India - Second Andhra Pradesh Irrigation Project

 Second Andhra Pradesh irrigation project Report No: ; Type: Report/Evaluation Memorandum ; Country: India; Region: South Asia; Sector: Irrigation & Drainage; Major Sector: Agriculture; ProjectID: P009843 India: Second Andhra Pradesh Irrigation Project (Loan 2662-IN and Credit 1665-IN) The India Second Andhra Pradesh Irrigation project, supported by Loan 2662-IN for US$131 million and Credit 1665- IN for SDR 127.5 million (US$140 million equivalent), was approved in FY86. The entire loan was canceled: US$90 million in December 1991 and US$41 million in May 1993. SDR 40.8 from the Credit was reallocated to help finance the Andhra Pradesh Cyclone Emergency Reconstruction Project for which the Bank also provided a Credit (2179-IN) and a Loan (3260-IN), which closed in FY94 with a satisfactory outcome. The remaining SDR 86.7 million was fully disbursed and the credit closed as planned in June 1994. The Implementation Completion Report (ICR) was prepared by the FAO/World Bank Cooperative Program and finalized by the South Asia Regional Office. The borrower's final evaluation is appended and includes comments on the draft ICR: it is critical of the Bank's management of appraisal, procurement and supervision. The project's objective was to raise 131,100 farmers' incomes by increasing agricultural production. This was to be achieved by: (i) upgrading 146 km and extending by 281 km the main distribution canals from the Srisailam and Sriramsagar reservoirs; (ii) undertaking irrigation development on 393,000 ha; (iii) improving water management and the recovery of O&M costs; (iv) providing telecommunications to facilitate canal operations; (v) building 1,152 km of feeder roads; (vi) training farmers, professional and support staff to manage and operate the irrigation system; (vii) delivering effective monitoring and evaluation, technical services and assistance; and (viii) studies of institutional upgrading and the planning of additional irrigation needs. The project was also to complete the resettlement and rehabilitation (R&R) of 44,000 families resulting from the earlier filling of the Srisailam and Manair reservoirs. The project failed to achieve its objective because it was poorly designed. The government of Andhra Pradesh (GOAP) was slow to provide an acceptable R&R Action Plan which delayed effectiveness by over a year. This was a demanding project crippled by contentious water allocation issues and the problems of a newly reorganized implementation agency. Water allocation was agreed at loan/credit negotiations. Subsequently, the Bank questioned the basis of water allocation, creating animosity between the Bank and GOAP, and this stopped detailed design work of major portions of the project's canals. Additional implementation problems arose from the Bank's recommendation in 1986 that the Irrigation Department be merged with the Command Area Development Department to form a new Irrigation and Command Area Development Department (ICADD). ICADD performed less efficiently than its individual parent organizations, particularly in planning. As a result, command area development did not take place, land acquisition was delayed, procurement became a major issue, and the cost of major works overran by 40-120 percent. At credit closure, no new or rehabilitated irrigation was operational because civil works were scattered and could not be connected to water supply reservoirs, and only about 30 percent of the project's physical targets was achieved. Even so, important studies on groundwater and tank-based irrigation were successfully completed and will help resolve the water allocation issues. The low rate of disbursement of the credit caused the Government of India to cancel the loan and reallocate part of the credit (to cyclone emergency reconstruction) without consulting GOAP, thus precluding project restructuring and extension. Assuming that the water allocation issues are settled and additional funds are made available to complete the project, the ICR re-estimates the ERR at 14 percent, much lower than the appraisal estimate of 22 percent because of delayed benefits and cost overruns. The project did not provide economic rehabilitation to the 45 percent of project affected families who were above the poverty line or those families affected by construction of project roads and canals. The Operations Evaluation Department (OED) agrees with the ICR in rating the project outcome as highly unsatisfactory and sustainability as uncertain. OED downgrades the ICR's rating of institutional development from partial to negligible because the newly formed ICADD performed less efficiently than its parent organizations. Both the ICR and OED rate Bank performance as unsatisfactory in project preparation, appraisal and supervision. In particular, project designers failed to take account of lessons from the failure of a previous project (Andhra Pradesh Composite Irrigation Project, Loan 1251-IN). Two lessons from this project are that inadequate project preparation and appraisal of water allocation issues and failure to learn from past mistakes will reduce project viability. Trying to rectify such defects during supervision jeopardizes the Bank's partnership with the borrower, increases costs and causes delays. The ICR is highly satisfactory, providing an extremely thorough and objective account of the institutional, resettlement and technical issues. A plan for future operations was not included pending resolution of outstanding water allocation issues and completion of a pilot program of participatory irrigation management. No audit is planned.