Tunisia - Irrigation Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report Fo. 5344 PROJECT COMPLETION REPORT TUNISIA IRRIGATION REHLABILITATION PROJECT (LOAN 1068-TUN) December 4, 1984 EMENA Regional Office This document has a restricted distribution and may be used by recipients only in the pedformance o f their official duties. Its contents may not etherwise be disclosed without World Bank inhorization.  ABBREVIATIONS AND ACRONYMS BNT National Bank of Tunisia CCN Central Cooperati-ve for Fruits and Vegetables of Nebbana DEGTH Directorate for Hydraulic Studies and Major Works FOSDA Special Fund for Agricultural Development OMIVAN Office for the Development of Nebhana - Execution Ageacy for- the NeDhana Component OMVVM Office for the Development of the Lower Medjerda Valley - Execution Agency for the Medjerda Component SONEDE National Company for the Exploitation and Distribution of Drinkable Water STIL Tunisian Company of Milk Industries STEG Tunisian Company for Electricity and Gas  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT TUNISIA IRRIGATION REHABILITATION PROJECT (Loan 1068-TUN) Table of Contents Page No. PREFACE ..................................................... BASIC DAtA SHEET ....................... ii HIGiAIGHTS ..................... ........................ iii I. BACKGROUND ..................... 1 II. PREPARATION AND APPRAISAL .................................. . 2 Chronology .............................. 2 Targets and Goals . 3 Project Description ...................................... 3 III. IMPLEMENTATION .............................................. 5 Effectiveness ............................................ 5 Implementation Schedule .................................. 5 Reporting ....................................... 5 Procurement .............................................. 7 Costs .........................,,.,.,.,.,,.,,,,.,, 7 Disbursements ................ ....... 10 IV. PROJECT IMPACT .13 Nebhana .13 Medjerda .17 Credit to Farmers .22 V. ECONOMIC REEVALUATION .25 VI. PERFORMANCE ................................................. 28 VII. SPECIAL ISSUES AND LESSONS LEARNED .......................... 30 ANNEX: Telex from OMVVM of August 22, 1984 MAP: IBRD 10986 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.  PROJECT COMPLETION REPORT TUNISIA IRRIGATION REHABILITATION PROJECT (Loan 1068-TUN) PREFACE This is a project completion report of the Irrigation Rehabilitation Project, for which a Loan 1068-TUN to the Republic of Tunisia was approved an December 19, 1974 in the sum of US$12.2 million. The Loan was closed on June 30, 1983, and the unused balance of US$560,611 was cancelled as from that date. This Project Completion Report was prepared by the Bank staff based on the Appraisal Report, Loan Documents, supervision reports, other relevant documents contained in the Bank files and a Completion Report prepared by OMIVAN (March 1983) and on several working papers specially prepared by OMVVM. In June 1983, a Bank mission to the field discussed the major issues of the project with the executing agencies and collected additional data. The PCR was submitted to OED on February 22, 1984. The Project was not selected for audit by OED and the PCR was sent to the Borrower on June 21, 1984 for comments. Comments received from OMVVM are attached as Annex.  PRO1cr C011LGtIof REPOReT TUNISIA IRRICATION RERAMILITATION PROJECT (LOam 1066-mti) Basic Data sheet REy PROJECT DATA Appraisal I of Appraisal Estimate Actual Estiate Project coat (USt million) 23.8 23.0 97 Los Aount iusS illion) 12.2 11.6 95 * Date Board Approval 12119/74 12119174 Date Effectiveness 05/01/75 09/18/75 DBte Physical Compounnts Complectd 12/81 12/82 Closing Date 06/30182 12/31/82 Economic Rate of Return ifl 28 32 114 Institutional Performanc s tisf atory Agronomic Perfornce sat if ctcry CUHUIATIVC DISBURSEMENTS FY70 FY77 FY78 FY79 FY8O FY81 FY8Z FY83 Appraisal Eat ia,st (USl milliocs 0.3 5.0 8.0 E0.1 11.0 11.5 12.2 - Actual (UsS sillion) 1.2 1.9 4.2 5.8 7.0 8.7 9.7 11.6 Actu-l as 2 Df Estimate 400 35 53 57 "4 7b lD 95 Date of Final Disbursement 7/28/83 MISSION DATA ;o. of Man- Specil. Perfor. TVpe of Mission Date PersonD. Week./A Repre- /b Rating t Tr-nd/d Pr-b!sl /e Identification 12/71 3 14 IE/EC - - _ Preparat ion 5/73 3 12 IE/EC/AG - Appraisal/Board 11/73 b MF:)15 I/EC/EC'FA - (`q) 128 Subtota1 Ib5 Supervision 1 0/75 1 2 EC 2 1 K Supervision 2 12/75 3 a EC/IE/AC 2 2 P/N Supervision 3 4/7t. 2 I EC/AC 2 2 P Superv ision 4 10/7n 3 8 IE/EC:LVS 2 2 P Supervision 5 2/7; 3 7 IE/EC/LYS 2 2 P Superv.aion O 10177 2 3 IE/AC 2 2 P Supervision 7 4178 AG/IE 2 1 0 up rvisiosi 8 91/7O I I IE 2 1 0 Superv-ioi li/Heu 2 2 ACIEC I I - Supervision 10 10180 2 1 AC/SE I 2 Supervision 1i 2111 2 I IE:/A I 2 _ Supervision :Z 108 2 2 XE 2 2 FlO Supervision 11 2/82 1 2 E 2 F/P Supervision 1_ 91/8R 2 1 IE/AC 2 2 F Subtotal 4 Total 211 OTHER PROJE-CT DATA Horr- er : over-s-nt of Republic of Tunisia Guarantor : Republic of Tunisia .ecut ing Agent leni : DNT. OMV'. ONIVA4 Fisc-l Year of B -rrover ; Janu-ry I to Demb-r 31 Nam ot Curr.ncy Cabbr-vs.tinn) Tuni.ia. [ioar (fl Currency E-chanRe Rate: Appraisal Ye-r Averag1 USS1.00 - D 0.44 Intervening eYar Average US31.00 - D 0.45 Ciapletion Ye-r Aver-ge USS1.00 D 0.59 FoLlov n Pro ect NA_ : d 1erdrWbh..n irrigation -ov.lopmr Proje Loan S.mber : Z1;7-tUN Amount ;1;$ M.sLli.n. 224[ Lon Axremrent DAt 1*8/82 a Fl - Filld; Hq - Headquarter /i FA - Financial Analeat; AC - agronmist: F. - e-onomist; IE - Irrigation Engine-r; LVS - Livestock Sperialiat 7 I - proble-free or inor pro-ble; 2 - md-eat. prebl-e Id 1 - improving; 2 - stati .nar Ir F - financial; N managerial; P - political; 0 - other  - iii - PROJECT COMPLETION REPORT TUNISIA IRRIGATION REHABILITATION PROJECT (Loan 1068-TUN) HIGHLIGHTS 1. The project was the Bank's first irrigation project in Tunisia. It was aimed essentially at the rehabilitation of the existing irrigation infrastructure in the Medjerda and Nebhana areas. Its objectives are in line with those of the 1973-76 National Development Plan, and were as a whole successfully met: (a) use the existing irrigation infrastructure more fully and efficiently; (b) raise incomes of small farmers by intensifying and diversifying the cropping patterns; (c) increase farmers' security of land tenure and access to adequate agricultural credit; (d) provide needed public services together with assistance to project authorities; and (e) improve housing conditions for farmers within the lowest income bracket in the Medjerda. 2. For the Medjerda subproject, the rehabilitation works and part of the program to construct farm houtses program was carried out directly by OMVVM in a satisfactory manner which demonstrated its capability to execute further new development and maintenance works. Of the on-farm components using credit channelled through the National Bank of Tunisia (BNT), only the purchase of dairy cattle was fully successful. BNT's lengthy administrative procedures, its requirements, and the levels of down payment led the other lines of investment (stables, tree plantations) to fall short of appraisal targets (para. 3.03). The strengthening of the Office for the Development of the Lower Medjerda Valley (OMVVM) extension services was physically completed, but their impact on the use of irrigation water was low. However, increased assurances of water availability and better water management led farmers to take bigger financial risks and to produce higher-value crops. Yields have generally improved and the shift to higher-value crops has been faster than anticipated at appraisal (para. 4.05). 3. For the Nebhana subproject, rehabilitation works for irrigation, drainage and the road network was satisfactorily carried out by the Office for the Development of Nebhana (OMIVAN) and appraisal targets were often exceeded. The credit component was again less successful (storage basins, land levelling) for the same reasons as for the Medjerda subproject. Construction and equipment of the service cooperative storage facilities  - iv - was 40 completed and the construction of the grading, processing and marketing station was postponed several times by lack of management capacity of the Central Cooperative of Nebhana (CCN) and eventually had to be cancelled. The extension service set up under the project was a success in encouraging farmers to adopt improved cultural practices. However, the impact was less than it could have been because of the insufficient supply of irrigation water. This issue is being addressed by the follow-up project (Loan 2157-TUN), which improves the harnessing, the distribution and the management of the available water resources. 4. The economic reevaluation shows an economic rate of return (32%) higher than estimated at appraisal (28X). This is mainly due to higher value of production, better use of the already existing land and infrastructure which resulted from higher security in water supply (para. 5.06). 5. Other points which may be of special interest are: - programming, monitoring and evaluation were inadequate (para. 4.15); - extension staff made significant achievements in promoting improved farming techniques, especially for the production of selected vegetables (para. 4.15); and - farm income is estimated to have increased about 12% at project completion and is expected to increase further by around 19% at full development (para. 4.19). 6. A lesson to be learned is: when farmers are assured of a reliable water supply they are likely to use irrigation structures better and be willing to take bigger risks with higher valued crops (para. 7.04).  PROJECT COMPLETION REPORT TUNISIA IRRIGATION REHABILITATION PROJECT (Loan 1068-TUN) I. BACKGROUND 1.01 In 1971 the Government of Tunisia requested Bank assistance in increasing the returns to investments in public irrigation infrastructure in the three zones of highest priority for rehabilitation, Medjerda, Central Tunisia and Nebhana. The present project covers two of these zones, Medjerda and Nebhana, and it was prepared by the FAO/Bank Cooperative Program in cooperation with the Tunisian GovernmenIt. On December 19, 1974, the Bank approved a loan of US$12.2 million which was the Bank's first irrigation operation in Tunisia. 1.02 The Medjerda and Nebhana projects are the two oldest public irrigation investments in Tunisia. The French and US Governments financed feasibility studies for both in the 1950s. Construction of major works was completed in Medjerda in 1960, and in Nebhana in 1970. 1.03 In Medjerda, the irrigation and drainage methods needed improvement, and existing facilities were badly maintained; there was a lack of security of farm titles and considerable fragmentation of holdings. In Nebhana, the basic layout of the irrigation network was not adequate and could not satisfy the requirements of the farming systems, which led to underutilization of the irrigation networks. The Fourth Development Plan (1972-1976) aimed at increasing agricultural production and focused on the rehabilitation of existing irrigation infrastructure; encouragement of investment by the private sector; facilitating the access to credit by small farmers; and increasing the security of land tenure. The project objectives closely followed these general goals by (a) closing the gap between potential and actual use of irrigation investments; (b) raising incomes of small farmers; (c) increasing tenure security; (d) increasing the accessibility and volume of credit available to small farmers; (e) strengthening agricultural development institutions; and (f) providing needed public services (electricity, water supply) and improved housing for low-income farmers in Medjerda. 1.04 The project was estimated to cost a total of US$23.8 million, with a foreign exchange component of US$12.2 million (51%). The Medjerda su-bproject was expected to cost US$17.2 million and the Nebhana subproject the remaining US$6.6 million. The Bank was to finance the foreign exchange component and Government the balance.  -2- 1.05 OMVVM and OMIVAN had overall responsibility for project execution in the two subproject zones. OMVVM utilized the services of the Tunisian Company for Electricy and Gas (STEG) and the National Company for the Exploitation and Distribution of Drinkable Water (SONEDE) to execute power and water supply components. Credit was provided by BNT through the existing channels. 1.06 Implementation of both subprojects was expected to take seven years and full agricultural development (1987) was expected to be six years after irrigation rehabilitation had been finished. The Completion Date was scheduled for December 31, 1981 and Closing Date June 30, 1982. The Closing Date was extended by six months to December 31, 1982 (our telex of April 12, 1982) and expenditures committed before that date were honored until July 28, 1983 when the loan account was closed. The extension given was requested by the Government to permit the compleFion of irrigation and drainage related structures which had been delayed due to unfavorable climatic conditions and the use of the balance of the credit component. II. PREPARATION AND APPRAISAL Chronology 2.01 The project was appraised in November/December 1973 on the basis of the preparation report mentioned in para. 1.01. 2.02 After appraisal, major issues were raised relating to (a) land tenure and agrarian reform, (b) agricultural ciedit, (c) organization and manpower, and (d) availability of water. The existing legislation on land reform was satisfactory, but it was not enforced. The lack of clear definition of land ownership and Droperty boundaries discouraged exploitation and access to credit was difficult. Proper water management and proper distribution bv adequate networks was not possible. 2.03 The agricultural credit issue was related (a) to "proof of ownership" as a condition to be awarded credit (a matter to be resolved in the context of Agrarian Reform), and (b) to conditions for medium- and long-term credit on which no coTIsensus had been obtained at that time. The two executing agencies, OMVVM and OMIVAN, at that time needed a better deEinition of their internal organization and of their relations with other departments of the Ministry of Agriculture. The availability of water was an issue in Nebhana where competition with tourist and industrial activities could endanger the satisfaction of the irrigation needs. 2.04 Negotiations were held on November 4-13, 1974, and agreement was reached on the above issues. The basis of understanding reached for agricultural credit is particularly worth mentioning, since it was a constant problem during project implementation. It was agreed that the Government would review agricultural credit policies on the basis of which an agreement with BNT (under conditions acceptable to the Bank) would be entered into before February 1, 1976 for providing credit to  -3- farmers under the project. Without this the Bank would not disburse funds of the credit component of the project. Board presentation took place on December 19, 1974, the Loan Agreement was signed on December 31, 1974 and became effective on September 18, 1975, 4.5 months after the initially foreseen date. The delay was because of difficulties experienced in recruiting a senior advisor for OMIVAN. Targets and Goals 2.05 The project was to greatly reduce the disparity in income and 4 standards of living between smal]l farmers on one hand, and large farmers in Mcdjerda and the urban population, on the other. It was planned that as a result of thc project, about 1,800 farmers in Medjerda would have a net incone rise of 142% and about 2,000 farmers in Nebhana would have an increase in net farimi incomte of 153% compared with the situation without the project. The demand for hired labor was expected to double at full developmtnt, while self-employment at farm families was projected to increase by ahbouL 36% in Mccdjerda and 53% in Nebihana. Additional full-timle ciiployinirt for abouLt 3,000 persons was expected to result from Lhe project. Agricultuiral prodtiction would be increased through inc reas ing y i e 1 (Is ind X roppud area Project L)Dtscrrip rion Mt d j e- rd.m 2.06 Tets ma iii e IfmitittS were: (a) rch.bi Ii tLt ion of l th existing irrigation, drainage and road ritworks ovt'r all arta of 20,000 ha; (h) cotistr it tion o lFarm houses and installation of facilities to provide dr-i uki mg watc r and cictricity to farms; (r ) c'stibl i Shiig wrin l'r-;kS; (d) pullrflh.isu of0 gqii;)imnt rtO- o[pration and maintenance of the ;rr-i;lt(inl works; (!') .sl-t'l.gt tiniu of fO'MWVVM through provision of specialists, '.01 Ilowh'; i p;) in11i VeSl i *' t!S; l, ai~- t.mra: *": 2o'r!ii (orchards, dairy cattle, stables) to be Iai! - .nl 'b r. i-gli;l !!NI by ritt!i dinm-term e-redit, and short-Lterm *. ;-:i t Kar i opult;; and ({) ~.-, ;1' '! 25S.til!(Cet to) nYVvvm ill prejparing final design and ti '''. ' isui-.. 1 ' r tiet Project works.  -4- Nebhana 2.07 The main elements were: (a) repairs to the hydro-mechanical equipment of the main pipeline serving the whole area of 5,000 ha; (b) rehabilitation of 50 km of farm roads, provision of 800 water meters, installation of water distribution PVC pipes, construjction of 98 km of drains and establishment of windbreaks. These works to be executed on about 2,000 ha where land reform consolidation was expected to be completed; (c) provision of equipment for operation and maintenance of the irrigation system; (d) on-farm development and short-term seasonal credit to be finaniced through credit provided by BNT; (e) in;provem--nt of cooperative storage facilities and construction of a Lruit and vegetable grading and packing station at Sahline and provisiun of vehicles for these facilities (to be financed through BNT credit); (C) strunglli:ning of OMIVAN through provision of specialists and vLhiclcs; anid (g' technical assisL-nce to OMIVAN for preparation of engineering designs and tender documents for project works, and for the preparationr of a seconc. phase project. 2.CW In May 1978 :i proposal made by OMIVAN to introduce some minor cl;ang.s ii th*,- :ictioris initially planned at appraisal was approved by the iVa;nk. Tlity ar- ess-unti.ally related to (a) elimination of deep plowing; (b) irtrn,al- of sprinkling irrigation system for 400 ha of veg. tabl..s; 'c) pl;nt.tiorn of 300 ha of orchards; and (d) provision of the S*e:;t::.:s Ifi a consulta1nt for the land raform; addition of other ::ctviti.;:s -ike upreotiLng of olive trees, construction of farm roads, purc;rs;s or; equinipzetit and sm;l!1-.qcale demor,stration of sprinkling syst. -1L :I':. . n:f L.ti ons did not imply a change in the cost estimate. '.0 9 y v ttcr daVuri .iuiv 7, 1980, the Loani Agreement was amended to refl !. t Z e.:e '..soi to finance DC paLrchasU of 350 additional selected ".IO AfLer extensive de'ays, because of lack of initiative and m:an;;emw; 'apailbities of the Central Cooperative of Nebhana (CCN), s In.~ lt was dico:mtd not be feasible ar.ymore to construct it lefore the c! etioi: d.late, it was decide d (on February 26, 19S2) not to finance the c;t -srur t I '. a.ln cq: ppi;ng of the vt:getab]c and fruit grading and packing s-::t 0o! f Ofl! tji Nebharia subproject anld to include it in the follow-up pro; ct.  -5- 2.11 In addition, because of the low rate of disbursement of the credit component, *t was decided on February 26, 1982 that the balance of the funds allocated for credit could be used to finance the execution of works anid purchase of equipment for other parts of thie Projec'. III. IMPLEMENTATION Ef f lt'c t i veiiess 3.01 Tte origintally envisaged date of Effectiveness was May 1, 1975. The following additional conditions were added to the Geners' Conditions oE E:ffE.-tiveness: (a) the authorization and ratification. of the OMVVM Project Agreement; (b) the same for the OMIVAN Project Agreenment; and (c) tthe recrui tLmr:nt by OMIVAN of a senior advisor to assist its director to coordillteL tle project activities. OMIVAN was neither able to fulfill the thircd requliremlent in time for the initial target date mentioned nor for the two exLensionis (July 1, 1975, and September 1, 1975). The Loan became effective oni SeptLenber 18, 1975. This delay did not, however, have ani imlipOl-talnt im11pcLCt on the implementation schedule. .302 Chart I compares the actual with Lhe estimataed schedule of inilduimenLtaLioni for the manzjor comlJponienits of bothl s-ubprojects. This chart sht)ws that (a) the start of mosL of the activiLies was delaiyed by six to Lwrt:1vty monihs, (b) they took much longer than est imnated, and (c) some Wt-c ('teXtldC(l dint i I the Clos ing Date. 30--'( i In the case of the Mcdjerda componenift, sl i ppage was mainly due ti (. lack of caparcity to exectute large ainount of force accolnt works C ro.i ) ; (b) Lil rlm necessa:iry to settle witth SONIFD atn agr-ceimeti for thet co;nsLc-1W't ilo of tire rural wa-ter distribtition system; (c) difficuilties in t 'it i: so it;lhl e siLtes for the construction of th1e' rural centlrs; anii (d) Ch. lulinyg thet wiuillire-iak system and availabiI ity of planting maltrials. 4.i r). lit tl,. cast: of Nehhana the del avs resul ted from (a) chainge s in i - oach to pt :-formn the ltnd reform; (b) lark of capacity for thc : i ct f ,r'. :'--e,o!!,i works; (c) late arrival of the cxpert to ' ~l i ~ tie I-k L i nig c ilpt'.ntn; atan (d ) u pd!at i ng a(I de La i i ii g . i : e- i h .1ii I i Ly s lid i '!S rectioS tLed( by Ltlh Bank. I- ---I:l ) [t:h;ag g S *lic, fljMVVMl :roud OMiVAN, prepared Limlll.y qm.rrte r ly And ortri ior:s rcporL, whic-h were submn iLLed Lo thei Bnk shortly after *',:: :;c e-;t Lt-, periodl to wlinch thtey referred. Thte sitit ilion iS quite i 'i thlit f i e-l d of f inal:c a I s tatements antd nu i t . The ala st : aud ittle acountLs corretspoiid Lo 1981 and the 198 21 accounts ar-C ;'. * .)terI to be- ready arid aud i ted before the Cen(i of 1983. Th.- reasoi ':--- : d ;iv! .-s is thL short A.-- of q iA I if itd s t.t ff to prep. Irt aeroIin Ls *:. 1 erlatc equi pun tI in Lht offt ice-s. The formter is di ft ir ul t to s '. di to the competLitiion of the private sec or. The latter, howover, t.s bct, :"itproving greatly by the efforts mnade aL the centra-l It-vel of t" --'r:i -t ry of Agr icli tilre.  -6- caX I Dw ATITI S PM= , S E~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1975 1976 1977 1978 1979 1980 1981 1982 1983 A. )En1EM BPeibilitation of Ehisting IrriMtinu Drainage and P08ds Netnk Ccstruction _ _ __ . Construction: Famn HBoses, El'tricity, ;kter and RLwal Centers cmstructi__ Od--a= Development c -4 B. NEEHIA4A Land Reform _- iabilitation of Existig Irrigation,