Peru - Quiroz-Piura Irrigation (Second Stage) Project

R E S T R I C T E D RETURN TO REPORTS ! Report NO. T.O. 24-c WITHIN ONE WEEI This document was prepared for internal use in the Bank. In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT ON QUIROZ-PIURA IRRIGATION PROJECT (Second Stage) PERU March 25, 1955 Department of Technical Operations  TABLE OF EQUIVALENTS U.S. $1.00 S. 20.00 S. 1.00 U.S.$ 0.05 S. 100,000 X U.S.$ 5,000 S. 1,000,000 U.S.$ 50,000 1 Quintal 101.4 pounds  P E R U REFPOR.T ON QUIRO-PIURN. IRRtIGATIOI! PROJLCT TABLE 01F CONTETNTTS I. Summary Page I II. Purpose and Scope of this Report Page 2 III. The Quiroz-Piura Irrigation Development Page 3 IV. Progress to date Page 3 V. Description of the Proposed Project Page 4 VI. Estimated Cost of the Project Page 7 VII. Construction and Expenditure Schedules Page 9 VIII. Local Currency Financing Page 9 IK. Returns from the Project Page 10 X. Organization and Managermient of the Department of Irrigation Page 13 XI. Recommended Basis for a Loan Page 14 Table I Table II Table III Table IV Map - General i4pp of kuiroz-Piura Project  P E R U REPO?XT ON QUIIRCQZ-PINWA IRRIGATION PROJECT I. Sunnary 1. The Government of Peru has asked the Bank to finance part of the cost of the construction of '-tage II of the Quiroz-Piura Irrigation Project. 2. The proiect is located near tne tovwn of Piura, thle capital of a large and growing agricultural and industrial zone, about 1,000 kilometers north of Lima. In the area there is a large farr. population wrho have the means to becone landowners or to increase their holdings for more profitable operation. The project will relieve the existing pressure for new land. The project ill increase employment in the region and provide a m?;ore stable income to labor. 3. The project is being developed in tvo stages. Stage I, costing 4l1.0 million, has been financed entirely by the Government from its ovn resources. This phase, completed in December 1953, involves the diversion of the t4uiroz River into the Piura Uiver. Stage I has resulted in the cul.tivated area being increased from 15,000 to 31,000 hectares. 4h Stage II, for vwhich financing has been requested, involves the construction of a dam to store 250 million cubic meters of Quiroz waters, 85 kms. of main canals and structures to irrigate 50,000 hectares of presently uncultivated land and provide supplemental water for 31,000 hectares of cultivated land in the riura Velley. The estimated total cost for the construction of Stage II is tne equivalent of about $28 million of which $18.0 million will be required in foreign exchange. The Government plans to meet the local currency requirements of the project from the counterpart funds of U.S.surplus commodity transactions supplemented if necessary from budgetary appropriations. 5. 'The 50,000 hectares of new land to be irrigated uncer Stage II are located betw7een the Chira and Piura Rivers. The Tablazo area contains 20,000 hectares and 30,000 hectares lie in the Yuscay-Tejedores and Tambo Grande areas. Of the total, 20,000 hectares will be devoted to cotton production and tle remaining 30,000 to foodcrops and pasture. 6. An additional expenditure of the equivalent of $5 million is required for land preparation. Jlso, approximately :i3.5 million has been spent in preparation for Stag:e II through extra construction on 'tage I, and on engineering studies bringirng the total cost to about ..37 million. The cost thus armounts to $740 per hectare (0300 per acre). This cost com- pares favorably with similar projects throuiThout the world.  - 2 - 7. Total expenditures for construction, lomn interest, operation anid maintenance during the proposed loan period of 25 years are estimated at .;'54 million. During thxis saaie period, the increased direct income of the Government from Stage II for the sale of water a.nd lmnd, plus taxes from increased production is estimated at $80 million. During the same period, the farmiers wzill obtain an estimated gross return of $315 million on their production. The net improvement in Peru's balance of payments after servicing of the loan is estimated at the equivalent of $4.3 million per year, or $86.0 million over the period of' repayment of the proposed loan, 8. To insure that the project vwill be constructed in accordance with accepted standards, the Government has agreed to retain engineering consultants, satisfactory to the Bank, to revievw designs and specifications and provide engigneering supervision and inspection during construction. It has also agreed that contractors, acceptable to the Bank, be engaged to construct the dam and canal system. 9. The personnel of the Department of Irrigation are -well trained and experienced in the construction and management of small irrigation projects. however, since this project is the largest single developmXent in the country to date, many problems may arise in its nanagement. At the suggestion of the Bank, the Government has agreed to retain an experienced irrigation administrator acceptable to the Bonk to assist in the project management over the first few ye>xs, and has approached the U.S.Bureau of Reclamation for assistance in finding a properly qualified person. 10. The land vill be sold to farmers on 10% cash payment and a 20 year loan at 6%. The size of the plots vwill vary from 15 to 100 hectares. The Governuaent has undertaken to arrange with SCIPA and the Banco .-Agxopecuario, both borroir;ers under previous loans, to serve the f