Tunisia - Irrigation Management Improvement Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15356 IMPLEHMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA IRRIGATION MANAGEMENT IMPROVEMENT PROJECT (LOAN 2573-TUN) FEBRUARY 16, 1996 Natural Resources and Environment Division Maghreb and Iran Department Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS Currency Unit = Tunisian Dinar (D) 1986: D1.00 = US$1.33 1986: US$1.00 = DO.75 1995: US$1.00 = Dl.08 GOVERNMENT OF TUNISIA FISCAL YEAR January I - December 31 ABBREVIATIONS AND ACRONYMS AIC Association of Common Interest (Association d'interet collectif), WUA ASIL Agricultural Sector Investment Loan (PISA) (Pret d'investissement au secteur agricole) BNT National Bank of Tunisia (Banque nationale de Tunisie) CNI National Computer Center (Centre national informatique) CREGR Research and Experimentation Centre of the Rural Constrction Department (Centre de recherche et d'experimentation du genie rural) CRDA Regional Agricultural Development Commission (Comrnissariat regional de developpement agricole) CTV Local Extension Unit (Cellule territoriale de vulgarisation) DAF Department of Administrative and Financial Affairs (Direction administrative et financi6re) DCOMVPI Department of Coordination of Irrigation Development Offices (Direction de la coordination des offices de mise en valeur des p6rimetres irrigues) DEGTH Departnent of Studies and Large Hydraulic Works (Direction des etudes et grands travaux hydrauliques) DGR Department of Rural Engineering (Direction du genie rural) DPSAE Department of Planning, Statistics and Economic Analysis (Direction de la planification, des statistiques et des analyses economiques) DRE Department of Water Resources (Direction de ressources en eau) ECE Economic Commission for Europe FOSDA Agricultural Development Fund (Fonds sp&cial de d6veloppement agricole) f!Tu f--- { rf WT,,-A"lir Tynterest (Groupement d'interet hydraulique) GTZ Gesellschaft fur Technische Zusammenarbeit HEM Hydro/Electromechanical (Hydro/electromecanique) INRAT National Institute of Agricultural Research (Institut national de recherche agronomique tunisien) LMV Lower Medjerda Valley (Vallee de la Basse Medjerda) MOA Ministry of Agriculture (Ministere de l'agriculture) MOF Ministry of Finance (Ministere des finances) OMV Development Offices (Offices de mise en valeur) OMVVM Development Office of the Medjerda Valley (Office de mise en valeur de la vallee de la Medjerda) PISA Pret d'investissement au secteur agricole (ASIL) PPI Public Irrigation Perimeters (Perimetres publics irrigues) SONAM National Farm Mechanization Company (Socidtd nationale de motoculture) SONEDE National Society for Water Supply (Socidtd nationale d'exploitation et de distribution des eaux) STEG Tunisian Electricity and Gas Company (Societe tunisienne d'6lectricit6 et du gaz)  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT TUNISIA IRRIGATION MANAGEMENT IMPROVEMENT PROJECT (LN. 2573-TUN) Table of Contents Preface .................................................. i Evaluation Summary .......................................... ii PART I: Project Implementation Assessment .......................... 1 A. Statement and Evaluation of Objectives ......................... 1 B. Achievement of Objectives ................................. 2 C. Major Factors Affecting the Project ........................... 4 D. Project Sustainability .................................... 7 E. Bank Performance ...................................... 8 F. Borrower Performance ................................... 9 G. Assessment of Outcome ................................... 13 H. Future Operation ....................................... 14 1. Key Lessons Learned .................................... 15 PART II: Statistical Tables ................................... 16 Table 1: Summary of Assessments ............................... 16 Table 2: Related Bank Loans/Credits . ............................ 18 Table 3: Project Timetable .................................. 19 Table 4. Cumulative Loan Disbursement ......... ................. 19 Table 5: Project Achievements ................................. 20 Table 6: Key Indicators for Project Operation ....... ................ 22 Table 7a: Studies Included in the Project .......... ................. 22 Table 7b. Inventory of Studies Undertaken ........ ................. 23 Table 8a. Project Costs ................................... 24 Table 8b. Project Financing ................................... 25 Table 9. Economic Costs and Benefits .......... ................. 25 Table 10. Status of Legal Covenants . ............................ 26 Table 11: Compliance with Operational Manual Statements ..... ........... 29 Table 12. Bank Resources: Staff Inputs .......... ................. 29 Table 13. Bank Resources: Missions . ............................ 30 APPENDIX 1 - Financial and Economic Analysis ...... ................. 32 Appendix Table 1 ..................................... 36 Appendix Table 2 ...................................... 37 Appendix Table 3 ...................................... 38 Appendix Table 4 ...................................... 39 Appendix Table 5 ...................................... 41 APPENDIX 2 - Borrower's Project Evaluation ....... .................. 43 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.I   IMPLEMENTATION COMPLETION REPORT TUNISIA IRRIGATION MANAGEMENT IMPROVEMENT PROJECT (Loan 2573-TUN) Preface This is the Implementation Completion Report (ICR) for the Irrigation Management Improvement Project in Tunisia, for which Loan 2573-TUN in the amount of US$ 22 million was approved on June 6, 1985, and made effective on July 28, 1986. The loan was closed on 30 June, 1995 (originally planned June 30, 1992, in the SAR). A sum of US$ 5 million was cancelled on June 28, 1990, upon Government request. Final disbursement was concluded on August 8, 1995, leaving no remaining balance. The draft ICR was prepared by an FAO/CP mission, "on the basis of initial discussions in Washington with Mr. C. Gois, MN1NE Task Manager, and with Tunisian authorities during a mission 4-15 September 1995. The report was finalized by Mr. Stephen Mink, Natural Resources and Environment Division of the Middle East and North Africa Region, and reviewed by Mr. Costa, Project Advisor, MN1. Preparation of the ICR was begun during the Bank's final supervision mission (23-30 October 1994). It is based on material in the project file. The borrower contributed to preparation of the ICR by drafting its own Completion Report (August 1995), commenting on the draft ICR and also by arranging all field visits and discussions with central and regional officers of the various agencies involved in the project implementation, and providing available data on project performance. " An irrigation engineer and an economist.   IMPLEMENTATION COMPLETION REPORT TUNISIA IRRIGATION MANAGEMENT IMPROVEMENT PROJECT Evaluation Summary Introduction 1. Since 1967, the Bank has been closely associated with agriculture development in Tunisia. The irrigation sub-sector benefitted from five loans in the last 15 years: the Medjerdah/Nebhana Project (LN 2157-TUN), the Technical Assistance Loan for irrigation studies (LN 2197-TUN), the Central Tunisia Irrigation Project (LN 2234-TUN), the Gabes Irrigation Project (LN 2605-TUN) and the present project. In addition, an irrigation and water-use efficiency component is included in the on-going Agricultural Sector Investment Loan (LN 3661-TUN; US$ 120 million) approved in 1994 and expected to close by June 1999. Project Objectives 2. The general objectives and their level of achievement (main report, para. 5) are as follows: (a) improving OMVs' capabilities to provide increased water delivery, in a timely and cost-effective manner, and to maintain existing irrigation systems: substantial achievement; (b) introducing pricing and cost recovery policies for OMVs' services, in particular irrigation water, aimed at: (i) a more rational use of available resources; (ii) increased competition from the private and cooperative sectors; and (iii) greater financial autonomy of OMVs: substantial achievement, except the financial OMV autonomy due to the dispersion of OMV structures into the CRDA; (c) setting up an institutional framework providing for: (i) improved management efficiency and greater accountability for OMVs; and (ii) strengthened planning and control capabilities for Government services in charge of monitoring OMVs' operations: negligible achievement due to the dispersion of OMV structures into the CRDA; and (d) increasing the role and responsibilities of Water User Associations in the O&M irrigation systems: partial achievement. (ii)  3. The project components (para. 6) included: (a) an Investment Component aimed at strengthening OMVs' O&M capabilities including, the purchase of heavy equipment and vehicles for O&M activities, the rehabilitation of the hydro- and electro-mechanical (HEM) equipment, the establishment of safety stocks of spare parts for HEM equipment and irrigation networks, the rehabilitation for part of OMVVM's (i) irrigation network (serving an area of about 1,000 ha); and (ii) drainage network (1,100 km of ditches and 960 km of drains); and support for the improvement and maintenance of OMVVM's feeder road system (600 kIn); (b) an Institutional/Policy Reform Component aimed at strengthening the coordination between OMVs and their supervisory Ministries (Agriculture, Plan, Finance) for the planning and monitoring of their activities, strengthening the role of Water User Associations (WUAs) in the O&M of irrigation systems, improving the management of OMVs through the setting-up of an efficient Management Information System (MIS) and the definition of improved financial and operating procedures and introducing pricing policies for OMVs' services, in particular for irrigation water, promoting a more rational use of existing resources and a greater financial autonomy of OMVs; (c) a Technical Assistance, Training and Support Action Component including: i) technical assistance to OMVs to define improved accounting, financial and operating procedures, to set up a new MIS and carry out the necessary related training programs, to prepare detailed terms of reference or engineering design for proposed project works, and to carry out proposed water management studies and to the (then) Directorate of Planning and Statistics (DPSAE, now DGPDIA) to strengthen capabilities to plan and monitor OMVs' activities; ii) the establishment of a system to monitor water flow in OMVVM's irrigation network; iii) the creation of a pilot sector of about 500 ha where OMVVM would test alternative water delivery and management technologies, and iv) the equipment necessary for the OMV of Gafsa-Jerid to carry out experiments on water saving technologies and cropping methods; and (d) On-Farm Development. 4. The project main changes after appraisal were: i) the substantial modifications of the institutional/policy reform and technical components due to the reorganization of the Ministry of Agriculture leading to the merging of the OMV into the CRDA, namely the suppression of all activities earmarked to improve accounting, financial and operating procedures in the OMV, in particular the setting-up of Management Information Systems (MIS); ii) the exclusion of the Medjerdah pilot sector to test management techniques and of the provision of water saving equipment to the Gafsa-Jerid OMV. (iii)  Implementation Experience and Results 5. Achieved objectives. The project cannot be considered fully successful as its priority, the irrigation management of the existing systems, has not been considerably improved. The project assisted in the rehabilitation of the systems, but the disappearance of the OMVs half way through project implementation prevented the development of modem management instruments, such as the MIS. The project would nevertheless be eventually profitable to agricultural production, because the majority of staff involved in operation of irrigation perimeters have now taken the measure of the importance of modem management on the operation as well as on the preventive maintenance aspects. 6. As long as the present policy, to maintain annual irrigation tariff increases so as to recover the whole of O&M costs, and even part of the initial investment, through water charges to farmers, continues unabated, the sustainability of the project is guaranteed; in addition the participation of farmers in O&M activities through Water Users Associations would also contribute to a sustainable development. 7. Project costs. The project investment cost totalled US$ 30.44 million, compared with US$ 28.39 million evaluated in the SAR, i.e. a 7% increase (paras. 16-19). The initial loan amount of US$ 22 million was reduced to US$ 17 million in 1990 upon Government request that in retrospect was a misjudgement that was too readily accepted by the Bank. The part of the project cost, outside recurrent costs, expected to be financed by the Government rose from US $ 6.0 to 10.1, due to the US$ 5 million cancellation, certainly too rapidly requested. About US$ 3.3 million for technical assistance were granted by the Economic Commission for Europe. 8. Implementation delays. At appraisal the project was expected to last seven years, from loan signing (July 1985) to closing (June 1992). At Government request, the closing date was extended first in 1992 by two years to June 1994, then in Nov 1993 by one extra year to June 1995; the total implementation period since effectiveness was therefore nine years (para. 20). 9. Key factors affecting project implementation. The major factors (paras. 9-13) that affected achievement of the major objectives were: i) absence of Government consensus on project opportunity before effectiveness; ii) initial procurement problems due to the lack of experience of local contractors and suppliers; weak project management due to the lack of a competent project director from 1988 to 1991; iv) considerable reorganization of regional authorities initially entrusted with project implementation. 10. Bank performance. The project was particularly thoroughly prepared and appraised. The single missing aspect was the monitoring/evaluation activities during and more specially after project execution; both quantifiable performance indicators and agricultural production records were not identified or maintained (para. 28). The project was adequately supervised by the same engineer (in average one mission every seven months), but it can be regretted that no other skill participated to these missions, even during the mid-term review (para. 29). The working relations were generally excellent between the implementation agencies (OMV, and then CRDA), the European Community representative and the Bank task manager. (iv)  11. Borrower performance. Despite weak project directorship which affected the project from 1988 to 1991, and dramatic reorganization which substituted administrative structures (CRDA) to the executing agencies, the project implementation was globally satisfactory. Table 5 provides a detailed description of the various achievements. It should be emphasized that the sudden restructuring of the Ministry of Agriculture in 1989 disturbed considerably the project execution. The current institutional organization dealing with public irrigation (CRDA) is in some ways less suitable and efficient for conducting commercial-type of operations (such as water delivery) than the organizations (OMV) that were responsible before the 1989 reorganization. 12. The implementation of the investment component was very satisfactory (para. 37) and the provision of technical assistance by ECE was outstanding. The progress of the institution/policy reform component leaves much to be desired; nevertheless the almost total recovery of O&M costs by the CRDAs, and the regular progression of water tariffs are two important project achievements (paras. 38-40). 13. Project outcome. Summarizing the achievement of objectives detailed in Section B, the project outcome was globally satisfactory, as most of its major objectives were achieved. The Department of Rural Engineering and the CRDA's technical divisions have derived considerable benefits from the technical assistance and training component, entirely funded by the European Community. Summary of Findings, Future Operations, and Key Lessons Learnt 14. Main finding. From the project implementation experience the most important finding is certainly the necessity to provide this type of project from its inception with a monitoring/evaluation system; the continuing lack of the latter results in the impossibility to quantify the project results in terms of benefits outcomes and economic viability. The absence of an indicator for the increase of water efficiency, the ultimate target of the project, is particularly regrettable. 15. Future operations. A significant weakness of the appraisal report is the lack of plans for the project's future operation, which should have been considered thoroughly; indeed the project is providing the necessary instruments to improve irrigation management, but the directions for their use were missing. The absence of a sound action plan for future operation, backed by a solid monitoring/evaluation structure could rapidly lead to a loss of interest from the project participants. The ICR mission made the following proposals and recommendations to remedy the situation and secure the project sustainability (paras. 56-58), but their implementation remains to be assured: i) maintain and if possible strengthen the Project Management Unit; ii) define optimal maintenance objectives for each type of infrastructure and short and medium-term action plans for maintenance; and iii) identify and monitor operation and maintenance indicators, consolidated in an indicator of the increased water use efficiency, which is the ultimate measure of the project's success. In addition a detailed monitoring/evaluation system of agricultural returns should be set up by the DGR in collaboration with CRDA divisions dealing with agricultural production, planning and economic analysis. (v)  16. Key Lessons Learnt. The major lessons learnt during project implementation (para. 60) are as follows: i) project size should always be in accordance with the absorptive (institutional/financial) capacity of the executing agency as well as of the ultimate beneficiaries; ii) when recurrent costs are a substantial part of total project costs, often the case in irrigation projects, specific commitments for the financing of the former should be worked out before project start; iv) at appraisal stage, the design of a proper monitoring/evaluation system should be a critical element of any project, particularly those which are nation-wide and mainly composed of rehabilitation and/or restructuring activities; v) the number of actions requested to be reflected in Loan covenants should be limited, and only priority conditionalities strictly necessary to assure proper implementation of the project mentioned; and vi) when the institutional arrangements previously agreed upon are substantially changed during project execution, as the case arose with the reorganization of the Ministry of Agriculture, the new situation should be formally reviewed and the appropriate modifications made to the project design and to the Loan Agreement. (vi)  I  IMPLEMENTATION COMPLETION REPORT TUNISIA IRRIGATION MANAGEMENT IMPROVEMENT PROJECT (LN 2573-TUN) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. STATEMENTIEVALUATION OF OBJECTIVES 1. The main objectives of the Project were to: (a) increase and ensure the sustainability of agricultural production within some 105,000 ha of irrigation land in public irrigation perimeters (PPIs), thereby contributing to Goverrnent's objective of self-sufficiency in food production; (b) improve the incomes of farmers living in PPIs and create employment opportunities directly and through forward and backward linkages; (c) aim at eliminating OMVs' operating deficit, thereby reducing the burden of annual operating subsidies on Government's budget; and (d) reduce the need to regularly undertake major investments for the rehabilitation of existing irrigation systems by improving regular maintenance operations. " 2. The two first objectives were quite ambitious, because some components benefitted only a limited percentage of farmers exploiting a moderate part of the overall 105,000 hectares. On the other hand, only a reduced number of the initially foreseen institutional components were actually carried out. In addition, the real creation of employment opportunities cannot be ascertained. 3. The aim of eliminating OMVs' deficit was clear, easy to implement and to monitor; the evaluation of actual O&M expenses would have been possible through the proposed analytic accounting to be introduced in the OMVs by the project. The merging of OMVs during the project into the administratively-managed CRDA led to abandonment of the introduction of this analytic accounting. 4. While qualitatively it appears possible to conclude that the project led to reduced rehabilitation needs due to improved O&M, the supposed increased infrastructure life time is almost impossible to assess. An action program for monitoring and evaluation post-project activities needs to be carried out to provide the required information. The lack of "The project covered 10 OMV with responsibility for the promotion of agriculture in irrigated areas at the start of the project: Gabes-Medenine, Gafsa-Jerid, Jendouba, OMIVAK (Kairouan), OMIVAL (Lakhmes), OMVVM, Nabeul, OMIVAN (Nebhana), Sidi Bouzid and ODTC. -1 -  monitoring/evaluation activities during implementation is particularly prejudicial to any assessment, even approximate, of the project benefits and outcomes. B. ACHIEVEMENT OF OBJECTIVES 5. The general targets fixed to achieve the above objectives and their level of achievement are as follows: (a) improving OMVs' capabilities to provide increased water delivery, in a timely and cost-effective manner, and to maintain existing irrigation systems: substantial achievement; (b) introducing pricing and cost recovery policies for OMVs' services, in particular irrigation water, aimed at: (i) a more rational use of available resources; (ii) increased competition from the private and cooperative sectors; and (iii) greater financial autonomy of OMVs: substantial achievement, except the financial OMV autonomy due to the dispersion of OMV structures into the CRDA; (c) setting up an institutional framework providing for: (i) improved management efficiency and greater accountability for OMVs; and (ii) strengthened planning and control capabilities for Government services in charge of monitoring OMVs' operations: negligible achievement due to the dispersion of OMV structures into the CRDA; and (d) increasing the role and responsibilities of Water User Associations in the O&M irrigation systems: partial achievement. 6. To achieve its overall objectives, the Project has implemented, over a nine-year period (compared with five years initially scheduled), the following actions with various rates of achievement (See Table 5): (a) an Investment Component aimed at strengthening OMVs' O&M capabilities including: - the purchase of heavy equipment and vehicles for O&M activities; - the rehabilitation of the hydro- and electro-mechanical (HEM) equipment; - the establishment of safety stocks of spare parts for HEM equipment and irrigation networks; - the rehabilitation for part of OMVVM's (i) irrigation network (serving an area of about 1,000 ha); and (ii) drainage network (1,100 km of ditches and 960 km of drains); and -2 -  support for the improvement and maintenance of OMVVM's feeder road system (600 Iam); This investment component was almost fully implemented. (b) an Institutional/Policy Reform Component aimed at: - strengthening the coordination between OMVs and their supervisory Ministries (Agriculture, Plan, Finance) for the planning and monitoring of their activities: acceptable coordination between OMV and then CRDA with Ministry of Agriculture; probably looser with other Ministry. That coordination will be consolidated in the framework of the on-going Agricultural Sector Investment Loan (ASIL); - strengthening the role of Water User Associations (WUAs) in the O&M of irrigation systems: partial achievement; irrigation AICs increased from 158 in 1989 to 477 in 1995; thefully developed AICs are carrying out only part of the O&M of irrigation systems. - improving the management of OMVs through the setting-up of an efficient Management Information System (MIS) and the definition of improved fmancial and operating procedures: no achievement due to the dispersion of OMV structures into the CRDA; and - introducing pricing policies for OMVs' services, in particular for irrigation water, promoting a more rational use of existing resources and a greater ftnancial autonomy of OMVs: substantial achievement (See paras 38-40). (c) a Technical Assistance, Training and Support Action Component including: - technical assistance to OMVs to define improved accounting, financial and operating procedures, set up a new MIS and carry out the necessary related training programs: no achievement, as the CRDA, as administrative organisms, are not structured to apply these types of reform; - technical assistance to OMVs to prepare detailed terms of reference or engineering design for proposed project works, and to carry out proposed water management studies: very substantial achievement; - technical assistance to the Department of Planning and Statistics (DPSAE) to strengthen capabilities to plan and monitor OMVs' activities: no achievement; - the establishment of a system to monitor water flow in OMVVM's irrigation network: partial achievement; - 3 -  the creation of a pilot sector of about 500 ha where OMWM would test alternative water delivery and management technologies: cancelled, the project manager considering that sufficient technical data are available on the topics to be tested; the equipment necessary for the OMV of Gafsa-Jerid to carry out experiments on water saving technologies and cropping methods: cancelled in 1991 because it was judged that experimental work on water techniques, given their important scope and impact for the country, should be the objective of specific projects; and (d) on-fann development : through agricultural credit (not monitored by the project). 7. The project was thoroughly designed on the basis of detailed O&M studies prepared in 1983 by consulting firms; the prevailing conditions during appraisal in 1984, the project design was appropriate for achieving the proposed objectives. After the 1989 administrative reforms, some of the initial objectives such as the build up of efficient management information systems, including modern accounting standards, and the preparation of program- contracts between the OMV and the Government, were abandoned, as they had no object for the CRDAs' administrative structures. 8. The criteria for judging the achievement of the objectives had not been identified during appraisal; no key indicators were quantified and the project progress was simply monitored according to the matrix shown in Table 5. Mainly because of the lack of proper monitoring/evaluation, it is practically impossible to calculate an economic rate of return for the project (para. 54). C. MAJOR FACTORS AFFECTING THE PROJECT 9. Factors not subject to Government control. The Project suffered in 1992/93 from procurement delays because of the lack of satisfactory responses from local bidders to perform contracts for the rehabilitation of hydro- and electro-mechanical equipment. By the end 1993 this type of contract finally began attracting qualified and interested firms, permitting completion of this component with some delay. 10. The climatic conditions have an impact on budget management by the CRDA; since the subsidy to a CRDA's operational budget (Titre I Budget de fonctionnement) cannot exceed the total amount of its water sales, in a given budget year, the financing capacity of the CRDA is considerably expanded in dry years when the volume of water sales increase. This was the case from 1987 to 89 and from 1993 to 95; water sales revenues were particularly low during the rainy year 1991 to 92. 11. Factors subject to Government control. The Project was affected by a one-year delay in effectiveness due to the initial absence of consensus on the project's desirability at the Tunisian Chamber of Deputies. Mid-1986, the project started very slowly due to - 4 -  management problems, mainly the difficulty to set-up the Project Management Unit (PMU); the first disbursement occurred end - 1987, i.e. two years later than expected. 12. The direction of the PMU was entrusted end-1987 to the ex-director of the national water distribution company (SONEDE); during the subsequent 4 years, the project then suffered from the demotivating atmosphere created by its leader, its lack of management capacity, the limited and unproductive contacts maintained by the project manager with the regional OMVPI, etc. From 1988 to end-1991, most of the SPN reports mentioned the WB concern about the project mismanagement, but the Government was probably not in a position to consider a change in director before end 1991, when a new and dynamic Project management came on board and the project resumed a normal pace of implementation, kept till its completion. 13. The June 1989 reorganization of the Ministry of Agriculture further disturbed the project progress. A decision was reached in that year to decentralize the MOA by devolving various functions to the Regional Commissariats of Agricultural Development (CRDAs) in each of the twenty-three administrative regions. The Government's reasons for this reorganization were independent of this project, and the decision was taken without prior consultation with the Bank. Along with the reorganization came the disengagement of Government institutions from input delivery, credit provision and various marketing services. As part of the reorganization, the functions of the OMVs, the Project executing agencies, were merged with those of the CRDAs, resulting in the institutional component of the Project no longer able to be implemented along the initial design. In particular the introduction in the OMV " of modern management information systems (program-contracts, private-orientated managerial methods for cost accounting, financial planning and a posteniori control, etc.) was no longer possible in the context of the CRDAs which were managed as a public administration. After one and a half years of hesitation and adaptation, the new regional CRDA structure of the Ministry of Agriculture became fully operational in 1991. 14. Factors subject to implementation agency control. The technical assistance component that was financed separately by the European Community contributed significantly to the project. Two permanent expatriate engineers were engaged to strengthen management processes for pumping stations and irrigation networks, including to establish thorough diagnosis, prepare action plans and tendering documents for rehabilitation works and maintenance contracts and to organize training seminars and study tours. Unfortunately in January 1990, the project manager interrupted the contract of the irrigation engineer, which led to considerable delays on infrastructure rehabilitation and plans for its future preventive maintenance. 15. Based on new legal instruments promulgated in 1988, the creation of Water User Associations (WUA or AIC in French) began to be promoted slowly; their development is particularly difficult in the northern PPI because it is difficult to create associations of a size significant to cover the infrastructure that effectively assures water delivery to the farmer. Beyond 1992, after modification of the 1988 Law to attribute more responsibility and " The OMV benefitted of the rules applied to the enterprises with commercial and industrial profile. -5-  financial autonomy to the WUA, progress in constituting them has accelerated. There are presently 477 WUA, although they are still relatively rare in the northern PPI. 16. Cost changes. The project investmnent costs (see Table 8A) totalled US$ 30.44 million. This is US$ 2.06 million (7%) over the SAR estimate, mainly because of a cost overrun of US$ 6.3 million in the maintenance contracts, while most other expenditures were somewhat less than expected." The importance of maintenance contracts increased because the CRDAs disengaged from many activities (previously done by OMVs, including force account works) that were subsequently entrusted to the private sector; this focus on maintenance affected positively the project, much more than expected at appraisal. 17. The main variances in the investment cost of project components are the result of the difficulty during preparation to design accurately most components of this type of project. Dominant differences with SAR cost estimates are the following: i) safety stock of canals and pipes: + 98%, due to higher than expected demand; ii) - 35% on vehicles, as only 67 service cars and trucks were procured when 112 were planned; iii) cancellation of the pilot irrigation schemes, representing 13% of the SAR investment cost; iv) - 74% on computer equipment (the Electronic Data Processing was not provided) and - 35% on the studies due mainly to the cancellation of the Management Information Systems; and v) + 280% of the maintenance contracts, indicating the successful CRDA policy to transfer to the private sector most of the activities so far implemented by force account. 18. The recurrent expenses considered in the SAR were the O&M costs of the equipment and vehicles supplied by the project. As the CRDAs are applying governmental accounting procedures, but not modern analytical accounting systems, the actual expenses could not be identified. A reconstruction of recurrent costs, using an approach described in Appendix 1, provides the recurrent cost figures presented in Table 8a. 19. Although tentative, the estimate of actual recurrent costs suggests that the levels of O&M expenditures deemed necessary at appraisal were never met. The recurrent costs accounted for almost half the SAR total project costs but were never the object of any specific financing commitment from the Government. This was partly because of the SAR assumptions that recurrent cost financing was manageable due to O&M costs being better controlled and expected better coverage of these costs by higher irrigation tariffs. OMV's "program-contracts" were in any event to be carefully monitored to ensure adequate recurrent cost financing. However, this approach and system of controls was not translated or reconfigured following the OMVs replacement by CRDAs. As a result, the O&M of the rehabilitated irrigation infrastructures tended to be neglected, partly because the budgetary allocations were reduced in the context of economic structural adjustment programs. 20. Implementation delays. At appraisal, the project was expected to last 7 years, from loan signing (July 1985) to closing date (June 1992). At Government request, the closing date was extended first in 1992 by two years to June 1994, then by one extra year to June 1995. " With the noticeable exception of technical assistance/training, stocks of pipes/flumes and materials. US$2 million more than expected were spent by the EC on technical assistance/training (see para. 41). - 6 -  The 3-year delay is the consequence of one year between signing and effectiveness, and two more years due to a combination of the 1989 administrative reform and the difficulties encountered initially in the procurement of hydro- and electro-mechanical equipment for the pumping stations and the irrigation networks. The weak project management from 1988 to 1991 also contributed to implementation delays. D. PROJECT SUSTAINABILITY 21. The long-term sustainability of the project depends on three factors: the adequacy of the O&M on the irrigation infrastructures, the financing of the O&M, and the involvement of the private sector. 22. The adequacy of the O&M in the future is primarily a matter of organization and specific proposals are made to this effect in Section H. The financing of the O&M raises institutional as well as economic questions. In addition to ensuring that water charges are sufficient to cover the related costs - which is achievable as demonstrated in Appendix 1 - the CRDA's "Operation Arrondissements (OA)" must be able to collect the revenues in a way that compensates for the substantial inter-annual variation of receipts because of irrigation demand responsiveness to variable rainfall. As a unit within an administrative entity (CRDA), OAs are required by budget law to transfer net receipts from irrigation water sales revenues to the Ministry of Finance each end of year, while the budget subsidies that CRDAs receive for irrigation are proportional to the water sales in an average year. As a consequence, the funds available to the CRDA are generally inadequate in high rainfall years when water sales are low but overhead costs continue, with the result that maintenance is inadequate. Part of the solution is clearly for the OA to further reduce their considerable overheads so that there are less fixed costs to contribute to this inter-annual budget issue. Other solutions are being tested to enable CRDAs to manage this variation so as to better match receipts to expenditures, such as advance payment for water by farmers in Ariana CRDA. The binomial tariff offers potential is addressing the issue, but has other operational constraints. 23. The involvement of the private sector implies helping the AICs to take over the O&M of the irrigation infrastructures, since the AICs should in the future be capable of carrying out the O&M work more efficiently and in a more sustainable manner, at least in the case of the on-farm works and part of the conveyance canals. A specially targeted training program would be necessary to achieve rapid results in this respect." ' The on-going KfW training project focuses on AICs responsible for village water wells. - 7 -  E. BANK PERFORMANCE 24. The project identified during the 1982 Bank Agricultural Sector Survey was consistent with the development strategy for agriculture and the priority role given to irrigation within the sector, both being fully agreed by the Government and the Bank. After a long period of specific projects aiming to further development of new irrigation in specific areas, the present project represented a next generation by tackling systemic issues of the irrigation sub-sector. It gave priority to partial rehabilitation, improvement of operation and maintenance activities and institutional changes to sustain the above priorities rather than to new investments. Nevertheless, the project has the configuration of an investment program. It should have been prepared, implemented and monitored with the flexibility dedicated to programs, inter alia with less emphasis on fixed production targets and less disaggregation by farm model of financial/economic analysis than done in the SAR. 25. The Bank assistance during preparation was particularly significant, as a large part of a previous Technical Assistance Loan (Loan 2197-TUN) was devoted to specific studies undertaken between 1983 and 1984 related to the preparation of the present project. 26. The project was thoroughly appraised on the technical side. The economic analysis was very detailed with the elaboration of 28 farm models mostly based on theoretical assumptions but as a practical matter it is difficult to assess these models after project completion, thus rendering the appraisal exercise somewhat academic. Limited efforts were made to evaluate the part of the command areas expected to benefit from the project, and to defme performance indicators; in particular a specific assessment of the increased water use efficiency should have constituted the ultimate measure of project success. 27. The appraisal of Government commitment and of the capacity of the implementing agencies was correct. It should be recognized that at appraisal there were no thoughts being given to the dramatic reorganization of the implementing agencies that was subsequently put in place. The project design was ambitious and complex in retrospect excessively so; while none of the components is redundant and all are well articulated, a sequence of projects addressing homogeneous categories of irrigation perimeters (Medjerdah large perimeter, Kairouan small pumping units, Southern oasis, etc.) could have led to more modest sized and manageable projects. The assessed risks in SAR were related to a lower than expected production response and rehabilitation cost savings, but the fundamental reorganization or the issues related to an inappropriate project management were not anticipated. 28. Completely missing in the SAR were quantifiable performance indicators to be monitored during implementation; this gap was also neglected during supervision. The indicators for project operation, especially important in this type of project, were also disregarded; in particular the evaluation of water efficiency should have benefitted from monitoring several key indicators. 29. During the implementation period, from mid 1986 to mid-1995, the Bank organized thirteen supervision missions and updated the WB Form 590 SPN on three additional occasions, which corresponds to an average of one mission every seven months; two missions per year took place during the period 1987 to 1990, when the main management -8 -  problems arose; then till the end, one annual mission was sufficient. Project supervision was characterized by exceptional continuity but a narrow skill mix, since all the supervision were undertaken by the same engineer, always alone, even for the mid-term review in 1989; it is regrettable that neither an agronomist nor an economist ever participated in supervision mission, because they would have been more likely to insist that priority be given to the monitoring/evaluation of the project agricultural outputs. Further, it is surprising that there was not a more concerted effort to evaluate the impact on the project of the MOA reorganization and need for restructuring of the project. The reorganisation posed significant questions about key project elements such as mechanisms for recurrent cost financing and management of irrigation budgets, and a number of clauses in the Legal Agreement become inoperable. But apart from the lack of such reflection, routine supervision by the Bank was satisfactory in terms of mission timing, field visits, adequately reported of implementation progress and identification of the prominent issues. 30. However, the Bank advice concerning project mismanagement continued for three years beginning 1988 without effect until 1991. Furthermore, there was no Bank request for a general review of the project to account for the consequences for the project of the 1989 reorganization of the MOA, nor amendment of the Loan Agreement to recognize the new institutional structure and non-viability of several project covenants. Despite numerous attempts by the Bank, the Ministry never allocated the necessary staff to the Project Management Unit as specified in the SAR (but not specifically in the Loan Agreement); this is mainly the consequence of permanent budgetary constraints that translated into recruitment freezes at the ministry level. It should also be noted that the almost exclusively engineering profile of supervision mission staffing may have contributed to the lack of rectification of the absence of monitoring indicators to permit measuring the impact of improved management of irrigation infrastructure. 31. The working relations were generally excellent between the implementation agencies (OMV, and then CRDA), the European Community representative and the Bank supervisor; from 1988 to 1991, the lack of relations between the PMU and the OMV/CRDA and the demotivating atmosphere created by the project manager was a permanent concern for the Bank; this situation lasted until 1992, when the Directorate of Rural Engineering was again entrusted with the project management, and remedied the past unfavorable situation. 32. It should be mentioned that project implementation never induce any significant deviations from Bank policies and procedures; the procurement and disbursement procedures per se didn't raise any particular difficulties for the PMU. F. BORROWER PERFORMANCE 33. The project was identified during the Bank Agricultural Sector Survey of 1982 and prepared under the Bank-financed Technical Assistance Project (Loan 2197-TUN). The project was thoroughly prepared by the Ministry of Agriculture (Department of Planning, Statistics and Economic Analysis and Department of Rural Engineering) with the assistance of a consortium of local and foreign consulting firms. Through four back-up missions, the FAO/CP also participated in the preparation. -9-  34. The preparation of the project was very satisfactory. During 1983-84 all necessary studies were carried out and progress was frequently reviewed and discussed with the Government by WB or/and FAO/CP follow-up missions. Nevertheless, the farmers were not adequately involved in the process. 35. Despite mismanagement which affected the project from 1988 to 1991, and dramatic reorganization which substituted administrative structures (CRDA) for the OMV executing agencies, the project implementation was globally satisfactory. Table 5 provides a qualitative description of the various achievements, on a similar format to that adopted in the Bank supervision reports. 36. It should be emphasized that the sudden restructuring of the Ministry of Agriculture in 1989 disturbed considerably the project's execution. The current institutional organization dealing with public irrigation (CRDA) is in some ways less suitable and efficient for the conducting of commercial-type of operations (such as the delivery of water) than the previous organizations (OMV) before restructuring. 37. The Investment Component. The rehabilitation of irrigation/drainage networks, concentrated in the Medjerdah Valley, were fully completed (39 km of concrete canals, 107 km of rural roads and 312 km of drains); all maintenance heavy equipment, vehicles, spare parts, workshop tools, radio and computer equipment were delivered; based on sound diagnosis, contracts with private enterprises for the maintenance of irrigation/drainage infrastructure (mainly irrigation network and electromechanical equipment) are now replacing force account activities in most of the CRDA; initially designed only for large pumping stations in four OMV, the rehabilitation of electromechanical equipment was expanded to a large number of tubewell pumping equipment. The overall rating of this component is therefore very satisfactory. 38. Institutional/Policy Reform Component. The situation in the Institutional/Policy Reform component is less satisfactory. In fact, the integration of the OMVs in the CRDAs negatively affected directly the implementation of key aspects of this component: establishment of sound accounting principles and management information systems, and deflnition of the relations between the State and the departments in charge of the water management." The new legislation for the AICs has been promulgated in October 1987, improved in December 1992, but its effectiveness is experiencing difficulties, particularly in the North. The level of development of the existing AICs -- and the success in promoting new ones -- have been much better in Southern regions where farmers have been accustomed to water sharing for centuries. The water charges have been systematically increased, at a pace not appreciably less than what had been agreed, and the objective of full recovery of The Ministry of Agriculture has persisted independently in testing commercial accounting in two pilot CRDAS -- Ariana and Bizerte -- where routine implementation is to begin in 1996. All CRDAs have received training on the advantages of commercial accounting. - 10 -  O&M cost nearly reached". The legislation to define the binomial tariff and various modalities for payment of irrigation water has been promulgated but not implemented. 39. Water Tariffs. A specific loan covenant anticipated that the water charges to farmers for irrigation water were to be increased by an average of 9% per year in constant terms (after inflation). Appendix Table 1 illustrates the evolution of the fees by CRDA over the project period. In constant terms, the average annual increase rate varies from 11 % in Jendouba to 1 % in Nabeul. Appendix Table 2 shows that the overall average for all CRDAs is 7.4% when weighted by the respective consumption volumes of water by CRDA. This average is satisfactory considering the institutional difficulties experienced during project execution, and compared to similar situations in other developing countries. It must also be pointed out that the basis for setting the level at a target of 9% is not stated in the SAR; it was perhaps over-optimistically estimated. 40. Recovery of O&M costs. Appendix Table 3 compares the fees for 1994, by CRDA, to the actual costs for the CRDAs of delivering the water. The coverage of the costs by the fees varies from 51 % in the case of Kasserine to 184% in the case of Siliana. Weighted by the 1994 consumption volumes, the overall average for all CRDAs is of 106%. This result must be interpreted with caution. 1994 was a year of high demand for irrigation water as rainfall was low. Some of the direct costs are not fully variable in the sense that they do not decrease proportionately with a lowering of the consumption, personnel for example. Therefore, economies of scale were gained in 1994 which would not necessarily exist at lower levels of water consumption. Nevertheless, it has been demonstrated that already at this point in time, the fees can cover the related direct costs under favorable circumstances. 41. Technical Assistance. The technical assistance component, entirely granted by the European Community (equivalent to about US$3.3 million) aimed to: i) establish the rehabilitation requirements of the irrigation/drainage infrastructure; ii) define the methodology to set up routine procedures for preventive maintenance; and iii) assist the Ministry in the establishment of maintenance contracts. The component was expected to provide the permanent assistance of two expatriate experts and additional short-term consultancies on specific themes. Despite some misunderstandings with the project director in early 1990 the results of the assistance were extremely satisfactory as they provided a clear program of actions for rehabilitation works and preventive maintenance, and largely contributed to the effective training of national technical staff at the central ministry and regional implementation unit levels. 42. In a first 4'h year-phase, from September 1988 to March 1993, an expatriate pumping station specialist carried out the diagnosis of the electromechanical equipment inventory, and the definition of action plans for each OMV (then CRDA) including tendering documents to rehabilitate the defective equipment. During 2