Sri Lanka - Mahaweli Restructuring Project

Report No. PIC1015 Project Name Sri Lanka-Mahaweli Restructuring Project (@) Region South Asia Sector Irrigation and Drainage Project ID LKPA34212 Implementing Agency Mahaweli Authority of Sri Lanka (MASL) 500 T.B. Jayah Mawatha Colombo 10, Sri Lanka Contact: Mr. S.W.K.J. Samaranayake Director General MASL Telephone No.: 94-1-687238 Fax No.: 94-1-687240 Date Prepared January 1997 Projected Board Date August 1997 Project Objectives. The Government of Sri Lanka (GOSL) is committed to improving the efficiency of public expenditures. Nevertheless, irrigation structures in the Mahaweli areas continue to deteriorate for lack of funds for maintenance (40-60% shortfall) necessitating premature rehabilitation, while farmers organizations (FOs) which could play a greater role in operation and maintenance (O&M) of especially the downstream facilities remain underdeveloped. The extension staff in the Mahaweli areas includes large numbers of poorly qualified field agents conducting visits to farmers, while in the rest of the country the extension service is being streamlined to operate with a fewer number of better qualified agents, complemented by mass media techniques. MASL's commercial activities, notably in architectural design and construction supervision and animal husbandry and manufacture of dairy products, crowd out the private sector on which GOSL is relying for faster growth. Clearly, the original approach of heavy state intervention is no longer sustainable or desirable. On the other hand, the Mahaweli Authority (MASL) has an essential role to play in the O&M of the major upstream facilities which cannot be handled by FOs, as well as provision of water to the various irrigation systems, townships and industry. It also has a vital role to play in protecting the land and water resources in the Mahaweli basin from environmental degradation. Consistent with this new role, the main objective of the project is to transform MASL from a project implementing agency into an entity responsible for overall water management and environmental protection, thereby clearing the way for the private sector including FOs to become the main agents of growth and development. Project Description. The proposed project would be the initial 4- year phase of a 7/8-year program consisting of three main components: (a) Restructuring of the Mahaweli Authority with emphasis on development of FOs to take over O&M of simpler downstream facilities,  streamlining of public service functions such as extension, and privatization of commercial activities. Measures to deal with excess staffing would be included. (b) Rehabilitation of irrigation facilities in System H involving mainly distributory (D) and field (F) canals, but also expenditures on main and branch canals and on the drainage system. Farmers under the proposed project would be required to contribute to the cost of irrigation rehabilitation. They would also take over all maintenance responsibility for the D and F canals. (c) Strengthened environmental management including establishment of a monitoring capability and a capacity to address high priority environmental issues in MASL. Environmental Aspects. Due to its rehabilitation nature, the project has been classified as a "B" (full environmental assessment (EA) not required but environmental analysis required). Nevertheless, an EA was carried out to design measures to improve overall environmental management and monitoring in the project area, address environmental problems arising from past development and guard against future problems. An environmental component along these lines has been incorporated into the project. Project Implementation. Restructuring measures would be carried out by MASL and the recipient entities (e.g., FOs for O&M). For civil works, FOs or federations thereof would sign contracts with private contractors or do the works themselves under the technical supervision of MASL, depending on their complexity. Project Costs and Financing. The total cost of the initial 4-year project is tentatively estimated at US$36.7 million, of which IDA would finance US$23.0 million (63%), farmers US$5.6 million (15%), and GOSL US$8.1 million (22%). Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202)458-5454 Fax No.: (202)522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending February 7, 1997. - 2 -