Nepal - Second Bhairawa - Lumbini Groundwater Project

Document of E CO0' The World Bank FOR OFFICIAL USE ONLY Report No. 4038-NEP STAFF APPRAISAL REPORT NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT STAGE II December 6, 1982 South Asia Projects Department Irrigation II Divion 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 EQUIVALENTS 1 Nepalese Rupee (NRs) = US$0.076 13.2 NRs = US$1.00 FISCAL YEAR Nepal Fiscal Year = July 16 to July 15 WEIGHTS AND MEASURES m = meter (3.28 feet) km = kilometer (0.62 miles) ha = hectare (2.47 acres) Mm = million cubic meters (810.71 acre-feet) m3= cubic meter (35.31 cubic feet) ton = metric ton (2,205 pounds) liter = 61.02 cubic inches MW = Megawatt (thousand kilowatts) kWh = Kilowatt hours (860.42 kcals) kV = Kilovolt FOR OFFICIAL USE ONLY PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ADBN - Agricultural Development Bank of Nepal AIC - Agricultural Inputs Corporation AO - Agricultural Officer APROSC - Agricultural Projects Services Centre BLGPO - Bhairawa Lumbini Groundwater Project Office CCA - Cultivable Command Area DADO - District Agriculture Development Officer DIHM - Department of Irrigation, Hydrology and Meteorology DOA - Department of Agriculture ERR - Economic Rate of Return GRDB - Groundwater Resources Development Board HMGN - His Majesty's Government of Nepal HP - Horse Power HYV - High Yielding Variety ICB - International Competitive Bidding ICP - Integrated Cereals Program JT - Junior Technician JTA - Junior Technical Assistant LCB - Local Competitive Bidding MA - Ministry of Agriculture MWR - Ministry of Water Resources NEC - Nepal Electricity Corporation NFC - Nepal Food Corporation NZIDB - Narayani Zone Irrigation Development Board O&M - Operation and Maintenance PCC - Project Coordinating Committee PLAA - Panchayat Level Agricultural Assistant SAO - Senior Agricultural Officer SDV - Supplementary Data Volume SMS - Subject Matter Specialist T&V - Training and Visit UNDP - United Nations Development Programme USAID - United States Agency for International Development GLOSSARY Panchayat - Smallest subdivision of Government Sajhas - Cooperative Society District - Principal administrative unit; there are 20 districts in the Terai region in Nepal Paddy - Unhusked rice Kharif - Wet season (June to September) Rabi - Dry season (October to February) Hot weather- March to May 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.  NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT VOLUME I - MAIN REPORT Table of Contents Page No. I BACKGROUND ......1...............................1 The Country........................................... 1 The Agriculture Sector .............................. 1 The Irrigation Sub-sector ................ ........ 3 The Need for Technical Assistance ...5.............5 Project Formulation ....................... ...... 6 II THE PROJECT AREA .......................... ...... 6 General ... ........................................6 Climate ...............................................7 Topography and Soils .................................7 Hydrogeology ......................................... .7 Existing Irrigation. ...............................8 Agricultural Supporting Services.................. 8 Socio-Economic Conditions ................... 10 III THE PROJECT.......................................... 11 A. General.......................................... 11 Project Concept ...................... 11 Project Components............................ 11 B. Bhairawa-Lumbini Project Stage I................. 13 Performance and Cost.......................... 13 C. Stage I Tubewell Systems and Stage II 0 & M Component.................................. 14 Detailed Features............................. 14 Operation and Maintenance..................... 17 D. New Tubewell Systems............................. 19 Detailed Features............................. 19 Planning Criteria............................. 20 Design Criteria............................... 21 Operation Criteria............................ 23 Construction Methods......................... 24 This report is based on the findings of an appraisal mission to Nepal in February/March 1982. Mission members included Messrs. E.L.M. Kramer (Mission Leader), Y.K. Choi, C. Diewald, R. Vick, G. Abdi (IDA), W. Barber K. Mahmood (Consultants) and D. Campbell (FAO/IBRDJ Cooperative Program). - 11 - Page No. E. Agricultural Extension and Training.....**** 25 F. Technical Assistance and Training............ 26 G. Birganj Tubewells* ..*.*.... ................. 28 General************** ************** ..... 28 Performance of the Systems .....*.......... 28 Justification for IDA Assistance.......... 29 Proposed Improvements..................... 29 H. Implementation Schedule...................... 30 I. Environmental Effects............... ......... 31 IV PROJECT COST AND FINANCING....................*. 31 Cost Estimates .*.*.*..* .....* .................* .. 31 Financing.............. ...... *.................... 33 Procurement...................................... 33 Disbursements................... .............. 34 Accounts and Audits............................. 35 V ORGANIZATION AND MANAGEMENT .................. 36 General ...* *............... .......0..0......** 36 The Governing Authorities........... 36 Project Management...... ......................... 37 Project Coordination...... ............. ........ 38 Farmer's Organizations.... ....... ...... .. ...... 38 Monitoring and Evaluation......... ............... 39 VI AGRICULTURAL PRODUCTION, MARKET PROSPECTS AND PRICES** ******* * .... ............. ......... 40 Cropping Patterns...................... . . 40 Crop Yields .............................. ..... 40 Agricultural Production........................ .. 41 Input Requirements............................... 42 Market Prospects and Prices...................... 43 VII FINANCIAL ANALYSIS........................ . 44 Changes in Farm Incomes ......................... 44 Impact on Poverty..... ..... ......... ..0. 45 Cost Recovery. .......... .............. 45 - iii - Page No. VIII BENEFITS AND JUSTIFICATION ...................... 51 Benefits................................... 51 Economic Analysis.. .... ................... 54 Sensitivity and Risks.................... 55 IX AGREEMENTS REACHED AND RECOMMENDATIONS....... 56 ANNEXES 1 Supporting Tables Table 1 to Table 22 2 Consulting Services Draft Terms of Reference SKETCHES I Typical Well Design 2 Pipe Distribution System and Control Chamber CHARTS 1 Implementation Schedule 2 Organization 3 Projected Cropping Pattern MAPS IBRD 16431 Project Location IBRD 16432 General Plan of Project Area VOLUME II - SUPPLEMENTARY DATA ANNEXES 3 Supporting Tables Table 1 to Table 17 4 Hydrogeology in the Project Area 5 Bhairawa-Lumbini Groundwater Project Stage I (Credit 654-NEP) - iv - 6 Training 7 Monitoring and Evaluation 8 Assumptions for Financial and Economic Analysis 9 Draft Terms of Reference for Study of Groundwater Development Strategies for Irrigation in the Terai NEPAL BRAIRAWA-LUMBINI GROUNDWATER PROJECT STAGE II STAFF APPRAISAL REPORT 1. BACKGROUND The Country 1.01 Nepal is landlocked between China and India. It is divided into three parallel ecological zones running east-west: the Terai Plain, an extension of the Gangetic Plain of India; the Hills, actually the foothills of the Himalayas, ranging from 500 m to 4,000 m in elevation; and the Himalayan Mountains to the north. These three zones account for 17%, 68% and 15% of the total area (140,800 sq km), respectively. Rivers and streams, running north-south, cut the Hills into isolated areas and varying microclimatic conditions provide a range of environments for plant growth, depending on elevation, aspect, cloud cover, slope, etc. 1.02 Nepal's population is currently estimated at 15.0 M and is increas- ing at 2.6% annually with about 65% of the population living in the Mountains and Hills. Population pressure and the lack of employment opportunities in the Hills forces 10% to 50% of male family members to migrate either seasonally or permanently, to the Terai, Kathmandu or elsewhere in order to find employment and supplement incomes. Annual per capita income, estimated at about US$ 156 in 1982, is one of the lowest in the world. A detailed assessment of thT/country's economic performance is to be found in the latest economic report.- The Agriculture Sector 1.03 Agricultural Performance. With farm production and related activities comprising more than 60% of GDP, agriculture is the key sector of economic development. It engages almost 90% of the labor force and provides more than 60% of all exports. Only about one sixth of the total land area is available for cultivation, of which at most 15% is irrigated. About 90% of the cropped area is grown to foodgrains, predominantly rice (half of cropped area), followed by maize, wheat, some other cereals and pulses. Performance of foodgrain production largely determines agricultural growth. Less than 10% of the cropped area is under cash crops, mainly oil- seeds, jute, sugarcane, potato and tobacco. During the seventies, the trend in production of major foodgrains and potatoes has been rather disappointing, except for wheat. Production grew at about 1.1% annually due to expansions 1/ "NEPAL, Policies and Prospects for Accelerated Growth," 1981, Report No. 3577-NEP. -2- in acreage, while yields, except for wheat, fell at a rate of about 0.8% per year. Some bad monsoons, declining demand in India and higher cost of fer- tilizers might account partly for this, but other endogenous factors have also played a role, such as shortfalls and delays in public investment, inappropriate pricing policies, insufficient support services, lack of trained manpower, etc. Cash crops, however, fared much better due to favorable prices and the fact that these crops are mainly grown in the Terai. Production growth in cash crops, too, was derived from expanded cultivation and not from increasing yields. 1.04 Agricultural Institutions. Agricultural development and policy are the concern of four ministries: the Ministry of Agriculture (MA), the Ministry of Forests, the Ministry of Water Resources (MWR) and the Ministry of Land Reform. MA includes the Department of Agriculture (DOA) which is in charge of promoting production through extension, training and research. MA has also overall responsibility for a number of public institutions such as the Agricultural Development Bank of Nepal (ADBN) and the Agricultural Inputs Corporation (AIC). The Department of Irrigation, Hydrology and Meteorology (DIRM) is within the jurisdiction of MWR. Both MA and MWR suffer from a chronic lack of trained staff and a sparse distribution of services throughout the country. Annual increases in trained staff are small, readily absorbed and insufficient to meet the rapidly growing demand by projects. A national agricultural extension service is provided under DOA's Division of Agricultural Training Extension, through offices at regional and district level. Agricultural research is carried out at seven research stations, six agricultural, eight livestock and six fishfarms under the direction of DOA. Some agricultural research stations are also national crop development cen- ters (for paddy, maize, jute and wheat). 1.05 Agricultural Credit. ADBN is the main source of institutional credit in agriculture; the commercial banks as yet play only a minor role in this sector. ADBN extends short, medium and long-term loans to individual farmers, groups of farmers, cooperative societies and village committees. Overall lending has increased considerably over recent years, and covers now about 25% of total agricultural credit needs. ADBN's financial position is sound, and loan recovery has been satisfactory under the circumstances; overdues ran at about 24% of loans outstanding over the past years. Repay- ment performance of cooperative societies, however, has been poor; their creditworthiness seemed to be declining. Recently, however, ADBN has recorded improvements in loan collection. Loans are extended for a wide variety of purposes, including irrigation, mechanization, warehousing and marketing. Interest rates vary with loan purpose between 6 and 16%. ADBN is making efforts to reach more small farmers directly, although the rules for collateral are not in favor of farmers with very small holdings. Application procedures for institutional credit are lengthy and cumbersome, so that many farmers avoid this source in favor of easy credit from private lenders at higher cost. -3- 1.06 Agricultural Input Supply. Agricultural input supply (fertilizer, seeds, chemicals and some implements) is exclusively entrusted to the AIC. AIC procures, both abroad and locally, stores and distributes all inputs through a network of regional and district branches. AIC fixes retail prices for inputs and provides them according to district plans in coordination with District Agricultural Development Officers (DADOs), ADBN and Cooperative Societies or Sajhas. The activities of AIC have been rapidly extending; its services in the Terai are fairly satisfactory in the light of supply problems and bottlenecks related to credit cooperatives. The Irrigation Sub-Sector 1.07 Water Resources Utilization. Nepal has abundant water resources, including major rivers with annual average discharges totalling 150 billion m3 and capable of irrigating 6 to 8 M ha. However, there are only about 1.3 M ha of land suitable for gravity irrigation in the country. Exploitable groundwater resources, which are largely concentrated in the Terai, could provide tubewell irrigation for about 1.0 M ha. The total irrigation poten- tial is therefore about 2.3 M ha. Utilization of water resources for irriga- tion is limited by several factors: (i) there are few reliable sources of perennial surface water from the eight major riversl/; (ii) these large rivers are costly to develop particularly for relatively small command areas which are typical in the Terai; (iii) heavy sedimentation in riverbeds creates considerable problems in construction, operation and maintenance of irrigation systems; and (iv) power supplies to energize tubewells are severely restricted in extent and amount. At present, only about 300,000 ha (about 23% of the potential surface irrigable area) are provided with some form of irrigation, of which about 150,000 ha are under public schemes. 1.08 Irrigation Development: Before the launching of Nepal's first Development Plan in 1957, few substantial irrigation works had been under- taken by HMGN. The main reasons were limited financial resources and shortage of trained manpower. Nevertheless, with schemes such as the 11,000 ha Chandra Project (1922), farmers' stream diversions, bucket-lift, and other traditional methods, some form of irrigation had been provided to an area of 154,000 ha, mainly in the Hills. During the First and Second Development Plans (1957-62 and 1962-65 respectively), HMGN's irrigation programs were concentrated on building medium sized systems (15,000-60,000 ha) in the Terai. In the Third Plan (1965-70), a program was launched for construction of minor irrigation projects, mostly in the Terai, to encourage greater farmer participation and to expand irrigated areas rapidly. Due to poor investigations and construction, many of these projects fall short of expectations, which resulted in discouraging response from farmers. HMGN then 1/, The Mahakali (Sarda), Karnali, Babai, Rapti, Narayani (Gandak), Bagmati, Kosi and Kankai Rivers. -4- switched back in the Fourth Plan (1970-75) to a policy of constructing medium-sized irrigation projects. In keeping with the priority given to quick yielding investments, the emphasis has shifted in the Fifth Plan (1975-80) towards the completion of ongoing schemes and new investment in projects with short gestation periods and high returns, including groundwater development by tubewells. In the Sixth Five Year Plan (1980-1985) major works are proposed to command new areas totalling 155,000 ha of which 70,000 ha are at present under construction; existing major works commanding about 115,000 ha are to be rehabilitated; and approximately 105,000 ha are to be developed for intensive irrigation within existing command areas. The Sixth Plan rightly stresses the need to more fully utilize the existing irrigation infrastructure and to enhance the extension services and associated inputs to irrigated areas. 1.09 Bank Group's Participation in Irrigation Development. The first irrigation project undertaken with Bank Group assistance in Nepal was the Birgani Irrigation Project (Narayani Zone) (Cr. 373-NEP, US$6.0, 1973). The project was completed in mid-1981 1/ and can be considered successful, in particular with regard to the surface irrigation component. The tubewell component has been less successful, mainly because of inadequate attention to maintenance and lack of spares. The proposed Bhairawa-Lumbini Stage II project includes some funding to improve the performance of the Birganj tubewells. At present, the Bank Group is involved in five ongoing irrigation projects and two rural development projects with irrigation components. The Narayani Zone Irrigation Development (Stage II) Project (Cr. 856-NEP, US$14.0 M 1978) followed on the Birganj Irrigation Project. It was designed to develop the remaining 12,700 ha deleted from the Birganj project and to provide intensified agricultural support services. Most civil works and equipment contracts have been awarded, and construction is progressing satis- factorily. The Bhairawa-Lumbini Groundwater Project (Cr. 654-NEP, US$9.0 M, 1976), the first full scale tubewell project in Nepal provides for construc- tion of 64 deep wells, detailed development of the 7,600 ha command area and agricultural supporting services (see para 3.03). The Sunsari-Morang Irriga- tion and Development Project (Cr. 812-NEP, US$30.0 M, 1978) is designed to restore and improve the existing canal system throughout 66,000 ha, involv- ing, inter alia, river training and sediment control works. The ICB process for the construction of the headreach improvements and irrigation and drainage works in about 12,000 ha is progressing; the contract is scheduled to be awarded during the last quarter of 1982. The project is facing a cost overrun and project implementation has fallen about two years behind schedule. The Mahakali Irrigation Project (Stage 1) (Cr. 1055-NEP, US$16.0 M, 1981) provides for the rehabilitation and upgrading of the exist- ing irrigation system (3,400 ha) on the left bank of the Mahakali River in 1/ For detailed information reference is made to the Project Completion Report (June 1982). -5- the Far Western Region and extending it to 6,600 ha net. The project's start-up activities have taken somewhat longer than anticipated. The required survey and engineering designs are ongoing and scheduled for comple- tion towards the end of 1982. Bids for equipment and vehicles have been invited. The Babai Irrigation Engineering Project (Cr. 1093-NEP, US$3.5 M, 1981) is to finance the preparation of detailed designs and tender documents for irrigation and drainage project works in 13,500 ha, and for 42 km of highway design. A consulting firm has been engaged and project implementa- tion is progressing as scheduled. A component in the First Rural Development Project (Credit 617-NEP, US$8.0 M, 1976) provides for improvement of small scale Hill irrigation schemes and development of a high lift scheme on the Batar plateau in Nuwakot District for a total of approximately 1,900 ha. The Second Rural Development Project (Cr. 939-NEP, US$11.0 M, 1979) also includes a component for the improvement of small scale Hill Irrigation schemes in the Mahakali Zone. Implementation of this project is in an early stage. The Need for Technical Assistance 1.10 Shortage of adequately trained (technical) manpower is a severe constraint on Nepal's development. It limits the Government's ability to prepare, implement and operate projects, and considerable technical assis- tance is required to remove this constraint. Because of the high priority given to irrigation and the large number of projects under preparation and implementation this constraint is increasingly felt. Available staff is thinly spread over the various regions, divisions, and projects, and is insufficient to meet present needs. The shortage of engineers will continue to be a major bottleneck in implementing irrigation projects under the Sixth Five-Year Plan. For the Sunsari-Morang Irrigation and Drainage Development Project (Cr. 812-NEP), the Mahakali Irrigation Project (Cr. 1055-NEP) as well as for the Babai Engineering Project (Cr. 1093-NEP), DIHM was unable to provide the necessary counterpart design staff and local consulting firms were recruited to work together with project management and expatriate project consultants in order to meet manpower requirements. The use of local consultants has been fairly successful and their use in IDA financed projects is expected to strengthen their development. In addition, any completed project would require about as much staff for operation and maintenance as is now available for construction. Hence, the number of irrigation engineers in the country has to be increased drastically if irrigation development is to be accelerated. IDA and other donors include training components in most projects in Nepal. Under the Mahakali Irrigation Project (Cr. 1055-NEP), about 80 Nepalese students are to be trained abroad in civil and mechanical engineering and agriculture. In the meantime, local capabilities have to be supplemented by technical assistance, both from overseas and from neighboring countries. -6- Project Formulation 1.11 The proposed project follows on the first stage Bhairawa-Lumbini Groundwater Development Project (Credit 653-NEP) which is to be completed by mid-1983. The Stage I project has largely concentrated on the construction of infrastructure, and since adequate power for pumping was only recently supplied to the project area there is as yet not much experience with the opera- tion of the tubewells. In order to generate project benefits HMGN requested IDA-assistance for a Stage II project to help with the operation and main- tenance of the completed wells and canal infrastructure and to build up the required institutions for O&M of this and similar groundwater development projects in the future. 1/ 1.12 During the implementation of the Stage I tubewell schemes, delays were encountered with the supply and installation of pumping equipment and the construction of the open-channel distribution system. Because of the nature of the traditional conveyance system (unlined earthen canals) dif- ficulties with water distribution.may occur once the systems are operational. The project would therefore experiment with more modern designs of the dis- tribution networks (of 15 new tubewells) and with the pumping equipment used in the wells. This is expected to eliminate some of the major shortcomings of the Stage I designs, i.e. the excessive conveyance losses in the earthen canals, and minimize delays in implementation and the high cost of land acquisition for the traditional type of distribution networks. The project would be executed over a five-year period by the existing project authority under the Groundwater Resources Development Board (GRDB) and the Department of Irrigation, Hydrology and Meteorology (DIHM). II. THE PROJECT AREA General 2.01 The project area, which is located within the Rupandehi District in the Western Terai at an altitude of about 100 m, consists of two con- tiguous sections (see IBRD Map 16432). The Stage I "implementation area" of 7,600 ha net, which is part of a 20,000 ha gross area lying between the Dano River in the west, the Rohini River in the east, the Churia (Siwalik) Hills to the north, and the India/Nepal border to the south. This area was 1/ The Bhairawa-Lumbini Groundwater Project is the first relatively large size tubewell development in Nepal. At present, very little experience exists with the operation of electrically driven tubewells and with the distribution of water to a relatively large number of farmers (120 ha; 50-70 farmers). -7- selected with the objective of implementing about si-ty-three deep tubewells in the IDA-assisted Stage I groundwater development project. An area of 2,340 ha gross, lying west of the Dano River and with its southern boundary along the Lumbini-Bhairawa highway, has been selected for further experimental groundwater development under the project. The asphalt surfaced Bhairawa-Lumbini road links this area with Bhairawa, where it intersects with the north south Butwal-Bhairawa road which bisects the Stage I implementation area and connects to the major highway systems of Nepal and India. Access to the project area and Bhairawa is facilitated by the existence of a modern airport, located close to Bhairawa, which is served by a daily Royal Nepalese Airlines flight from Kathmandu. Climate 2.02 The project area is located within the monsoon belt. Consequently, its climate is monsoonal or sub-tropical with three distinct seasons: a warm, wet season from mid-June through September, a cool dry season from October through February and a pre-monsoon hot season from March to mid-June (SDV Annex 3, Table 1). Topography and Soils 2.03 The topography of the Rupandehi Plain is that of a flat, or nearly flat, plain sloping in a general north-west to south-east direction with an average gradient of 0.1 to 0.2%. Elevations range from about 120 m in the northeast to about 90 m in the South-west. The land classification for irrigation according to U.S. Bureau of Reclamation standards identified predominantly class II or III lands. Soil and land classification in terms of soil types, drainage conditions and crops recommended for the area selected for further groundwater development is detailed in SDV Annex 3, Table 2. Hydrogeology 2.04 The Western Terai, of which the project area forms a part, is underlain by a sequence of alluvial deposits which thicken southwards onto the Ganges Plain. Drilling has proved thickness of alluvium in excess of 450 m. Coarse fragmented rock deposits predominate in the sections towards the northern edge of the Terai adjacent to the Churia Hills. The results of drilling some 51 production wells in the Stage I implementation area have shown that clean, water yielding sand and gravel forms on average 63% of the section between about 40 and 180 m depth (SDV, Annex 4, Table 1). An exploratory well at Lumbini to the south of the Stage II development area has proved 38% of clean sand and gravel in the section from 45-225 m depth. It may therefore be expected that the section between about 40 and 200 m depth in the Stage II implementation area will contain about 50% of screenable aquifer material with a range of about 40-60%. Pump tests of the wells constructed in the Stage I area have proved exceptionally high well produc- tivity with yields in the range of 223-545 m3/hr for drawdowns of a few -8- meters. The yields of wells drilled to 200 m in the Stage II development area with production strings from about 40 to 200 m are expected to be high. 2.05 The water levels in the wells constructed in the Stage I implemen- tation area are permanently or seasonally above ground level (i.e. the wells yield artesian free flows) in over two-thirds of the area. Water levels deeper than 5 m below land surface occur in less than 5% of the Stage I area. All wells drilled in the Stage II area to 200 m with screens set in the section from 40 to 200 m are expected to yield artesian free flows. A more detailed description of the hydrogeology, including water supply and demand in the project areas is given in SDV Annex 4. Existing Irrigation 2.06 A relatively small part of the Stage I project area is at present irrigated from farmer constructed irrigation systems which receive water from various stone and brushwork diversion structures on the unstable Tinau River. The diversion works are all located north of the Stage I area, between the town of Butwal and a point some 2 km to the south of the town. The main purpose of the schemes, which have been in operation for many decades, is to convey supplementary water for monsoon paddy. The supplies from these sys- tems, including one such scheme on the Dano River, are in general inefficient and unreliable, particularly to the lower portions of the distribution net- works. The operation and maintenance of the diversion schemes is managed by farmers committees, without government participation. The systems are impor- tant to the local population. Other small-scale existing irrigation schemes are supplied from artesian wells and from pumping from rivers and local depressions. Agricultural Supporting Services 2.07 Agricultural Extension. The project district is one of the six districts in the Terai in which IDA-assisted irrigation projects are located, and where during the mid-seventies the Department of Agriculture (DOA) decided to introduce the T&V system of agricultural extension. A detailed description of that system is given in IDA's appraisal report of the Agricul- tural Extension and Research project of January, 1981 (Credit 1100-NEP). Under the Stage I project the existing extension services in the district were reorganized and strengthened. The activities concentrated on (i) the introduction of new demonstration methods, (ii) strict adherence to programmed training and visit schedules and (iii) the enforcement of impor- tant cultivation practices for the major crops in the area. The project employed a Senior Agricultural Officer (SAO), who supervised the agricultural extension activities. It also involved the appointment of additional staff which at present consists of eight Subject Matter Specialists (SMS), 20 Junior Technicians (JT), 34 Junior Technical Assistants (JTA) and 55 full-time Panchayat Level Agricultural Assistants (PLAA). At present each -9- PLAA serves three tubewell commands with a net cultivable area of about 350 ha and about 1,900 ha in areas not commanded by the tubewells. 2.08 In support of training of PLAAs and farmers, the IDA-assisted Narayani Zone Irrigation Development Stage II Project (Cr. 856-NEP, 1978) provided funds for equipment, vehicles and the construction of five training sub-centers and 22 housing units for JTAs. The housing units were mainly for the field staff operating in the tubewell command areas of the Stage I project. 2.09 As financing of the agricultural extension services under Stage I was running out in mid-1980, the IDA-assisted Mahakali Irrigation Stage I Project (Cr. 1055-NEP) provided additional operational funds required to continue with the extension activities for three more years and for the engagement of a local consultant. Total funding for the 1980-1983 period was about US$80,000. 2.10 Although some setbacks were experienced with the construction of staff quarters and training sub-centers, the performance of the district's agricultural extension service established in accordance with the staffing intensities and methodology as stipulated under the Training and Visit system of extension service, was encouraging. 2.11 Agricultural Research. Agricultural research on crops in the project area is conducted at the Bhairawa Agricultural Farm which employs nine research officers. The Farm also serves as a regional research station for the Western Region. The National Wheat Development Program, which is responsible for all aspects of wheat improvement and production conducts its research at the Farm. The Farm spreads over 35 ha, of which 25 ha are used for research on paddy during the wet season and on wheat during the dry season. Major areas of research conducted by the Farm are: selection and introduction of crop varieties suitable for the region, improved crop cul- tivation practices, application of fertilizer, plant protection and on-farm water management. In addition, the Bhairawa Station conducts training ses- sions for extension staff and farmers. The research program at the Station is complemented by the Integrated Cereals Program (ICP), which is assisted by USAID, to carry out research on paddy, wheat and maize. The research activities at the Station are to be further strengthened under the on-going IDA assisted Agricultural Extension and Research Project (Cr. 1100-NEP). 2.12 Input Supply. The Agriculture Inputs Corporation (AIC) produces high quality wheat, paddy and maize seeds through a contract system with private growers. These seeds are sold to the farmers at cost. As the number of farmers using high quality paddy and maize seeds is as yet not very sig- nificant, AIC does not have problems in meeting the demand. However, the demand for the HYV wheat seed is larger than the available supply. DOA, through assistance given by ICP, is taking steps to improve the situation by allowing the Bhairawa Research Farm to expand its foundation seed production -10- program. This seed is to be supplied to AIC for certified seed multiplica- tion and distribution. 2.13 AIC is also responsible for the procurement and distribution of fertilizer and plant protection chemicals. For the project areas these inputs are available through the District AIC located in Bhairawa. Fer- tilizer and agro-chemicals are generally sold to the Sajhas at subsidized prices at the district AIC godowns. The Sajhas transport the inputs to their facilities at the panchayat level. During the 1980/81 cropping season, AIC sold about 1,100 ton of fertilizer (in nutrient) in the district. At present, the overall district storage capacity for agricultural inputs (6,600 ton) appears adequate. However, there is a need for additional input storage facilities in the Stage II tubewell development area. 2.14 Storage, Processing and Marketing. Storage of agricultural produce at the farm level is limited to grain for home consumption. Paddy is usually stored in mud bins. Farmers normally sell their produce at harvest inter alia for want of suitable storage facilities. Private dealers buy the surplus paddy and transport it to nearby areas or deficit Districts in the hill region. The processing facilities in the project area are well developed. At the village level, many small rice mills, flour mills and oil presses exist which satisfy the local demand. Larger scale rice mills and a flour mill operate in Bhairawa. Socio-Economic Conditions 2.15 The project area consists mainly of small, mostly owner-cultivated farms. About 64% of the smallest farms occupy about 35% of the land (SDV Annex 3, Table 3). The average farmsize is about 2.0 ha. According to a survey, only about 5-10% of the land is farmed by tenants or owner-cum-tenants. These survey results, however, appear somewhat suspect as evidence collected by the mission (from interviews) suggests a much higher percentage of tenancy. Less than one third of the families represent the original Tharu population, while the remainder are settlers, mostly from the hills. The average family size is about 7.2 persons. About 55% of the family members are available for work. Women also participate in agricul- tural activities, such as transplanting and harvesting. 2.16 About 90-95% of the farm families are estimated to live below the poverty threshold of about NRs 1,050 (US$80) 1/ per capita per year. Most farm families have earnings in addition to their subsistence income from crop cultivation and animal husbandry, mainly from seasonal work as hired laborers on other farms or from occasional construction jobs. The sale of land in emergencies is not uncommon. Not much is known about indebtedness, but it is probably high, particularly among small farmers. The dominance of large farmers is a pervasive feature of the agricultural economy of the area. 1/ Estimated for the project area (para 7.03). -11- III. THE PROJECT A. General Project Concept 3.01 Although the implementation of major works in the Stage I project is nearing completion, it is clear that the crucial phase of properly operat- ing and maintaining the tubewell schemes is still to be tested. While the Stage I project has developed a conceptual basis for O&M of the tubewell systems, sustained agricultural development will hinge on a reliable water supply, proper distribution and on-farm management of water, experienced and dedicated staff, sufficient funding for O&M and improved agricultural support services. The essence of the proposed project is to ensure that the existing Stage I tubewell systems would be operated and maintained in accordance with sound engineering standards, that there would be active farmers' participa- tion and that the agricultural inputs and support services would be made available to achieve the projected production. Therefore, a central task of the project would be to build up institutions to operate and maintain the project as well as similar projects elsewhere in Nepal in the future. In addition, the project would experiment with improved technologies in the design and construction of new tubewell irrigation systems. The improvements are to be introduced on a pilot scale (about 15 tubewell systems) to enable comparison of both technologies -- improved designs versus Stage I technology -- during the project's five-year implementation period. The proposed project would also include a comprehensive study to compare the advantages and disadvantages of the tested technologies and of other alternative strategies to direct future groundwater development in Nepal. Project Components 3.02 The project would finance over a five-year period the following components: (a) staff required for project operation and maintenance of 64 wells,1/ 280 km of canal distribution networks, 96 km of village roads and for organizing farmers: 1/ In the course of Stage I project implementation, it was agreed to increase the number of tubewells to 64, by converting one observation well into a production well. -12- (b) design and construction of approximately 500 km of field channels to convey irrigation supplies from the 5 ha outlets to the farmers- fields; (c) procurement of equipment, vehicles, spare parts, construction materials and workshop and office facilities required for operating and maintaining the project and for constructing 15 new wells; (d) training of project staff; (e) staff, vehicles and buildings required for the T&V system of agricultural extension in the Rupandehi District; (f) provision of seeds, fertilizer and pesticides to progressive farmers for the growing of major crops in about 150 ha; (g) planning, design, installation and operation of 15 new tubewell schemes, to be3equipped with submersible pumps discharging about 300 m /hr and distribution networks of buried PVC pipes, to serve 120 ha required for each well, a drainage network and about 100 km of field channels; (h) construction of approximately 25 km of roads to provide access to the 15 new tubewells and to connect the major villages in that area; (i) construction of approximately 35 km of 33 kV transmission lines with transformers to provide power to the new wells. (j) the completion of the Stage I project including the installation of 64 tubewells, the construction of 280 km of distribution and drainage systems, 80 km of power transmission lines, 96 km of roads and the project buildings. Other project components would be: (k) monitoring and evaluation studies; (1) provision of consulting services for this and, if required, other IDA-supported irrigation projects in Nepal for project implementation, aerial photography and mapping, for undertaking a comprehensive study to compare the advantages and disadvantages of alternative strategies for future groundwater development in Nepal, and, if required, for updating the existing -13- feasibility study for a further groundwater development project in the Bhairawa-Lumbini area to serve about 13,000 ha. (m) repair and improvement of the Birganj tubewell systems. The project cost is estimated at US$19.4 M. It will be implemented over a five-year period by the Bhairawa-Lumbini Groundwater Project Office under the Groundwater Resources Development Board. The rehabilitation of the Birganj tubewell system would be carried out by the Narayani Zone Irrigation Development Board (NZIDB). B. Bhairawa-Lumbini Project Stage I Performance and Cost 3.03 General. The project was appraised in November/December 1975 and became effective in November 1976. It represented the first stage of a groundwater development program to provide irrigation to the Western Terai and included the design and installation of 63 tubewells, distribution net- works to serve about 120 ha under each well, 70 km of 11 kV transmission lines, 70 km of village roads, 1,000 ton grain storage facilities and the strengthening of agricultural supporting services in the project areas. The project cost was estimated at US$13.7 M and the IDA-credit approved was US$9.0 M (Credit 654-NEP). The scope of the project was selected on the basis of need, accessibility to and agricultural potential of the project area, proven groundwater resources, and implementing capability of HMGN. Project implementation was to take four years and to be completed in 1980. 3.04 Physical Progress. Due to inadequate staffing and budget alloca- tions, cumbersome procurement, tendering and land acquisition procedures and poor performance of local contractors, the construction of,project works, the acquisition of construction materials and repair of equipment and vehicles was held up. With the arrival of essential construction equipment and machines in 1979, the implementation of works picked up and completion of all works is now scheduled for mid-1983. Procurement problems also delayed the erection of the 33 kV substation at the Gandak West Power Station. As a result power was only supplied to the project from March 1982. The construc- tion of field channels by the farmers has not made much progress, because water was not available from the tubewells. The situation may change once water becomes available at the outlets. Also only a small portion of the programmed drainage works was constructed, because of resistance from farmers. It is anticipated that farmer-s reluctance for the implementation of the drainage program would diminish once the tubewells become operational and certain low-lying areas may become waterlogged. -14- 3.05 Financial Progress. The revised cost-estimate to completion of the project, which is scheduled for mid-1983, amounts to US$15.6 M. This repre- sents a cost increase over the appraisal cost estimate of about US$1.9 M, or about 15%. The cost overrun is mainly due to the 3-year delay in project implementation which has resulted in higher costs for civil works, project staff and consulting services. Until September 1982 IDA had disbursed US$8.8 M 1/ or 98% of the US89.n M credit Full disbursement is likelv by end 1982. Futrther details on physical and inancial progress are given in SDV Annex 2. C. Stage I Tubewell Systems and Stage II 0 & M Component Detailed Features 3.06 General. As originally conceived at appraisal, the tubewell irrigation systems were to have included the following elements: (a) installation of 63 tubewells varying in depth from 120 to 200 m equipped with Slectric motor powered pumps capable of discharging 300 m /ha against 30 m of head; (b) constriction of 63 earth storage reservoirs each with 2000 m capacity for receiving the discharge from the tubewells; (c) construction of earth channel conveyance systems serving 120 ha down to 5 ha outlets and drainage networks with outfalls to rivers and streams; and (d) construction of approximately 70 km of 11 kV transmission lines through which power would be delivered to the project pumps from the existing 33 kV Bhairawa-Butwal grid and provision of 11/0.4 kV transformers at each wellhead. 3.07 As actually implemented, the project departed in several respects from the original design concept. The storage reservoirs, which were intended to allow maximization in use of the erratic power supply and mini- mize use of energy during peak power demand periods, were not constructed. The absence of the reservoirs in the existing systems was to some extent 1/ Including US$0.5 M disbursed from Credit 654 for engineering services for the preparation of the Sunsari Morang Irrigation Project authorized and Development Credit Agreement amended in December 1977, which effectively reduced IDA funding to the Bhairawa-Lumbini Project by this amount. -15- replaced by increasing the pumping capacity of the water points but automa- tion of pumping is now not possible. The power supply is from the 33 kV line extended from the Gandak power station to Butwal and Bhairawa. Use of this source of power required construction of 7 km of 33 kV transmission line and provision of a 5 MW 33/11 kV transformer substation which were not foreseen at appraisal. 3.08 Wells. As originally designed, the wells were to have had a 14 in. inside diameter (ID) mild steel pump chamber to a depth of 40 to 50 m and a 10 in outside diameter (OD) fiberglass production string to 120-200 m depth consisting of slotted pipe set opposite selected aquifer material and the balance of blank pipe. In the event, the fiberglass design was applied only experimentally at two sites and the remainder of the wells were constructed with 10 in ID mild steel production strings. The 14 in ID pump chamber was retained for a number of the early wells but the size of this element was increased to 16 in ID when casing purchased specifically for the project became available. 3.09 The wells range in depth from 101 to 190 m with pump chamber depths in the range of 32-52 m. The length of screened section ranges from 29 to 77 m and averages about 50 m. As expected, the permeability of the 3aquifer proved to be high with specific capacities in the range of 23-176 m /h and averaging 107 m /h. The design dischargei of the 56 wells successfully completed to date range from 320 to 545 m /h to serve irrigated areas in the range of 85 to 145 ha (SDV Annex 4, Table 2). 3.10 Of the 58 wells completed to date, 42 are either permanently or seasonally free fl9wing at land surface level and 23 have artesian discharges in excess of 200 m /h. Water levels range from about +4 to -8 m relative to land surface. However, the artesian flowing conditions are not expected to persist for long after the well field becomes fully operational. The initial decline of the water level would be relatively rapid and a long-term decline of up to 15 m is foreseen. Such declines can be easily accommodated within the existing well design. 3.11 Pumping Units. The pumps are 3 or 4 stage turbines with water lubricated column assemblies, a 10 in. diameter rising main, and powered by vertical hollow shaft squirrel cage induction motors. There is a flow meter on the delivery pipe. Of the 68 motors gurchased, 48 have 100 HP prime movers and are designed to deliver 400 m /h against 5 m of head and 20 have 75 HP prime movers and are designed to deliver 300 m /h against 45 m of head. Such pumping head requirements are now not expected to develop and certainly not within the expected life of the pumping units. With lower than design heads, the pumps would deliver higher than design discharges. Nevertheless, almost all the pumps are considerably overpowered for the required yield. Assuming a long-term water level decline of 15 m below the present pumping level at the required discharge and a wire to water pumping unit efficiency -16- of 60%, the required capacities of the pump motors would range from 27 to 88 HP (with one exception of 144 HP). 3.12 Power Generation, Transmission and Transformation. The Gandak West Hydropower Station is located on a 5 m drop structure on the Gandak left bank main canal. It has three turbines each with 5 MW installed capacity. At present, only two of the turbines are operated simultaneously (the third being kept on stand by), generating on average about 5 MW from about December 15 through March 15 and about 8 MW during the balance of the year. The firm capacity as presently operated is therefore 5 MW, except under canal closure conditions which are supposed to be for one month in -October but in fact are for shorter periods. The low projected generation at the plant is not properly explained. There is no shortage of water in the canal, it seems unnecessary to have a turbine on standby at all times and the head fluctua- tions through the turbines are minimal. The plant supplies energy through a 132 kV line to Hetauda and the national grid and through a 33 kV line to Butwal and the project area. 3.13 The project has constructed 7 km of 33 kV transmission lines from the Gandak 33 kV line to a location in the Stage I project area where a 5 MW 33/11 kV transformer substation has been located. From this substation, 73 km of 11 kV transmission lines have been constructed to serve the 64 wells planned for Stage I. Transformation from 11 to 0.4 kV is provided at each well head. 3.14 It is estimated that the Stage I project would require about 3 MW of power at the well head assuming water levels in the area decline through time by 15 m. Considerably less power would be required in the early years. HMGN would cause NEC to operate the 33 kV transmission line from the Gandak West Hydropower Station to the 33/11 kV Substation in Stage I as a dedicated feeder and to provide the required power which is expected not to exceed 5 MW (inclusive of the power requirements for the 15 new tubewells) at the substa- tion at full development. 3.15 Pumphouse. The pumphouses are brick built structures and provision is made for access through the roof so that the pump and rising main can be removed from the well. The structure includes a residence for the pump operator. 3.16 Water Requirements. The annuil water requirements for a typical tubewell unit are estimated at 10,400 m per ha. This is based on a cropping patte5n designed to match the following main assumptions: pump discharge of 450 m /hour, supply unit of 120 ha net, conveyance efficiency of 70% from pump to 5 ha outlet and no more than 18 hours pumping per day during the June peak demand period in a mean rainfall year (SDV Annex 3, Tables 9, 10A, 10B and 10E). In years of lower rainfall pumps would need to run up to 24 hours per day during the peak demand period. -17- 3.17 Distribution System and Outlets. The wells discharge into a divi- sion box which directs the flow into a network of canals: the canals are on the average 4.5 km long for a 120 ha cmmand area. The unlined earthen canals, designed to convey about 450 m /hr or 125 1/sec, have a bottom width of 0.4 m, a depth of 0.6 m with water depths ranging from 0.20 to 0.45 depending on the available gradient (0.05 to 0.30 %). The majority of the canals are built in fill in order to ensure adequate command and provided with the necessary control structures and crossings. An overall conveyance loss of 30% from the pump to the 5 ha outlets is assumed. The 5 ha outlets are built in conjunction with check structures provided with wooden stoplogs. As the losses of the unlined canals in certain reaches are expected to be high, the proposed Stage II project provides for lining of 10 km of the most vulnerable reaches. A 1.20 m wide track runs alongside the canals to facilitate 0&M and to provide access to the fields. Below the 5 ha outlets farmers are responsible for the construction of field channels and drains. No field channels were constructed so far and only a small proportion of the drainage network proposed under Stage I was implemented (SDV Annex 5). Operation and maintenance of the facilities down to the 5 ha outlets would be the Stage II project's responsibility. 3.18 Completion of Stage I. The proposed Stage II project would finance the Stage I cost overrun to complete the installation of 64 tubewells, the construction of 280 km of distribution and drainage network, 80 km of power transmission lines, 96 km of roads and the project buildings, estimated at US$1.7 million. In addition it would provide funding to compensate for US$0.5 M disbursed from Credit 654 to finance engineering services for the preparation of further irrigation projects in the plains of Nepal (see para 3.05). This is justified as HMGN finds itself unable to provide from its own resources the additional funds required to complete the construction of the Stage I project works. Without completion of these works Stage I objectives would not be achieved. Consequently HMGN requested IDA to provide financing for the balance of the Stage I civil works, materials, equipment and advisory services in the proposed follow-up project. Operation and Maintenance (component of Stage II) 3.19 A special division of the project organization would deal with all aspects of operation and maintenance. This division would have an O&M sub-division and a mechanical engineering sub-division, supported by a workshop equipped with mobile repair units. The O&M sub-division would operate in close cooperation with the agriculture division. The main criteria for operation and maintenance of the Stage I tubewell systems are outlined in,SDV, Annex 5. Maintenance works under the project would cover routine and preventive maintenance work, repair of breakdowns and general repairs. The Nepal Electricity Corporation (NEC) would operate, maintain and repair the facilities which supply electricity to each wellhead. These facilities include the Gandak West Hydropower Station, the substations, and the transmission lines up to the electricity meter at each wellhead. In -18- normal years no electricity would be supplied to the project tubewells during hours of peak load on the Central Nepal System and pump operators would be instructed not to run the pumps during those hours. The project office would seek a general agreement with NEC that necessary repairs would be carried out within 24 hours. 3.20 The main problems with the repair and maintenance services encountered during the implementation of the Stage I project were: (a) the lack of machinery and handtools for the workshop and field staff; (b) the effectiveness of limited staff available was often hampered by lack of adequate transport; (c) because of cumbersome procurement procedures and inventory controls, spare parts were generally not available in time; and (d) responsibilities for operation and maintenance staff were not clearly defined. The improvements proposed under the project are the following: (a) recruitment and training of additional 0&M staff; (b) provision of adequate transportation for the O&M staff; (c) procurement of additional equipment and tools for the workshop and spare parts for pumping equipment; provision of advisory services in workshop management; (d) separation of O&M from construction activities and the inclusion of an O&M division in the project organization. 3.21 Agreements have been reached with HMGN that (a) all canals, struc- tures, pumping equipment, power lines, roads, O&M equipment and other facilities would be properly operated and maintained; (b) at all times ade- quate staff would be employed and funds made available, as and when required, to properly operate and maintain the project; (c) the project consultants would prepare a comprehensive O&M manual for typical tubewell systems in the project and furnish it in draft to IDA for its review by 1 November 1983 and in its final form by 1 November 1984. -19- D. New Tubewell Systems Detailed Features 3.22 General. The new tubewell designs would improve water conveyance from the pumphouse to the outlet, eliminate the delays in implementation because of land acquisition problems ind improve pumping performance. The discharge of the wells would be 300 m /hr or 85 1/sec. Each well would serve a net area of about 120 ha. The PVC pipe distribution network would consist of four independent distribution "loops", each supplying approximately 30 ha with a nominal flow size of 22 1/sec. The losses in the system down to the 4 ha distribution outlets would be negligible. 3.23 The Water Point. The water point would consist of the well, pump, prime mover, switch gear, starter and protection relays and electrical power supply. The unit would be housed in a brick-built pumphouse. The wells would average 200 m depth and be fitted with electrical submersible pumps instead of the vertical shaft turbine pumps of the Stage I project. 1/ Sub- mersibles are proposed because they are cheaper and because they give more protection against vandalism. All pumps would have foot valves to prevent the possibility of reverse flow causing motors to spin backwards when power stoppages occur. Other changes from the first stage water points design involve the switch gear, starter relays and ancillary equipment. These include: (a) a control chamber placed adjacent to the well fitted with water level operated switches to allow automation of the prime motor which obviates the necessity of a pump operator to be present to start and shut down the pumps; (b) a float-operated throttling valve on the outlet from the pump delivery line, to restrict the flow from the pump when the water level in the control chamber rises above a set level; (c) fitting of solid state electrical totalizing meters on all pumping units to monitor operation of each pump. 1/ Very good submersible pumps have been developed in India during the the last 6-7 years, which are providing reliable service under less than perfect conditions e.g. on tubewells which are not entirely vertical. -20- 3.24 Control Chamber. An important feature of the system would be the control chamber. This structure of reinforced brickwork, would have one inflow and several outflow chambers, one for each of the distribution loops. It would have the following functions: (a) maintaining the operating head in the piped distribution system; (b) permitting the pipe distribution system to be operated at less than the discharge rate of the pump, without causing spillage; (c) ensuriig equal distribution of the pump discharge (300 m /hr) into each of the distribution loops; (d) permitting automated operation of the pumping unit, including automatic resumption of pumping in the event of power failures. 3.25 Pipe distribution network. The pipe conveyance would consist of PVC feeder pipes from the control chamber to closed loops of PVC pipes. Thus, any distribution outlet on a loop may be simultaneously supplied with water flowing from two directions which reduces flow veiocities and head losses. The discharge to each loop would be about 75 m /hour serving approximately 30 ha. A 20 ha command area would have four loops and a well point discharge of 300 m /hour. The control chamber would divide the pump discharge equally to four outflow chambers and thence to the distribution loops. 3.26 Distribution outlets. The outlet valves would be of the simple Alfalfa type, placed on risers from the loops. Seven to eight outlet valves are to be placed on each loop. Thus, each valve would serve an area of approximately 4 ha. 3.27 Field channels. The outlet valve would discharge into a distribu- tion box from which the flow is to be directed into one or more unlined field channels. Assuming that the outlet valve is placed in the center of the 4 ha it serves, the field channel length would generally be less than 100 m. Planning Criteria 3.28 Site selection. The area selected for the installation of the fifteen new tubewells is located West of the Dano River adjacent to the Stage I area. It measures 2,340 ha gross, with an irrigable area of 1800 ha net. As the Dano river channel is active, it has been agreed that the wells be sited at least 500 m away from the river bank, so that bank erosion would not affect the tubewell schemes. The selection of this area was based on (i) expected high well yields, (ii) the suitability of the soils for sus- tained irrigated agriculture and (iii) the proximity of the first stage project area. A 1979 feasibility study for a 15,000 ha Stage II project was -21- made up of numerous small, practically independent units, of which the 1800 ha area was one. As a result, the basic surveys and preliminary designs for a road and power transmission network for this area are available. 3.29 Roads. A low cost gravel surfaced road network would be con- structed in the extension area to provide access to the well sites and to connect the main villages with each other and the main road system in the area. The planned roads would mostly follow existing tracks and utilize established right-of-ways. 3.30 Drainage. Since the key crops in the proposed cropping patterns are rice in the wet season and wheat in the dry season, drainage would be required to expedite drainage of excess flood waters and to provide suitable conditions for the cultivation of dry season crops. Farmers would build the drainage network within a 4 ha unit. These field drains would discharge into secondary drains which in turn are connected with natural streams. 3.31 Surveys. The detailed planning and design of the new tubewell schemes requires the following surveys: (a) ground control work and topographic mapping to a scale of 1:10,000 with 1.0 m contour intervals, and to a scale of 1:2,500 with 0.25 m contour intervals; the topographic survey would be carried out using existing aerial photography; (b) a semi-detailed soil survey on a 1:10,000 scale. Design Criteria 3.32 Wells. The wells would be drilled using direct circulation rotary rigs using bentonite mud appropriately weighted with barytes to control artesian pressures. A production string would be inserted consisting of 250 mm ID mild steel screen opposite all suitable aquifer material and blank pipe covering non-productive beds. It is expected that the screen would represent about 50% of the production string but the maximum thickness of aquifer material would be screened in all wells. (Sketch 1) 3.33 The wells would be naturally developed, i.e. there would be no gravel pack. The wells would be initially developed by airlift pumping using a compressor and finally developed with a turbine test pumping unit. The test pump wsuld have a capacity at least equal to the design discharge of the well (300 m /h) and preferably about 50% higher. The wells would be test pumped for 24 hours. 3.34 Pumping Units. The pumps would be electric submersible type with an 8 in. ID rising main. The starter relay would be of Auto Transformer -22- Starter type, and a single phase preventor would be included in the relay. The switch gear would be automated through a water level operated electrical control at the regulating tank. A capacitor would be provided for power factor correction and current regulation. A solid state electronic totaliz- ing hour meter would be fitted to the pump. 3.35 Power transmission and transformation. Power for the fifteen new tubewells would be extended from the existing sub-station in the Stage I area. The 33 kV lines would be mounted on steel posts. Step-down trans- formers (33 kV/0.4 kV) of appropriate capacity would be provided at each tubewell. The project would plan, design and construct these works. An agreement would be obtained from HMGN causing NEC to energize the tubewell pumping units within two months after the completion of any water distribu- tion system in the project. 3.36 Pumphouse. The pumphouse would be a simple brick-built structure which would be fitted with facilities to lift the submersible pumping equip- ment for maintenance. It would include an accommodation room for the pump operator. 3.37 Control chamber. This structure would be of reinforced brickwork and would have an inflow and four outflow chambers (Sketch 2). The discharge from the tubewell is delivered into the bottom of the inflow chamber via a float controlled throttling valve. At the top of the inflow chamber are four V-notch weirs, dividing the pump discharge equally among the four outflow chambers. Two related design parameters are the elevation of the V-notch at the top of the inflow chamber and the size of PVC pipe used in the loops. With PVC pipe sizes for the loops of 160 mm and for the PVC lines connecting each loop with the control chamber of 200 mm, the total friction head from the control chamber to the valve farthest away would amount to 1.8 m. If delivery is at an elevation of 0.3 m above ground, the water level in the outflow chamber would be at 2.1 m and in the inflow chamber about 2.2 m above ground. Thus, with about 0.6 m of freeboard, the structural height of the control chamber would be approximately 2.8 m above ground level. The inflow chamber would be equipped with an upper level probe which shuts down the pump once the water level rises above a set operating level. The lower probes -- one in each outflow chamber -- re-start the pump if the level falls below a set level. 3.38 Water Requirements. The cropping pattern design and related water requirement calculations are made for a typical tubewell un t supplying 120 ha net. They are based on a pumping discharge of 300 m /hr, and a con- veyance efficiency of 98% from pump to the 4 ha outlet and a maximum 18 hours of pumping per day during the June peak demand period in a mean rainfall 3 year. This results in an annual water requirement at the pump of 6,875 m per ha of net CCA in a mean rainfall year (SDV Annex 3, Tables 9, 10C, 1OD and 10E). In years of lower rainfall in June, pumps would need to run up to 24 hours per day during the peak demand period. -23- 3.39 Distribution system and outlets. An important feature of the proposed buried pipe distribution system is the rotational supply to 4 ha units from otlet valves on distribution loops. The size of the delivery stream, 75 m /hour or 22 1/sec, is synonymous with the capacity of the loop. The pipes for the loops would be PVC 160 mm 0.D. and for the lines conne5ting the control chamber and the loops PVC 200 mm 0.D., both with a 2.5 kg/cm pressure rating. The actual layout of the distribution systems and the areas served by the individual loops would be influenced by topographic and cadastral factors; they generally would not be rectangular. Boundaries of the areas served by individual outlet valves in practice would follow exist- ing property lines; consequently the areas need not be uniform in size. The depth of soil cover over the 160 mm loop would not be less than 1 m. The valves would discharge into a brick distribution box. A single 160 mm surge riser would be provided on each loop, at a point farthest from the control chamber. The top elevation of the riser would be approximately 0.5 m above the top of the control chamber. 3.40 Drainage. The average field drain length within a 4 ha service area would be about 40 m/ha and would have a discharge capacity of 4 1/sec/ha. Each 4 ha service unit would have at least one outfall into a secondary drain. The secondary drains would function as carriers to the natural drains. The project would improve the carrying capacity of about 28 km of natural streams, through deepening and straightening certain sec- tions, the removal of obstructions and gully control in sensitive sections. The drains would be provided with appropriate structures and crossings where needed. 3.41 Roads. Two types of roads would be built under the project. Type "A"' roads, which are to link clusters of villages and to connect them with the existing road system, would have a formation width of 6.0 m providing a 3.5 m wide traffic lane and two shoulders of 1.25 m each. The type "B" road would be built mainly to provide access to isolated wellsites or villages. The formation width would only be 4.0 m with a traffic lane width of 3.0 m. This is sufficient for occasional vehicles with no passing traffic. In both cases, the pavement would be constructed from two layers of river gravel, each 15 cm thick, placed between the earthen shoulders. A gravel filter through the shoulders would be constructed at 10 m intervals to allow for drainage of the pavement. Operation Criteria 3.42 The operation criteria for the Stage I tubewells as described in SDV Annex 5 are essentially also valid for the new tubewells. However, the key differences are (a) a more efficient, reliable and timely supply of water to 4 ha units (b) built-in operational flexibilities which represent impor- tant operational advantages over open channel systems: -24- (a) the freedom from dependence upon tubewell operator attendance; (b) the much reduced problem of water distribution to the delivery outlets and within the area served by such outlets; (c) the future possibility to opt for alternative methods of operation in areas exclusively under paddy, for example, delivery from more than one outlet at a time on the same loop. This would increase the capacity of the loop by about 33% and require similar increase in pumping capacity. 3.43 The "new" tubewell system designs, which were successfully tested in India, would eliminate the high conveyance losses in the earthen canals, and delays and costs of land acquisition. A comparison of performance of the "Stage I well" versus the "new well" is expected to favor the "new wells" because: (a) conveyance efficiency of a pipe distribution system is much higher than for earthen channels; (b) delivery valves on the pipe system are located in the center of a 4 ha area served, while the open channel outlets deliver to the boundaries of 5 ha units; (c) the greater efficiency of delivering water through pipes (at least 25%) would result in a lower energy requirement per unit of water delivered to each field, despite the additional 2 m head required to convey the water through the pipes; (d) investment costs are in favor of submersible pumps and piped distribution systems; and (e) maintenance cost strongly favor a buried pipe distribution system; Construction Methods 3.44 Drilling, development and testing of the new wells would be the responsibility of the drilling unit of the construction division in the project organization. Sufficient expertise to successfully undertake these activities was developed under Stage I. Essential drilling and testing equipment was procured under the first stage project, including two direct rotary rigs. Some additional equipment would have to be procured under the present project. The laying of PVC pipes would be undertaken by contractors as a turnkey package, including the supply of the pipes and fittings. Local labor would be engaged by the contractors to excavate the trenches in which to place the pipes. The supply and installation of the transmission lines and the transformers at the new wellheads would be undertaken by contractors -25- engaged and supervised by project staff. Before taking over and charging the power transmission network NEC would inspect and test the power supply facilities built by the project. E. Agricultural Extension and Training 3.45 Under the project the T&V system of agricultural extension, which was established under Stage I for the whole of the Rupandehi District, would be strengthened and made more effective. This would include a concentration on in-service training of extension workers, regular farm visits and periodic monitoring of the results. The extension effort would be focussed on on-farm water management, and improvement of agronomic practices of HYVs of major crops. The extension advice on on-farm water management and improved soil preparation would be channelled through the Water Users Groups at the 4-5 ha service unit level. Planning and establishing field demonstrations at the Research Station as well as at farmers' fields would have a high priority in order to show: (a) the most suitable high yielding paddy varieties; (b) the optimum time for sowing of wheat; (c) wheat yield responses to cultivation under different soil and drainage conditions; and (d) cropping patterns most suited to different areas. Under the Stage II project.the agricultural extension staff in the project's tubewell areas (about 9,500 ha) would be strengthened to 1 JT for 3,000 ha, 1 JTA for 360 ha or 3 tubewell commands and 1 PLAA for 120 ha or one tubewell command. They would be managed by the project's agricultural officer who heads the Agricultural Division and would be accountable to the project manager. The project would also include funding for (i) staff cost including essential extension materials (ii) construction of additional staff residen- ces and five input storage units of 100 ton each and (iii) procurement of vehicles. The extension service in the District outside the tubewell area will continue operating at the Stage I staffing levels,'with financing provided under the Stage II project. For details on future staff and build- ing requirements see SDV, Annex 3, Tables 4 to 8. 3.46 Research workers at the Regional Research Station, Bhairawa, would assist in the training of extension staff. The Agricultural Extension and Research Project (IDA Credit 1100-NEP) provides funding to improve the train- ing facilities for a Regional Training Center to be located at the Research Station at Bhairawa. Additional funding is included under this project to allow the completion of the training complex. The facilities, for which all -26- plans and designs are ready, include a training hall, hostel, dormitory, classrooms, and residential quarters (Annex 1, Table 4). F. Technical Assistance and Training Consultants 3.47 Consulting Services would be required to assist DIHM, DOA, the Groundwater Resources Development Board and project management in the implementation of the project and if required in updating the 1979 feasibility studies which may lead to a possible third stage groundwater development project in the Bhairawa Lumbini area. Draft terms of reference are given in Annex 2. The expatriate consultants would advise and guide the project staff in project management, in organizing and implementing the day-to-day 0&M activities, including the preparation of 0&M manuals, and provide in service training in these fields. They would be responsible for providing the plans, designs, tender documents and construction supervision for the new tubewells to be built under the project. In addition the con- sultants would advise on broader project aspects such as the planning of annual work programs, cost recovery, preparing of bid documents and evalua- tion of bids, monitoring of project benefits and evaluation of each year's O&M performance and the derivation of unit costs, comparative analysis of the performance of the Stage I tubewell schemes versus the new schemes and measures to improve the overall operational efficiency of the tubewell schemes. Technical .assistance would also be provided to organize and manage the agricultural support services, with particular emphasis on organizing farmers into water users groups, the development of suitable cropping patterns, water management practices and in service training. About 190 manmonths (which includes 50 manmonths unallocated) would be provided over a five-year period at an estimated cost of US$10,000 per manmonth. Two years after the commencement of the project or at the end of 1984, HMGN would review the need and nature of further technical assistance and decide, after consultations with IDA, on the use of the 50 unallocated manmonths (Annex 1, Table 11). An agreement has been reached with HMGN that consultants whose qualifications and experience are acceptable to IDA would be employed by March 1, 1983 under terms and conditions acceptable to IDA. 3.48 Consulting services would also be required to assist the Groundwater Resources Development Board in undertaking a comprehensive study of past, present and projections of future performance of various public and private groundwater development alternatives, in order to determine the most suitable strategies for groundwater development for irrigation in the Terai in Nepal. Prior to the anticipated start of the study, an IDA mission intends to review in the field the data base necessary for the work primarily to narrow the scope of the proposed study, to update and if necessary amend the draft terms of reference for the study as given in SDV, Annex 9. In order to make as much use as possible of the construction and O&M experience obtained from the -27- Bhairawa Lumbini and Birganj projects the study would be initiated in 1985. The final report would be submitted by March 1986. It is tentatively estimated that about 30 man-months would be required for the study, at an estimated cost of US$10,000 per man-month (Annex 1, Table 17). Qualified local consultants may be used in collaboration with foreign consultants. During negotiations HMGN has agreed that consultants whose qualifications, experience and terms and conditions are acceptable to IDA, would be employed by January 31, 1985. 3.49 The proposed credit would include US$1.0 million for the provision of consultants and training to assist HMGN (DIHM or DOA as the case may be), in the strengthening of institutions responsible for implementation of irrigation projects with particular emphasis on supervision of design and construction contracts. These funds would be allocated to specific projects by mutual agreement between HMGN and IDA. One likely allocation would be the funding of consulting services for supervision of the ICB-tender for con- struction of works under the Sunsari Morang Irrigation and Drainage Project (Credit 812). Other allocations have not yet been specified in detail with a view to maintaining flexibility in implementation. The consultants employed shall be satisfactory to the Association and their terms of reference and final contracts between HMGN and the consultants would be subject to agree- ment between HMGN and IDA. It is expected that most of the technical assis- tance would be provided by foreign consultants. However, qualified local consultants may also be used either independently or in collaboration with foreign firms. 3.50 Training. Training would be required for staff working in the fields of: (a) agricultural extension and training, (b) operation and main- tenance of tubewells systems, (c) planning, design and operation and main- tenance of the proposed new tubewell designs. The latter is needed because the equipment and PVC pipe distribution systems to be installed are unfamiliar to the local engineering staff. The training would be on-the-job and through special courses, organized and directed by the project consult- ants. Field excursions to similar tubewell schemes in the state of Uttar Pradesh in India would form part of the training. A pre-requisite to the training program would be the compilation of O&M manuals for the Stage I tubewells as well as design and operation manuals for the new tubewells. The project consultants would be responsible for the preparation of these manuals. Details of the training program are provided in SDV, Annex 6. -28- G. Birganj Tubewells General 3.51 The Birganj Irrigation Project (IDA Credit-373) was completed in mid-1981. 1/ This project included a groundwater component which consisted of: (a) testing of 14 existing wells provided in 1968-1969 and re-equipping with new pumps, switch gear and ancillary electrical equipment. (b) construction of 14 new wells to serve 125 ha each with yields of about 80 1/sec. (c) construction of 18 km of 11 kV transmission line and provision of 11/0.4 kV transformation at wellhead. (d) construction of pumphouses, night storage reservoirs, lined channel (about 1.0 km) and unlined channel conveyance to turnouts commanding chaks of 30-40 ha and drainage networks in the command of each tubewell. Performance of the Systems 3.52 The performance of the systems has, with one notable exception, not been good. Although initially farmers' response to the availability of water from the tubewells was good, the utilization has steadily declined. The utilization of the systems operating in 1977 has tended to decrease through the years often to less than half of the original levels. The com- missioning of the new wells and systems was delayed until the 1979 monsoon season and never achieved a high degree of utilization. 3.53 Various causes can be attributed to the deterioration or failure to achieve the projected irrigation intensities and crop yields in the tubewell irrigation systems. The main causes have been: (a) the introduction of fibre glass casing and screen to contract drillers who had no experience with this material; replacement wells were constructed with 1/ Project Completion Report, Birganj Irrigation Project, IDA Credit 373, June 1982. -29- mild steel casing and slotted pipe screen with gravel packing; (b) the breakdowns of pump units, starter relays and switch gear were generally not swiftly repaired, because the initial stock of spares for pumping units and accessories had been utilized and had not been replenished and the project electricians and mechanics had very limited facilities; (c) some problems of pilfering have occurred e.g. transformers were stolen for their copper content; (d) the night storage reservoirs provided were in most cases not used; the only well which has achieved good results continues to use the night storage facility; (e) the unlined conveyance system was often inadequate and the system was provided with insufficient division boxes; (f) the small staff charged with operation and maintenance of the tubewell systems lacked spares and transport; (g) absentee pump operators. Justification for IDA-Assistance 3.54 A relatively modest amount of funding (US$1.5 million) is required to repair and upgrade the well systems and to strengthen NZIDB operational performance to maintain acceptable levels of utilization. IDA extended a second stage credit to the Birganj Irrigation Project in 1978. At that time the performance of the tubewell systems was quite satisfactory and IDA fund- ing to maintain or improve the performance was considered unnecessary. However, since then the performance of the systems has deteriorated. A further deterioration can be expected to occur unless (i) repairs and deferred maintenance works are undertaken (ii) a stock of essential spare parts is procured and (iii) NZIDB's capacity to operate and maintain the tubewell system and extend agricultural support services is strengthened. During the first half of 1982, NZIDB redrilled nine wells and thus the stage is set for a renewed effort to improve the performance of the systems. HMGN has indicated its inability to raise the required funds to implement the proposed improvements of the Birganj tubewell systems and requested IDA for assistance. Proposed Improvements 3.55 This component includes funding for the repair and improvement of the 28 Birganj tubewell systems and to convert an observation well at -30- Jagannathpur to a production well supplying water to a command area of about 60 ha. The proposed works would be implemented by staff of the Narayani Zone Irrigation Development Board (NZIDB), who would also be responsible for the operation, maintenance and future repairs of the tubewell systems. 1/ The works include the conversion of the Jagannathpur well, construction of 6 km of lined canals, improvement of 44 km of earthen canals and procurement and installation through contractors of 5 new pump sets, 70 division boxes, 28 drop-out switches and connection pipes for the 9 redrilled tubewells. The project would also finance the procurement of necessary spare parts for pumps and switchgear. To strengthen NZIDB's capacity to properly operate and maintain the wells and to supply agricultural inputs and support services to the farmers in the areas commanded by the tubewells, the project would also finance salaries, allowances, staff quarters, transport and operating expen- ses for O&M and agricultural project staff over a period of five years. Agreements have been reached with HMGN that (i) sufficient funds for repair, improvement and 0&M of the Birganj tubewells would be made available directly to NZIDB and that (ii) the project consultants engaged for the implementation of the Narayani Zone Irrigation Project (IDA Credit 856) would also assist NZIDB with the implementation of the proposed improvements of the Birganj tubewells. H. Implementation Schedule 3.56 The proposed implementation schedule for all components of the project is shown in Chart 1. The project would start in November 1982 and continue through October 1987. During this period the project will con- centrate on developing and implementing proper O&M procedures and training of project staff. During the first project year high priority will be given to complete the implementation of balance Stage I works, to recruit additional O&M staff and to establish Water Users Groups. In year two the planning, design and tender documents for the new tubewells would be completed with two-thirds of the new wells drilled in the 1984 dry season and the remaining in 1985. The construction of the distribution networks and installation of pumping equipment would start in early 1984 to be completed by mid-1985. HMGN has agreed that it would furnish to IDA annually the detailed plans for implementing the project in its next fiscal year. 1/ For a description of NZIDB refer to SAR (Report No. 2067a-NEP) of the Narayani Zone Irrigation Development Project of September 1978 (IDA Credit 856). -31- I. Environmental Effects 3.57 The project areas have been under wet season cultivation for many decades and the introduction of irrigation improvement and the expansion of dry season cropping is not expected to produce significant changes in environmental conditions. Water from the tubewells is potable and its availability is expected to reduce the occurrence of intestinal diseases. The water delivery through buried pipes proposed under the project is expected to reduce the potential hazards of malaria. IV. PROJECT COST AND FINANCING Cost Estimates 4.01 Based on June 1982 unit prices, the total cost of the project over the five-year period 1982-1987 is estimated at US$19.4 M including the Birganj tubewell improvement component and about US$0.2 M in taxes and duties. A summary of the project cost is given below. The foreign exchange component is estimated at about US$12.1 M or 62% of total project cost, on the basis that all equipment contracts would be supplied from outside Nepal. The annual operation and maintenance cost, including electricity, staffing, agricultural services and equipment, vehicles and materials are presented in Annex 1, Tables 1 to 5. They are based on early 1982 price and salary levels and for equipment, vehicles and materials on updated quotations from sup- pliers. The cost for the new tubewell systems is based on evaluation of equipment performance carried out under the Stage I project, on recent Stage I contract awards and on recent contracts awards for similar works in the State of Uttar Pradesh in India. These costs are shown in Annex 1, Tables 6 to 14. The estimated cost for rehabilitation of the Birganj Tubewells are shown in Tables 15 and 16. The estimated cost of consulting services (Annex I, Table 16) is based on recently concluded contracts for similar services in Nepal and other countries in the region. An estimated schedule of annual expenditures is given in Annex 1, Table 18. The early 1982 prices were increased by 3.5% to arrive at June 1982 prices. 4.02 Physical contingencies of 15% have been added to the cost of civil works, salaries, allowances and operating expenses. A contingency of 10% has been added to the cost of equipment, materials, technical assistance and SUMMARY OF PROJECT COST Local Foreign Total Local Foreign Total % Foreign % of ----- NRs million----- -----US$ million------ Exchange Base Cost 1.Civil Works and Materials Tubewells 1/ 0.6 6.0 6.6 - 0.5 0.5 Distribution Network 1/ 1.0 8.7 9.7 0.1 0.6 0.7 Roads 5.8 1.5 7.3 0.4 0.1 0.5 Drainage 1.3 0.1 1.4 0.1 - 0.1 Transmission lines 1/ 0.5 4.5 5.0 - 0.4 0.4 Buildings 2/ 7.7 1.9 9.6 0.6 0.2 0.8 Construction materials 8.8 1.7 10.5 0.7 0.1 0.8 Sub-Total 25.7 24.4 50.1 1.9 1.9 3.8 50 25.9 2. Land Acquisition 0.5 - 0.5 0.1 - 0.1 - 0.7 3. Vehicles and Equipment - 15.0 15.0 - 1.1 1.1 100 7.5 4. Agricultural Inputs - 1.3 1.3 - 0.1 0.1 100 0.7 5. Salaries and Operating Cost 17.8 6.6 24.4 1.3 0.5 1.8 28 12.2 6. Electricity Cost 2.1 8.5 10.6 0.2 0.6 0.8 80 5.4 7. Technical Assistance and Training 7.3 41.3 48.6 0.6 3.1 3.7 85 25.1 8. Improvement - Birganj Wells 5.8 8.7 14.5 0.4 0.7 1.1 60 7.5 9. Completion of Stage I 12.8 16.2 29.0 1.0 1.2 2.2 55 15.0 10. Base Cost 72.0 122.0 194.0 5.5 9.2 14.7 63 100.0 11. Contingencies Physical 7.0 14.4 21.4 0.5 1.1 1.6 68 10.9 Price 17.1 23.7 40.8 1.3 1.8 3.1 58 21.1 TOTAL PROJECT COST 3/ 96.1 160.1 256.2 7.3 12.1 19.4 62 132.0 1/ includes supply of materials 2/ includes pumphouses 3/ identifiable taxes and duties are about NRs 2.5 million (US$0.2 million equivalent) and the total project cost net of taxes and duties is NRs 254.2 million (US$19.2 million equivalent). -33- training. Price contingencies amount to about 21% of the baseline cost, based on the following inflation rates: Fiscal Year '83 '84 '85 '86 '87 '88 ------------------ %------------------- Local (Nepal) 9.0 8.0 7.5 7.0 6.0 6.0 Foreign 8.0 7.7 7.2 6.5 6.0 6.0 Financing 4.03 The proposed IDA credit of US$16.0 M to HMGN on standard terms and conditions would finance the foreign cost of the project (US$12.1 M) and about 53% of the local cost (US$3.9 M), or about 82% of total project cost. The proposed IDA credit includes an estimated US$1.5 M for retroactive financing of expenditures incurred from March 1982. HMGN would finance most of the remaining costs: Foreign Exchange Local Currency Total US$M % US$M % US$M % IDA 12.1 100 3.9 53 16.0 82 HMGN - - 3.2 44 3.2 17 Farmers - - 0.2 3 0.2 1 12.1 100 7.3 100 19.4 100 HMGN would finance the electricity cost needed to run the pumping units in the Birganj and Bhairawa Lumbini project areas. This cost over the five-year project implementation period is estimated at NRs 13.4 M based on present tariffs. The relatively high proportion of IDA cost financing is because of the strains already imposed on HMGN's budget by a large number of develop- ment projects. During negotiations it has been agreed that HMGN would submit to IDA annually estimates of the financial requirements for implementing the project, on the basis of which it would make the budgetary allocations for project implementation. Procurement 4.04 Works. The works financed under the project would cost approximately US$5.7 M, excluding engineering and administrative costs, but including price and physical contingencies. They would be grouped into -34- appropriate bidding packages with a primary goal of generating maximum com- petition. (a) International Competitive Bidding (ICB). The construction of roads, the supply and installation of the PVC pipe conveyance system and the supply and erection of the power transmission lines, totalling approximately US$2.3 M, or 40% of the works, would be contracted through ICB. Eligible domestic bidders would be entitled to a preference of 7 1/2%. (b) Local Competitive Bidding (LCB). The construction of the drainage systems, buildings and other minor works each less than US$50,000 in value, scattered throughout the project area, would not be of interest to foreign bidders. Approximately US$2.6 M, or 45% of all the works would be carried out by contractors under LCB procedures that would be acceptable to the Group. This includes most of the balance Stage I civil works. (c) Force Account. The remaining US$0.8 M, or 15% of the works, would be constructed by force account. These works include the drilling, development, testing of tubewells and improvement of Birganj wells, mainly using equipment already on hand. 4.05 Goods. The total cost of goods financed under the project is estimated to be US$4.8 M, including physical and price contingencies. All the goods would be grouped into appropriate bidding packages to promote maximum competition. Over 75% would be procured through ICB. Qualified domestic manufacturers would receive a preference in ICB bid evaluation of 15% of CIF price or the import duty, whichever is lower. Not more than 25% of the goods would be procured through LCB and that would be restricted to the basic construction materials such as brick, stone, cement or urgently required spare parts for operation and maintenance. 4.06 Contract Review. All bidding packages estimated to cost US$50,000 equivalent or more, 90% of all the procurement by value, would be subject to IDA's prior review. The remaining contracts would be subject to post-review by IDA. Disbursements 4.07 Disbursements from the credit would extend over five years and would be against: (a) Materials, equipment, agricultural inputs, vehicles and spare parts - 100% of foreign expenditures, 100% of local expenditures (ex-factory) and 75% of other local expenditures; -35- (b) Technical assistance and overseas training - 100%; (c) Staff salaries, local training, allowances and operating costs exclusive of electricity costs - 50% (d) Civil works - (i) Contracted - 100% of foreign expenditures and 75% of local expenditures (ii) Force account - 40% of local expenditures Withdrawal applications under (a), (b) and (d)(i) would be fully documented. Disbursements for items (c) and (d)(ii) would be made against statements of expenditure certified by the project manager. The relevant supporting documentation for statements of expenditure disbursements would be retained at one central location and made available for inspection by IDA staff on request. Expenditures financed under statements of expenditures would be audited annually by independent auditors acceptable to the Group. Withdrawal applications would be prepared and submitted by the Bhairawa-Lumbini Groundwater Project Office, except for the applications related to the Birganj tubewell component which would be prepared by the Narayani Zone Irrigation Development Board. A schedule of estimated disbursements and the proposed allocation of the proceeds of the credit are presented in Annex 1, Table 19. The disbursement categories and percentages apply also to disbur- sements against expenditures incurred on the completion of Stage I. Disbur- sements are expected to be completed by November 1988, about one year after the scheduled completion of the project. Accounts and Audits 4.08 Assurances would be obtained during negotiations that HMGN would cause the project manager: (a) to establish and maintain separate accounts for the project, in accordance with sound accounting practices; (b) to have its accounts and financial statements audited annually by independent auditors acceptable to IDA; and (c) to send the certified copies of the audited accounts and the auditor's report to IDA within six months after the close of each fiscal year. The audit report would be required to include, inter alia, a statement that funds disbursed against statements of expenditure, had been used for the purpose for which they were provided. -36- V. ORGANIZATION AND MANAGEMENT 5.01 General. An important objective of the project is to build up a long term capacity of staff and institutions to construct, operate and main- tain the Bhairawa-Lumbini Groundwater Development Project and future similar projects elsewhere in Nepal. The proposed project would concentrate on planning and implementing sound O&M activities. During Stage I the implemen- tation of the project was basically carried out by existing line agencies which were brought together in the Bhairawa-Lumbini Groundwater Project Office. The office was set up under a special arrangement to insure coordina- tion among the agencies. The project office was headed by a project manager, who was responsible to the Groundwater Resources Development Board (GRDB) for programming, budgeting and finance and who coordinated all project com- ponents. The above organizational set up has operated satisfactorily. No major changes are recommended in the Stage II project. However, in view of the importance of O&M, its functions would be separated from construction. Staff assigned to O&M functions would work full-time on these activities. HMGN has agreed to make these adjustments and to strengthen the existing organization (Chart 2). 5.02 The Governing Authorities. The governing authority responsible for the implementation of the project would be the DIHM in the Ministry of Water Resources. Advice and overall coordination on all policy matters would continue to be vested in the GRDB. HMGN has agreed to strengthen the role of the Board. In addition to their policy responsibilities the GRDB main func- tions would also include: (a) approval of key staff appointments; (b) approval of annual budget proposals for executing the project; (c) approval of award of large contracts and consultant's agreements; (d) semi-annual reviews of implementation programs and progress. The Board would continue to be chaired by the Secretary to Government of the Ministry of Water Resources. Members would be representatives from the Ministries of Finance, Home Affairs, Panchayat and Local Development, the Planning Commission, the Director General of DIHM, representatives of the Departments of Agriculture and Electricity, and the general manager of ADBN. The chief of the groundwater section in DIHM will function as member secretary of the Board. In order to improve coordination and ensure that actions requiring board approval are quickly brought to their attention, HMGN has agreed that the project manager would be an observer in the GRDB for all matters relating to the project. The order which established the board includes a provision to add new members as appropriate. -37- 5.03 Project Management. The project manager, who would have qualifica- tions and experience acceptable to IDA, would be based at project head- quarters in Bhairawa. He would have the following main responsibilities. (a) to implement the project in accordance with the agreed time schedule; (b) to prepare annual implementation progress and budget proposals for approval by GRDB; (c) to manage and administer all project staff, including the consultants; (d) to authorize project works to be implemented on force account; (e) to prepare tender documentation for procurement of services and equipment; (f) to coordinate all project activities at the project and district levels; and (g) to report periodically to the GRDB and DIHM. The project manager will have four divisions under him. A General Administration and Finance Division responsible for personnel, procurement, collection of water charges, budgeting, finance, accounts and audit, stores, inventory control of supplies and equipment. The division would consist of the following six sections: administration, finance and accounts, stores, procurement, legal matters and water charges. The Construction Division would consist of an engineering and a geohydrological or drilling sub-division. The engineering sub-division would have sections dealing with survey, planning, design and construction supervision of the distribution system, drainage system, pumphouses, roads and project buildings including the buildings required by agricultural extension service in the Rupandehi district. The drilling sub-division would be responsible for well construc- tion and development. The Operation and Maintenance Division would be headed by an executive engineer who would supervise two sub-divisions; one dealing with the O&M of the distribution network including the preparation of water delivery schedules, and with the maintenance of the village roads. A separate section would be responsible for assisting farmers in planning and constructing field channels from the outlets to the fields. The second sub-division would mainly deal with mechanical and electrical engineering. It would supervise the running of the workshop and stores and the O&M of the pumping equipment, vehicles and the project's O&M construction equipment. The sub-divisions are headed by assistant engineers and the sections by overseers. The Agricultural Division will be headed by an Agricultural -38- Officer (AO) who would look after two main activities: agricultural exten- sion, and organizing farmers into water users groups. This division would closely coordinate with the O&M division in the field of water management, in particular, with regard to the planning and construction of field channels. It would be responsible for the establishment and functioning of the water users groups. The AO would work full-time on the project and would report on technical matters to the Department of Agriculture. For administrative matters and budget, he would be responsible to the project manager. The Agricultural Division's budget requests and releases would be channelled through the project manager. The implementation of the agricultural exten- sion T&V system in the rest of the district would be under the responsibility of the DADO. 5.04 Project Coordination. Coordination at the national level would be the task of the GRDB. At the project level a framework for coordination exists in the Project Coordinating Committee (PCC). This committee, chaired by the Chief District Officer, was set up to function as a forum for those directly involved in development in the District. It does not have executive powers. The committee would be expanded to include as associate members, the district managers of AIC, NFC and representatives of other agricultural institutions operating in or near the project areas. The committee would meet at least twice a year. The meetings would be convened by the project manager, who would be member secretary of the PCC. Farmer's Organizations 5.05 The project would be responsible for the operation and maintenance of the pumping equipment, canals and structures as well as pipe distribution networks down to the 4-5 ha outlets. The water users groups to be estab- lished for each tubewell command area would provide assistance to the project officers in drawing up the rotational water distribution schedules and in the actual implementation thereof. The water users group, which is headed by a water master and one or more assistants, would supervise proper implementa- tion of the rotational supply schedules to and below the 4-5 ha outlets. It also would play a key role in the planning, construction and the O&M of field channels below the 4-5 ha outlets. It has been agreed with HMGN that the project would continue its efforts to convince the farmers to carry out the construction of the field channels at their own expense. If farmers fail to do so, the project would undertake the construction of the field channels. The field channel construction cost is estimated at about US$150,000. 5.06 Under the Stage I project the establishment of water users groups has progressed slowly. HMGN had agreed not to start the drilling of a tubewell until a two-third majority of the potential beneficiaries in the service area had signed up in a water users groups and have agreed to pay water charges. This policy was not strictly followed. As a result no formal water users groups exist in the majority of the Stage I tubewell schemes. Since properly functioning water users groups and the existence of field -39- channels below the 4-5 ha outlets are considered key elements in achieving the successful and equitable distribution of water down to each farmer's field, HMGN would give the highest priority to the formation of water users groups and the construction of field channels in the tubewell command areas. HHGN has agreed that (a) no water would be supplied from com- pleted well systems until water users groups have been set up and are ready to assume the responsibility of water distribution below the 4-5 ha project outlet (b) that the drilling of any of the fifteen new tubewells would not start until two-thirds of the beneficiaries have formally agreed to form a water users groups and to pay water charges. Monitoring and Evaluation 5.07 The objectives of the monitoring and evaluation activities under the project are to: (a) monitor the cost, impact and economic benefits of the project; (b) provide feedback to project management; (c) develop improved criteria for planning, design, construction and operation and maintenance of future groundwater development projects; (d) compare the performance and cost of the Stage I tubewells and distribution networks with the fifteen pilot wells introduced under the project; (e) monitoring of the water table depth, through measurements from the observation well network. 5.08 A special unit, directly under the project manager, would be responsible for monitoring and evaluation activities of the project. HMGN has agreed to establish such a unit and to staff it with an engineer, an agricultural officer and a statistician. As a general rule the unit would not collect data itself but would rely on information from the four divisions in the project organization. It would process and review the data and report the results of the studies. In carrying out its tasks the unit would be assisted by project consultants. Towards the end of project implementation, the project staff, assisted by the project consultants, would prepare a project completion report, which would be completed within six months after the final disbursement from the credit and submitted to IDA. The existing groundwater monitoring unit would be integrated in the new evaluation and monitoring unit to be established directly under the project manager. A detailed description of the monitoring, evaluation and reporting requirements are given in SDV Annex 7. -40- VI. AGRICULTURAL PRODUCTION, MARKET PROSPECTS AND PRICES Cropping Patterns 6.01 The major crop grown in the wet season is paddy, occupying some 85-90% of the cropped area. Early and normal paddies are grown in the area. Early paddy is transplanted at the beginning of monsoon rains and harvested in August. Normal paddy is transplanted in July and harvested in November- December. Other wet season crops include maize (3%) and pulses (2%). During the dry season, wheat is planted on some 12-18% of the areas cropped during the wet season. Half of the wheat is grown on residual soil moisture follow- ing paddy and the remaining area enjoys until January some form of irrigation from the existing farmers' irrigation systems (para. 2.08). Other crops are oilseeds (5%) and grams (3%), which are grown without irrigation. The present cropping intensity in the project area is about 120%. Details of the existing cropping pattern are shown in SDV Annex 3, Table 13. 6.02 The present and projected future cropping patterns for the "without project" situation are based on available statistics, a survey of the project area and discussions with agricultural staff and farmers in the project areas. Future cropping patterns for the "with project" situation are projected in a similar fashion by taking into account two major factors: (i) the capacity constraint of supplying irrigation water for land prepara- tion and transplanting of paddy in the wet season; and (ii) the optimum time for wheat sowing in the dry season (Chart 3). In the monsoon season, paddy would continue to be the dominant crop. With improved water distribution and regulation and intensified extension services, it is projected that the area cultivated with local paddy varieties would decline, while the area cropped with HYV paddy would increase. In the dry season, wheat is expected to remain the principal crop. The area under maize, oilseeds, pulses and, to a lesser extent, sugarcane would also expand under the project. Some vegetables, in particular, potatoes and brassica, would be grown for home consumption and local markets. The cropping intensity at full development is estimated at 175-180% as compared with about 120% at present (SDV Annex 3, Table 13). Crop Yields 6.03 About 60% of the paddy grown in the project area consists of local varieties producing low yields. For early local paddy, the farmers use short maturing coarse grain varieties (Saraia and Padhani) which yield between 0.9-1.4 ton/ha. In low-lying areas farmers grow normal 1/ paddy, for which long maturing fine grain improved varieties (Masuli and Basmati) are used. 1/ "Normal" refers to the time of sowing and transplanting (June/July). -41- Yields are low, 1.1-1.3 ton/ha, mainly due to lodging and poor water manage- ment and cultural practices. Some early high yielding varieties (CH45, Chandina and Durga) are grown in a limited area under irrigated condition. Their yields, about 2.1 ton/ha, are low because of poor cultural practices. Normal HYV, such as Savitri and Janaki, which mature in 135 days produce yields of about 1.5 ton/ha for rainfed and 1.9 ton/ha for irrigated paddy. Maize is sown mostly in the wet season using improved varieties (Rampur Yellow and Rampur Composite), with low yields of about 1.5 ton/ha, due to inadequate use of fertilizer and plant protection chemicals. RR 21 and UP 262 are the two major wheat varieties grown in the area. The present yield of wheat ranges between 1.0-1.3 ton/ha. These low yields are attributed to unavailability of irrigation and untimely planting. Yields would improve considerably if wheat is planted around mid-November. Pulses are grown for home consumption and their low yields of about 0.3-0.5 ton/ha offer scope of improvement with only moderate irrigation. Oilseed crops grown are mustard and rapeseed. Because of poor crop management, yields are only 0.4 ton/ha. In general, as farmers rely for crop cultivation mostly on rainfall during the wet season and residual moisture in the dry season, they tend to use local varieties, practice traditional cultural methods and apply limited amounts of fertilizer and plant protection chemicals. As a result, the crops produce low yields. Yield estimates with and without project are summarized in SDV Annex 8, Tables 5A and 5E. 6.04 Future small increases in HYV paddy and wheat yields are possible in the "without project" situation, provided farmers use good quality seeds and apply improved methods of cultivation. In the "with project" situation yields of HYV paddy are estimated to reach 3.4 ton/ha, local paddy varieties 2.5-2.7 ton/ha, maize 2.5 ton/ha (wet season) and 2.8 ton/ha (dry season), wheat 2.9 ton/ha, pulses 0.6-0.9 ton/ha and oilseeds 0.7 ton/ha. The yield of sugarcane is estimated to reach about 40 ton/ha. These increases in yields reflect better water regulation, timely and more thorough land preparation, increased use of fertilizer, good quality seed, improved weed and pest control, improved cultivation and planting techniques, and timely harvest and threshing. The projected yield levels are therefore conditioned to an effectively operating extension service. Agricultural Production 6.05 Based on the expected future cropping patterns and yield levels, the annual incremental production at full development (early 1990's) is projected as follows: -42- Future Future Incremental Without Project With Project Production ' 000 ton------------------ Foodgrains a! 14.6 41.9 27.3 Pulses 0.3 0.9 0.6 Oilcrops b/ 0.3 0.6 0.3 Vegetables c/ - d/ 8.5 <8.5 Sugarcane 1.7 7.5 5.8 a/ Includes paddy, wheat and maize. b/ Mainly mustard and linseed. c/ Potato and brasicca. d/ No estimate available. Input Requirements 6.06 Present use of fertilizer is minimal and its use is mostly limited to paddy, wheat and maize. Local statistics show that in 1980/81 the project district received about 750 ton of nitrogen, 270 ton of phosphorus and 50 ton of muriate of potash, which corresponds to an application of about 8 kg of nitrogen, 3 kg of phosphorus and less than 1 kg of muriate of potash per cropped ha. The use of plant protection chemicals at present is negligible except for a limited application of insecticides to paddy, wheat and maize. Local statistics also show that in 1980/81 less than 2% of the farmers used good quality seeds (paddy, wheat and maize); most farmers meet their seed requirements from their previous harvests. The average family owns about 3 draft animals, small farmers normally own one pair. These animals provide adequate farm power for general farming practices. Mechanized farmers are very rare. 6.07 Present and projected input requirements are presented in SDV Annex 8, Tables 5A-H. For the future "with project" situation, about 250 ton of good quality seeds (90 ton for paddy and 160 ton for wheat and 6 ton for maize when replaced every three years) would be needed. It is estimated that on average about 1,200 ton of fertilizer nutrient would be required annually until the project reaches full development. About 1,750 ton of fertilizer nutrient (1,040 ton of nitrogen, 440 ton of phosphate and 370 ton of potash) would be required annually thereafter. With the Stage 1 project providing for eight input storage units of 100 ton capacity each for use by local sajhas the present project would include provisions for an additional five 100 ton units only. These facilities would be sufficient to meet the projected input demand. HMGN has agreed that sufficient quantities of agricultural inputs would be made available by AIC to meet the needs of the project. -43- 6.08 Short-term (production) credit for the purchase of fertilizer, seeds, pesticides and payment for hired labor and bullock teams is provided to project farmers by ADBN and private money lenders. Under project condi- tions it is estimated that the annual incremental requirement for production credit would amount to NRs 14 million. This figure is based on a 1.5 ha farm requiring farm inputs at an annual cost of NRs 2,200 (SDV Annex 8, Table 9B). It is estimated that the average farmer would need to borrow about NRs 1,500 annually from ADBN, with the balance being provided from savings or current income. ADBN through its zonal office in Bhairawa is not expected to have difficulties to meet the increased need for production credit in the project area. The production credits are normally channelled to the farmers through the cooperatives. During negotiations HMGN has agreed that it would make funds available annually to meet the production credit needs of the project farmers. The supply of medium and long-term credit for farmers in the Rupandehi district is being strengthened under the ongoing ADB assisted fourth Agricultural Credit Project. 6.09 During the first years of operation, the project would purchase seeds, fertilizer and pesticides to be used as input requirements for the growing of major crops in about 150 ha. The inputs would be provided to carefully selected progressive farmers in at least 10 tubewell command areas and would be sufficient to achieve projected production levels as tested in demonstration plots in the project or at the Bhairawa Research Station. As a condition for supplying the inputs the farmers participating in the scheme would have to sign an agreement to repay the project the full cost of the inputs, after it has-been measured that their crop production has increased beyond a predetermined level. The prime objective of this experiment is to (i) to show and convince the farming community in the project that it is essential to apply inputs in order to get high production levels and (ii) to reduce their reluctancy to seek short-term production credit for which present procedures are cumbersome and require a land ownership title. The project includes US$100,000 to purchase the required inputs. Market Prospects and Prices 6.10 The project area would be well connected by all-wheather village roads to the marketing center Bhairawa, which delivers to markets throughout central and western Nepal, as well as India. The potential market for production from the project is therefore large. However, the production increase, although substantial percentagewise, is small in relation to the market. Marketing of the project surplus produce is not expected to pose any significant problem to farmers, since a well established trading system through private dealers would take care of disposing the surplus. Most farmers would continue to receive unfavorable prices because they have to sell crops at harvest time for want of suitable storage and for repayment of loans. It is envisaged that the creation, under the project, of more storage capacity at local cooperatives and better training of cooperative staff will allow the farming community to store part of their produce for some time and -44- to reap the benefit of higher seasonal prices. The district is also planning to set up cold storage facilities for potatoes. Increased sugarcane produc- tion would find ready buyers at the Bhairawa sugarmill which is chronically working below capacity. 6.11 No major changes in crop prices are foreseen. Due to reasons explained in SDV Annex 8, paddy and maize are expected to rise by some 4% over a 5-10 year period in relative terms. Prices of pulses and oilseeds, which in the past rose more rapidly than the general price level, are expected to increase further in relative terms, by some 5% over a similar period. VII. FINANCIAL ANALYSIS Changes in Farm Incomes 7.01 In order to assess the project's impact on farmers' incomes, the population of farms has been divided into five size classes. For each class farm budgets with and without project have been estimated. Apart from size, farm models differ in the cropping intensities and cropping patterns at present and with the project, in the use of hired labor, and in the ratio of family members to available land. The main characteristics of these models are given in SDV Annex 8, Table 8. Estimated farm budgets are presented in SDV Annex 8 Tables 9A to E. More detailed assumptions on the derivation of farm incomes are given in SDV Annex 8. 7.02 Average farm income from crop-production before payment of water charges of water charges would rise by about 215%. Total family income would rise only by about 150%, since it includes income from other sources which has been left constant. Smaller farms would experience lesser increases than larger farms. Under the assumptions, the distribution of incomes with project would be slightly more skewed than without the project. About 50% of all incremental income would accrue to about 20% of the largest farms, while these farms receive at present an estimated 35% share of total income. The shares in incremental income are about the same as the shares in total area, reflecting the fact that benefits from irrigation are closely linked to the land distribution. Not taken into account are benefits to other segments of the local population such as landless laborers, for whom there would be greater seasonal employment opportunities, and to migrant laborers from the Hills. Future changes in the distribution of irrigated operational holdings (through sales of land and/or changes in land leased in and out) resulting from the project are quite uncertain and have not been assessed. The changes in income for different farm size classes are summarized in SDV Annex 3, Table 14. Income estimates are based on the present situation in the Stage I area. Present incomes in the new tubewell area are estimated to be somewhat -45- lower, due to the lack of irrigation. Increases would therefore be cor- respondingly higher than in the Stage I area. Impact on Poverty 7.03 Per capita incomes range at present from about NRs 540 (US$41) to NRs 1,360 (US$103), averaging about NRs 890 (US$67). This compares to an estimated national per capita income (in 1982) of NRs 1,900 (US$144). None of the farm size classes presently reach the national average income level, although individual farms in the highest classes may exceed it. The absolute poverty level for the project area has been estimated at about NRs 1,050 (US$80) per capita 1/. About 90-95% of all farm households and 85-90% of the farming population live presently at or below this poverty level. If land- less laborers and farmers in the new tubewell development area were included, these percentages may be even higher. 7.04 At full development, average per capita income before water charges would increase to about NRs 2,225 (US$169),2/ higher than the national per capita income projected for that time 3/ of NRs 2,050 (US$155). Again, all farmsize classes would not benefit equally from this increase. For the smallest farm the increase (over future without project levels) would be only about 65% as against 260% for the largest farms. All classes but the smal- lest would exceed the poverty level, reducing the estimated percentage of farm families to about 25-30% (20-25% of farming population), not including the landless. Cost Recovery 7.05 Introduction. The Bhairawa-Lumbini Project is the first sizeable public groundwater scheme in Nepal. HMGN faces the issue of comparatively high recurrent cost with the potential of substantial strain on public funds. This may not yet materialize through the proposed project, but certainly at a later stage when the public groundwater irrigation sector would be expanded. A new look at cost recovery policies, which have been neglected so far, is required. The following analysis and recommendations are made with two particular objectives in mind: firstly to assure economically efficient use of costly water; and secondly to strengthen Nepal's public savings perfor- mance through relatively high resource mobilization from the project. 1/ Based on a minimum caloric requirement of 2,100 Kcal, worth about NRs 680 at pesent farmgate prices, and other minimum consumption requirements (from surveys) of about NRs 370 per capita. 2/ Ranging from about NRs 900 to NRs 5,100 (see SDV Annex 3, Table 14). 3/ About 1992. -46- 7.06 Recoverable Cost. For purposes of cost recovery, total estimated capital and recurrent cost has been adjusted and separated into two parts (see Annex 1, Table 20): (i) Long-term investment cost, i.e. that part of capital cost that is not related to the degree of utilization of tubewells, and fixed G&M cost, i.e. O&M cost that does not vary appreciably with the number of running hours per year. This cost is considered fixed project cost. All cost items were expressed in present value terms and in 1982 Rupees. (Sunk cost of the Stage I Project, however, does not include cumulative interest for the duration of project implementation (FY78-82)). The cost of technical assistance and village roads was excluded. Annuities corresponding to fixed project cost were calculated at 10% interest, and related to the number of hectares served. (ii) Investments that need to be replaced after some time as a function of tubewell utilization, namely wells and pumpsets, and variable O&M cost (energy cost and other operating expenses) have been added together as variable project cost. Wells were assumed to last about 20 years or 55,000 hours of pumping, and pumpsets about 7 years or 19,000 hours of pumping. Present values of these cost items include the discounted values of appropriate replacement costs at regular intervals during a 30-year project horizon, and the residual values of wells at the end of 30 years. Replaceable investments and energy cost were estimated in present value terms in constant 1982 Rupees, both in economic and financial prices. They were related to the "present value" of pumping hours during the 30-year project period, 1/ to arrive at an estimate of the long-run marginal cost of pumped water. 7.07 The result of the separation of recoverable costs is summarized below (details in Annex 1, Table 20): 1/ 1.61 M hours for Stage I tubewells, 0.32 M hours for new tubewells -47- Recoverable Project Cost (NRs) Existing New Sum/Weighted Wells Wells Average (7,600 ha) (1,800 ha) (9,400 ha) 1. Fixed Cost - Present Value 147.8 M 25.6 M 173.4 M - Annuity per Ha 1995 1450 1890 2.a) Financial Variable Cost - Present Value 102.2 M 15.7 M 117.9 M - Marginal Cost per Hour 63.4 49.0 - - Marginal Cost per m3 0.223 0.176 0.213 2.b) Economic Variable Cost - Present Value 135.1 M 19.9 M 155.0 M - Marginal Cost per Hour 83.9 62.1 - - Marginal Cost per m3 0.295 0.223 0.282 at Field 1/ 7.08 For economic efficiency and if full cost recovery were the target, farmers would be charged on a volumetric basis at a price equal to the long-run marginal cost of pumping, in addition to a flat rate equal to the annuity of fixed cost per unit area. The use of economic marginal cost for volumetric pricing would ensure economic efficiency of water use and water allocation between crops, but it would recover more than the actual financial cost of running the tubewells. For full financial cost recovery, the fixed charge could in this case be lower than indicated by the annuity. It should be noted that the concept of long-run marginal cost, economic or financial, implies in part a recovery of investment cost (that of replaceable items, pumpsets and wells), and is therefore not related to the actual cash flow of O&M expenditure for the project. 1/ Long-run marginal cost, which includes recuperation of replaceable investments; the short-run marginal cost (mainly pumping cost) would amount to NRs 0.138/m3 and NRs 0.081/m3, respectively, at the field, with a weighted average of NRs 0.127/m3. -48- 7.09 Farmers Ability to Pay. For each of the five farmsize classes (para 7.01) the incremental land rent, or project rent, has been estimated. It is defined as incremental income less allowances for incremental deprecia- tion, use of own resources (family labor, bullock labor), for perceived risk and management services. As such it measures the net incentive for par- ticipating farmers resulting from the project. Theoretically, if the entire project rent (if known) were taxed away, a farmer would be left with only a marginal incentive to participate in the irrigation scheme. In practice, the project rent is in part a subjective value and can only be estimated within broad tolerances. Insofar as redistribution of incomes is an objective, the project rent is not fully available for cost recovery. Estimates for the project rent vary between NRs 3,000 and NRs 3,700 per ha at full development (see SDV Annex 8, Tables 9A-E), and average about NRs 3,500/ha. Project rent would be somewhat higher for the new tubewell schemes. The present value of the project rent, for each farm size class and for the entire Stage I area, is shown in Annex 1, Table 21. 7.10 Approach to a Practical Cost Recovery Policy. Present water rates in public irrigation schemes, most of which are surface water schemes, are very low. Charges are on the basis of a flat rate of about NRs 100 per ha and per crop. 1/ While this level is far from sufficient to recover cost fully, it approximates roughly the O&M cost of surface water schemes. This is in line with a general tendency of HMGN to tax the agricultural sector as little as possible, and to subsidize agricultural infrastructure and serv- ices, as well as fertilizers. Land taxes have remained unchanged and low for many years, and they do not reflect the availability of irrigation. Indirect agricultural taxes are virtually non-existent. It is in this context that the potential for cost recovery from a high-cost project, particularly for its operation, is seen as rather limited. It may, for instance, not be politically acceptable to charge widely differing rates for different sources of water. In this case, however, it can be argued that the reliability and timeliness of service from public tubewells is superior to those of public surface water schemes, (especially if the proposed new technology with piped distribution proves successful), and is therefore worth a higher price. 7.11 With regard to the level of charges possible under the proposed project, it should be noted that the estimates of average project rent, although fairly similar over different farm-sizes, imply a good measure of uncertainty; in addition, actual project rents for individual farmers may vary widely due to a number of personal, social and physical factors. In particular, it is suspected that more farmers than is apparent from surveys are actually tenants. While they have to share about one-half of their crops with the landlord, they pay usually all input costs themselves, including 1/ The rate also applies to the Birganj tubewells, so far the only sizable public tubewell scheme in Nepal. -49- water charges. Their ability to pay would therefore be lower than estimated for the "average" farmer. Hence, the setting of water charges would require caution in order not to depress incentives to the point of non-participation and not to create unwanted distributional effects. For these reasons, a cost recovery target level of about 30% of average project rent at full develop- ment or about NRs 1,000 per ha, appears to be reasonable albeit five to six times higher than in existing public irrigation schemes. 7.12 If a volumetric charge corresponding to the long-run marginal cost of water at the field 1/ were charged to all farmers equally, annual revenue at full development would amount to about NRs 1560-1920 per ha. This would be in excess of what appears feasible, resulting in average rent recovery ratios at full development of about 63% for the smallest and 43% for the largest farmers. Moreover, the possibility of a fixed charge, which is desirable to reflect the benefit from being able to rely on the system at all times, even with very low actual utilization, would be ruled out. As a second-best solution, it would still be possible to achieve economic efficiency in a limited sense, if the volumetric charge were equal to the short-run marginal cost of water (in economic terms), which excludes wells and pumpsets as variable cost elements and leaves basically the cost of power and other operating expenses as marginal cost. With such a volumetric charge 2/, revenue per ha at full development would approximately be NRs 700-870, corresponding to an average rent recovery of about 29% for the smallest and 19% for the largest farmers. This would leave room for an additional fixed charge, which could be tailored to discriminate among income classes and between tenants and owners, as far as this appears practical and desirable. Alternatively, HMGN may consider changing the land tax legisla- tion by incorporating a surcharge for access to public irrigation water, thereby discriminating implicitly between owners who pay land tax and tenants who do not, and narrowing the gap between recovery levels for this project and other public irrigation schemes. 7.13 There are, however, practical problems with volumetric charging in the existing tubewell schemes, and to a lesser extent in the proposed new scheme. Charging would most practically be done by hours of service received, of which records would be kept by the pump operators. This is present practice in a number of smaller tubewell commands (50-60 ha), run by the Department of Agriculture. In this case, farmers have to pay up front for the hour; the price varies according to the discharge at the well head. In the larger systems under this project, the additional difficulty of rota- tional distribution with more than one farmer receiving water at any one time, and of conveyance losses in the unlined canal systems which vary 1/ Weighted average of NRs 0.282/m3 for existing and new tubewells. 2/ Weighted average of NRs 0.127/m3 at field. -50- according to the location of a farmer on a distribution channel, complicate the determination of a fair price per running hour. While pump operators may be allowed to adjust for the irregularities, within limits, by varying either the charge or the "length of an hour", practical reasons dictate an average price per hour, based on average conveyance efficiencies and related flows received. It does not appear impractical, however, to have an hourly charge in the new tubewell systems different from that in the existing ones. Economic efficiency of water use may be further enhanced by charging dif- ferent prices in the wet season than in the dry season, reflecting different marginal costs of power in these seasons. 7.14 During negotiations, HMGN agreed to the following: (a) A new system of water charges, satisfactory to IDA, would be introduced for public tubewell irrigation schemes by March 31, 1984. (b) The new system would 'include a volumetric charge per hour, based on an estimate of short-run marginal economic cost of pumping per volume of water normally received by a farmer at the turnout or field during an hour of service. (c) In order to achieve a minimum rate of cost recovery and considering desired distributional effects and the need to protect marginal farmers and tenants from excessive charges, a fixed charge per ha would be levied with higher charges for selected groups of farmers, or, if this does not appear practical or feasible, for all farmers. (Such a fixed rate may be incorporated into a revised land tax). (d) HMGN would establish by March 1, 1983 a technical committee with the task of working out a practical pro- posal on the implementation of items (a) to (d). A draft proposal would be issued by the committee by December 31, 1983 for the consideration of HMGN and of IDA. (e) Until such time as a new charging system is in place, (by March 31, 1984) HMGN would continue to charge the present rate for public irrigation systems. Farmers would be informed at commissioning of of tubewell commands that higher rates would be introduced at a later stage. -51- 7.15 Projected Level of Cost Recovery. The exact level and structure of water charges cannot be given at this time. Projections of revenue from water charges for the entire Stage I area 1/ and for farmsize classes, have been based on the following assumptions: - no fixed charge per ha for farms with less than about 2 ha; - fixed charge of NRs 200/ha for all other farms from the first year after commissioning of tubewells; - no volumetric charge for the first 2 years after commissioning of tubewells; - volumetric charge of NRs 12 per 100 m3 at the outlet (final level); - stepwise increase of volumetric charge from 33% over 50% and 75% to 100% (year 6) of final level; 7.16 Projected water charges over the years for each farmsize are shown in SDV, Annex 8, Table 10. The average charge per ha would be about NRs 1000 in year 6. The present values of revenue thus projected are given in Annex 1, Table 21. The average rent recovery index would be about 33%, varying from 28% to 37%. While it may be desirable to have a higher index for the larger farms, the scope for achieving this is limited, because (i) smaller farms are likely to have higher irrigation intensities and there- fore higher volumetric charges per ha, and (ii) a progressive fixed rate to compensate for this would be impractical. Overall cost recovery would be about 23% of estimated cost. Per capita income after water charges would range from NRs 820 to NRs 4380 and average about NRs 1950 (US$148), slightly lower than the projected national per capita income (NRs 2050, US$155). An estimated 30-35% of farm households would remain below the projected poverty threshold of US$81 per capita, compared to 90-95% without project. VIII. BENEFITS AND JUSTIFICATION Benefits 8.01 General. The project would change the conditions under which agriculture in the project area is traditionally operating. Improved irriga- tion and drainage in the tubewell schemes would provide farmers with a more 1/ The projections would be similar for the.new tubewell area, but have been omitted. -52- reliable supply of water, reduce dependence on erratic monsoon rainfall and thus increase the incentives for higher input application and adoption of advanced farming practices. Project benefits would be generated through: (i) completion and proper operation and maintenance of 64 tubewells, serving 7,600 ha and about 3,800 farm families, thereby assuring reliable deliveries of water to farmers' fields, facilitating the transition from traditional to modern intensive cropping practices, reducing farmers' risks and increasing substantially marketable surplus and their incomes; (ii) introduction of a promising new technology, in the Nepalese context, of water distribution through pipe conveyance systems in fifteen new tubewells, serving 1,800 ha and about 900 farms; (iii) provision of technical assistance to and training of Nepalese engineers and agronomists in operation and maintenance of tubewell schemes, water management and agricultural extension; (iv) rehabilitation of malfunctioning tubewells in the Narayani Zone Irrigation Project; 8.02 The project's specific benefits from existing and proposed new tubewell schemes are quantified as follows: Estimated Project Benefits Farm families to benefit: approx. 4,700 of which presently below poverty level: approx. 4,300 Increase in Cropped Area: Increase in Production + 5,300 ha (+47%) - Foodgrains + 27,300 t (+185%) - Other Crops (at financial prices) + NRs 17 M (+490%) - Total (at financial prices) + NRs 70 M (+215%) Increase in Agricultural Employment + 0.76 M Mandays (+63%) 8.03 Production Benefits. The project would, at full development, increase foodgrain production by about 27,300 ton, equivalent to an increase of about 185% over production without tubewell irrigation. Incremental rice production would help save foreign exchange, most likely by substituting for imports, rather than through exports. Increased surpluses of wheat would be available for export to India or for covering the foodgrain needs in the Hills and Urban areas. Increased maize production would be available for distribution in the Hills, where it is a staple crop and where its production -53- has been stagnant for many years. Additional production of pulses would alleviate a growing countrywide scarcity in this main source of protein for human consumption. 8.04 Employment Benefits. Labor requirements in agriculture are estimated to rise from about 1.2 M to about 2.0 M mandays, or by about 63%. This would be due both to increases in cropped area and more intensive care of crops and higher labor needs for harvesting. It is estimated that the rate of farm labor utilization in crop production would increase from approximately 30% to 50% of available time. I/ Most of the employment benefits would accrue to self-employed family labor. It is expected that employment in the rural and urban non-farm sector would increase in line with expected additional demands for marketing, transport and processing facilities. The project establishment for operation and maintenance itself would create about 300 permanent jobs, both for skilled and unskilled workers. 8.05 Unquantified Benefits. Under the Stage I project sizeable invest- ments have been made for the the construction of village roads. The present project would not only provide for 0&M of these roads but for further exten- sion of this network in the new tubewell area as well. While the projection of agricultural production benefits already implies the existence of roads (to enhance farmers' incentive to grow surplus produce by providing access to markets and agricultural input sources), it is evident that there are con- siderable additional benefits in the form of improved communication, result- ing in time and transport cost savings. Judging from the substantial traffic on the completed Stage I project roads, including flourishing new bus routes, it is obvious that benefits, which have not been quantified, occur immediately once roads are open to the public. Another benefit is the availability of safe drinking water from the tubewells. 8.06 The project would use consultants, to help with design and con- struction, management and operation and maintenance of the tubewell schemes, and with promoting modern agricultural practices. While their employment increases the project cost, it would result not only in benefits to the project but also in long-term benefits to the country, by building up exper- tise in management, engineering and agronomy aspects of groundwater develop- ment. 8.07 The benefits from rehabilitating the Birganj tubewells have not been quantified. Most of these wells are presently functioning at a very low level of utilization or not at all. The incremental investment in their 1/ Overall utilization rates are higher due to other on-farm and off-farm employment. -54- rehabilitation is expected to yield agricultural benefits which would at any rate justify the cost, since most of the total cost is already sunk cost. 8.08 Beneficiaries. The project would benefit about 4,700 farm-families directly, and indirectly a number of landless laborers that has not been estimated, both in the vicinity of the project area and immigrant laborers from the hills. A high percentage of farm families living at present on or below the absolute poverty threshold would be reduced considerably, from 90-95% to about 30-35%, excluding landless laborers. Economic Analysis 8.09 Only agricultural production benefits have been entered in the economic analysis. Economic crop prices for tradable crops (rice, wheat, sugarcane) were derived from relevant border prices (mostly based on the Indian market), and for non-traded crops (maize, pulses, oilseeds, vegetables) from the prevailing and projected market prices. The economic prices of fertilizer were derived from IBRD price projections. The shadow price of agricultural labor was assumed at about 50% of the going (peak) wage rates for hired labor. Cost items were valued by employing specific conver- sion factors to financial cost; a standard conversion factor of 0.90 was applied only to unspecified cost items. Benefit build-up is the result of the assumed phasing of areas to come under irrigation, a relatively fast transition from present to future cropping intensities, and a more gradual build-up of yields and input use, including adoption of high yielding crop varieties. Full development would be reached after 8-10 years. The cost of pumping was based on the estimated long-run marginal cost of electricity for Nepal. Care was taken to allocate project costs properly to the project components. For the re-evaluation of the Stage I project, economic invest- ment cost FY78-82 was derived from actual expenditures. Detailed assumptions on economic analysis are spelled out in Annex 8. Economic prices used are shown in SDV Annex 8, Table 1; yields, inputs and cropping patterns assumed are detailed in SDV Annex 8, Tables 5A-H, together with a summary of economic agricultural returns and input costs for present, "future without project" and "future with project." 8.10 Economic Rate of Return. The economic viability of the Stage I Project, i.e. 64 tubewells, has been re-assessed, yielding an economic rate of return of about 10%. 1/ This estimate incorporates the effects of delays, the cost overrun and a revised estimate of agricultural benefits with and without project. The new tubewell scheme is expected to yield an economic 1/ Excluding the cost of technical assistance; see Annex 1, Table 22. If sunk cost were excluded, this project component would yield an extremely high rate of return of about 46%. (SDV Annex 8, para 24 and Tables 6 and 7). -55- rate of return of about 12%.2/ The rate of return for the new wells is higher due to faster implementation, lower energy cost, lower O&M requirements and somewhat lower agricultural production without project (no present irriga- tion). While the above rates of return are relatively low, the investments are considered acceptable as both tubewell components are experimental in nature and mainly set up to test the viability of future large scale groundwater development projects in Nepal. The project's essential objective to build up capacities to deal effectively with future groundwater projects has caused the overhead costs to be larger than normal. In addition the cost of drilling and developing the tubewells with project machinery and staff has proven to be much higher than if undertaken by contractors. If these con- siderations are taken into account the ERR's for the Stage I tubewells and the 15 new wells are estimated to increase substantially. Underlying cost and benefit streams for these two project component are shown in SDV Annex 3, Tables 15 and 16. The rate of return of the entire proposed project has been estimated at about 29% (excluding sunk cost and technical assistance). Sensitivity and Risk 8.10 Stage I Project. No sensitivity tests have been performed on the economic viability of the Stage I project as re-evaluated, since the economic rate of return is very close to the estimated opportunity cost of capital. The economic risk of the O&M component is related only to future costs and benefits, it is considered to be virtually nil due to a very high economic rate of return for the component (see footnote 1/ on page 54). 8.11 New Tubewell Systems. It is in the nature of a pilot project that uncertainties with respect to actual investment cost, O&M cost and perfor- mance are yet to be reduced during implementation. The performance of similar tubewell schemes in neighboring Uttar Pradesh (India) gives reason to believe that good results could be achieved in Nepal as well, especially since construction and 0&M appear less difficult than for conventional tubewell schemes. Sensitivity tests show, however, that under present assumptions there is not much latitude for cost overruns or benefit short- falls. The component is less sensitive to increases in the economic cost of pumping. It is, however, felt that with the introduction of improved tech- nology, benefits may in fact be higher and realized faster than projected, not in the least because the operation of the system would resemble more closely an "on-demand" type rather than the strict rotational distribution through canal conveyance. This may encourage farmers to make higher invest- ments in modern crop inputs, resulting in higher yields and possibly in higher irrigation intensities. Such projections, however, have not been incorporated into economic analysis. A summary of sensitivity analysis is given in SDV Annex 3, Table 17. 2/ Excluding cost of technical assistance, see Annex 1, Table 21. -56- 8.12 Project Risk. A possible risk would be the underutilization of the public tubewells. Utilization of the project tubewells as projected would depend mainly on three factors: adequate power supply to the wells, the ability of the project staff to operate and maintain the project facilities successfully, and active farmers' participation. To minimize the risk of underutilization of the project wells, the project is supporting measures to strengthen the operation and maintenance performance to supply irrigation water in a reliable, timely and equitable manner. HMGN's decision to establish the 33 kV line from the Gandak West power station to the project area as a dedicated feeder line would assure a reliable electricity supply. Institutional weaknesses most prevalent in Nepal, such us lack of coordina- tion between Government Departments have been identified and dealt with in the proposed project organization. In order to reduce the management risk, provision is made for substantial consultant assistance. Increased motiva- tion for farmers to participate in the project would be provided by a strengthened extension service, and through assistance in forming and running water users groups. Consequently, the risk associated with this project is acceptable. IX. AGREEMENTS REACHED AND RECOMMENDATIONS 9.01 During negotiations agreements have been reached with HMGN that: (a) it would (i) channel budget requests and releases for the Agricultural Division in the project office through the Project Manager and (ii) make the Agricultural Division for administrative and financial matters accountable to the project manager (para 5.03); (b) for purposes of implementing the project, it would expand and strengthen the role of the Groundwater Resources Development Board and include the Project Manager as an observer on all matters relating to the project (para 5.02); (c) (i) adequate funding for the execution of the Birganj tubewell repair and improvement component would be made available directly to Narayani Zone Irrigation Development Board; (para 3.55); (ii) the project consultants engaged for the implementation of the Narayani Zone Irrigation Development Project (IDA Credit 856) would also assist Narayani Zone Irrigation Development Board with the implementation of the proposed improvements of the Birganj tubewells (para 3.55); -57- (d) all canals, structures, pumping equipment, power lines, roads, 0&M equipment and other project facilities be operated and maintained in accordance with sound engineering standards (para 3.21); (e) it would furnish to IDA annually the detailed plans for implementing the project in its next fiscal year as well as estimates of the financial requirements for implementing the project, on the basis of which it makes budgetary allocations (para 3.56 and para 4.03). (f) a firm of consultants would be employed starting from March 1, 1983 to assist in the implementation of the project. The employment would be under terms and conditions which are acceptable to IDA (para 3.47); (g) where required consultants would also be employed to assist in the implementation of ongoing IDA assisted irrigation projects in Nepal. The employment would be under terms and conditions acceptable to IDA (para 3.49); (h) a firm of consultants would be employed from January 31, 1985 to assist the Groundwater Resources Development Board in undertaking a study of alternative groundwater development strategies in the Terai. The employment would be under terms and conditions acceptable to IDA (para 3.48); (i) it would cause the project consultants to prepare O&M manuals for the project's tubewell systems to be furnished to IDA for its review in draft by November 1, 1983 and in final form by November 1, 1984 (para 3.21); (j) submit to IDA a project completion report not later than six months after the project's Closing Date (para 5.08); (k) the Agricultural Inputs Corporation would make agricultural inputs available in sufficient quantities to meet the needs of the project (para 6.07); (1) the Agricultural Development Bank of Nepal would make funds available annually to meet production credit needs of the project farmers (para 6.08); (m) it would cause NEC (i) to operate the 33 kV transmission from the Gandak West Hydropower Station to the 33/11 kV substation in the project area as a dedicated feeder for purposes of providing the required power to the pumps which is expected not to exceed 5 MW at the substation at -58- full development (para 3.14); and (ii) to energize the tubewell pumping units within two months after the completion of any water distribution system in the project (para 3.35); (n) the Project Manager would (i) establish and maintain accounts for the project; (ii) have its accounts and financial statements audited annually by independent auditors acceptable to IDA; and (iii) send the certified copies of the audited accounts and auditor's report to IDA within six months after the close of each fiscal year (para 4.08); (o) if farmers fail to carry out the construction of field channels it would cause the project to undertake its construction (para. 5.05); (p) it would cause the project (i) not to supply water to farmers in completed tubewell schemes until water users groups have been set up and are ready to assume the responsibility of water distribution below the 4-5 ha outlet (para 5.06); (ii) not to start the drilling of any of the 15 new tubewells until two-thirds of the beneficiaries have formally agreed to form a water users group and to pay water charges (para 5.06); (q) it would set up and properly staff a special unit directly under the project manager to be responsible for monitoring and evaluation activities in the project (para 5.08); (q) it would (i) establish a committee by March 1, 1983 to work out concrete proposals for water charges by December 31, 1983 for consideration by HMGN and IDA (para 7.14); and (ii) introduce a new system of water charges for public tubewells by March 31, 1984, which would be satisfactory to IDA (para 7.14). 9.02 With the above agreements, the project would be suitable for an IDA credit of US$16.0 M on standard IDA terms. The borrower would be His Majesty's Government of Nepal. -59-. Annex 1 Table 1 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Management and Administration 1. Salaries and Allowances Unit Cost Total Cost 1/ Staff No. Month Year 1/ Per Year 5 Years --------------------NRs--------------------- *Project manager 1 1,475 22,125 22,125 110,625 *Senior administrator 1 1,030 15,450 15,450 77,250 *Senior accountant 1 1,030 15,450 15,450 77,250 *Accountant 2 750 11,250 22,500 112,500 *Purchasing officer 1 750 11,250 11,250 56,250 *Senior storekeeper 1 750 11,250 11,250 56,250 Storekeeper 1 470 7,896 7,896 39,480 Clerk 8 470 7,896 63,168 315,840 Typist 2 470 7,896 15,792 78,960 Driver 3 385 6,468 19,404 97,020 Miscellaneous worker 10 380 6,384 63,840 319,200 Total 1,340,625 2. Vehicles and Equipment Unit Cost Total c.i.f. Calcutta ----------- U.S.$--------- Passenger car 2/ 1 10,000 10,000 Jeep 3 12,500 37,500 Motorcycle 1 3,000 3,000 Bicycle 2 150 300 Miscellaneous 2,200 Total c.i.f. Calcutta 53,000 Transportation Calcutta-Bhairawa 5% 2,650 Total 55,650 3. Operating Expenses Cost (US$) Items c.i.f. Bhairawa Spare parts for vehicles 8,000 Fuel, lubricating oil 9,000 Office expenses 10,000 Printing 7,000 Mail 5,000 Miscellaneous 4,000 Total 43,000 1/ Includes 25% project allowance for officials (*) 40% project allowance for non-officials 2/ Kathmandu Office -60- Annex 1 Table 2 NEPAL Page 1 BRAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II OPERATION AND MAINTENANCE 1. Salaries and Allowances Unit Cost Total Cost 1/ Staff No. Month Year 1/ Per Year 5 Years --------------------NRs-------------------- *Mechanical engineer 1 1,095 16,425 16,425 82,125 *Civil engineer 1 850 12,750 12,750 63,750 Clerk 3 470 7,896 23,688 118,440 Driver 8 385 6,468 51,744 258,720 Workshop foreman 1 535 8,988 8,988 44,940 Mechanic 3 390 6,552 19,656 98,280 Helper 3 330 5,544 16,632 83,160 Vehicle electrician 1 390 6,552 6,552 32,760 Helper 1 330 5,544 5,544 27,720 Welder 2 535 8,988 17,976 89,880 Helper 2 330 5,544 11,088 55,440 Pump operator 64 285 4,788 306,432 1,532,160 Pump inspector 4 535 8,988 35,952 179,760 Pump mechanic 2 535 8,988 17,976 89,880 Helper 2 330 5,544 11,088 55,440 Pump electrician 2 535 8,988 17,976 89,880 Helper 2 330 5,544 11,088 55,440 Generator operator 2 390 6,552 13,104 65,520 Crane operator 1 535 8,988 8,988 44,940 Overseer 6 535 8,988 53,928 269,640 Builder 4 390 6,552 26,208 131,040 Helper 4 330 5,544 22,176 110,880 Motorgrader operator 1 535 8,988 8,988 44,940 Roadroller operator 2 535 8,988 17,976 89,880 Tractor operator 4 390 6,552 26,208 131,040 Lathe and mechanical workshop operator 2 535 8,988 17,976 89,880 *Surveyor 1 850 12,750 12,750 63,750 Helper 3 330 5,544 16,632 83,160 Draughtsman 1 535 8,988 8,988 44,940 Worker 8 330 5,544 44,352 222,660 Assistant geologist 1 535 8,988 8,988 44,940 Well observer 2 535 8,988 17,976 89,880 Assistant well observer 2 390 6,552 13,104 65,520 Helper 2 330 5,544 11,088 55,440 Total 0&M Staff 4,605,825 1/ includes 25% project allowance for officials (*) 40% project allowance for non-officials Annex 1 Table 2 Page 2 2. Equipment and Vehicles Item No. Unit Cost Total Cost c.i.f. Calcutta ------- U.S.$----------- Bulldozer/Loader, 110 HP 1 100,000 100,000 Motorgrader, 120 HP 1 65,000 65,000 Road Roller, 48 HP 2 20,000 40,000 Pick-up 6 12,000 72,000 Jeep 2 12,500 25,000 Motorbike 10 3,000 30,000 Tractor 50-60 HP 4 7,500 30,000 Trailer 3 4,000 12,000 Truck (4 ton) 1 20,000 20,000 Service trailer 1 25,000 25,000 Water tank trailer 2 5,000 10,000 Cranes (on pick-ups) 2 5,000 10,000 Mobile Crane 1 25,000 25,000 Wireless Sets and Accessories 9 1,700 15,300 Mobile welding generators 2 4,000 8,000 Miscellaneous tools 14,000 Office furniture 6,000 Office equipment 5,000 Bicycle 1,000 Miscellaneous 14,700 Total c.i.f. Calcutta 528,000 Transportation Calcutta-Bhairawa (5%) 26,400 Total 554,400 3. Construction Materials No. of Unit Units Unit Cost Total Cost c.i.f. Bhairawa --------- U.S.$--------- Gravel and Sand m 2 32,500 10 325,000 Bricks 10 no. 445 36 160,000 Cement bag 17,500 8 140,000 Total 625,000 -62 - Annex 1 Table 2 Page 3 4. Operating Expenses Estimated Cost Items c.i.f. Bhairawa US$ Spare parts for pumps 30,000 Electric parts for pumps 35,000 Generator parts 7,000 Electric motor repairs 30,000 Spare parts for equipment and vehicles 133,000 Outside workshop expenses 15,000 Fuel lubricants, grease 94,000 Office expenses 10,000 Printing 5,000 Mail 5,000 Periodicals and books 2,500 Consumable materials for workshops 10,000 Generator fuel, lubricants 40,000 Miscellaneous 40,000 Total 456,500 5. Buildings Cost Estimate No. of Unit Total Items Unit Units Cost Cost ---- NRs ------- Offices 1/ 140 1,500 210,000 Workshop and Stores m2 350 1,000 350,000 Housing ju io staff 2i m2 560 1,500 840,000 1,400,000 2 1/ 10 m2 per person 2/ 60 m per family Annex 1 -63- Table 3 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Projected Financial Cost of Electricity for Pumping a/ (Nrs M) Year Existing Tubewells b/ New Tubewells c/ Total 1982/83 0.73 0.73 1983/84 1.92 - 1.92 1984/85 2.27 0.08 2.35 1985/86 2.41 0.25 2.66 1986/87 2.56 0.28 2.84 1987/88 2.68 0.30 2.98 1988/89 2.80 0.33 3.18 1989/90 2.91 0.35 3.26 1990/91 3.03 0.36 3.39 1991/92 3.03 d/ 0.38 3.41 1992/93 3.03 0.40 3.43 1993/94 2.79 0.42 3.21 1994/95 etc. 2.79 0.44 3.23 a/ At present applicable tariffs: NRs 0.25/kWh Rs 300/kW per year for installed capacity b/ 64 wells, each 69 kW instaled, 44 kW demand in final stage c/ 15 wells, each 29.5 kW installed, 29.5 kW demand in final stage d/ Gradual replacement with new pumpsets of lower installed capacity (44 kW each instead of 69 kW) -64- Annex 1 TaTbTe 4~ NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Summary of Costs for Agricultural Extension and Training Year 1 Year 2 Year 3 Year 4 Year 5 Total 1. Capital Costs ---------------------------Rs '000---------------------------- A. Civil Works Housing 895.4 261.0 1,300.5 1,039.5 - 3,496.4 Input Storage - 50.0 250.0 200.0 - 500.0 Sub-total 895.4 311.0 1,550.5 1,239.5 - 3,996.4 B. Vehicles 30.0 740.0 - - - 770.0 C. Office Equipment and Furniture - 200.0 - - - 200.0 D. Extension Equipment - 208.0 - - - 208.0 Total Capital Costs 925.4 1,459.0 1,550.5 1,239.5 - 5,174.4 2. Operating Costs A. Staff Cost (i) Salary 931.8 931.8 931.8 931.8 931.8 4,659.0 (ii) Allowance 466.6 466.6 466.6 466.6 466.6 2,333.0 B. Operating Expenses and Extension Materials 46.1 86.9 86.9 86.9 86.9 393.7 C. Travel Cost 50.0 50.0 50.0 50.0 50.0 250.0 D. Vehicle Operating Costs 90.0 225.0 250.0 25Q.0 250.0 1,065.0 E. Training 79.6 79.6 79.6 79.6 79.6 398.0 F. Extension Activities 158.0 158.0 158.0 158.0 158.0 790.0 Total Operating Costs 1,822.1 1,997.9 2,022.9 2,022.9 2,022.9 9,888.7 Grand Total 2,747.5 3,456.9 3,573.4 3,262.4 2,022.9 15,063.1 (US$1,141,000) NEPAL BHAIRAWA-LUJMBINI GROUNDWATER PROJECT Stage II Training Center at Bhairawa Research Area Unit Cost Year 1 Year 2 Year 3 Year 4 Year 5 Total Capital Cost (m2) NRs/m2 ----------------------NRs '000---------------- A. Civil Works Hostell/ (two storeys) 600 4,000 300 800 1,300 - - 2,400 Training Complex2/ 400 2,800 200 500 420 - - 1,120 Housing3/ 325 2,400 90 350 340 - - 780 B. Equipment and Furniture 4/ 90 225 135 - - 450 Total 680 1,875 2,195 4,750 Provided for in IDA Credit-1100 240 875 835 1,950 Balance 440 1,000 1,360 2,800 1/ Hostel for sixty trainees. M 2/ Includes cost of classroom, office and ibrary facilities. 2 M 3/ Housing for one training officer (100 m ) and 5 support staff (225 m ) / Includes costs of furniture for classrooms, hostel and offices; office and training equipment and visual aids; one generator. -66- Annex 1 Table 6 NEPAL BRAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Incremental Staff for Planning, Design, Construction and O&M New Tubewells Unit Cost Total Cost 1/ Years in 1. Staff No. Month Year 1/ Per Year Project Project ----------------NRs----------------- Engineer* 2 850 12,750 25,500 102,000 4 Overseer 6 535 8,988 53,928 215,712 4 Surveyor* 2 850 12,750 25,500 102,000 4 Draftsman 1 535 8,988 8,988 35,952 4 Tracer 2 390 6,552 13,104 52,416 4 Helper 3 330 5,544 16,632 66,528 4 Worker 20 330 5,544 110,880 443,520 4 Pump operator 15 285 4,788 71,820 143,640 2 Pump inspector 1 535 8,988 8,988 17,976 2 Total 1,179,744 2. Vehicles No. Unit Cost Total Cost c.i.f. Calcutta -----------us $------------ Jeep 2 12,500 25,000 Motorcycle 2 2,500 5,000 Total c.i.f. Calcutta 30,000 Transportation Calcutta-Bhairawa 5% 1,500 Total 31,500 1/ includes: 25% project allowance for officials (*) 40% project allowance for non-officials -67- Annex 1 Table7 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Cost Estimates for Pumping Units and Ancillaries including Spares Item Description Unit Cost Cost of 15 Units NRs c.i.f. NRsxl03 C.i.f. Bhairawa Bhairawa 1. 40 HP Electric submersible pump to deliver 300 m3/h through a dynamic head of 20 m plus 30 m of 8 in. diameter rising main 80,000 1,200.0 2. Autotransformer starter relay including single .phase preventor 50,000 750.0 3. Capacitor 3,000 45.0 4. Hour operation meter 1,000 15.0 5. Electric wiring and lighting 2,500 37.5 Sub-Total 136,500 2,047.5 6. Installation 10,000 150.0 Total 146,500 2,197.5 7. 15% Spares on Items 1-4 - 301.5 GRAND TOTAL 2,499.0 -68- ANNEX 1 Table 8 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Well Construction, Development and Testing (200 m deep well to yield 300 m 3/h in Stage II area) Cost Estimate A. Well Construction Unit Total Item Description Unit Price No. Cost (-------------NRs------------- 1. Access and site preparation item - - 15,000 2. Fuel and lubrication for move item - - 4,000 3. Fuel and lubricants for drilling item - - 27,000 4. Drilling mud tons 900 2.5 2,250 5. Barytes tons 1,400 1.0 1,400 6. Polyphosphate kg 24 250 6,000 7. Bits item - - 36,000 8. Casing (16 in. mild steel) m 1,450 40 58,000 9. Casing (10 in mild steel) m 850 80 68,000 10. Screen (10 in. mild steel) m 1,050 80 84,000 11. Cement bags 100 100 10,000 12. Casing hanger, flanges and delivery pipe item - - 2,600 13. Valve on outlet unit 1,700 1 1,700 14. Spares and maintenance for rig item - - 20,000 15. Other consumables for rig item - - 5,800 16. Drill crew salaries - - - 17,200 TOTAL 358,950 B. Development with a Compressor Item Description Cost (NRs) 1. Fuel and lubricants for move 1,500 2. Fuel and lubricants for operation 14,000 3. Other consumables 1,200 4. Repairs and maintenance of equipment 7,000 5. Site preparation 5,000 6. Crew salaries 3,000 TOTAL 31,700 C. Test Pumping 1. Fuel and lubricants for move 2,100 2. Fuel and lubricants for test 18,200 3. Repairs and maintenance of equipment 7,000 4. Other consumables 1,500 5. Crew salaries 5,400 TOTAL 34,200 Summary of Costs for 15 Wells Item Description Cost/Well Cost for 15 Wells (NRs) (NRsxl0-3) 1. Well construction 358,950 5,384 2. Development with compressor 31,700 476 3. Test pumping 34,200 513 TOTAL 424,850 6,373 Note: Estimates do not include: (a) depreciation and interest on equipment. (b) supervision, (c) contingencies; but salaries are adjusted for wet season down time. -69- ANNEX 1 Table 9 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Vehicles and Plant for Drilling and Development and Testing To Be Cost No. Item Required Available Purchased c.i.f. Calcutta Drilling- ------------No. of Units------------- -----US$-------- Drilling 1. Rig complete 1 2 - - 2. Shale shaker 1 2 - - 3. Welding generation 1 2 - - 4. Heavy tractor (210 HP) 1 2 - - 5. Light tractor (40-50 HP) 1 1 - - 6. Truck (7 tons) 1 - 1 27,000 7. Water tank trailer 1 2 - - 8. Tool sets (Mechanical) 1 - 1 1,000 9. Logging equipment 1 1 - - 10. Fuel tanker, truck 3,000 1 1 - 1 22,500 11. Tents and camping equipment 3 sets - 3 19,500 Development and Testing 1. Compressor 1 1 2. Test pumping unit 2 3 - 3. Medium tractor (60 HP) 1 1 - 4. Light tractor (40-50 HP) 1 1 - 5. Trailer 2 2 - 6. Tents and camping equipment 3 sets - 3 9,600 Supervision 1. Pick-Up 1 - 1 12,000 Total c.i.f. Calcutta 91,600 Transport from Calcutta-Bhairawa at 5% 4P8 TOTAL 96,180 Note: This table assumes that one rig and ancillary equipment are used for the well construction, development and testing operations in the Stage II area of the Bhairawa-Lumbini project* -70- Annex 1 Table 10 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Workshop Plant and Vehicles etc. for New Works excluding Well Drilling and Testing Cost Estimate Item Description US$ (Cost c.i.f. Calcutta) A. Plant for Workshop 1. Lathe 12,000 2. Welding generator 4,000 3. Welding transformer 2,500 4. Drill 2,500 5. Compressor 2,500 6. Tools 3,000 7. Grindstone 1,000 Total c.i.f. Calcutta 27,500 Transport Calcutta-Bhairawa 5% 1,375 TOTAL 28,875 B. Vehicles, etc. for supervision of New Works, Excluding Drilling and Testing Number Number Number to be Item Description Required Available Bought US$ (Cost c.i.f. Calcutta) 1. Pick-up for supervision 1 - 1 12,000 2. Jeeps 2 - 2 25,000 3. Survey equipment x - x 12,000 Total c.i.f. Calcutta 49,000 Transport Calcutta-Bhairawa 5% 2,450 TOTAL 51,450 GRAND TOTAL (A+B) 80,325 -71- Annex 1 Table1 NEPAL BRAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Cost Estimate - Distribution Network for 120 ha Command Area Unit Total Unit Quantity Cost Cost ------NRs------- 1. Land Acquisition tubewell compound ha 0.05 60,000 3,000 Temporary occupation and crop compensation L.S. 1,000 Sub-Total 4,000 2. Works and Materials Pumphouse no 1 75,000 75,000 Control chamber and fittings no 1 54,000 1/ 54,000 Pressure release and stand pipe no 4 1,200 1/ 4,800 Procurement PVC pipe 200 mm m 560 92 1/ 52,500 160 mm m 5,600 58 1/ 324,800 Installation PVC pipe m 6,160 10 1/ 61,600 PVC fittings L.S. 17,000 Alfalfa valve outlet procurement of valve no 32 550 2/ 17,600 installation and chamber no 32 2,100 T/ 69,200 Field channels km 10 2,300 23,000 Sub-Total 699,500 Total 703,500 I/ Based on early 1982 prices valid for Lucknow UP India, converted to NRs and increased by 15% 2/ Based on early 1982 price valid for Lucknow UP India, converted to NRs and increased by 100% -72- Annex 1 Table 12 NEPAL BRAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Cost Estimate for Roads Unit Total Unit Quantity Cost Cost --------- ----------------NRs------- Village and well access roads - type "A" km 20.0 300,000 6,000,000 - type "B" km 5.0 200,000 1,000,000 Land acquisition 1/ L. S. 200,000 Total 7,200,000 1/ Proposed roads would mostly be aligned on existing rights of way that connect with the Bhairawa-Lumbini Road. -73- Annex 1 Table 13 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Cost Estimate for Power Supply System Unit Total Item Description Unit Quantity Cost Cost -----NRs------ 1. 33 kV line a. Conductor km 35 15,000 525,000 b. Poles no 420 2,800 1,176,000 c. Insultors per km 35 12,500 437,500 d. Stay wire sets per km 35 15,000 525,000 e. Hardware per km 35 5,000 175,000 f. Labor per km 35 7,000 245,000 g. Cement per km 35 2,000 70,000 2. Transformers (33/0.4 kV) unit 15 75,000 1,125,000 3. Connection and metering unit unit 15 35,000 525,000 Total 4,803,500 Note: Assumes 15 km of extension of the 33 kV line from the Stage I 33/11 kV substation to the Stage II development area and 20 km of 33 kV line withinthe Stage II development area. -74- Annex 1 Table 14 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Cost Estimate for Drainage Unit Total Unit Quantity Ear hwork Cost Cost (m /km) -----NRs------ For extension area (2,400 ha gross) 1/ Reshaping of existing- natural drains km 28.2 4,400 22,000 620,400 1/ Secondary drains- km 8.8 1,700 8,500 74,800 Inlets to natural drains no 2 5,000 10,000 Crossing structures no 3 30,000 90,000 2/ Service unit drains- km 75 880 4,400 330,000 Inlet structures2 no 100 2,000 200,000 Sub- Total 1,325,200 Land Acquisition ha 4.0 30,000 120,000 Total 1,445,200 1/ length based on data in stage II feasibility study, MGN/Tahal Consulting Engineers, October 1980. 2/ Based on about 40 m/ha 3! Based on 1 inlet 20 ha -75- Annex 1 Table 15 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Cost Estimate for Improvement of "Birganj" Tubewells Unit Total Unit Quantity Cost Cost ----------'000 NRs------------- A. Civil Works 1. Lining of canals km 6 300 1,800 2. Division boxes no. 70 2 140 3. Improvement of earthen canals km 45 7 315 4. Quarters for JT/JTA no. 5 80 400 5. Quarters for pump operators no. 28 45 1,200 6. Restoration of Jangannathpur well (i) development and testing 20 (ii) lined canal km 1 300 300 (iii) earthen canals and drains 150 (iv) pump and motor no. 1 125 125 (v) electrical connections 100 Sub-Total 4,550 B. Equipment and Vehicles 1. Replacement of pump sets no. 4 125 500 2. Drop-out switches no. 28 15 420 3. Steel pipes for redrilled wells no. 9 40 360 4. Spare parts 1/ L.S. 1,220 5. Pick-up no. 1 150 150 6. Motorcycle no. 9 20 180 7. Bicycle no. 15 1 15 Sub-Total 2,845 C. Salaries and Operating Cost 1. Salaries and allowances 3,715 2. Operating cost 2/ 560 4,275 D. Electricity Cost 3/ L.S. 2,860 GRAND TOTAL 14,530 1/ Including three 50 HP submersible pumps and transformers. 2/ Includes fuel consumption for O&M and agricultural extension program. / Based on current tariffs and 2,000 hours of pumping per well in project year 5. -76- Annex 1 Table 16 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Improvement "Birganj" Tubewells Salaries and Allowances Unit Cost Total Cost Per Year Per Year 5 Years No.- -----------NRs '000 ----------------- O&M Staff Engineer 1 18 18 90 Overseer 1 12 12 60 Senior electrician 1 12 12 60 Electrician 2 10 20 100 Mechanic 2 10 20 100 Office assistant 2 9 18 90 Storekeeper 1 10 10 50 Pump operator 30 6 180 800 Watchman 30 6 180 900 Helper 5 6 30 150 Sub-Total 500 2,500 1/ Agricultural Staff JT 1 13 13 65 JTA 10 10 100 500 PLAA 30 4 120 60G Clerk 1 10 10 50 Sub-Total 243 1,215 TOTAL 743 3,715 1/ Based on: 1 JT for 3,000 ha 1 JTA for 300 ha Cor three tubewells) 1 PLAA for 100 ha (or one tubewell) -77- Annex 1 Table 17 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Cost Estimate for Consulting Services Cost 1/ A. Technical Assistance Man-Month U$ 1. Irrigation and drainage engineer, Team Leader 60 600,000 2. Workshop and equipment management specialist 30 300,000 3. Agronomy/water management specialist 24 240,000 4. Design/Construction engineer 12 120,000 5. Soil specialist 4 40,000 6. Updating of feasibility study 10 100,000 7. Unallocated 3/ 50 500,000 Sub-Total 190 1,900,000 B. Sub-Contracts 1. Photogrammetry and mapping for 13,000 ha 400,000 2/ 2. Semi-detailed soil survey for 13,000 ha 100,000 3. Monitoring and evaluation (APROSC) 50,000 Total 2,450,000 C. Study of Groundwater Development Strategies 1. Study coordinator 10 100,000 2. Groundwater development specialist 4 40,000 3. Agronomist 4 40,000 4. Socio-Economist 3 30,000 5* Power Engineer 3 30,000 6. Unallocated 6 60,000 Total 300,000 1/ Based on US$10,000 per manmonth. 2/ Based on about US$28 per ha. 3/ Two years after the start of the Stage II project HMGN and IDA will decide on the allocation of 50 manmonths. -78- Annex 1 Table 18 NEPAL Bhairawa-Lumbini Groundwater Project Stage II Estimated Schedule of Annual Expenditures 1/ Ust x '000 NRs x '000 Total FY '83 FY '84 FY '85 FY '86 FY '87 FY '88 US$ NRs 0 NRs US$ NRs US$ NRs U$ NRs LS$ NRs UI NRs 1. Management and Administration 1.1 Salaries and allowances 105 1,387 16 208 21 277 21 277 21 277 21 278 5 70 1.2 Vehicles and equipment 58 766 10 132 48 634 - - - - - - - - 1.3 Operating Cost 45 594 7 93 8 106 8 105 8 105 9 119 5 66 Sub-total (1) 208 2,747 33 433 77 1,017 29 382 29 382 30 397 10 136 2. Operation and Maintenance 2.1 Salaries and allowances 361 4,767 54 714 72 953 72 953 72 953 72 954 19 240 2.2 Vehicles and equipment 574 7,577 124 1,637 259 3,419 191 2,521 2.3 Construction materials 795 10,491 127 1,680 175 2,302 175 2,302 145 1,916 141 1,868 32 423 2.4 Operating cost 473 6,244 71 937 94 1,241 94 1,241 94 1,241 94 1,241 26 343 2.5 Electricity cost 2/ 798 10,532 30 400 98 1,290 162 2,135 190 2,505 208 2,750 110 1,452 2.6 Buildings 110 1 32 414 78 1,035 - - - - - - - - Sub-total (2) 3,111 41,060 438 5,782 776 10,240 694 9,152 501 6,615 515 6,813 187 2,458 3. Agricultural Extension 3.1 Salaries and allowances 548 7,234 73 964 110 1,448 110 1,448 110 1,448 109 1,448 36 478 3.2 Operating cost 227 2,998 22 292 47 620 49 646 49 646 49 646 11 148 3.3 Agricultural inputs 100 1,320 100 1,320 - - - - - - - - 3.1 Vehicles and equipment 92 1,220 2 31 90 1,189 - - - - - - - - 3.5 Buildings 533 105 1,381 103 1,357 228 3,613 97 - 2 - - Sub-total (3) 1,500 19,807 302 3,988 330 4,614 387 5,107 256 3,378 158 2,094 47 626 4. Tubeweil Development Area 4.1 Salaries and allowances 93 1,221 7 87 20 263 20 263 20 263 19 263 7 82 4.2 Tubewell systems (a) drilling and installation 3/ 422 5,572 - - 253 3,343 169 2,229 - (b) development and testing 78 1,024 - - 26 342 52 682 - - - - - (c) pumping equipment 196 2,586 - - 118 1,552 78 1,034 - - - - - (d) vehicles and equipment 215 2,838 95 1,254 88 1,162 32 422 - - - - - (e) pumphouses 88 1,164 - - 29 388 59 776 - - - - - - (f) distribution network 4/ 734 9,695 - - 380 5,014 274 3,623 80 1,058 - - - - 4.3 Roads 549 7,245 150 1,980 321 4,230 78 1,035 - - 4.4 Power supply system 377 4,972 157 2,070 220 2,902 - - - 4.5 Drainage 104 1,371 - - - - 55 724 49 647 - - - 4.6 Land Acqisition 40 527 9 113 24 317 7 97 - - - - - - Sub-total (4) 2,896 38,215 418 5,504 1,479 19,513 824 10,885 149 1,968 19 263 7 82 5. Cost-Overrun Stage I 5/ 5.1 Drilling and installation 202 2,673 202 2,673 5.2 Pumping equipment 206 2,721 206 2,721 5.1 Buildings 250 3,299 250 3,299 5.4 Distribution and drainage network 687 9,070 687 9,070 5.5 Roads 143 1,885 143 1,885 5.6 Power supply system 402 5,302 402 5,302 5.3 Vehicles and equipment 36 480 36 480 5.8 Advisory services 270 3,56 270 3,556 Sub-total (5) 2,196 28,986 2,196 28,986 6. Technical Assistance and Training 6.1 Advisory services 1,863 24,592 300 3,960 518 6,838 393 5,188 290 3,828 290 3,828 72 950 6.2 Aerial photography and mapping 414 5,465 - - - - - - 414 5,465 - - - - 6.3 Surveys 155 2,046 15 198 10 132 10 132 100 1,320 10 132 10 132 6.4 Updating feasibility study 104 1,372 - - - - - - 52 686 52 686 - - 6.5 Groundwater study 300 3,960 - - - - 100 1,320 200 2,640 - - - - 6.E Training 48 634 6 80 21 277 21 277 - - - - - - 6.7 Advisory services to other projects 800 10,560 500 300 _3,960 Sub-total (6) 3,684 48,629 821 10,838 849 11,207 524 6,917 1,056 13,939 352 4,646 82 1,082 Base Cost (June 1982) 13,595 179,444 4,208 55,531 3,531 46,591 2,458 32,443 1,991 26,282 1.074 14,213 333 4,384 7. Contingencies 7.1 Physical 1,502 19,827 438 5,782 443 5,847 286 3,775 207 2,733 100 1,320 28 370 7.2 Price 2,833 37,395 381 5,09 626 8,263 637 8,408 664 8 399 5,27 126 1,663 Total (1) to (7) 17,930 236,666 5,027 66,342 4,600 60,701 3,381 44,626 2,862 37,780 1,573 20,800 487 6,417 8. Rehabilitation - Birganj Wells 8.1 Salaries and allowances 281 3,715 37 490 56 743 56 743 56 743 56 743 20 253 8.2 Operating cost 42 560 3 40 7 100 10 130 10 130 10 130 2 30 8.3 Electricity Cost 2/ 216 2,860 15 200 34 450 40 535 47 620 53 705 27 350 8.4 Vehicles and equipment 216 2,845 114 1,500 102 1,345 - - - - - 8.5 Civil works 345 4±55 114 1,500 190 2,500 41 550 - - - - Base Cost (June 1982) 1,100 14,530 283 3,730 389 5,138 147 1,958 113 1,493 119 1,578 49 633 8.6 Physical contingencies 122 1,607 35 454 48 636 16 213 10 131 10 131 3 42 8.7 Price contingencies 258 3,410 51 677 105 1,379 32 424 26 342 32 423 12 165 Sub-total (8) 1,480 19,547 369 4,861 542 7,153 195 2,595 149 1,966 161 2,132 64 840 TOTAL PROJECT COST 6/ 19,410 256,213 5,396 71,203 5,142 67,854 3,576 47,221 3,011 39,746 1,734 22,932 551 7,257 1/ based on June 1982 prices; cost figures from supporting tables plus 3.5% 2/ based on current tariffs: NRs 0.25/kwh and NRs 300 per year per kW installed. 3/ including construction materials 4/ including PVC pipes 5/ only listed are the cost of the Stage I project items, which were eligible for financing from Credit 654 (materials, equipment, vehicles, spare parts, civil works and advisory services). 6/ identifiable taxes and duties are about NRs 2.5 million (US$0.2 million equivalent) and the total project cost, net of taxes and duties, is NRs 254.2 million (US$19.2 million equivalent). Annex 1 -79- TableF19 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II A. Proposed Credit Allocation Amount of Credit % of Expenditures Allocated to be Financed (US $ Million) Birganj Bhairawa Total (1) Civil Works (a) by contract 0.3 3.8 4.1 100% (foreign exp.) 90% (local exp.) (b) by force account 0.1 0.2 0.3 40% (2) Equipment, materials, agricultural inputs, vehicles and spare parts 0.3 4.2 4.5 (a) directly imported 100% (foreign exp.) (b) locally maufactured 100% of ex-factory cost (c) locally procured 75% (3) Salaries, Local Training and Operating Cost exclusive of Electricity Cost 0.2 1.3 1.5 50% (4) Technical Assistance and Overseas Training - 4.9 4.9 100% (5) Unallocated 0.1 0.6 0.7 TOTAL 1.0 15.0 16.0 B. Estimated Schedule of Disbursements IDA Fiscal Year - Semester Disbursement (US$ Million) Semester Cumulative 1983 1st - - 2nd 1.0 1.0 1984 1st 1.5 2.5 2nd 1.7 4.2 1985 1st 1.8 6.0 2nd 2.1 8.1 1986 1st 2.2 10.3 2nd 2.0 12.3 1987 1st 1.6 13.9 2nd 1.4 15.3 1988 1st 0.7 16.0 Estimated effectiveness date: February 1, 1983 Estimated closing date : October 31, 1988 -80- Table 23 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT STAVGE II Reoverble Project Cost y Fixed and Variable Compoents STAGE i AREA (EXISTING WELLS) NEW TUBEWELL SCREME Prest Annuity Anuity Masginal C.t Present Annilty Annuity Marginal Cost value e/ at IO% pe _ er Hour b/ Value al at 10% oer p n Hoor _ b/ (NRs M) (NRs ) (NRs) (VNR) (NRs M) (NRs M) (NRs) (NRs) en. en. fin. eon. fin._ econ. fin. ooon fin, en, fin. e, fin. econ. fin. econ. 1.Leonr Inveotents (o) Distrib<tion ind Drainage Syem 34.5 - ) 1C.3 (b) Rildini i.7 -) (c) Vehielos, Eq-ipmenr, Materia 10.0 - ) 10.3 - 1319 - - - 9 - 2.12 - 172 - - - (d) Pnwer Connecons , 0 - ) .4 (e) Project EstabliLent 18.0 1.2 (f) bed Aequis4tion 10.2 - .7 2. Repiaeabla nestents (a) Wells 35.6 34.9 - - - - 22.1 21.7 10.C 10.2 32.5 31.9 (>) Ponpsen 38.3 37.2 - - - - 23.6 23.1 2.5 7.8 7.7 3. Fixed 0M lost (a) Managementi iAaintration 3.7 - .4 (b) Staff & Mteoils 19.3 - )- 1.719 136271 - - - ( ) ehicles i Euip ment for D&M f1 13.3 - 623 h/ (d3)oe el' on9e ((o a noe> 12.1 d'- 4. øeoo364Cese (a) Cost of Pønping (non. nort) - 14.2 50.3 - - - - 8.8 31.0 1.9 6.4 - - - - 5.9 20.0 (b) Operating Ex,penss il 14.4 13.0 - - - - 8.9 8.1 0.9 0. - - - - 2.8 2.5 5. Total (a) henud 147.8 - 15.16 - 1995 - - - 25.6 - 2.69 - 1448 - - (b) variable 102.2 135.1 - - - 63.4 83.9 15.7 19.9 - - - - 49.0 62.1 (e) total 250.0 - 15.16 - 1995 - 63.4 83.9 41.3 - 2.69 - 1448 - 49.0 62.1 4. Volume of ter per hou an field 284m3 284.a 279m3 279.' 7. Margina c per M0 f wter a f,eld (Rs) 0.223 0.295 0.176 0.223 a/ Prese,n -at refers to 1982/83 for both coonents. Inestment cost for eintirg welln doesnot non tain accumulatnd inte st onoyn stno start of implementation, but is expresd in 1982 prices, os st oef en wels. b! Calculated a preent vale of cst divided by pr-pes valueof netoned runing heurs (1.61 1 hourn ror eisting weln, 0.32 M hone for ne non ll.) c/ Excluding technical asisnc--e. d/ Assnnag average life of 20 yoers; replaenent at NRs 0.5 M per oell; reidual nalu recovered in year 30. e/ A.siing avrage lite of 7 yea (or abou 19,000 rnning hours); replacment at NRs 0.2 N per pumpset (subnersile every 7 vers; nc resdual eal-e. f/ Replaced eery 7 yers. / Corresponds to 'ied osat of instal"ed capacity (bRn 300/kW/y,ear) c/ Based os differential ranes for peak and off-peak, eet And dry seaon one (s ee Annex 8) os phasing-in of wells and gradual increase in dradown. i/ Spares, fuels, etc. -81- ANNEX 1 Table 21 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Rent and Cost Recovery Indices (Stage I Area) Farm Size Class 1 2 3 4 5 Total -------Incremental Present Values (NRs M)-------- 1. Gross Value of Production a/ 12.74 145.90 61.87 41.00 67.65 329.16 2. Less Production Cost (cash) 2.62 31.78 14.47 13.14 23.59 85.60 3. Gross Margin 10.12 114.12 47.40 27.86 44.06 243.56 4. Less Depreciation 0.10 0.70 0.28 0.17 0.23 1.48 5. Less Land Tax 0.00 0.00 0.00 0.00 0.00 0.00 6. Less Imputed Value of Own Resources b/ 1.90 19.33 7.95 3.55 3.65 36.38 7. Less Risk Allowance 1.03 11.22 4.00 2.40 3.88 22.53 8. Less Management Fee 0.81 9.41 3.91 2.41 3.98 20.52 9. Land Rent 6.28 73.46 31.26 19.33 32.32 162.65 10. Rent as % of Gross Margin 62% 64% 66% 69% 76% 67% 11. Volumetric Water Charges 2.30 21.19 9.00 5.07 6.74 .44.30 12. Other Water Charges - 2.18 2.57 1.63 2.44 8.82 13. Total Charges 2.30 23.37 11.57 6.70 9.18 53.12 14. Rent Recovery Index 37% 32% 37% 35% 28% 33% (13 + 9) 15. Recoverable Cost - - - - - 235.5 d/ 16. Cost Recovery Index - - - - - 23% (13 + 15) 17. Farmers' Income Per Capita (after water charges) c/ 821 1,706 2,466 2,726 4,384 1,950 18. Estimated Critical Consumption Level c/ - - - - - 1,070 19. Estimated National Per Capita Income c/ - - - - - 2,050 a/ After deduction of losses and seeds, but including by-products i/ Family labor and labor of owned bullocks c/ At full development in project year 10 (1992), equivalent to estimated absolute poverty level. d/ Share of Stage I area in total recoverable cost of the project (para 7.06), when aggregate cost of existing and new tubewell scheme and apportioning according to size of command. Actual present value of cost for Stage I area is estimated to NRs 250.0 M. ANNEX 1 Table 22 -82-. NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT STAGE II Economic Rates of Return A. Entire Stage I Project, incl. sunk cost: Incl. TA a/ Excl. TA Incl. Road Cost 7.6% 9.6% Excl. Road Cost 8.1% 10.3% B. New Tubewell Scheme: Incl. TA Excl. TA Incl. Road Cost 10.8% 12.0% Excl. Road Cost 12.1% 13.6% C. Entire Stage II Project (O&M and new wells; "best estimate"): Incl. TA Excl. TA Incl. Road Cost 24.4% 28.6% Excl. Road Cost 25.9% 30.6% a/ TA = Technical Assistance (Advisory Services) Annex 2 -83- Page 1 NEPAL BRAIRAWA-LUMBINI GROUNDWATER PROJECT Stage II Consulting Services Draft Terms of Reference Introduction 1. Consulting Services are required by the Department of Irriga- tion, Hydrology and Meteorology and the Department of Agriculture of HMGN to assist and to advise them in the implementation of the Bhairawa-Lumbini Groundwater Development Project Stage II. The Consultants duty station would be Bhairawa. The Groundwater Resources Development Board, DIHM and DA through the project office in Bhairawa would provide appropriate professional, technical and administrative personnel as counterparts to work with the consultants. Proposal 2. Consulting firms invited to submit a proposal for the required services should describe in the proposal how they would carry out the assignment, and give the experience and qualifications of the staff they intend to assign to the project. A timetable for the various parts of the assignments and for the deployment of staff should be presented in the form of a bar chart. In addition to specialists in construction and O&M of groundwater projects and irrigated agriculture, the consultant team should include a workshop and equipment management specialist. The con- sulting services would start on March 1, 1983 and would be provided over a period ending October 31, 1987. Scope of Work 3. The essential objective of the project would be to build up a long-term capacity to ensure proper operation and effective maintenance of the tubewell schemes constructed under the stage one project, which, on the long term would also benefit similar projects elsewhere in Nepal. In addition, the project would include a pilot demonstration component to develop, test and demonstrate improved design, construction and O&M stand- ards for new tubewell schemes. The main components of the project are: (a) to complete the implementation of the stage one project works; (b) operation and maintenance of 64 wells equipped with electric powered pumps, 280 km of canal distribution, 96 km of village roads; -84- Annex 2 Page 2 (c) procurement of equipment, vehicles, spare parts, construction materials and workshop and office facilities required to carry out the project; (d) planning, design, installation and operation of 15 new tubewells, equipped with submersible pumps and distribution networks of buried PVC pipes; (e) implementation of field channels and organizing farmers in water users groups; (f) strengthening of agricultural support services and training; (g) monitoring and evaluation studies; (h) updating an existing feasibility study for a further groundwater development project in the Bhairawa-Lumbini area to serve approximately 13,000 ha. Scope of Services 4. Management. The project consultant would advise and assist in: (a) strengthening the project's capacity to plan, execute, monitor and operate and maintain the project works; (b) defining the mechanism and responsibilities of project management and of the functional divisions, with the objective to operate the project as an integrated agricultural development project; (c) determining the project's staff and budget requirements; (d) the project's administration, finance and accounting and auditing procedures. 5. Operation and Maintenance. The project consultant would be responsible for: (a) the preparation of comprehensive O&M manuals, for the typical tubewell designs. The manuals for the tubewell designs would be furnished to HMGN in draft by November 1983 and in final form by November 1984. In addition the consultant would advise and assist in: -85- Annex 2 Page 3 (b) developing standards and programs for the O&M; (c) designing a cost accounting system for Operation and Maintenance; (d) organizing farmers in water users groups; (e) providing guidelines on on-farm water management practices; (f) the operation and maintenance of the project's workshop and fleet of equipment which include the preparation of guidelines for inventory control to ensure timely availability of supplies, materials and spare parts and preparation of schedules for regular inspection and overhaul of project's facilities. 6. Engineering. The project consultant would advise, assist and supervise the: (a) preparation of topographic maps for the 2,300 ha gross Stage II area to a scale of 1:10,000 with 1.0 m contour and to a scale of 1:2,500 with 0.25 m contour intervals; the topographic survey would be carried out using the existing aerial photographs; (b) the siting of the fifteen new wells, the delineation of the command areas, and the preparation of detailed specifications and ICB tender documents for the supply and installation of submersible pumps, engines, switch gear, casing and appurtenant works for the 15 tubewells; (c) staking out the alignments of the village roads, transmission lines, drains, the pipe distribution lines and the placing of the outlet valves serving 4 ha areas; (d) the preparation of detailed designs, specifications and tender documents suitable for competitive bidding for the village roads, pump houses, and drains; (e) the detailed design of a pipe distribution system supplying to 4 ha service units; specifications and tender documents for the supply and installation of PVC pipes; (f) design, construction and testing of wells and the installation of pumping and control equipment. -86- Annex 2 Page 4 7. Agriculture. The project consultant would: (a) advise and assist in managing the extension service in the Rupandehi district with particular emphasis on the tubewell areas; (b) review cropping patterns and introduce, in consultation with project staff, cropping patterns best suited to the project area; introduce improved farm practices, in particular with regard to wheat cultivation under different soils and drainage conditions in the project area; (c) advise and assist in establishing crop demonstration plots in each season in farmers' fields in the project area, to demonstrate improved cultural practices including the use of fertilizer and plant protection chemicals; emphasis would be laid on demonstrating cropping systems which would practice intensified crop cultivation throughout the year; (d) prepare recommendations (crop manuals) for improvement of farming practices for the anticipated range of agricultural conditions the recommendations would form the basis for agricultural extension in the project area; (e) establish and carry out, in collaboration with project staff, a program for: (i) in-service training for JT and JTA; (ii) refresher courses for SMS; and (iii) training techniques for DADO and SMS; (f) identify the problems associated with the development of on-farm water application systems and make, with the help of the project staff, appropriate recommendations to improve the layout, design and construction of such facilities; (g) assist in organizing farmers in water users groups; (h) visit relevant research stations to obtain data relation to crop water requirements and utilization practices; prepare detailed guidelines for on-farm water management of each crop for use by field staff and farmers in the project area; assist in staff training programs in on-farm water manage- ment and operations where required. 8. Monitoring and Evaluation. A local consulting firm kAPROSC ) would advise and assist in: -87- Annex 2 Page 5 (a) a periodic review of the progress of project implementation and in assessing whether the project's objectives are being achieved; (b) collecting and analyzing data, which would provide guidance for improving the planning, design, and construction criteria for public tubewells. The consultant would carry out short-term studies on the following subjects: (c) the role and effectiveness of the water users groups; (d) the effectiveness of the organizational arrangements for O&M of the project including the role of agricultural extension in it; (e) an evaluation and comparative analysis of both tubewell systems in the project. The expatriate consultant would guide and supervise the work of the local group. 9. Training. As an integrated part of the services, the project consultant would transfer their experience and know-how to project staff through on the job training and guidance and through arranging special training courses for the project staff. As part of the training program the project consultant would prepare a manual for the planning, design and operation of the "new" tubewells. 10. Updating of Feasibility Report. The project consultant would revise and update as required the 1979 stage two feasibility report for a possible future groundwater development project in the Bhairawa-Lumbini area, covering approximately 13,000 ha. At HMGN's request the consultant would make necessary arrangements for undertaking the aerial photography and mapping for the area. For the purpose of carrying out a semi-detailed soil survey in the Stage II tubewell area (2,300 ha) as well as for the possible 13,000 ha follow-up project, the project consultant would enter into contract with a local consulting firm. The project consultant would supervise their work. 11. Reporting. The project consultant would prepare and submit to the Project Manager a monthly progress report describing the consultants past activities, future work plan, staff movements, financial statements, etc. The consultant would advise and assist in the preparation of quarterly and annual progress reports as well as the project completion report for submission to IDA. -88- Sketch 1 NEPAL BHAIRAWA - LUMBINI GROUNDWATER PROJECT STAGE II Typical Well Design -Concrete plinth 22" Drilled hole (40 m) 16" ID API casing Grout (40 m) asing hanger 16"110" 13%" Drilled hole - 10" ID API casing (160 m) (about 80 m) Naturally developed 10" ID API slotted screen graded pack (about 80 m) Total depth about 200 m May, 1982 World Bank-23918 -89- Sketch 2 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT STAGE II 1100 m Surge Riser Outlet Valve 100 350 100 Buried Pipe 160 mm 0 PVC 120 ha Net Command Area /160 mm E 4 ha Area Tubevell Served byI Outlet Value- Schematic of Tubewell Buried Pipe Distribution System Approx 3.0 m Outflow Chamber "Exploded" View (Float control on pump line and level probes for Apprx. 28 mpump stop/start not shown) Approx 2.8 m To D istribution Reinforced Loops < BrickwVork Control Chamber for Four-Loop Pipe Distribution System May .1982 World Bank-23891 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT STAGE i Implementation Schedule Calendar Year 1982 1983 1984 1985 1986 1987 Project Year 1 2 3 4 5 Monsoon Season] /// /// // //, /// Credit Effective Tubewell Systems Stage I (7,600 ha net or 64 tubewell systems) Construction of Balance Works Construction of Field Channels Operation and Maintenance New Tubewell Systems (1,800 ha net or 15 tubewell systems) 2,400 ha Survey and Mapping 15 Planning and Design 9 6 Drilling and Installation M M g 0 5 10 Development and Testing m m i 5 10 Installation of Pumping Equipment 5 I I 5 10 Construction of Distribution Network Operation and Maintenance 5 20 Roads (25 km) I l% 5 50% 50% 9 Drainage 0 0 Power Supply System Procurement of Equipment and Vehicles Buildings Technical Assistance and Training Advisory Services and Training Survey and Mapping m in 13,000 ha Updating Feasibility Study Rehabilitation of Birganj Wells Procurement Construction Operation and Maintenance 1] Mid-June to end September Project Start Project End November 1, 1982 November 1, 1987 rt World Bank-23937 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT STAGE II ORGANIZATION CHART M nitry.of Ministry of Water Resources A oricolture General Manager Department of Irrigation National Groundwater Resources!J Department of Electricity Corporation Hydrology and Meteorology Development Board Agriculture Electr icity Corporation - Comriatig - ---- -- - Project Manager RgiA ciretor TrCotructin nesaConoulaanProject Coordination cuestrucaioravalResearchn National Extension Transmission Lines MonitoringPrjc Operation andGoudw Maintenance Mntrn AdministrtionConstrction Operation and - Agriculture District Agriculture 'alttonc Division Developmeant Officer Finance Division Division Mati neeDsion Adminrive. Administration - Unit Surveys Enginesand Fieldchannels3) _ As Us SMS SMS P KathmanduAsciash - iac tc D r- Developmerot Eicaln Canals.,Structures Sub JtrT F Dgn and JHeavy - CnutEipment Roads JTA JTA Budings Costruct ion Vehicles PLAA I] Groundwater Resources Development Board 2/ Project Coordinating Committee Chairman - Secretary to Government, Ministry of Water Resources Chairman Chief District Officer Members - Director General, DIMM Members - Resident Engineer, NEC - Representative, NEC - Manager, Agriculture Research Farm - Representatin, Ministry of Finance - Manager, ADBN, Bhairawa - Representative, National Planning Commission - Chairman of District Panchayat - Representative, Department of Agriculture Local Development Officer - Representative, Ministry of Home Affairs - Pradhan Panch, Village Panchayats (8) - Representative, Ministry Panchayat and Local Development Member/Secretary - Project Manager, BLGP Line of Command _ Preprosentative, Department of Electricity Liaison - General Manager, ADBN 3) Planning and deign of finldchannls and - - - - Advise Observer - Project Manager, Shairswa Lumbini Project assrstance with construction. Member/ Secretary - Chief, Groundwater Resources Development Section, DIHM World Bank-23857 NEPAL BHAIRAWA-LUMBINI GROUNDWATER PROJECT STAGE II Projected Cropping Pattern SUGARCANE2%. PIGEON PE-A 2% POTATO 4% MAIZE SEGETABLES 2%MAIZE 5 LAND MUNG5% /PADDY * PREP. Normal, Local and Improved 8 1 5% ,#NURSER Y LAND 7 PREP. PADDY WHEAT 11 Normal, HYV 10% & 40% :NURSERY WHEAT I 40% ? AND LAND PADDY PREP.* Early, HYV & 20% UNURSERY JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Cropping Intensity DryLSeason Wet Sason World Bank-23969 [ 첫 변짓 - 〃 & & ,- j4,: 일 : 묫r ㄴ ( · ; 닐 』 ㄴ스  - -~~~ -------- -j~ 130 -,m 0 > -g-~ 0~~ 0 0 0 0 00, 0c 7\~/0 lmP Z~ -ô j c - I~ 306 -> 0 - ri 3 y a n -