Despite their merger, institutional development in terms of combining the Irrigation Department (ID) and the Command Area Development Department (CADD) into an effective I&CADD was unsuccessful and, in fact, probably reduced the level of performance and achievements these two departments were individually capable of before being merged. This is because the immediate construction aspects remained a priority and dominating 1 Andhra Pradesh Composite Irrigation Project (Loan 125 1-IN), closed on June 30, 1985. 2 From "Borrower Contribution to the ICR", GOAP, June 30, 1994. It should be noted that the borrower anticipates that, given sufficient funds and taking into account the increase in the rate of construction over the project period, the project works could be completed by June 1997. 3 Subsequent preparation missions for a proposed follow-up Third Andhra Pradesh Irrigation project are of the opinion that work still remains to be done to meet the objectives of the R&R Component. The remainder R&R retrofit work will be financed under this proposed project. 4 By Water and Land Management Training and Research Institute (WALAMTARI). 5 The SAR (para. 5.13) envisaged the creation of special extension areas within the sub-projects. This was cancelled halfway through implementation in agreement with the Bank.  3 influence, whilst the activities of the erstwhile Command Area Development Department were short-funded and sidelined. 8. Because of its failure to meet physical targets substantially under both the sub- projects and respond to the aspirations of local population, the project created some demoralizing impact on the overall macro-economic environment. Poverty reduction did not take place. There also has been some adverse environmental effects due to the presence of partially completed and unused excavations, in some of which stagnant water has accumulated and which impede communications, particularly for the underpriviledged. 9. Project Impact. Although the works are incomplete, the project impact has been evaluated assuming that further funding will be available to complete the project works and taking into consideration three distinct benefits: irrigation modernization in 165,000 ha in km 0-146 under the SRS sub-project; and new irrigation in 163,000 ha in km 146-284 under SRS and in 65,000 ha under the SRBC sub-project. At project completion in June 1994, benefits have not commenced because construction works were only partially completed. With additional investments to complete the on-going works, benefits are estimated to be generated from 1995 and full benefits thereafter. Cropping patterns and yields of crops in present situation are based on farm surveys conducted by the Department of Agriculture (DOA), while those in the "without project" (WOP) and the "with project" (WP) situations are projected by DOA based on farm surveys and historical productivity trends in the project areas. Cropping intensities are: (i) 148 percent in present, 151 percent in WOP, and 152 percent in WP situations in km 0-146; (ii) 109 percent in present, 114 percent in WOP and 149 percent in WP situations in km 146-284; and (iii) 103 percent in present, 107 percent in WOP and 163 percent in WP situation in SRBC. In the "with project" situation, the increased production would come mainly from increases in cropping intensities in areas where new irrigation would be introduced and significant shifts from low value crops (pulses, pigeon pea, chick pea, coriander, tobacco, medium staple cotton, etc.) to higher value crops, including long staple cotton, oilseeds, vegetables, mulberry, fruits, and some seed production, in both already and new irrigated areas. 10. Economic Rate of Return. The current economic rates of return (ERRs) re-estimated at project completion are 16.1 percent for SRS, and 11 percent for SRBC, and 14.4 percent for the combined two schemes (Appendix C, Tables 8-10), compared with the appraisal estimate of 23 percent, 20 percent and 22 percent, respectively. The lower ERRs are due mainly to longer implementation period resulting in delayed accrual of project benefits, and cost overrun. The recalculated ERRs are based on actual expenditures incurred up to Loan/Credit closing date plus costs to complete works until FY99, and the updated projection of benefits. 11. Sensitivity Analvsis. Sensitivity analysis has been carried out to consider the impact of major risks, including delays in completing the on-going works and the resulting delayed accrual of project benefits, and increased completion costs. The results of the sensitivity tests show that ERRs are not sensitive to either delays/decreases in benefits or increases in completion costs as summarized below:  4 Economic Rate of Return (ERR) SRS SRBC Combined Two Schemes Base Case 16.1 11.0 14.0 Completion Costs (+20%) 15.7 10.3 13.9 Total Benefits (-20%) 14.5 9.4 12.8 Total Benefits lagged 2 years 14.2 9.6 12.7 Benefits lagged 2 years, completion costs (+20%) 13.7 9.1 12.1 12. Farm Incomes. Farm income analysis has been re-estimated at completion on the assumptions made at appraisal using the current and projected cropping patterns and crop budgets in the WOP and WP situations and the prevailing 1994 prices of outputs and inputs (Appendix C, Table 2). The project impact on farm incomes has, therefore, been analyzed for three representative farms: 2.3 ha farms in already irrigated areas and newly irrigated areas in SRS and 3.6 ha in newly irrigated areas in SRBC. Based on the above assumptions, the re-estimated incremental annual net farm income at full development is Rs.25,930 and Rs.38,265 for 2.3 ha farms in already and newly irrigated areas in SRS and Rs.97,220 for 3.6 ha farms in SRBC, reflecting real increases of 17 percent-55 percent over the appraisal estimates as summarized below: Farm Incomes Incremental Annual Net Farm Incomes (Rupees) Appraisal Estimate ICR Estimate 1985 Prices 1994 Prices 1994 Prices Already Irrigated Areas (2.3 ha) in SRS 10,340 22,130 25,930 Newly Irrigated Areas (2.3 ha) in SRS 11,550 24,720 38,265 Newly Irrigated Areas (3.6 ha) in SRBC 31,900 68,265 97,220 C. MAJOR FACTORS AFFECTING THE PROJECT Factors Not Generally Subject to Government Control 13. Factors which have contributed to the failure of both the sub-projects and which can be considered as not subject to Government control, but for which the Bank should share the blame, are listed below: (a) lack of in-depth analysis at appraisal including: (i) the critical project design assumption of reduced water allocation in SRS that required farmers to change their cropping pattern (mainly away from the socially-favored rice cultivation) in order to provide more equity of water distribution to all;  5 (ii) failure to plan thoroughly and appraise adequately R&R requirements; (iii) the assumption that the employment of consultants would handle the problems of the innovative features of the projectl; (iv) lack of appreciation of the difficulty and high cost of introducing structured irrigation network design with rotational water supply (RWS) scheduling concept into an existing irrigation area in comparison with normal irrigation modernization; (v) appraisal mission's disregard of comments and advice of Bank staff and consultants, some of whom had been involved in preparation and appraisal of the project2, regarding likely implementation problems; (vi) the deletion of an on-line balancing reservoir (Gorakallu) from the SRBC sub-project by the appraisal mission was not supported by a study of the operating procedures of Srisailam reservoir in order to ensure water supply reliability, nor was the design re-evaluated to determine if canal capacities should be reduced or left unchanged to accommodate system expansion at a later date; and (vii) a total lack of appreciation of the importance of the tank and shallow well irrigation systems prevalent in SRS sub-project area and the weightage it should have as regards the concepts to be used for irrigation development of the proposed command area3. (b) cancellation of the Bank loan of US$131 million at the request of GOI (US$90 million in December 1991 and US$41 million in May 1993), in both cases without consultation or reference to the Government of Andhra Pradesh (GOAP). GOAP was not officially informed of these cancellations Apart from the difficulty of integrating consultants' efforts in these aims, the SAR assumed that GOAP would engage such consultants by December 31, 1986 (on the basis that the project would become effective on January 1, 1986) and that "All consultants would be engaged in accordance with Bank Guidelines". This was most optimistic. 2 The World Bank Office Memorandum on Project Brief for AP Irrigation II project (October 10, 1985) and "Yellow Cover Report" critique (March 19, 1988) highlight the problems likely to occur based on past experience of AP irrigation schemes, the memos are remarkable in that they predict many of the problems which have adversely affected the project in practice. (It should be noted that the author was a member of the appraisal team). Additionally a World Bank Office memorandum "Comments on Yellow Cover SAR" (October 11, 1985) strongly queries water availability, removal of re- regulating reservoirs, inter-action between irrigation and power generation, and most importantly the acceptance of the concept of RWS by AP Irrigation Department. Lastly, "Consultants Report on Visits to Sriramasagar and Srisailam Projects in Andhra Pradesh", India (February 1984) advised that parts of the project would take 10 years to complete, not 5 as estimated by GOAP nor 7.5 as estimated by SAR, and that a potential water-logging situation existed. 3 This resulted in a system design which did not include tanks and which makes the future integration of all water resources in the area (surface supplies, tanks and groundwater wells) extremely difficult to conceptualize and design.  6 until several months after the eventl. As the loan was cancelled in two tranches, it is evident that the main reason for the cancellations was the low rate of disbursement under Credit 1665-IN and savings generated due to the devaluation of the Rupee. However, the cancellation of the loan effectively prevented any consideration of project restructuring with an extension of the project implementation period. (c) questioning by Bank superivision missions of water availability for SRS sub- project based on water allocations and witholding of disbursements on some contracts, rather than insisting on a rigorous analysis of what amount of water would be required, say, per month or fortnight build up of demand as irrigation development proceeded, and its relation to actual water available2. Factors Generally Subject to Government Control 14. The main factor subject to Government control which adversely affected project implementation was GOAP's weakness in: (a) responding adequately to Bank preparation/appraisal missions for satisfactory resolution of major issues of its apparent concern, such as the project's assumption that required farmers to change their cropping patterns, and the difficulties of introducing structured irrigation network design with RWS concept into an existing irrigation area, and its consequent lack of commitment and diligence during the early years of the project's implementation period; (b) unduly delaying the preparation and implementation of a satisfactory R&R program for oustees from the reservoir sites of the dams connected with the project; and (c) allowing the implementing agency to be dilatory in dealing with contract award procedures which affected all stages of employing contractors, from obtaining tenders, through adjudication, to award. The procedure often occupied an unacceptable period of time from six to twelve months. Another contributing factor was the failure of the Government of India (GOI) to consult and inform GOAP in time about the cancellations of the Bank loan [para. 13 (b)]. Factors Generally Subject to Implementing Agency Control 15. General reasons which led to the disappointing performance of the project and which could be considered subject to GOAP's/implementing agency's control, were caused by a combination of factors as discussed below: (a) inadequate preparation of the project with: - over-optimistic rates of progress projected; over-optimism and lack of clarity about water resource reliability estimates; - an absence of integration of the irrigation design caused by a lack of perception that physical design of the project should flow from the expected operational aspects of the completed project. To some extent this is believed to be the result of lack of communication and integration 4 Not informing GOAP resulted in Bank staff visiting the project and discussing further disbursement plans with GOAP staff, when they knew that relevant funds had been cancelled. 2 There is no indication either in the SAR or during supervision of a rigorous analysis of water demand and its relation to water availability being carried out. Discussion and modelling always centered around the amount of water allocated to the sub-project. In fact a detailed analysis of Krishna River availability was carried out by a Bank consultant in 1984 and listed in the Project File.  7 between the Irrigation Department and the Command Area Development Departmentl; - lack of adequate preparation and design of the roads component; and - inaccurate cost estimates. (b) lack of experience and urgency in implementation: - delay in meeting resettlement and rehabilitation conditionality issues; - lack of communication between construction and operation/ maintenance sections of I&CADD impeding on-farm development (OFD) and planned operation of existing canal network at SRS sub-project; - attempts to unofficially vary the physical design of the project by inserting components relating to Gorakallu and Owk reservoirs into canal contract packages - this was noticed by the Bank and resulted in delay whilst packages were re-tendered for the correct components and also led to a lack of trust between Bank and Borrower; - inadequacy of contractor pre-qualification procedures, employment of under-capitalized and inexperienced contractors, subsequent unsuccessful attempts to improve contractor performance, consequent cancellation of contracts and litigation before replacement contracts could be awarded to more reliable contractors, and all these leading to long delays in implementation and affecting seriously the proper scheduling of construction2; (c) the inability to learn from experience in past projects3, such as difficulties with and cancellation of the CADD (micro network) component in the composite project, the likely difficulty in changing cropping patterns against the wishes of the farmers, and staffing problems in the SRS sub-project. 16. Cost Changes. Delays were caused in the award of contracts because tenders were much higher (40 to 120 percent) than the implementing agency's estimates. This was caused by three factors: firstly, government type cost schedule estimating using low rates; secondly, not being allowed to include all the items required in a Bank contract (items such as insurance, major 1 See SAR paragraph 5.08, GOAP were to formalize the merger of the Irrigation Department and Command Area Development Department by April 1, 1986. Thus fairly soon after such a merger the new organization was being asked to rapidly carry out a project of magnitude and, at minor canal and watercourse level, requiring considerable rural and social engineering. 2 This was an area in which the Bank should have been able to help from commencement; in fact early Bank assistance in this subject with the provision of typical pre-qualification documents used in another state appears to have caused more problems than it solved. The Bank has to share the blame for contract tendering/adjudication problems since all procurement activities were cleared by the Bank from pre-qualification to contract signature stages. 3 Pochampad Project (closed December 1979), AP Irrigation and CAD Composite Irrigation Project (closed June 1985).  8 access arrangements, realistic profits, are not features of a GOAP cost schedule estimate); and thirdly, no allowance being made in the original estimates for the additional costs involved in constructing a "structured irrigation network system". 17. Implementation Delays. The appraisal mission estimated that the project would be completed in seven and a half years. In fact about 30 percent of the project's physical works were complete at credit closure. The apparent delays in implementation were due to: (a) unrealistic implementation schedule; (b) inadequate contractor pre-qualification procedures and initial appointment of inefficient and litigious contractors; (c) lack of drive by the implementing agency both directly and in slow appointment of consultants; (d) procedures for agreement of contract packages between GOAP, GOI and the Bank taking longer than expected partly due to the number of packages and to some extent caused by queries on some packages containing items (Owk reservoir etc) which were not in the agreed works and/or not correctly described; (e) shortage of senior staff at the beginning of the project and a continuing shortage and rapid turn-over of staff; (f) delay in clearance of local and international competitive (LCB and ICB) procurement (became satisfactory May, 1989); (g) shortage of local funds (first year only); (h) lack of detailed design and accurate cost estimates at commencement; (i) inordinate delay in appointing consultants for the Gorakallu By-Pass structure (consultancy awarded February, 19901) (this by-pass was the key to conveying irrigation water to the fields in SRBC); (j) delays in obtaining land acquisition and clearance, particularly for forest lands; (k) shortage of good field vehicles, and use of unreliable vehicles at commencement which affected survey, investigation, and supervision; (1) lack of communication between Irrigation Department and the Command Area Development Department (integrated into one unit in 1986 at the suggestion of the Bank); This consultancy was discussed in detail between GOAP and the Bank between June 1986 until it was cleared by the Bank in November, 1988. It took GOAP 15 months to draw up revised TOR for the consultants (March 1987 to August 1988); recruiting consultants after clearance took another 14 months.  9 (m) great delays in authorization of road construction (eventually authorized about October 1990, but construction not commenced until May 1991); and (n) the apparent lack of a strong coordinating project organization. D. PROJECT SUSTAINABILITY 18. The question of the project's sustainability without additional funding to complete the works is irrelevant because the project never reached operational status. In the new extension areas below Lower Manair Dam (LMD) and in SRBC, the civil works are incomplete and inoperable due to carrying out distribution network contracts in a haphazard manner. The existing irrigation area above LMD sub-project which was to be rehabilitated has been left virtually untouched, and the existing standard of maintenance and operation of this area provides a dire warning about the likely sustainability of the project had it reached operational status. In SRBC, the major conveyance system is yet to be completed, and only a minor part of distribution works are under construction. Without further funding, for which GOAP has approached the Bank and a follow-on operation is being processed, the physical works established or under construction in the two sub- project areas will gradually erode and become forgotten. E. BANK PERFORMANCE 19. Identification. The project concept was good and consistent with the government's development strategy and priorities, and the Bank's development strategy for India. However, the Bank identification mission failed to flag major issues that would require satisfactory resolution in the course of further processing of the project. Also, during identification process, not enough attention had been given to review the institutional capacities of the Irrigation Department and the Command Area Development Department so that the weaknesses in their capabilities critical to the project could be properly addressed. In addition, the existence of a large number of irrigation tanks in SRS sub-project area seemed to have been ignored and, as a consequence, the question of the need for their incorporation with groundwater and the proposed canal system under SRS sub- project did not receive the required attention. 20. Assisting Borrower with Project Preparation. The Bank's performance in assisting with normal aspects of preparation was less successful than usual; the main deficiency was the lack of stringency in not requiring a feasibility study with field and site investigations to international standards, and not ensuring that all major structures were designed in sufficient detail for accurate costing at this stage. In addition the preparation mission did not ensure that the implications of the innovative features of the project (structured irrigation network and rotational water supply) were fully appreciated by the Borrower both in terms of the localization issue, kharif (monsoon) rainfall and also integration with the irrigation tanks in existence in SRS area. The Bank also failed to stress the absolute need for a clear analysis of the water availability situation, and, allied with this, the need for a digital model for systems operation to check the availability of water by irrigation period. The standard of Bank staffing (both staff members and consultants) were technically good, but there had been a lack of follow through once an issue had been noted. The more mundane requirements, such as the need for accurate cost estimation, were also not given due attention. 21. Bank Performance in Project Appraisal. This was disappointing and several critical aspects of the project design were not satisfactorily dealt with as discussed below: - Operational: The Staff Appraisal Report (SAR) did not insist on detailed field investigation/designs and bid document preparation prior to submission of the project to the Bank's Board of Executive Directors.  10 Resettlement and Rehabilitation: Resettlement and Rehabilitation (R&R) Action Plan for oustees from dams built by GOAP but to be used by this project had not been agreed at appraisal as required by the Bank's relevant Operational Directive (see Part IVTable 11). No policy of compensation and economic rehabilitation entitlement was agreed a priori to form the basis of a Resettlement Action Plan (RAP). Implementation of R&R was based on annual rolling programs of construction of resettlement village infrastructure and provision of income-generating schemes under GOAP poverty alleviation programs. While clear targets were set for infrastructure, income- generating schemes were not related to a target population of eligible project affected families. Despite the displacement of 43,979 families, the economic rehabilitation program was confined to 24,126 below poverty line families only. Thus the R&R program did not satisfy the basic tenet of income restoration for all project affected families. While providing for retroactive actions to redress the impacts of land acquisition for project- related reservoirs constructed by GOAP earlier, the SAR did not include provisions to mitigate the impact of land acquisition for canals and roads. The SAR in fact stated that these structures would not have an adverse impact. Water Rights: The SAR required farmers operating in an existing irrigation area to change their cropping pattern (mainly away from the socially-favored rice crop) by accepting less irrigation water in order to provide more equity of water distribution to all. However, the fact that many of the farmers had a legal entitlement to grow rice seemed to have been ignored, and subsequent negotiations and legislation to change the cropping pattern took a long time1. Technical: The Bank failed at appraisal to insist on a detailed review of the surface and groundwater resources and to ensure a comparison of the same with the irrigation demand for both the sub-projects. The implications of all that was involved in structured irrigation networks (SIN) and rotational water supply was discussed with the Borrower and a short seminar held for design engineers. However it was not written up in the SAR nor was a written description made available to the project engineers. Bank staff were not only advising the use of this method but were the actual technicians who codified the structured network approach; this was an ideal opportunity to cover the subject comprehensively to ensure understanding. In fact the difficulty of using the SIN approach in a high monsoon rainfall area (SRS) seemed to have been minimized. Similarly, the difficulty of implementing a surface irrigation scheme in SRS sub-project area, with its vast number of This was not a new problem, the PCR for the AP Composite Irrigation Project(Loan 1251-IN), May 29, 1989, states "In the cropping patterns assumed in the SAR, the NSP future with project patterns contained much reduced "Irrigated Wet" (IW - rice or sugar cane) in favour of enhanced "Irrigated Dry" (ID - crops other than rice and sugar cane). On these were based future economic projections and the savings in water which would permit the extension areas to be supplied. It was assumed that GOAP would induce the farmers already growing excessive paddy to convert to the new patterns by persuasion and water rotation means. Regrettably this has not occurred, with GOAP taking no steps to correct the situation".  11 tanks and with their impact on SIN design, was either not noticed or ignored. The roads component was very briefly and incompletely designed. Technical advice on perceived difficulties of the project design were not heeded and the conflict between dam operation for power and for irrigation was not highlightedl. Finance and Economics: Costs (Part II, Table 8A) were grossly under- estimated; sensitivity analysis did not examine all major risks. The financial package was appropriate for the costs estimated at the time of appraisal. Had the project been fully implemented there would have been a major shortfall in funding (50 percent possibly); in view of the slowness of disbursement this was not a problem. Institutional: The ability of the existing institution to deal with items such as project coordination, [CB, LCB, and hiring of consultants in a rapid and efficient way was over-estimated. Commitment: The SAR did not comment directly about this issue. However it is apparent that the project beneficiaries were not consulted. GOAP and the Irrigation Department were very much in favor of the project. Incentives for Sustainability: The SAR attempted to provide this by persuading GOAP to integrate the ID and the CADD. This integration have not been a success (see para. 7). Project Design and Complexity: The project was not complex - basically the construction of canals from existing dams was designed to flow water onto the fields. There were, however, complexities within this concept which are discussed above under "Technical" issues. Project Risks and Key Variables: Risks anticipated and examined at appraisal did include the possibility of delay in construction, but not to the extent that had occurred. This was probably a reasonable approach at the time of designing the project. However a risk that was heavily discounted in the SAR - the enforcement of water allocation and management - proved to be a major factor in delaying the project and in not obtaining the anticipated early benefits. This risk was discounted on the basis of "experience found in the AP I project". The actual experience was otherwise as documented in the PCR for AP I Project, which closed on June 30, 19852. Whilst the risk analysis looked at the effect on the economic analysis both by switching values and by looking at individual risk factors, the combination of two or more of the risk factors occurring was not analyzed even though some of the risks were clearly linked. 1 The SAR examined the cost of power foregone in the economic calculations but nowhere was the effect of power "winning" control of water considered; in fact recent dam operation has indicated that dams are being operated with priority for power and that there is no firm operating agreement for avoiding operational conflict. 2 See also World Bank Office Memorandum dated February 14, 1985, subject "Comments on Project Brief", page 5, para. 30. This section comments upon the difficulty (in AP I) of changing the principles of "localisation" of crops and of persuading farners to change their cropping pattern.  12 - Appraisal Team Composition: The team's composition was reasonable but could have benefitted from the full time attention of a water resources planner] - including such a specialist would have probably highlighted the potential problems of water availability and problems with water allocations and management. Whilst the section on design criteria and water management were contributed by such an engineer, he was not a full time member of the appraisal team, and as such probably had only limited time at his disposal2. The inclusion of a sociologist might have provided a better perspective on farmers' reactions to changed cropping patterns. 22. Bank Performance in Supervision. Thirteen supervision missions were mounted over a period of 6.5 years. This is slightly above the usual average for a project of this nature and indicates the emphasis placed on supervision and the need of this project to be closely supervised. The composition of the supervision missions showed a marked bias towards engineers, and this was probably accounted for by the large engineering component and the need, under the terms of the agreement, to check and review many engineering designs and contracts. 23. Supervision by the Bank proved ineffective. Although the project encountered serious implementation difficulties right from the early years of the project period, the supervision missions failed to come to grips with the emerging problems and offer timely and viable solutions to resolve them. For instance, whilst it was fairly obvious from the fourth supervision mission (September 1989) onwards that project implementation was very slow and faced major problems, it was not until April 1991 that it was decided to use strong measures to improve implementation performance or cease disbursing on the project. The April 1991 supervision mission also identified major project design deficiencies that had not been addressed prior to appraisal. Supervision missions could have also been tougher in not allowing GOAP to prevaricate on R&R issues and delay the implementation of the R&R program. These missions did not insist on relating provision of income-generating schemes to the target population of Project Affected Families prior to clearance of annual R&R programs. The Bank and the Borrower were in dispute over several issues largely arising from the inadequacies of the project design and the attempts to remedy the situation during implementation appeared to have caused friction, as these questioned basic concepts and agreements written into the SAR and the credit/loan agreement. Although it was clear that major difficulties stemmed from the estimation of water availability, there appeared to have been no attempts to work out the actual water requirements of the sub-project commanded areas on a monthly or fortnightly basis. Instead, much of the time was lost in questioning the amount and adequacy of water allocated to the sub-projects and that too, on an annual basis, and confronting the Borrower with the threats of disbursements. Strenuous efforts by the supervision missions in later years to retrieve the situation caused by the inadequacies of project preparation and appraisal did not generate the necessary response from the Borrower. The option of restructuring the project was belatedly considered (mid-1992) and decided against. Clearly, an early realization and a firm warning by the supervision missions that the project was failing could have led to a formal and timely review to restructure the project which could then have increased the chances of its success. 1 Who could have replaced one of the three irrigation engineers on the mission. 2 SAR states that this engineer "contributed to sections on design criteria and water management".  13 F. BORROWER PERFORMANCE 24. Preparation. The Borrower should have known that the costs of the project were generally under-estimated because of the use of out-of-date unit cost estimation procedures and the dearth of subsurface investigations, that there would be a major water allocation/management problem, and probably also a water resource problem. These problems could have been highlighted for a detailed review in the interest of improving project design and facilitating subsequent implementation. On the other hand, they seemed to have been underplayed perhaps to ensure that the required Bank loan/credit was obtained. However, only one of these problems caused the initial delays in implementation - the change in cropping pattern/water allocation problem. Based on experience under AP Irrigation I project, GOAP could have foreseen the difficulties that would be encountered and emphasized the need for beneficiary consultation and involvement. At the time of preparation the Bank was already discussing with the Borrower SIN and RWS, but it is likely that the Borrower did not realize the demands of these systems on design, the additional costs or the impact on water allocations. 25. Implementation. The Borrower's performance during implementation was "deficient", although it considerably improved towards the end of the project period. A number of quite normal reasons contributed to the implementation delays: shortage/rapid turnover of staff, delays in paperwork connected with ICB and LCB procurement, shortage of local funds, delay in completing designs, delay in appointing consultants, delay in land acquisition, shortage of good field vehicles, internal problems in I&CADD, delays in road design and construction, and initial flaws in construction supervision. However, there were some much more decisive reasons that caused the poor implementation rate. These were: (a) poor preparation of the project resulting in flawed project design and a project impossible to implement within the chosen time-frame; (b) the lack of a strong project coordinating organization including lack of implementation planning ability, leading to problems in scheduling construction packages; (c) initial appointment of unsuitable contractors; and (d) water allocation/management problem; At a later stage two more problems were indirect causes of delay: (a) Bank's query of the reliability of the water resource and wish to evaluate this before approving designs/contract packagesl; and (b) a lack of appreciation of the demands of SIN and RWS. 1 The problem with this approach by the Bank was that the GOAP had provided an assurance at appraisal/negotiations that the required quantity of water would be made available; GOAP thought that it was unfair to raise the water reliability issue during implementation when the assurance had already been accepted.  14 G. ASSESSMENT OF OUTCOME 26. The project's outcome is assessed as Highly Unsatisfactory because the project failed to achieve any of its major objectives and has not yielded, and is not expected to yield, worthwhile development resultswithout further investment. H. KEY LESSONS LEARNED 27. The primary lesson to be learnt is that a project will not succeed unless it is well prepared and appraised. Other lessons are sub-sets to the primary lesson. These sub-sets are: (a) the Bank should strictly enforce its own guidelines on the quality of project preparation and appraisal; (b) at project appraisal, water supply availability and reliability must be unambiguously established and command areas sized accordingly, and where the project design is changed', the appraisal should specifically determine whether the capacity (and cost) of other facilities should be reduced, or left unchanged to facilitate possible system expansion at a later date; (c) detailed designs for major works must be available at appraisal and should be based on consideration of cost-effective design alternatives and adequate field surveys and sub-surface investigations; (d) appraisal cost estimates should be realistic and based on market prices prevailing in the contracting industry2; (e) procurement of works contracts must follow a logical implementation sequence to enable timely realization of benefits as planned, and to permit any adjustments needed if and when doubts about adequate water availability occur3; (f) introduction of new methods of system design and water management procedures - such as structured irrigation networks and rotational water supply - must be fully understood and documented at appraisal to ensure their understanding, acceptance and application by the Borrower; (g) the appraisal missions must rigorously review, for inclusion of appropriate remedial measures, the implementing organization's ability to adequately control construction quality and ensure efficient operation and water management; (h) loan/credit effectiveness conditions should be strictly enforced (in this case the submission of a satisfactory R&R Action Plan), and if such conditions are to be waived, they should be transformed into dated covenants; I Such as elimination of the Gorakullu and Owk balancing reservoirs in this case. 2 Tenders received proved to be 40 to 120 percent above Government estimates. 3 This should have included concentrating on modernizing the existing SRS irrigation network at commencement of project implementation.  15 (i) project implementation success depends on establishment of viable institutional arrangements for involvement of beneficiaries in participatory irrigation management, and particularly where water delivery rights and allocation arrangements are to be changed, an appropriate legal, regulatory and administrative framework must be in place to implement the new system of water allocation; and (j) as soon as clear symptoms of serious implementation difficulties are visible, Bank supervision missions should come to grips with problems and propose immediate viable solutions, even if they lead to strong action such as a fundamental modification of the appraised project formulation and design. I. FUTURE OPERATIONS 28. The Bank has agreed, in discussion with GOI and GOAP (November 1993), to consider providing further assistance to complete the project, or that part found, on re-examination and restructuring, to be viable. It is apparent, with hind sight, that firm control of the Bank's role in the project might have resulted in an earlier decision to re-plan the project. At present the process of the project re-design and re-structuring to facilitate early completion of processing of the proposed Third Andhra Pradesh Irrigation Project is taking place with a much better spirit of cooperation between GOAP and the Bank than was hitherto the case. The preparation of the proposed follow-on project has addressed the deficiencies inherent in the appraisal and implementation described in this ICR. A rigorous appraisal of the proposed project has been completed with the following improvements: (a) the water availability of SRBC has been ascertained by the results of a detailed simulation study of all existing and proposed projects in the Krishna River Basin, while in the case of the SRS sub-project, a simulation study found that its extension begun under the previous project was not viable, and therefore will not be supported under the follow-on project; (b) sub-surface investigations were conducted to determine design criteria for canal lining where expansive clay soils are prevalent, and design alternatives were evaluated for the capacity of major structures; (c) all cost estimates have been updated to reflect current market prices prevalent in the contracting industry; (d) a logical procurement sequence has been mandated, and in the case of the SRS sub-project, approval of bid documents has been made subject to beneficiary consultation regarding canal closure schedules during implementation and agreement to proposed system design changes; (e) the proposed canal operation and water allocation policies are subject to confirmation by public and beneficiary consultaltion prior to project Negotiations; (f) a pilot program to test participatory irrigation management by establishment of Water Users Associations has been undertaken and its results will be incorporated in the program for establishment of Water Users Associations in both the SRBC and SRS sub-projects;  16 (g) the Command Area Development Authority is being reorganized to facilitate improved water management and project maintenance for all projects in the state, and a program of improved construction quality assurance and staff training has been established for supervision of project works; (h) a project R&R policy satisfactory to the Bank has been agreed and has been applied in the preparation of a R&R Action Plan for rehabilitation of persons affected by canal and road construction in each sub-project, and a Retrofit Action Program has been prepared to address the deficiencies of the previous project's R&R program; and (i) arrangements have been made to implement a program of irrigation water charges and O&M funding increases.  17 PART II. STATISTICAL TABLES Table 1: Summary of Assessments A. Achievement of obiectives Substantial Partial Neelicible Not Apnlicable () W) W) W) Macro policies E [1I ElO Sector policies E 7 m7 Fmancial tbjectives E O El1 Institutional development E Ol O Physical objectives O El El Poverty reduction E El El Gender issues E E El Other social objectives E El El Environmental objectives E E El Public sector management E E El Private sector development E E El Other (specify) E E E E B. Proiect sustainabilifv'/ Likely Unlikel] Uncertain (1) (.) (1) HifghlY C. Bank nerformance satisfactorv Satisfactorv Deficient W) V) V) Identification E El Preparation assistance E El Appraisal E El Supervision E El 1/ The project did not reach operational status.  18 Hinhly D. Borrower performance satisfactory Satisfactory Deficient V) V) /) Preparation I E -I' Implementation l Z O Covenant compliance El El l Operation (if applicable) al El Fl Hiph Highly E. Assessment of outcome satisfactory Satisfactory Unsatisfactory unsatisfactorv (I ) v/) Li E El 0  19 Table 2: Related Bank Loans/Credits Loan/credit title Purpose Year of approval Status Preceding operations 1. Pochampad Irrigation To complete Pochampad dam 1971 Closed in (Cr. No. 268-IN) and develop part of the December 1979. command area of the Pochampad Project (now named the Sriramasagar Project). 2. Godvari Barrage Construction of modern barrage 1976 Closed in June (Cr. No. 532-IN) to replace very old weir to enable 1981. diversion of irrigation water to the distribution system in the Godvari estuary delta to continue functioning. 3. A.P. Irrigation and To accelerate the construction of 1976 Closed in June CAD Composite the distribution canal network to 1985. (AP I Project) make use of the water (Ln. No. 1251- IN) impounded in Nagar Juna Sagar Reservoir including the field channel network beyond minor canal outlet down to farm level. Following operations 1. A. P. Cyclone Reconstruction and rehabilitation 1990 Closed by June 30, Emergency of infrastructure damaged by the 1994. Reconstruction Project cyclone of May 1990. (APCERP) (Cr. No. 2179-IN and Ln. No. 3260-IN) 2. National Water To increase productivity and 1987 On-going project Management farm incomes in existing (original closing Programme irrigation schemes by means of a date was March (Cr. No. 1770-IN) more reliable, predictable and 1994 but this has equitable irrigation service. been extended to March 1995).  20 Table 3: Project Timetable 1 | Date actual/ Step_ in project cycle Date planned latest estimate Identification (Executive Project Summary) September, 1984 Preparation February, 1985 Appraisal March/April, 1985 Negotiations January 7 - 15, 1986 Letter of development policy (if applicable) Board presentation March 20, 1986 Signing May 28, 1986 Effectiveness June 28, 1987 October 2, 1987 First tranche release (if applicable) Midterm review (if applicable) Second (and third) t-anche release (if applicable) _- Project completion December 31, 1993 June 30, 1994 Credit closing October 31, 1994 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (SDR million) FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 Estimated 3.1 16.4 33.3 55.3 77.1 97.5 114.0 127.5 Actual 0.0 0.0 4.0 7.8 15.8 36.2 61.2 86.7 Actual as % of estimate 0 0 12 14 20 37 54 68 Date of final disburs-ment July 30, 1994 Comments: Of the total credit amount, SDR 40.8 million were diverted in August 1990 for the Andhra Pradesh Cyclone Emergency Reconstruction Project (Cr. 2179-IN and Ln. 3260-IN). Further, the total loan amount of USS131.0 million was cancelled in May 1991 (US$90 million) and in June 1993 (US$41 million).  21 Table 5: Key Indicators for Project Implementation (a) Srisailam Sub-Project Key operating indicators in SAR Unit SAR Actual A. Survey & Investigation Lump Sum(RsM) 30 4.8 B. Land Acquisition & Relocation Lump Sum(RsM) 90 177.97 C. Main Canal (km 0 to 141) 1. Main (Branch) Canal (km 0 to 53.5) Earthworks km 35.5 41.79 Lining km 50.5 l Structures km 50.5 11.56 Gorakallu Aqueduct km 3.2 2. Main Canal (km 53.5 to 113) Earthworks km 59.5 22.51 Lining km 59.5 3.81 Structures km 59.5 7.60 3. Main canal (km 113 to 141) Earthworks km 40 20.6 Lining km 40 12.11 Structures km 40 25 D. Block Development (65,000 ha) 1. Block 1 - 10 (41,000 ha) Earthwork 1000ha 41 0 Lining 1000ha 41 0 Structure 1000ha 41 0 Roads (4 m/ha) km 164 0 OFD Works 1000ha 41 0 Drainage 1000ha 41 0 2. Block 11 - 16 (24,200 ha) Earthwork 1000ha 24 0 Lining 1000ha 24 0 Structure 1000ha 24 0 Roads (4 m/ha) km 96 0 OFD Works 1000ha 24 0 Drainage 1000ha 24 0 E. Other Investments 1. Buildings Lump Sum 26.6 ND 2. O&M, Training & M&E Equipment Lump Sum 17.6 ND 3. Communication Equipment Lump Sum 10.6 0  22 Table 5: Key Indicators for Project Implementation (b) Sriramasagar Sub-project Key operating iadicators in SAR Unit SAR Actual A. Survey & Investigation Lump Sum(RsM) 113 - B. Land Acquisition & Relocation Lump Sum(RsM) 54.2 165 C. Sriramasagar Main Canal (km 0 to 284) 1. Kakatiya Main Canal (km 0 to 146) Raising Bunds & Upgrading Lining km 146 1085 Construction of Cross-regulators km 3 2. Kakatiya Main Canal (km 146 to 250) Earthworks Lining km - 13 Structures km 102 9.52 km 102 2~ 3. Kakatiya Ma;n canal (km 250 to 284) Earthworks km 16 16 Lining km 18 - Structures km 34 14 D. Distributaries, Minors, OFD (km 0 -268) 1. Kakatiya (km 0 - 146), Improvement. Canals 1000ha 165 ND3 Control Devices 1000ha 165 0 Measurement Devices 1000ha 165 0 Roads (m/ha for 50% of area) km 165 ND Drainage 1000ha 165 0 2. Kakatiya (km 146 - 234), Completion. Earthwork 1000ha 88 ND' Lining (down to 1 cu m/sec) 1000ha 88 ND Structure 1000ha 78 ND Roads (4 m/ha) km 352 ND OFD Works 1000ha 88 ND Drainage 1000ha 96 ND 1/ 2 cross-regulators partly completed 2/26 structures partly completed 3/ Some work done on Block VIII but not possible to express as km work done. 4/As for footnote 3 in all these items.  23 Key operating indicators in SAR Unit SAR Actual 2. Kakatiya (km 234 - 268), New Distys. Earthwork 1000ha 75 NDI Lining (down to 1 cu m/sec) 1000ha 75 ND Structure 1000ha 75 ND Roads (4 m/ha) km 375 ND OFD Works 1000ha 75 ND Drainage 1000ha 75 ND E. Other Investments 1. Buildings Lump Sum 28.9 0.85 2. O&M, Training & M&E Equipment Lump Sum 17.3 ND 3. Communication Equipment Lump Sum 11.5 0 D. Supporting Investments 1. Training Lump Sum 29.5 ND 2. Monitoring & Evaluation Lump Sum 21.5 ND 3. Agricultural Extension Lump Sum 0 ND 4. Agricultural Research Lump Sum 0 ND 5. Rehabilitation Programme: -Infrastructure Lump Sum 7 ND -Training Lump Sum 4.8 ND -Surveys & Monitoring Lump Sum 0.2 ND Table 6: Key Indicators for Project Operation Thlis table is not applicable to thzis project. 1,As for footnote 3 in all these items.  24 Table 7: Studies Included in Project Purpose as dcfined Study at appraisal/redefined Status Impact of study 1. O&M procedures A.P to carry out a study to Partly completed; O&M Has increased (Covenant 3.06(a)) review GOAP's current charges were increased the O&M procedures and financial from 75 to 100 Rs/ha to charges. requirements for O&M of both meet the increase in sub-projects under terms maintenance and satisfactory to the association establishment charges, but no real study of "procedures' appears to have been carried out. 2. Bench Mark Survey To record pre-project socio- Studies completed. Impact not (SAR para 5.25) economic conditions in the assessed since area in order to be able to main project measure changes of such objectives not conditions as a result of the achieved. impact of the project 3. Long range To identify the priorities for Not completed. None. investment options study future irrigation development for irrigation in AP in the state (SAR para 3.21) 4. Systems operation Monitoring of the irrigation Not done, it is doubtful Not possible to (SAR 5.25(i)) system for timeliness and for if this could be classed monitor an losses. as a study but was so inoperable classed in SSR No. 1. system. 5. Ground water To assess utilization of existing Studies completed to a Provided basis monitoring (SAR wells and rate of increase of good standard. for a useful 5.25(iii) wells installcd and their use report. 6. Crop data collection To report changes in cropping Reported on during ICR Useful for (SAR 5.25(iii) and (iv) patterns, crop selections and meeting, July 1994. Some planning future farming intensities;assist in doubt about crop pattern work. identifying factors that increase and yield conclusions. or decrease adoption rates. 7. Impact of project To indicate how well the No details because Not possible works (SAR 5.25 (vi) project was working project not operational. since project not operational. 8. Progress of R&R To check on efficacy of R&R Regular reports made. Work virtually activities of PAPs from activities completed. Mannair Dam (SAR 5.25 (vii) 9. Integration of Minor To find out if it was desirable Done as part of GW Positive Tanks (SAR 5.27 (iii)) to integrate minor tanks in the investigation, which recommendation surface water irrigation system decided it was not a which helps useful idea. groundwater decision. cont'd/..  25 Table 7: Studies Included in Project Purpose as defined Study at appraisal/redefined Status Impact of study 10. Detailed water To assist in changing to RWSS Some work done but None so far, management plan irrigation incomplete. project (SAR 6.04/6.14) inoperable. 11. Transient Flow To assist with water scheduling Not done. None. Model (SAR 6.20(a)) and canal/dam control. 12. Realistic O&M costs In-depth examination of O&M Not complete. None. (SAR 6.29 and Annex 4) costs - rules, procedures and financial requirements Studies Identified After Effectiveness 13. Integrated Operation To enquire into the integrated Some work done but Useful for Studies operation of Sri Sailam and incomplete. hydrological Naga Juna Saga Dam work on future projects. 14. Gorakullu Crossing To decide the most effective Completed but some Has basically Study design. queries outstanding. resolved the design of this bye-pass structure. 15. Telecommunications Design of project Not completed. None. communication system.  26 Table 8A: Project Expenditure Appraisal Estimate Actual Actual as % of Estimate Rs M US$M Rs M US$M Rs US$ Land acquistion 186.3 14.3 343.0 12.3 184 86 Civil works 5828.2 448.3 4968.0 191.6 85 43 Equipment 79.6 6.1 19.1 0.8 24 13 Resettlement & Rehabilitation 75.3 5.8 39.3 1.7 52 29 Support services 15.7 1.2 179.4 6.6 1140 550 TOTAL: 6185.1 475.7 5548.8 213.0 90 45 Comments: Actual total project coats in Rupee terms as of June 30, 1994, were Rs5,548.8 million ( Annex 1, Tables 1-3), or 90% of the appraisal cost estimates of Rs6,185 million. Actual costs were Rs2,218.4 for SRSP, including Rs2,122.2 million for the construction works in below LMD sub-project and Rs96.2 million for the pilot modernization works in above LMD sub-preject, and Rs3,330.4 million for SRBC sub-project, or 74% and 104% respectively of the appraisal estimates of Rs2,977 million for SRSP and Rs3,208 million for SRBC. In US dollar terms, due to devaluation of the Indian Rupee against US dollar the actual total project costs were only 213 million, or 45% of the appraisal cost estimates of 475.7 million. Cost overrun was 326% for SRSP and 175% for SRBC. An analysis of seven on-going packages of contracts showed that the cost estimates using Government's schedule rates are about 70% (ranging from 45% to 120%) lower than the actual tender value. Table 8B: Project Financing Sources Estimates (USS M) Actual (USS M) IBRD/IDA 271.0 118.0 GOI/GOAP 204.7 95.0 TOTAL 475.7 213.0 Comments: Total loan of US$131 million was cancelled and SDR40.8 million out of the IDA credit was diverted to finance the Andhra Pradesh Cyclone Emergency Reconstruction Project (Cr. 2179-IN/Ln. 3260-IN).  27 Table 9: Economic Costs and Benefits | Appraisal Estimate ICR Estimatel/ SRS SRBC SRS SRBC Increased irrigated area (ha) 165,000 65,000 165,000 65,000 Rehabilitated area (ha) 163,000 163,000 l Increased production (000 481 99 1024 194 ton/year) l Generated farm employment 7.2 4.5 37.8 12.9 (million man-day/year) l Generated non-farm employment 7,500 4,700 21,840 41,850 Gobs/year) l Net Present Value (Y's.M) l SRS 4,810 3,954 SRBC 1,136 -487 Whole project 5,946 3,467 Economic Rates of Return (%) l SRS 23 16.1 SRBC 20 11.0 Whole Project 22 14.4 Underlying Assumptions SRS SRBC SRS SRBC Project life (years) 50 50 50 50 Standard Conversion Factor 0.8 0.8 0.9 0.9 Construction Conversion Factor 0.75 0.75 0.80 0.80 Unskilled Labour valued at: 0.67 0.67 0.90 0.90 Financial Wage Rate (Rs/man-day) 10 10 25 20 At full development after investment of estimated completion costs during follow-on AP Irrg. III.  28 Table 10: Status of Legal Covenants India Second Andhra Pradesh Irrigation Project Origial Revised C|vCnant Present fulfillment fulfillment DEscription of Agreement Section type status datc date eDvenant Comments 2.01, T OK 04/30/87 // On April 30 of each year & SH.2ai thereafter furnish to Assoc. for its review detailed design & draft contract docs. for all civil works under Parts A & B of the project to be implemented during the subsequent construction season. 2.01, T OK // // On April 30 of each year & SH.2aiii thereafter furnish to Assoc. for its review, plans for the roads under Part C of the project to be constructed during the subsequent construction season. 2.01, M NC 10/01/86 // Introduce & apply a detailed Not done before SH.2b water management plan in the Project Closing in SRS sub-project area, satisfactory June 1994. to the Association, which would plan to include a RWS system taking into account the need for regulating irrigated wet and dry crops. 2.01, M NC // // Before 2 years of water delivery Not yet required SH.2c in SRDC sub-project, prepare since Gorakallu bye- detailed water management plan pass not yet built. including RWSS. and introduce thereafter considering the Association's comments. 2.01, M NC 09/01/87 // On September I of each year, Not done before SH2di commencing Sept. 1, 1987, advise Project Closing in farmers the proposed timing and June 1994. the number of turns for water to be made available in their outlets in subsequent October-March period. 2.01, M NC 10/01/87 // On Oct. I of each year, starting Not done before SH.2dii Oct.1, 1987, finalize water Project Closing in distribution schedule for farmers June 1994. & inform them accordingly. Any predictable changes to be communicated to farmers at least one month prior to implementation. 2.01, M NC 05/31/87 // Take all necessary action to Not done before SH.2e organize farmers committees at Project Closing in chak outlets by May 31, 1987 in June 1994. areas currently being irrigated and not later than six months before the expected date for irrigation water to be delivered in those areas to be irrigated. 2.01, T NC // // Cause the irrigation distribution Not done before SH.2f systems to be developed Project Closing in concurrently with construction of June 1994. major canals in each of SRBC sub-project and SRS sub-project areas. cont'd/  29 Original Revised (twenant Present fulrdiment fulftilment Description of Agreemcnt Section type status dale date covenant Comments 2.01, T OK // // Ensure that each distributary Design reviewed by SH.2g linked to Kakatiya canal between Bank. Under km 234 & km 267 shall carry no implementation. less than 25 cusec of water and command no less than 1,000 ha. 2.01, M OK // // Sanction staff positions in its SH.2h Irrigation Department in accordance with organization & staffing schedules established in consultation with the Association. 2.01, M OK // // Provide staff with the necessary SH.2i training for adequately implementing the project and operating and maintaining the irrigation systems. 2.01, M NC 10/01/87 07/01/91 Establish and maintain an Not done before SH.2ji agricultural extension system in Project Closing in accordance with organization & June 1994. staffing arrangements satisfactory to the Association, which shall include two special agricultural extension units in the SRS sub- project area. 2.01, M NC 10/01/88 12/31/93 Establish and maintain an Not done before SH2jii agricultural extension system in Project Closing in accordance with organizational & June 1994. staffing arrangements satisfactory to the Association, one -pecial agricultural extension ut it in the SRBC sub-project area. 2.01, M OK 06/30/87 // Furnish to the Association for SH.2k review plans for strengthening the PPM Unit by June 30, 1987 and carrying out M&E activities under Part G of the Project, and thereafter, taking into account the Association's comments, if any, implement such plans. 2.01, M NC 04/30/87 12/31/93 Establish a committee, with Not done before SH.21 CADA Administrator as a Project Closing in member, to coordinate water June 1994. nmanagement and agricultural production activitics in SRBC sub-project. 2.01, T OK // // Furnish to the Association, for its Bank agreed to the SH.2m review & comments, training initial training prograni for the staff and the program. Further farmers committee chairman. programme was developed by WALAMTARI. 2.01, M OK // // Take all requisite action to GOAP has given an SH.2n ensure supply of not less than 19 undertaking in this TMC of water to SRBC from regard. June I to March 31. 2.01, M NC // // Take all such steps to ensure that Not done before SH2o the outilet comimittees operate, Project Closing in repair & nmaintain the field June 1994. channeIs. cont'd/..  30 Orinnai Rviwed Covenant Present fulfillment fulfillment Deacription of Agreement Section type status date date vnant Comments 2.01, T NC 12/31/86 // Cause AP Agricultural University Not done before SH.2p to furnish proposals to ICAR to Project Closing in establish suitable facilities to June 1994. carry out agr. research in SRBC and SRS sub-project areas and furnish the programs developed to the Association for review. 2.06 T OK 12/31/86 09/30/87 Establish Dam Safety Panel, with Assoc. approval, to periodically inspect, in accor. with sound engineering practices, Sriramasagar, Mannair & Srisailam dams & related structures & facilities for any deficiencies in the quality & condition of structures. 2.07 M NC // // AP to take measures to No drainage built minnimise the risk of malaria and yet. other water related diseases. 2.08 RPT OK 01/01/87 // From January 1987 and thereafter AP to submit Semi-Annual Progress Reports to the Association. These reports should be furnished within 3 months after end of each reporting period. 3.01 ADT OK // // AP to: (a) maintain separate- records & accts. related to project & (b) furnish to the Association accts. & financial statements for each FY, certified by an independent auditor acceptable to the Association. not later than 9 mths. after end of each year. 3.02 ADT OK // // AP to cause its departments and agencies to furnish the Audit Report to the Association, immediately following its finalization. and any other information on financial statements & audit as shall from time to time be requested by the Association. 3.04 M NC 09/30/87 12/31/93 AP to ensure that construction of Not possible as Madras Water Supply Canal is Gorakullu bye-pass completed on time and by not built. September 30, 1987 and thereafter 19 TMC of water is conveyed to SRBC sub-project area. 3.06(a) F NC 03/31/87 12/31/92 AP to carry out a study to review Not done before GOAP's current procedures and Project Closing in financial requirement for O&M June 1994. of SRBC & SRS sub-projects, under terms satisfactory to the Association. 3.06(b) F NC 03/31/88 12/31/93 AP to furnish to the Association Not done before a report on the results & Project Closing in recommendations of the above June 1994. study. cont'd/ l  31 Original Revised CoQc rt Present fuMIdiment furd3llment Description of Agreement Section type status date date covenant Comments 3.06(c) F NC // // AP to implement the Not done before recommendations of the study Project Closing in after taking account of Bank's June 1994. comments. 3.07 F NC 05/30/87 J/ AP to revise current level of Not done before water charges to recover full cost Project Closing in of O&M and a reasonable June 1994. portion of capital costs taking into account farmer's repayment capacity. 3.08(a) M OK 03/31/87 // Establish and thereafter maintain - a Water Charges Review Committee with membership and terms of reference satisfactory to the Association. 3.08(b) F NC 09/30/87 12/31/93 Furnish to the Association, for its Not done before review & comments, results & Project Closing in recommendations of the Water June 1994. Charges Review Committee's reporl, and thereafter, in accordance with Association's comments, establish method of assessmcnt & collection of water charges. 3.08(c) F NC 07/01/89 12/31/93 On July I of every two calendar Not done before years, starting July 1, 1989, cause Project Closing in Water Charge Review Committee June 1994. to review and revise water charges to recover full cost of O&M and some portion of capital costs. SCH.1, M NC 11/01/86 // Employ consultants, with Not done before SEC.I1 approval of Assoc., to assist in Project Closing in final design & documentation for June 1994. constr. & O&M of irrig. schemes & to carry out other activities. Tlhis selection will be made on basis of World Bank guidelines. Table 11: Compliance with Operational Manual Statements Statement number and title Describe and comment on lack of compliance 1.OMS 2.20 "Project Appraisal" Civil Works not designed in sufficient detail for accurate costing at appraisal, nor advanced enough for early start of work (see relevant OMS para 21, 22). Good feasibility study not available (in fact no feasibility study available - see relevant OMS para 20). 2.OD 4.30 "Involuntary Resettlement" R&R program should have been agreed before completion of appraisal but was not (see para 30 of relevant OD)'/ 1/ See letter of ASAIN Department dated March 19, 1986, commenting on British ED's office comments that R&R programme should have been agreed bcfore appraisal as required by the Bank's OM. Objections were also registered by Germany and the Nordic Countries.  32 Table 12: Bank Resources: Staff Inputs Planned Revised Actual Stage of Weeks US$ Weeks USS Weeks USS Iproject cycle Through appraisal NA NA NA NA 155 NA Appraisal-Board NA NA NA NA 8.1 NA Board-effectiveness Supervision NA NA NA NA 229.5 NA Completion NA NA 1.9k/ NA TOTAL 394.5 1 Not including FAO/CP ICR Mission. Table 13: Bank Resources: Missions Performance rating Imple Develop- Specialized men- ment Stage of Month/ Number of Days in staff skills tation objectives Types of project cycle year persons field represented1/ status problems2/ Through appraisal NA NA NA A, E(3), EC(2), - _ _ IDS, PR Appraisal through NA NA NA NA - Board approval Board approval through NA NA NA NA - _ _ effectiveness Supervision October 1987 8 16 A, E(2). FA, LS, 3 2 M,F PR. RE, S. lune 1988 4 8 E(3), RE 3 3 M,F February 1989 5 9 E(3), PR, RE 2 2 M Sept. 1989 7 8 E(4), RE, S(2) 2 2 M February 1990 S 6 A, E, FA, RE. S 3 2 M.T Sept.1990 6 9 A, E(2), PR, RE, 3 2 M,T S April 1991 7 9 A, E(3), EC, PR. 4 3 M,T S Sept./Oct. 1991 6 9 A, DE, E, EC, 3 3 M,T PRS Apr/May 1992 5 6 E,EC,RE,SA,S 3 3 T July/Aug. 1992 May 1994 2 3 E(2) 3 3 M,T 5 6 A, E(2), RE, S , 3 M,T Completion July 1994 33/ 234/ A, E, EC, - _ 1/ A = Agriculturalist, E = Irrigation Engineer. EC = Economist, FA = Financial Analyst, IDS = Institutional Development Specialist, LS = Land Settlement Specialist. PR = Procurement Officer, RE = Roads Engineer, S = Sociologist. 2/ M - Management, F = Financial, T = Technical. 3/ Included both ICR work and pre-preparation of Andhra Pradesh Irrigation 111 project. 41 Average of the five staff days in field.  33 IMPLEMENTATION COMPLETION REPORT INDIA SECOND ANDHRA PRADESH IRRIGATION PROJECT (Loan 2662-IN/Credit 1665-IN) Appendix A Mission's Aide Memoire Introduction 1. This aide-memoire has been written by an FAO Investment Centre Mission preparing a draft ICR for the World Bank. The Mission included J. B. Downs (Mission Leader and Engineer), E. Simone (Agronomist) and T. Lohavisavapanich (Economist). During the period the ICR mission was in Hyderabad ( 10 to 29 July) it visited both sub-project areas, SRSP for the period 13 to 16 July and SRBC for the period 18 to 20 July. Both visits were very well organised by the project staff; information, data and site visits arranged to meet the wishes of the mission, and during the whole period in Hyderabad every effort was made to provide all information and services requested. For all this, together with the hospitable and kindly reception they have received, the mission members were very grateful. 2. This is the final draft of the aide-memoire referred to in World Bank Operational Manual, OP 13.55, dated April 1994, Page 2 Section (e) - "During the ICR Mission". This section requires that the aide-memoire (i) records the views of the Bank, borrower, implementing agencies, and co-financiers (if any) on project implementation and operation, including the operational planl; and (ii) confirms that it has provided advice and support to the borrower for preparing its own contribution to the ICR. A copy of the operational plan (if in existence) is to be attached to the aide-memoire. The first draft of the aide-memoire gave rise to an interesting discussion on 27 July during a meeting held in the Conference Hall at the "C" Block of the General Administration Block, Irrigation and C.A.D. Department, GOAP. This final draft of the aide- memoire has been revised to reflect points made during that discussion; subsequent discussions held with technical departments of the project and a final meeting held on 3 August in the office of the Secretary Irrigation, GOAP, at the Secretariat, Hyderabad. 3. This is among the first ICRs (which replaces the previous Project Completion Report) to be prepared for a project based in India. The ICR OP applies to all projects that have a completion mission departing after July 1, 1994. This mission arrived in India on July 3, 1994, and will depart August 10, 1994. having been in Hyderabad and the project area for the period 10 July to 4 August. 4. The ICR OP contains the provision that the borrower should prepare its own contribution to the ICR; this was provided to the mission2, and is a helpful and detailed document providing a great deal of background information, which will make a most useful contribution to the draft ICR. 5 . The object of producing this aide-memoire is to ensure that it will represent as fully as possible the consensus of all parties to the project and, where agreement cannot be reached, to flag 1 For operations already under implementation as of July 1, 1994, the borrower is encouraged to prepare the plan and do so as soon as possible. 2 "Borrower Contribution to the ICR", June 30, 1994, GOAP, Hyderabad.  34 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire such issues. This will then provide a sound basis for the draft ICR. In this draft where it has not been possible to agree the mission's text, the views of the dissenting parties are printed in italics. The Project 6. The project aimed to increase agricultural production and farmers' incomes by bringing new and/or improving irrigation to two sub-project areas: (i) Srisailam Right Branch Canal (SRBC) (65,000 ha) and (ii) Sriramasager (SRSP), Kakatiya Canal Command (modernization of 165,000 ha and new development of 163,000 ha). Common to both of the sub- projects were the following: provision of a feeder road network (1,152 km), irrigation water management development, equipment, especially communications equipment, training of staff and farmers, continued rehabilitation and provision of amenities for oustees from reservoirs associated with the sub-projects, monitoring and evaluation, technical services, as well as provision for studies and planning. 7. The SRBC sub-project comprised construction of a main canal (about 143 km long and 70 cumec capacity, including a major crossing structure across a valley at Gorakullu), and the necessary irrigation distribution system. 8. The essential feature of the SRSP sub-project was to improve the existing main canal (km 0 to 146); extend it to km 285 and improve the irrigation infrastructure as described above. Project Funding and Financing 9. The loan and credit (US$131 million and SDR 127.5 million) became effective on October 2, 1987. During the project period the loan (US$131 million) was cancelled in its entiretyl 2 and SDR 40.8 million of the credit was diverted to the Andhra Pradesh Cyclone Emergency Relief Project (AP, CERP) leaving SDR 86.7 million available for AP Irrig. II. This amount was fully disbursed by the closing date of June 30, 1994. Overview of Implementation 10. Whilst some major construction has been completed or in some cases partly constructed for both sub-projects, the main objective of the project, provision of improved and new irrigation has not been achieved (Physical progress on SRBC was 38% and SRS 21% as at end of June, 19943). The following table, taken from the Borrowers Contribution to the ICR, 1 This re-allocation of funds was carried out by GOI without the knowledge, at the time, of GOAP. 2 The same problem about a loan being cancelled and the decision not being rapidly transmitted to a State occurred in the course of implementation of the Haryana Irrigation II Project (Cr. 1319-lN). See Draft PCR, 8 October, 1992, prepared by FAO/CP (page 19, paragraph 10.5) (Report No: 139/92 CP-IND 94 PCR). 3 From: "Borrower Contribution to the ICR", GOAP, June 30, 1994.It should be noted that the borrower anticipates that, given sufficient funds and taking into account the increase in the rate of construction over the project period, the project works could be complete by June 1997.  35 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire provides an assessment of the present state of progressing the major works (it does not represent what has been built): ercentage of Work Type Description ompletion I______ _______ ______ __________ |SRBC SRSP Investigation l [Main Canal 100 100 _Distributory System 62 90 Designs l_ [Main Canal 96 100 Distributory System 62 90 Grounding of Packages a/ CGounded 74 49 [To be Grounded 26 51 a/ "Grounding" is a term used to indicate at a contract has been awarded, but do ot mean that construction has commenced. l 11. R&R activities have been largely completed and progress towards the end of the project period was encouraging. Provision of feeder roads amounted to 48% of the SAR target at a cost of about Rs.377 Million (72% of the SAR provision). A good deal of training of staff and farmers was well carried out (447 engineers, 4064 contact farmers and 3024 outlet committee chairmenl). Groundwater studies were well carried out during the years 1990-94. Overall water management in SRSP has not improved, no new agricultural extension system has been established2, and although 900 outlet committees (OCs) were formed for the existing irrigation area above Lower Manair Dam they have become defunct, presumably because of the difficulties over resolving the conversion (IW to ID) problem3, and lack of improved distribution system and new irrigation operational infrastructure (particularly the micro-network)(GOAP disagree with this statement about the reason for OCs becoming defunct and say it happened only because the necessary upgrading of the canal system had not been carried out). In effect within the six and 1 By Water and Land Management Training and Research Institute (WALAMTARI). 2 The SAR (para 5.13) envisaged the creation of special extension areas within the sub-projects. This was cancelled halfway through implementation in agreement with the Bank. 3 This was not a new problem, the PCR for the AP Composite Irrigation Project(Loan 1251-IN), May 29, 1989, states "In the cropping patterns assumed in the SAR, the NSP future with project patterns contained much reduced IW in favour of enhanced ID. On these were based future economic projections and the savings in water which would permit the extension areas to be supplied. It was assumed that GOAP would induce the farmers already growing excessive paddy to convert to the new patterns by persuasion and water rotation means. Regrettably this has not occurred, with GOAP taking no steps to correct the situation".  36 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire three-quarter year period between effectiveness and closing the project failed to achieve its implementation targets, and there were no tangible benefits generated. It is thus not possible to calculate an economic rate of return (ERR) for the project. The rate of progress and quality of construction of the water conveyance and distribution works was improving considerably towards the end of the project period. However the inappropriate order in which contract packages were implemented meant none of the irrigation worksl could become operational. (GOAP wish to stress that 12,000 ha of Ayacut (CCA) in SRSP was ready to receive water in June 1994, and an additional 28,000 ha will be ready by December 19942). Reasons for Failure to Achieve Implementation Targets 12. General reasons for the disappointing performance of the project were caused by a combination of: (a) inadequate preparation of the project with: (i) planning (projected over-optimistic rates of progress, lack of appreciation of the IW to ID problem, lack of detail and hard data in water resource reliability estimates); (ii) project design (departments not well-integrated, absence of a well thought out project management unit, capable of controlling all aspects of the project)3; and (iii) cost estimation deficient (under-estimates of cost, based on government schedules of rates method and no allowance for the additional costs inherent in a project built under Bank conditions(see 9(d)); (b) lack of in-depth analysis and detail at appraisal4, including: (i) the critical assumption that GOAP would be able to transfer IW to ID areas; 1 The scheduling of the works, was to an extent, upset by slight differences in tender submission dates, delay of contract award in some instances caused by Bank queries on the tenders and the need for GOAP to reply to these queries, however some of the more significant slippages occurred when GOAP included works in packages which did not conform to the SAR and which involved further investigation/studies. 2 However the necessary watercourse development has not been built/completed. 3 See SAR paragraph 5.08, GOAP were to formalize the merger of the Irrigation Department and Command Area Development Department by April 1, 1986. Thus fairly soon after such a merger the new organization was being asked to rapidly carry out a project of magnitude and, at minor canal and watercourse level, requiring considerable social engineering. 4 Since Preparation was assisted by Bank pre-Appraisal Missions, it must be assumed that Bank had an influence on it.  37 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire (ii) no detailed treatment including absence of plans and detailed planning for the roads component - two paragraphs for a component estimated to cost US$40.3 million; (iii) the assumption that the employment of consultants would handle the problems of the innovative features of the project'; (iv) lack of appreciation of the difficulty of introducing the RWSS concept into an existing irrigation area; and (v) placing little emphasis upon the comments of informed technicians made during both pre and just post-appraisal; (c) lack of experience and urgency in implementation (i) delay in meeting R&R conditionality issues (see Staff Supervision Report (SSR) January 12, 1988, May 9, 1989); (ii) slow development of R&R programme (SSR April 25, 1990); (iii) lack of communication between project Chief Engineer (construction) and Administrator CADD impeding OFD and planned operation of existing canal network at SRS (SSR June 28, 1988); (iv) inadequate preparation and design of the roads component (SSR January 12, 1988), revision of roads component, inadequate numbers of staff allocated; delay in sanctioning works (SSR June 28, 1988, however roads work only started May 1991); (d) an apparent inability of borrower and lender to learn from past experience2, such as cancellation of CAD works in the composite project, staffing problems in Pochampad project; (e) confusion caused during implementation by the well-intentioned efforts of borrower and lender to remedy the initial inadequate project design; Apart from the difficulty of integrating consultants' efforts in these aims, the SAR assumed that GOAP would engage such consultants by December 31, 1986 (on the basis that the project would become effective on January 1, 1986) and that "All consultants would be engaged in accordance with Bank Guidelines". This was most optimistic. 2 Pochampad Project (closed December 1979), AP Irrigation and CAD Composite Irrigation Project (closed June 1985).  38 INDIA: Second Andhma Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire (f) changes in the Bank's attitude to procurement and reimbursement in later stages of the project, contributed to uncertainty within the project and hence delays; (g) cancellation of the loan; and (h) attempts to vary the physical design of the project by inserting components/realigning canals relating to Gorakullu and Owk reservoirs into canal contract packages. 13. The factors contributing to the poor implementation performance included: (a) shortage of senior staff at the beginning of the project and a continuing shortage and rapid turn-over of staff; (b) delay in clearance of LCB (supervision June 28, 1988) and ICB procurement (became satisfactory May 9, 1989); (c) shortage of local funds; (d) lack of detailed design and accurate cost estimates at commencementl; (e) inordinate delay in appointing consultants for the Gorakullu By-Pass structure (consultancy awarded February, 19902); (f) delays in obtaining land acquisition and clearance, particularly for forest lands; (g) shortage of, and use of unreliable vehicles at commencement which affected survey, investigation and supervision; (h) lack of communication between Irrigation Department and CADA (formed into one unit in 1986 at the suggestion of the SAR); (i) great delays in authorization of road construction (eventually authorized about October 1990, but construction not commenced until May 1991); (j) poor performance by the initially appointed contractors with further delays caused by abandonment and litigation; Resulting in low estimates of cost. 2 This consultancy was discussed in detail between GOAP and the Bank between June 1986 until it was cleared by the Bank in November, 1988 (it took GOAP 15 months to draw up revised TOR for the consultants (March 1987 to August 1988); recruiting consultants after clearance took 14 months.  39 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire (j) uncertainty in later stages about the Bank's intentions regarding procurement/cancellation/extension (during a six month period); and (k) the apparent lack of a strong coordinating project organization. Sustainability 14. Since the project infrastructure and facilities have not been completed or in some instances, even begun, sustainability of the project cannot yet be measured. However the lack of good 0 & M procedures and performance in the existing SRSP irrigation area provide cause for concern about sustainability of the project, when completed (see para 9(h)). It should however be noted, that an AP m Preparation has commenced which has as its objective the completion of AP 11 so as to provide an economically sustainable project. Operation of the AP II Project 15. It is not possible to comment upon the operation or the operation plan (which lays down how irrigation operation will be administered, controlled and staffed), because at present the project (apart from the pre-project existing irrigation areas) has not been completed sufficiently to be operated, and no operation plan is in existence. Compliance with Covenants 16. There were thirty-three covenants contained in the Project Agreement, of which thirteen have been complied with, others were showing signs of compliance immediately prior to Project Closing. Lessons Learned 17. The primary lesson to be learnt is that a project will not succeed unless it is well prepared and competently appraised, other lessons are sub-sets to the primary lesson. These sub- sets are: (a) Reliability of water-resource estimates for the sub-projects. Delay in later stages of implementation were caused by discussion about the reliability of water supplies to the two sub-projects from their respective river systems and reservoirs, their sustainability and their temporal distribution. The problem here was that whilst GOAP had committed water supplies to the project (SAR paras 6.06 et seq) the Bank doubted whether this allocation was possible (SSR June 1991), and the resulting studies, discussions and re-appraisal of the subjectl, affected decisions being made with regard to implementation (procurement, approvals of contracts, cancellation). GOAP considered that if at the time of Appraisal the assurance given about water supply was accepted, 1 Believed to have been fust flagged by concern over the effect of dam operation for power generation at the two major dams, affecting inigation supplies.  40 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire (which it was) the issue of water reliability should not have been raised again during Implementation, and certainly should not have been used as a cause for "freezing" procurement/reimbursement; it being the GOAP's responsibility to ensure make good their assurances when the project became operational. This seems to be a reasonable attitude by a borrower. The important lesson here for project design for future projects is that: without an unambiguous analysis of water supply reliability for an irrigation project, established at Preparation, and checked and agreed at Appraisal, decisions about major items of water conveyance become protracted and delay progress. If it is impossible to arrange such an unambiguous analysis, the project must be so scheduled that development proceeds in steps with water availability being assessed as each area of irrigation development becomes operational (GOAP strongly disagree with this statement in the context of this project because they believe that development has now taken place over a considerable length of the main and distributory canal system and that it would be better to complete the project in its entirety as conceived in the SAR and commence irrigation operation over the bulk of the area). (b) Procurement Procedures: These have been a subject of discussion and delay for many projects in India, and have, to an extent, been resolved since this project became effective1. The history of the development of a suitable set of documents for procurement of LCB and ICB contracts for this project does not throw credit on any party to the project, bureaucracy and meticulous attention to detail seemed to obscure the urgent need for commencing and accelerating construction. However this project now appears to have a good grasp of both ICB and LCB procedures. An associated problem connected with procurement is the accuracy of contract package estimates prepared by the project when compared with the contractor's bids. Whilst the mission sympathize with the project's dilemma in having to use government schedule of rates estimating procedures, an attempt should have been made to rectify the situation and produce more realistic rates for project contract estimates. Appraisal should ensure that there is a full and practical understanding between the parties to the loan/credit as to all that is implied in Bank procurement requirements, and the Bank must ensure that the borrower has the institutional capability, ability and willingness to proceed within the guidelines issued by the Bank. If the borrower considers that the guidelines are inappropriate this should be resolved at negotiation2. 1 "Procurement of Works", draft approved by World Bank, December 1993, by Task Force GOI. . 2 There appears to be a good case for an experienced, competent Bank Procurement expert (preferably an engineer for engineering oriented projects) to be a member of the appraisal team, available to fully explain and discuss in detail Bank procurement procedures with the proposed borrower (at State level).  41 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire Government should also consider modifying its procedures to ensure that their estimates of contract costs are realistic. Bank on its part should, by now, be aware of the problem of Government estimating and have a methodology to realistically re-estimate the costs or at least check them with attention to this problem. (c) Implementation Planning Ability: A feature of this project has been the apparent piecemeal nature of development. To some extent this has been caused by the initial poor contractor performance, coupled with protracted discussions between borrower and lender (for reasons discussed above) on clearance and award of particular "packages" resulting in inappropriate scheduling of construction, and the apparent inability of the CAD part of I & CAD to prepare suitable designs or operating conditions to bring on-stream (with the RWSS system) the existing part of SRS1. This is reflected by: (i) construction of blocks in SRSP commencing towards the lower end of the command instead of consecutively downstream from the supply source and, even in the case of blocks that were constructed, the necessary in field canalization was not built; (ii) delay in site investigation, design and construction of a vital major structure (Gorakullu By-pass); and (iii) extensive delays in designing water distribution at field level. Every effort must be made in projects of this nature to schedule construction so as to bring irrigation on-stream, in stages, at the earliest possible time and, to bring in irrigation from the head of the system downwards. Only in this way can benefits be obtained at an early stage and the completed project sized (if necessary) to fit water availability and reliability. (GOAP disagree with this statement, they feel that development in stages would lead to farmers whose land is developed first applying pressure to obtain excess water resulting in problems later2, GOAP feel that in SRSP development should proceed concurrently above and below Lower Manair Dam). (d) Cost Estimates: It is essential that cost estimates at appraisal accurately represent final costs of the work. The costs appear to It is appreciated that the IW to ID problem caused CAD some difficulty, but there appears little reason for the apparent paralysis and lack of drive to do something in the existing command; such as providing good maintenance and attempting to obtain greater equity of water supplies within the existing canal framework. 2 This, of course, has serious, implications regarding the ability of the Operation Department of I & CAD to control irrigation supplies.  42 INDIA: Second Andhra Pradesh Lrrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire have been worked out, in some cases, using simplified estimating procedures and without making due allowance for the additional costs incurred in large contracts spread over a large area, resulting in an underestimate of costs. If it is not possible for government to carry out accurate estimates, consultants and quantity surveyors should be employed to provide a second set of more realistic estimates which would acknowledge the extra costs inherent in a Bank-supported project and based on sufficiently detailed design. The SAR appeared to ignore Bank policy in that major structures had not, in all cases, been designed in sufficient detail to provide accurate costs and a quick commencement of constructionl. The Gorakullu By-Pass, for example, was not designed at appraisal to the standard expected, and the appointment of consultants to carry out the design was not made until three years after effectiveness. (e) Engineering Design: It is a pre-requisite to a successful and properly costed project that engineering design is based on satisfactory examination of all parameters that affect the design. In this project preparation insufficient attention had been paid to establishing canal lining design to suit foundation conditions (swelling clays - SSR June 1991) and it would also seem that in SRBC alternative alignments of canals/structures had not, in all cases, been studied2. In SRSP the design of distributaries and minors tended to be in full cut, this placed some land out of command (SSR October 19893). Physical design at Appraisal must be carried out to the standard necessary to ensure that a good economical solution for construction works has been found. (f) Irrigation Operational Features: An essential element of the irrigation design was the use of Rotational Water Supply System (RWSS). This subject was proposed in the SAR but was not covered in a sufficiently detailed manner to guide an irrigation department unversed in the concept. This could well have been the subject of a comprehensive annex in the SAR or in a supplementary Paragraph 3.30 of the SAR states that "GOAP has submitted design and contracting packages, satisfactory to the Bank/IDA, that cover all proposed works in the 1986-87 construction season. an agreement has been reached with GOAP that it will submit detailed designs and draft contract documents for all works proposed in both sub-projects by April 30, 1987, and tbereafter by April 30 of each year for all work to be let to contractors for execution during subsequent construction seasons". This agreement was not kept as the project advanced, due to reasons given in the text of this aide-memoire. 2 See "Annexure 1, Package - X, S.R.B.C. from KM: 111.385 to KM: 114.386, Report on Structures vs Dykes", Ref: Letter No. SO(PP&M)/EE.IlI/100(Gl)/94/95, dated 25-04-94. 3 This is a noticeable feature of many canals seen by the mission.  43 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire data volumel. This deficiency was well corrected by the Bank in conjunction with the project staff during Implementation2 but there is little doubt that time spent in ensuring a full appreciation of the subject during Preparation/Appraisal would have helped prevent delays in producing designs. The Warabundi system of water distribution at watercourse level, not a new concept in Andhra Pradesh, but one which appears to have fallen out of use and not to be used in new AP projects, needed detailed treatment in both the SAR and an additional time allowance in Implementation for its incorporation in design. Whilst field distribution works have not yet been built, the need to incorporate this system probably slowed down the ability of designers to proceed expeditiously with the field distribution design task. Where a new philosophy of design is to be implemented every effort must be made by the Bank to ensure that its methods and implications are fully understood and accepted by the proposed borrower. The present lack of discipline in operating the canal water supplies in SRSP has resulted in excessive quantities of water being supplied to farmers in the existing (to be re-modelled) command - to some extent this has been exacerbated by the pre-project concept of localizing irrigation for "irrigated wet"(IW) and "irrigated dry"(ID) crops and the legal right of farmers to such arrangements. Consequently farmers have become used to a copious supply of irrigation water, which will not be sustainable in the future when the same quantity of water will have to be spread over a much larger area. Recently GOAP carried out a public relations campaign which should ease this problem, but the success of this initiative still remains to be tested. Water must be rationed to farmers from the start on the expected ultimate development basis in order to prevent unfortunate precedents being created. (GOAP argues that it is reasonable to make use of available water on an existing area even if this means that farmers receive more water than they can be allocated in the future). This does not appear to be realistic given farmers' known reluctance to reduce irrigation water use below that to which they have become accustomed. Hopeful signs for the future are the results of a pilot programme carried out by an NGO (IRDAS) on Distributary 64 during the period 1989 to 1992 that has shown that significant improvements can be made in water distribution and equity of supply of irrigation water by use of social organizers. This approach should be followed up in the future. The subject was stressed at the 4 In fact there was no supplementary volume to the SAR which is surprising considering the complicated nature of the project. The lack of detailed coverage of features in the SAR, such as RWSS and the Roads component was probably a source of delay. 2 Resulting in a useful manual for RWSS - "Guidelines for Improvement to Existing Irrigation System to Suit Rotational Water Supply System", GOAP, Irrigation and CAD Department, Sri Rama Sagar Project, dated May, 1990 - three years after effectiveness.  44 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire Programme of discussions on AP III Irrigation Project with World Bank mission on 21 July by GOAP who propose the formation of pilot Farmer Users Associations for assistance in both operation and maintenance. The SAR made a major assumption in assuming outlet committees would be effective, and that they could be enlarged into a larger organization of farmers. The subject warranted an analysis of much greater depth and detail. (g) Quality of Construction: Some of the engineering work carried out both by the early unsatisfactory contractors and by the replacement, more responsible contractors, has shown serious deficiencies in construction quality, and some is now being rebuilt - again causing delays. Whilst it is noted that the standard of work being carried out by contractors is now generally much better than before, it is essential that construction supervision is sustained at continually high standards. (h) Maintenance of Irrigation Works: The present standard of maintenance of existing irrigation structures is totally inadequate. Many gates are in-operable, canal lining is being damaged by excessive weed and tree growth and minor canals are not being prepared for the present kharif season (canals are likely to commence flowing in late July/early August). There appears a lack of commitment in I & CAD to effectively operate and maintain the existing system, which has been exacerbated by insufficient budget (85% of the existing budget is allocated to staff salaries). It is essential that a disciplined force for O&M is created and that consideration is given to a separate budget devoted to the actual costs of maintenance. (i) Costs of delay and need to maximize benefits: The sooner improvements are carried out on an existing irrigation scheme or a new irrigation scheme is brought on stream, the sooner the benefits will be generated for the farmers and a return on the government's investment. It is essential to inculcate this principle in project planners. (j) The loan cancellation (US$131 M) is believed to be a cause of delay'. Whilst at the time of cancellation the funds were not committed to any particular expenditure, the psychological effect on the senior staff implementing the project, when they became aware of the cancellation of the Bank loan must have been bad for morale and adversely affected progress. It may have helped create a situation where extension of the project was less likely to be considered. Had the loan not been cancelled, had there not been the problem of starts and stops in procurement and if project planning by GOAP had been better providing sequential block development, it is likely that the project See "Borrower Contribution to the ICR", GOAP, June 30, 1994.  45 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix A: Mission's Aide Memoire Conclusion (a) It should be appreciated that this aide-memoire attempts to obtain agreement of the mission findings or, where this has not been achieved. to flag the unresolved issues. This aide-memoire, subsequent discussions and analysis will be reflected in the draft ICR which will be provided to GOAP for final comment and review in October, 1994. (b) Whilst the project has not been a success, it is obviously undesirable that it be left in the present half-finished and inoperable state; additional investment is needed to complete the works necessary to generate benefits.  46 IMPLEMENTATION COMPLETION REPORT INDIA SECOND ANDHRA PRADESH IRRIGATION PROJECT (Loan 2662-IN/Credit 1665-IN) Appendix B Resettlement and Rehabilitation (R&R) Introduction 1. The R&R component of Andhra Pradesh Irrigation II (AP II) Project was described in the Staff Appraisal Report (SAR) as comprising "the rehabilitation of and amenities for oustees from the Srisailam and Lower Manair reservoir sites and other project works;" (The Project, Summary of Project Components). The Srisailam reservoir was originally constructed by GOAP as a hydroelectric scheme and was completed in 1981 after its site was gradually acquired from 1974 onwards. This reservoir now serves multi-purpose objectives of power, irrigation and water supply. The Lower Manair reservoir was completed by GOAP in 1985 to store surplus Godavari River waters and the flow of the Manair River for extension of the SRS sub-project. In the detailed description of the project components further details were given of how Project Affected Persons (PAPs) would be treated for the two reservoir sites, and concludes: "An agreement has been reached with the Government of Andhra Pradesh (GOAP) that they will resettle and rehabilitate the PAPs in accordance with an action plan satisfactory to the Bank/IDA; such a plan would be based on paras 3.17-3.20 and Annex 7 of the SAR. The program, along with the Action Plan covering Srisailam and Manair Reservoir sites, would be submitted to the Bank/IDA for approval, as a condition of Loan/Credit effectiveness (1987)". 2. Annex 7 of the SAR was very brief (half a page) and some paragraphs were so general as to be capable of different emphasis and interpretations by readers. As noted in the main text (para 6) and expanded in paras 5-11 below, there was considerable delay in obtaining a suitable R&R plan from GOAP and effectiveness was eventually granted to the project after this condition was relaxed. The R&R Component 3. The total number of households affected by and displaced by the construction of the two reservoirs under the Andhra Pradesh Irrigation II Project is 43,979. The AP II project included all past oustees in its R&R Program. The program consisted of providing improved village infrastructure facilities, vocational training and income generating schemes for the oustees. Persons affected or displaced by the construction of canal, irrigation structures and similar works were not provided for in the AP II R&R component. Houseplots were only provided for Srisailam oustees in resettlement villages; Lower Manair Dam oustees were not given houseplots. 4. The people considered to be PAPs were any persons whether land owners or landless who was residing or cultivating land or carrying out any occupation in the area and who were adversely affected by the submergence during the filling of the two reservoirs. The unit of entitlement for land and house compensation, and rehabilitation grants was the family. The Project Affected Family (PAF) was considered to be wife, husband and dependent children. Major sons were treated as a separate PAF under the R&R program.  47 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix B: Resettlement and Rehabilitation The R&R Action Plan (RAP) 5. The RAP was based on two sample surveys conducted by the Center for Economic and Social Studies (CESS), Hyderabad, and the Bureau of Statistics (BES), Hyderabad, in 1986. Both surveys examined whether households purchased assets with the compensation received, studied the changes in the socio-economic conditions of the households after evacuation, identified deprived groups, suggested a plan for the economic rehabilitation of the deprived groups and identified gaps in the socio-economic infrastructure provided by GOAP in the new settlements. Using this survey GOAP prepared two annual RAPs for the 1988-89 and 1989-90 periods. This was later updated to a revised three year RAP for 1991-93. It was submitted by the authorities in 1991 to the Bank and officially cleared in September 1991. It should be noted that GOAP was not required to formulate an R&R Policy as a basis for the RAP. 6. A total of Rs.146.54 million was spent on village infrastructure and civic amenities, while Rs.39.0 million was used for income-generating schemes and vocational training. The infrastructure and the rehabilitation components are reported as 97 percent and 96 percent complete at closure. However, some doubt exists as to the coverage of the rehabilitation component since the RAPs do not relate the schemes to the target population of 24,126 eligible families below the poverty line. 7. The overall responsibility for arranging R&R was borne by I&CAD. Implementation was the shared responsibility of the relevant District Collector and the Chief Engineers of SRBC and SRS respectively. They were assisted in this task by I&CAD staff and the Panchayat Raj. Economic rehabilitation was planned by the R&R cell in the District Rural Development Agency (DRDA) which the District Collector chairs. Project R&R staff formed part of these cells. Monitoring functions were carried out by the Special Officer, Project Planning and Monitoring (PPM), I&CAD, Hyderabad, whilst concurrent evaluation and impact assessment was done by CESS. Maintenance of resettlement infrastructure was carried out by the Panchayat Raj Department. 8. Participation and Consultation was organized through a District level Committee which supervised R&R implementation; this included representatives from the oustee comminity and the state legislature. In addition, local NGOs were involved in this process. 9. GOAP decided to settle Srisailam oustee disputes regarding land acquisition compensation outside the formal court system as the court system was found to be time consuming. The method introduced was the establishment of Lok Adalats (Peoples's Courts) in the district, which settled disputes about land acquisition and compensation. The District Judge and the District Collector helped by members of the District legal Aid Committee visited each affected village, identified the complainants and settled compensation disputes through a process of negotiation with the PAPs. This process relieves PAFs from long periods of waiting for settlement of claims for enhanced compensation. Towards the end of the project period GOAP decided to settle all outstanding compensation claims by Srisailam PAPs with a 30 percent solatium and to release compensation amounts in the form of government bonds, this is said to provide a form of forced savings to oustees. It is anticipated that this method of paying compensation will enable oustees to retain their compensation until they need it to purchase land or other productive assets; in the past they tended to use compensation for consumption. No Lok Adalat has been instituted for Lower Manair Dam oustees.  48 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Repoit Appendix B: Resettlement and Rehabilitation Benefits 10. In all 24,126 out of the 43,979 PAFs, those below the poverty line, were eligible for economic rehabilitation through non-land based income generating schemes. This was because the economic rehabilitation plans were based on only oustees below the poverty line being assisted and this was done through the Government's Integrated Rural Development Programs' (IRDP) ex- gratia cash grants and loans in addition to compensation for houses and land acquired. The increase made in compensation towards the end of the period by the Lok Adalats have also benefitted Srisailam PAFs. Economic rehabilitation programs based on irrigation have had considerable success. Several lift irrigation schemes have been implemented for the oustees. Women's economic activity based groups have been successful; these groups proved to be credit worthy making regular repayments on loans and revolving fund accounts. In many cases, however, livestock schemes were not successful due to saturation of village demand, and lack of veterinar-y services for the high quality animals provided. Instances of sale of assets to obtain cash abound as in all IRDP programs. I 1. In 1993-94 the pace of R&R implementation improved considerably. The major problems of the earlier plan - poor support from the local banks, lack of adequate follow-up by DRDA, poor coverage of women, were to a great extent resolved. Coordination between Project Authorities, banks and DRDA improved. Problems with contractors were largely resolved. It is noticeable that this improvement took place after the Bank comrnenced making arrangements to close th-ie project. The fundamental issue of adequacy of coverage of income restoration schemes in relation te the number of eligible PAFs remains. C oncluisions 12. GOAP took a very long time to appreciate the Bank's desire for a comprehensive R&R procyram to address the adverse impacts of displacement of 43,979 families by pre-project GOAP-funded reservoir construction. Until about 1992-93 GOAP prevaricated on R&R to avoid action until ther the project was complete. i 3. Ec.-ononic rehabilitation programs based on minor irrigation and women's groups i!rAv`e ble un s ucCe>SfL1l, but livestock schemes were inadequately planned and less successful. i 4. The R&R program did not allow for PAPs arising from canal and road construction. Any that were created by AP II will have to be dealt with under the proposed AP III project along with any likely to be caused by the later project. 15. G(OAP was successful in speeding-up compensation to Srisailam oustees by i);stituting and using the Lok Adalat system. 16. While expenditure on civic amenities and infrastructure for resettlement villages exceeded SAR allocations, the economic rehabilitation implementation program suffered from fundamental flaws. An R&R Policy of compensation and income restoration entitlement for PAFs was not forrnulated and agreed at appraisal and a satisfactory RAP was not agreed by the time the project was declared effective. The RAP became a "rolling" annual program which was periodically updated based on Bank supervision mission impressions. While targets for village  49 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix B: Resettlement and Rehabilitation infrastructure and civic amenities were rationally selected, Bank missions failed to insist on: (a) income restoration for all displaced families and not only those below the poverty line; and (b) relate IRDP scheme targets to the population of eligible PAFs. At project closure, it is therefore difficult to determine if all "eligible" PAFs received income restoration assistance.  50 IMPLEMENTATION COMPLETION REPORT INDIA SECOND ANDHRA PRADESH IRRIGATION PROJECT (Loan 2662-IN/Credit 1665-IN) Appendix C Economic Re-Evaluation A. AGRICULTURAL IMPACT 1. At appraisal, the increase in agricultural production was expected to come from a more stable and intensified cultivation and shifts to higher value crops especially groundnuts and long staple cotton, and also shifts to high yielding variety seeds. The command areas include 328,000 ha in the Sriramasagar Scheme (SRS), including 165,000 ha (km 0-146) under irrigation modernization in the above Lower Manair Dam (LMD) and 163,000 ha (km 146-284) under new irrigation in the below LMD, and 65,000 ha under new irrigation in the Srisailam Right Branch Canal Scheme (SRBC). In the already irrigated areas in SRS, present cropping intensity was 120%, and it was projected to increase to 123% without project (WOP) and 150% with project (WP). In the areas where irrigation was to be introduced, cropping intensities were 108% present and WOP and 135% WP in SRS, and 106% present and WOP and 135% WP in SRBC. Yields were projected to increase slightly WOP. 2. At project completion in June 1994, benefits have not commenced because construction work, were only partially completed. With additional investments to complete the on-going works benefits are expected to be generated from 1995 and full benefits are expected thereafter. Cropping patterns and yields of crops in present situation are based on farm surveys conducted by the Department of Agriculture (DOA) while those in WOP and WP are projected by DOA based on farm surveys and historical productivity trends in the project areas. Cropping intensity in Present, WOP and WP in the sub-project areas are summarized below: P WOP WP Cropping Intensity (%) Above LMD (km 0-146) 148 151 152 Below LMD (km 146-284) 109 114 149 SRBC 103 107 163 3. In WP, it has been projected that there would be significant shifts from low value crops (pulses, peageon pea, chick pea, coriander, tobacco, medium staple cotton, etc.) to higher value crops, including long staple cotton, oilseeds, vegetables, mulberry,  51 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix C: Economic Re-Evaluation fruits and some seed production. Projected yields of major crops except cotton in both WOP and WP are higher than the appraisal estimate as shown below: Yields (t/ha) Appraisal Estimate ICR Estimate Crops WOP WP WOP WP Paddy 2.0-3.5 3.5-4.5 3.2-3.5 5.4-5.6 Maize 1.2-3.2 2.5-4.0 2.2-2.7 3.0-4.5 Groundnuts 0.6-1.1 1.1-1.5 1.0-1.8 1.8-2.5 Cotton 1.0-2.1 2.5-3.5 1.1-1.3 2.5 Sorghum 1.0-1.4 2.3-2.5 1.2 2.5-3.0 Sunflower - 0.6-0.7 1.5-2.0 B. FARM INCOMES 4. At appraisal, the impact of the project on farm incomes was analyzed for three representative farms: 2.3 ha farms in already irrigated areas and newly irrigated areas in SRS and 3.6 ha newly irrigated areas in SRBC. Table 12 of SAR shows the estimated incremental annual net farm incomes in 1985 constant prices before taxes and water charge payments of Rs. 10,340 and Rs. 11,550 for 2.3 ha farms in already and newly irrigated areas in SRS and Rs 31,900 for 3.6 ha farms in newly irrigated areas in SRBC. Re-stated in FY95 constant prices, incremental annual net farm incomes would be Rs. 22,130, Rs.24,720 and Rs.68,265 respectively. 5. The net farm incomes have been re-estimated at completion on the assumptions made at appraisal using the current and projected cropping patterns and crop budgets in WOP and WP situations and the prevailing 1994 prices of outputs and inputs (Table 2). Based on the above assumptions, the re-estimated incremental annual net farm income at full development is Rs.25,930 and Rs.38,265 for 2.3 ha farms in already and newly irrigated areas in SRS and Rs. 97,220 for 3.6 ha farms in SRBC, reflecting real increases of 17%-55% over the appraisal estimates. The project would directly benefit approximately 527,660 farms in SRS and 57,200 farms in SRBC at full development.  52 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix C: Economic Re-Evaluation C. ECONOMIC RE-EVALUATION 6. At appraisal, the economic rates of return (ERRs) were estimated at 23% for the SRS and 20% for SRBC and 22% for the combined two schemes, based on the following assumptions: - Project life of 50 years, including a construction period of seven and a half years; - All project's investment costs were taken into account in the analysis, including the sunk costs of the Manair Dam (75% allocated to irrigation) and its conveyance (Rs. 876 million, Table 15 b of SAR). The weighted average construction conversion factor (CCF) of 0.75 was used to convert the financial construction costs into border prices; - Unskilled labour inputs were valued at 67% of the market wage; - Prices of non-traded goods and services were adjusted by a Standard Conversion Factor (SCF) of 0.80; - Annual O&M expenditures were estimated at Rs. 150/ha, adjusted by CF of 0.67%; - Foregone benefits from land acquired for construction under the project, and land submerged by Manair reservoir (7,400 ha) were valued at the net economic value of rainfed crop in WOP; - Foregone benefits of hydro-power in SRBC was estimated at Rs. 9.6 million annually when the Srisailam Reservoir is not spilling; - Economic farm-gate prices of paddy, maize, groundnuts, sorghum, cotton and fertilizers were based on projected 1985, 1990 and 1995 world market prices in 1985 constant prices; - Planned irrigation intensities were assumed to be attained in 3 years in areas already irrigated and 5 years in areas where irrigation was to be newly introduced; - Cropping intensities in WOP were assumed to be attained in 7 years in areas already irrigated and 10 years in areas enjoying new irrigation 3 years and 5 years respectively in WP, and projected yields  53 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix C: Economic Re-Evaluation in WOP were to be achieved in 7 and 10 years and 5 and 7 years respectively in WP. 7. The ICR re-evaluation of the project's ERRs follows the appraisal assumptions. The main differences are: Actual project expenditures of the two schemes (Tables 3-6), plus the completion costs, have been re-stated in 1994 constant prices using wholesale price indices and adjusted to border prices by the updated CCF of 0.80 (Table 7); - Non-traded inputs and unskilled labour were adjusted to border prices by SCF of 0.90; - Inclusion of cost of land levelling in the newly irrigated areas, which has been estimated at Rs. 500/ha, adjusted by SCF of 0.90; - Foregone benefits of hydro-power in SRBC was estimated at Rs. 72 million annually at the long run marginal cost of electricity at Rs.1.6/kwh; - Present O&M budget in km 0-146 is Rs. 213/ha, including Rs.185 for the establishment costs and only Rs. 28/ha for maintenance costs. Under the project, annual maintenance costs have been increased to Rs.170/ha, adjusted to border prices by using CCF of 0.80; Foregone benefits from land acquired for construction under the project (in SRS: 7,400 ha submerged by Manair reservoir, 2,526 ha acquired under AP II and additional 1,500 ha yet to be acquired; and in SRBC: 1,464 ha acquired under AP II and additional 2,310 ha yet to be acquired), have been valued at the net economic value of rained crop in WOP (Rs.5,700/ha in the above LMD and Rs. 5,600 /ha in below LMD and SBRC; Average 1995-2000 projected world market prices of paddy, maize, sorghum, groundnuts, cotton, soybeans, sugarcane and fertilizers in FY95 constant value were used in the analysis. Non-traded goods and inputs were adjusted by SCF of 0.90. A summary of economic prices of outputs and inputs is presented in Table 2; and Inclusion of economic benefits of feeder roads, including vehicle operating cost savings, passenger time saved and incremental load from time saved, which have been estimated at Rs. 227,465/km/year  54 INDIA: Second Andhra Pradesh Irrigation Project Implementation Completion Report Appendix C: Economic Re-Evaluation in SRS and Rs. 207,130 /km/year in SRBC based on the traffic surveys conducted in December 1994 by the Roads and Highway Department, AP. However, only 50% of the construction and O&M costs have been included due to several tertiary benefits which cannot be quantified, including an increased literacy, improved health and family planning, access to banks, opportunities in road construction and maintenance. The maintenance costs have been estimated at Rs. 35,000/km, adjusted by CF of 0.80. Total length of feeder roads are summarized below: Length (kn) SRS SRBC Completed under AP 11 425.1 60.0 Completion of works planned under AP 11 305.1 163.0 Additional new roads - 96.0 Total 730.2 319.0 8. On this basis, the re-estimated ERRs are 16.1% for SRS, and 11.0% for SRBC and 14.4% for the combined two schemes (Tables 8-10). The lower ERR is due mainly to longer implementation period resulting in delayed accrual of project benefits and cost overrun. Excluding the sunk costs of the Manair Dam and foregone benefits of land submerged by the Manair reservoir, the re-estimated ERRs increase to 20.8% for SRS and 16.1% for the combined two schemes. 9. Sensitivity Analysis. Sensitivity analysis has been carried out to test major risks, including delays in completing the on-going works and the resulting delayed accrual of project benefits and increased completion costs. The results of the sensitivity tests show that ERRs are not sensitive to either delays/decreases in benefits or increases in completion costs as summarized below: ERR (Se) SRS SRBC Combined two Schemes Base Case 16.1 11.0 14.4 Completion Costs (+20%) 15.7 10.3 13.9 Total Benefits (-20%) 14.5 9.4 12.8 Total Benefits lagged 2 years 14.2 9.6 12.7 Completion Costs (+20%), Benefits 13.7 9.1 12.1 lagged 2 years  55 INDIA Second Andhra Pradesh Irrigation Project Table 1 Ctnulative Benefltted Area (ha) SRS SRBC Modernizatlon New Irrigation 2/ 2/ 1/ km146-23*m234 -284 FY95 0 0 0 420 FY96 2581 1303 0 840 FY97 6268 4015 0 1260 FY98 20518 9111 1103 3335 FY99 37206 17228 3536 8310 FYOO 59195 29669 7681 15490 FY01 84769 46036 13993 24505 FY02 111623 60994 25247 37085 FY03 138367 73568 39164 48010 FY04 156123 83122 51751 56035 FY05 165000 88350 62626 61440 FY06 71334 65000 FY07 75100 1/Areas phased over 3 years. 2/ Areas phased over 5 years.  56 INDiA Tabk 2 SacuW Amca Pradaih trigtiwn Project Summaryoif Finune iindEcoriomlk prion FlirtW Economic Finrwcio Econscmic Outputb (ReAon) 1/ Paddy 3070 6345 Inputb (RiAg Sorghum 3500 6110 SeeS 2/: LV HYV LV HNV Sorghufm 9646 7500 13090 Party a 12.8 Maim 3000 200 Sorghum 5 8-40 6.7 14-70 Maimes dB 7500 1550 main 10-20 20.7-413 Soybpe 8000 10235 Soybpm 10 12.8 Grouruin 10500 12760 B soae ds 30 27 Pis.W 10500 9450 Groundnutb 1S 21jS Pigeon Peas 9o 8100 Sunfiower 15 70-150 182 65-162 ChickPea 9350 8415 Pulae 10 a wIl-s 13000 11700 Pageon Poo 12 10.6 V geteb_ts 2200 1960 Cidi Pa 15 131 Coraindar 13000 11700 Tumrrkc 1000 goo Mubary 6500 7650 Chilibi 200 10 Sugarca 525 970 Vegeltabs 150 135 Fn.u 4870 4380 Coriandrm 15 13.5 Tu ric 150D0 13500 Cotton 22 150-250 19.8 135-225 Sun80w r 9700 11790 Sugcane cuttings 0.60 0.54 Su nrflosrads 30000 34W6 Tobacco 130 117 Bndhl smds 15000 13500 Cator olsadu 45 40.5 SeadCCoten (MS) 17000 17240 Ftilzm (P%/kg: SeadCotim (Lq 190O0 18i86 Lrn 3 7.3 Conan amd 11000t 9III DAP t.5 8.2 Taco 13000 11700 MOP 3.9 6.1 Caste olsads tODO 9000 MUnLIs 0) 140 126 By-products: paddy 225 200 Labour (Rs/md) 20-25 18-22.5 Sogeum 120 110 CraftPower(AsWa) 50 45 Mal 6O 55 Groundruts 275 250 1/ Non -traded outputs, hIputs, fbour amd draft power efe adjusted by SCF of 0.90. 2/ For irad comrmd. nt.e coormic nepras wsre based rn tfe aai price ratio baleen gra nrsnd seeds.  57. IN DiA Table 3 Second Andhra Pradesh Irrigation Proiact Sriramasagar (Rs. Million) (km 0-146) A. AP II Expenditures FY89 FY90 FY91 FY92 FY93 FY94 4-6194 Total Survey&lnvestigatlon 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Main Canal 8.00 10.00 6.00 7.00 0.00 0.00 0.00 31.00 Roads 0.00 0.00 0.00 0.00 31.23 51.38 18.13 100.74 Buildings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Distributaries 0.60 0.00 0.00 0.00 0.00 25.40 0.00 26.00 Eng. L Administration 1/ 8.14 10.54 9.53 3.98 0.00 12.25 0.00 44.44 Total 16.74 20.54 15.53 10.98 31.23 89.03 18.13 202.18 1/Approtioned from the total engineering and administration costs. B. Completion Costs FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 Total Civil Works 2V 206.00 283.40 487.10 525.30 710.40 685.5 534.3 534.8 3966.8 Support Services 3/ 6.00 12.00 12.00 18.00 15.00 18.00 - 18.00 18.00 120.0 Total 212.00 295.40 499.10 543.30 728.40 703.50 552.30 552.80 4086.8 2/lnchiding equipment and roads. 3/lnciuding training, studies, M&E, agric. support services, CAD &WUA development.  58 INDLA Table 4 Second Andhra Pradesh Irrigation Pro ject Sriramasagar (Rs. Million) (Km 146-234) A. AP II Expenditures FY89 FY90 FY91 FY92 FY93 FY94 4-8/94 Total Survey&lrnestigation 00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Main Canal 16.04 12.60 23.68 2.00 0.00 0.00 0.00 54.32 Drainage 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Roads 0.00 0.00 0.00 0.00 46.25 76.09 26.85 149.19 Buildings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Dlstributarlas 14.26 17.48 924 43.90 0.00 0.00 41.60 126.48 Eng. & Administrationil 28.12 30.82 52.42 23.89 0.00 0.00 8.50 143.75 Subtotal 58.42 60.90 85.34 69.79 46.25 76.09 76.95 473.74 ResetMament& Rehac. 0.00 2.06 0.95 1.36 7.58 22.25 24.27 58.45 Total 58.42 62.96 86.29 71.15 53.81 98.34 101.22 532.19 1/Apportuoned rrom the total engineering and administratIon costs. B. Completion Costs FY98 FY96 FY97 FY98 FY99 FYoo FY01 FY02 Total CMi WorKs2/ 248.10 288.20 258.60 264.60 422.60 514.60 0.00 0.00 1996.70 Support Services 3/ 9.40 9.40 12.73 12.73 12.73 12.73 12.73 12.73 95.18 Total 257.50 297.60 271.33 277.33 435.33 527.33 12.73 12.73 2091.88 2/ Including equipment and roads. 31 Including resettlement and rehabilitation, training, studies, agric. support services, M&E, CAD & WUA.  59 IN DIA Table 5 Second Andhra Pradesh Irrigation Project Sriramasagar (Rs. Million) (km 234-284) A. AP II Expenditwres FY89 FY90 FY91 FY92 FY93 FY94 4-6/94 Total Land Acquisition 11.6 0.08 0.15 35.25 43.13 60.84 13.95 165.00 Survey&lnvestigation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Main Canal 0.00 0.00 0.00 38.29 19.96 7.37 29.66 95.28 aainage 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Roads 0.00 0.00 0.00 0.00 22.52 35.53 10.81 68.86 Buidings 0.00 0.00 0.00 0.00 0.85 0.00 0.00 0.85 C3strbutaries 40.50 38.25 20.80 101.02 176.56 242.23 100.30 719.66 Eng.& Administration 1/ 37.74 39.74 33.36 71.68 104.95 120.40 26.54 434.41 Total 89.84 78.07 54.31 246.24 367.97 466.37 181.26 1484.06 1/Apportioned from the total engineering and adminisoation costs. B. Completion Costs FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 Total Land Acquisition 51.4 58.7 110.1 Civil Workrs 2/ 96.00 244.80 512.40 286.90 270.80 189.4 551.4 638.8 2790.5 Support Services3/ 0.00 0.00 13.70 13.70 13.70 13.70 44.5 44.6 143. Total 147.4 303.5 526.1 300.6 284.5 203.1 595.9 683.4 3044.5 21 Including equipment, roaCs. 3/ Including resettlement and rehabilitation, training, studies. agric. support services. M&E. CAD and WUA.  60 INDIA Table 6 Second Andra Predesh irrigation Project Srilssbm RBC (Re. Milbon) A. AP 11 Expenditurees FY9 FY90 FY91 FY92 FY93 FY94 4-6j94 Toti Land Acqui iticon 3.11 0.43 1.6 21.45 47.11 60.06 24.19 177.97 Survey&lnvestigation 0.00 0.00 1.17 0.23 0.09 0.00 3.31 4.80 Main CarE 63.56 75.66 67.72 40325 417.83 1199.10 325.76 2552.90 Roads 0.00 0.00 0.00 0.00 6.00 39.77 12.11 57.88 Buidinge 3.4 5.40 6.52 9.49 9.67 19.45 6.09 60.26 aOtbution Systems 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Eng.& Admhnistiobn 30.53 47.22 44.48 50.13 35.46 54.87 34.61 297.30 8ubtotd i100.64 123.71 121.49 484.5 516.16 139327 408.00 3151.11 Equl,oment 1.91 2.36 2.63 3.03 3.46 4.47 1.21 19.07 Reettlment & Relhb. 6.60 0.57 13.30 12.03 19.69 27.73 41.06 120.98 support services 3.00 3.36 6.72 3.88 7.97 4.77 0.56 39.25 TotS 112.35 135.00 144.14 503.49 5472B 143024 45721 3330.41 B. Complaton Costs FY95 FY96 FY97 FY98 FY99 FY00 FYO1 FYl2 Totel LandAcquitsiwmn 38.6 61.7 20 0 0 0 0 0 120.30 CMI Works 1/ 1358.50 1470.50 1381.80 926.60 174.80 0.00 0.00 0.00 5312.00 Support Services 21 25.50 25.30 25.20 24.80 24.80 24.80 24.60 24.60 200.00 Total 1422.80 1557.50 1426.80 951.40 199.60 24.60 24.80 24.80 5632.30 11 incuiOng roads end equipmert. 29 kiluding resettlement and rehnbilftatdon, training, studies, M&E. agric. support sviyes, CAD and WUA.  61 INDIA Socondi Andria Pradesh Irrigation Project Constructon Conversion Frctor Table 7 FlrnciblCst Dutles& Finmncial Cost CFs EconomicCosts Compostlm Taxes (%) Alter toes Composition M) N ( fuel 15.8 27.4 11.5 1.0 11.5 cement 222 27.8 16.0 0.9 14.4 other local meterbls 23.5 7.0 21.8 0.9 19.6 steel 1.7 I88 1.4 0.9 1.3 olau 32.7 0.0 32.7 0.9 29.4 enghadmin 4.1 0.0 4.1 0.9 3.7 Total 100.0 87.5 79.9  62 INDIA Second Andha Pmdesh Irrigaton Project Table 8 Economic Amlysia-SRS (km0-24j (Re. Million) Investment Other Costs Land Land WOPO&M WP O&M COM Tot lCosts WOP WP Road Inc. Net Balance Clvil Works 2/ Costs leveling Irrigation. Irrgation. roads Net Prod. Net Prod Benefits Benefits 1/ 3/ Benefits Benefits Yrl FY89) 17133 442 17575 0.0 -1757.5 Yr2 2083 442 250 5 0.0 -2505 Yr3 182n 442 2262 0.0 -22e2 Yr4 303.1 493 3524 0.0 -352.4 Yr5 332.1 52.1 3842 0.0 -3842 Yr5 42eD 584 4824 0.0 -4824 Yr7(FY95) 5959 131 60.8 0.8 0.0 0.0 120 6830 0.0 0.0 98.7 9e.7 -5883 Yr8 5953 193 65.1 1.2 298 30 160o 8978 54D 533 1303 129a -5682 Yr9 987.7 348 65.1 2.8 299 31.a 203 1112.4 181.4 1965 1648 1791 -932.5 YrtO 897.7 40D 65.1 4.8 292 35.3 20.4 10334 429.8 497B 186D 2338 -799B Yr1l1 1195J 40D 85.1 7.5 291 40.7 204 13398 8022 1000J Jo6n 3644 -9752 yrl2 11788 40D 85.1 102 298 482 204 1330B 1315.7 17832 190D 8135 -717.1 Yri3 93294 671 65.1 11 291 582 204 11258 19565 2801.1 180D 10108 -1152 YrI4 10133 878 65.1 12D 291 894 20A 1218.1 28522 40758 168D 15898 371.5 YFr15 5.5 65.1 10D 291 80B 204 151.7 33553 55198 160D 23303 217aB YrhI 5.5 65.1 7.3 298 895 204 1571 3879.1 89021 1680D 31898 3031 1 Yrn7 5.5 65.1 3.9 291 954 204 1504 4207S 81042 16eD 40(23 39011 YrI1 5.5 65.1 1.7 291 98D 204 1508 43281 8993.1 1680 48322 4e714 Yn9I 5.5 85.1 0.0 291 992 204 1503 44004 96378 1eaD 54032 52421 Yr20 5.5 65.1 0.0 291 992 204 1803 4437.1 10019.8 160D 5748.7 55884 yr2l 5.5 65.1 0.0 291 992 204 1803 4470D 10212.8 180D 59088 57485 Yr22 5.5 85.1 0.0 292 992 204 1e03 44975 10282.5 168D 5951D 5790.7 Yr23 5.5 65.1 0.0 291 992 204 1503 4519D 10305.4 l60D 59524 5792.1 Yr24 5.5 65.1 0.0 298 992 204 1503 45340 10308.8 188D 59388 57783 Yr25 5.5 85.1 0.0 298 992 204 1503 4541 a 10307.1 168D 59312 57701 Yr26 5.5 65.1 0.0 291 992 20A4 1503 45474 10307.3 186D 59252 5765B Yr27 5.5 85.1 0.0 291 992 204 1803 45481 10307.3 1e8D 59244 5764.1 Yr28 5.5 65.1 0.0 299 992 204 1803 4549.7 10307.3 166D 59238 57633 Yr29 5.5 65.1 0.0 291 992 204 1503 4549.7 12907.3 160D 59238 57633 Yr30 5.5 65.1 0.0 299 992 20.4 1503 4548.7 10307.3 1880D 59238 57833 5.5 65.1 0.0 291 992 204 1503 4549.7 10307.3 I68D 59238 57633 5.5 65.1 0.0 298 992 204 15o3 4549.7 19037.3 160D 59238 57633 5.5 65.1 0.0 291 992 20.4 1503 4549.7 12907.3 1680 59238 57833 5.5 65.1 0.0 291 992 204 1503 45497 10307.3 168D 5923B 57633 Yr35 5.5 65.1 0.0 291 992 204 1503 45497 10307.3 166D 59238 57633 5.5 65.1 0.0 291 992 204 ISO3 4549.7 10307.3 t16D 5923B 57633 5.5 65.1 0.0 291 992 204 1803 4549.7 10307.3 1680 5923B 57633 5.5 65.1 00 291 992 20A 1503 4549.7 10307.3 16e8 5923B 57833 5.5 65.1 0.0 291 992 204 1503 4549.7 10307.3 1680 59238 57833 Yy40 5.5 65.1 0.0 291 992 204 1803 4549.7 10307.3 160D 59238 57633 5.5 65.1 0.0 298 992 204 10D3 4549.7 10307.3 180D 59238 57833 5.5 65.1 0.0 298 992 204 1803 45497 10307.3 160D 59238 57833 5.5 65.1 0.0 291 992 204 15e3 4549.7 10307.3 180D 59238 57833 5.5 65.1 0.0 291 992 20.4 1603 45497 10307.3 180D 59238 57833 Yr45 5.5 e5.1 0.0 298 992 204 10o3 4549.7 10307.3 16e0 59238 57833 5.5 65.1 0.0 291 992 20A 1503 45497 10307.3 16ee 59238 57833 5.5 65.1 0.0 291 992 204 15D3 4549.7 10307.3 16oD 59238 57833 5.5 65.1 0.0 298 992 204 1503 4549.7 10307.3 180D 59238 57633 5.5 65.1 0.0 291 992 20.4 1603 4549.7 10307.3 166D 59238 57633 Yr50 5.5 65.1 00 291 992 204 1503 45497 10307.3 1isD 59238 57633 NPV.Rs 39542 Million ERR. 16.1% I/ .Icluding expenditures ot Mainlyr Dam and conveyance works In year 1 (Table 15 b oa SAR). 2/ Icmuding costs oa resettbment rehabilitabon, MILE, studies, training. agric. extension, CAD and WUA. 3/ Including 7.400 ha otland (Tsbe l5b ot SAR) submerged by Manairreservoir in yeasr 1.  63 INDIA Second Andhra Pradesh Irnigadon Proect Table 9 Economic Analyis-SRPC (Fa. Million) Investment Other Costs Land Costs Land Foregone Inigation Road Total Costs WOP WP Road Ire. Net Balance Civil Works 1/ byelling Hydropower C&M O0M Costs Net Prod. Net Prod Benefits Benefits Benefits Benefits Yrl (FY89) 1358 170 0.1 153D -150 Yr2 e68D 8.0 0.2 1742 -1742 Yr3 140* 28e 0.2 169B -t698 Yr4 481.0 21 D 1.2 503 2 -503 2 Yr5 439.4 31e 3.4 474* -474* Yre 11284 34* 7.1 11683 -1168.3 Yr7(FY95) 13803 881 12.4 0.2 0.4 0.1 1 7 1443* 5.5 8.8 124 155 - 1428.1 Yr8 1144D 38.7 19.1 0.2 0.9 0.3 3.2 1208A4 8.4 141 23* 298 -1176.5 Yrs 11508 38e 213 0.2 1.3 04 7,1 1219* 22.1 40D 52* 707 -11491 YrlO 798* 20.5 213 0.9 3.7 1.0 8.9 8558 550 98* 6e.1 107.7 -7482 Yrl 1 137* 205 213 2.2 9.3 2.5 8.9 2023 1023 1605 88.1 1533 -485 Yr12 205 213 3.2 17A 4.7 8.9 780 183 4 348.4 86.1 251.1 175.1 Yrl3 205 213 4.1 274 7.4 8.9 89* 248.1 602 e8.1 42D0 330.4 Yrl4 205 213 5.7 41* 112 8.9 1094 3232 6258 88.1 a8s8 5594 Yrl5 2.7 213 4.9 534 145 8.9 105.7 3803 1257* 68.1 943 4 837.7 Yfl8 2.7 213 3.8 618 le 8.9 1153 4208 18130 86.1 12582 11428 Yrl7 2.7 213 2.4 685 183 8.9 1223 4508 19072 68.1 15224 1400.1 Yrl8 2.7 213 1.8 72.1 lg9 6.9 1262 458D 21138 68.1 1724D 1597B YrlB 2.7 213 72.1 19* 8.9 124* 481.9 2241D 88.1 18452 1720* Yr20 2.7 213 72.1 19e 8.9 124* 4872 23102 68.1 1909.1 17843 Yr21 2.7 213 72.1 19B 8.9 124* 471.9 2340.1 e8.1 15343 1809.7 Yr22 2.7 213 72.1 19e 8.9 124J 475.7 23432 88.1 1933* 1809D Yr23 2.7 213 72.1 19* 69 124* 47864 23452 88.1 19328 18083 Yn24 2.7 213 72.1 19* 8.9 124* 480D 23483 88.1 1932.4 1807B Yr25 2.7 213 72.1 19e 8.9 124* 480 8 2348 6 8e.1 1932D 1807 4 Yr2e 2.7 213 72.1 19e 6.9 124B 4812 2346* 66.1 1931 7 1807.1 Yr27 2.7 213 72.1 19* 8.9 124* 481.2 2348* 68.1 1931.7 1807.1 Yr28 2.7 213 72.1 19* 8.9 124* 481.2 2348* 86.1 1931.7 1807.1 Yr29 27 213 72.1 19* 89