Nepal - Sunsari Morang Second Irrigation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6655-NEP STAFF APPRAISAL REPORT NEPAL SUNSARI MORANG IRRIGATION II PROJECT May 13, 1987 South Asia Projects Department Irrigation II Division 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 US$1.00 = NRs 22.30 a/ WEIGHTS AND MEASURES (METRIC SYSTEM) 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 hectare (ha) = 2.47 acres (ac) 1.50 bighas 1 million cubic meters (Mm3 = 810 acre-feet or 35.3 Mft3 1 cubic meter per second (m /sec) = 35.31 cubic food per second (cfs2 1 cubic foot per second (cfs) = 0.028 cubic meters per second (mi/sec) 1 kilogram (kg) = 2.2 pounds (lb) 1 metric ton (t) = 2,205 pounds (lb) FISCAL YEAR July 16 - July 15 a/ The exchange rate at the time of appraisal. However, because of the differences between forecast foreign and local inflation rates, a gradual devaluation of the Nepali Rupees against the US dollar has been assumed as follows: US$1.0 = NRs 22.30 for 1986/87, NRs 22.50 for 1987/88, NRs 23.73 for 1988/89, NRs 24.56 for 1989/90 and NRs 24.80 for and beyond 1990/91.  FOR OMCAL Use ONLY ABBREVIATIONS AADO - Assistant Agricultural Development Officer ADBN - Agricultural Development Bank of Nepal ADO - Agricultural Development Officer AX - Assistant Engineer AG - Auditor General AIC - Agricultural Inputs Corporation APH - Adjustable Proportional Module CCA - Cultivable Command Area CMC - Chatra Main Canal D&C - Design and Construction Division DC - Director General (DIHM and DOA) DIHM - Department of Irrigationt Hydrology, and Meteorology DOA - Department of Agriculture EE - Executive Engineer ERR - Economic Rate of Return FCC - Financial Comptroller General FSL - Full Supply Level GOI - Government of India HMGN - His Majesty's Government of Nepal HYV - High-Yielding Variety ICB - International Competitive Bidding IDA - International Development Association JDTC - Jute Development and Trading Corporation JT - Junior Technician JTA - Junior Technical Assistant LCB - Local Competitive Bidding LIB - Limited International Bidding M - Million M&E - Monitoring and Evaluation MOA. - Ministry of Agriculture MWR - Ministry of Water Resources NEC - Nepal Eastern Canal NFC - Nepal Food Corporation O&M - Operation and Maintenance PLAA - Panchayat-Level Agricultural Assistant PM - Project Manager PPAR - Project Performance Audit Report RD - Revenue Department REC - Rice Export Corporation RiS - Rotational Water Supply SA - Special Account SCF - Standard Conversion Factor SMIDB - Sunsari Morang Irrigation Development Board SMIP - Sunsari Morang Irrigation Project SMS - Subject Matter Specialist SOB - Statement of Expenditure T&V - Training and Visit System (Agricultural Extension) NCAU - Water Charges Assessment Unit WUG - Water User's Group This document has a restricted distribution and may be used by recipients only in the perfomance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  GLOSSARY Distributary command - The area taking off from the main canal served by a distributary, typically in the range of 5,000-7,000 ha in SMIP Minor canal command - An operational area, typically in the range of 200-1,200 ha, served by a minor canal taking off from a distributary Chak - An operational area of 50-60 ha in the Stage I area or of 20-35 ha in the Stage II area Chak intake (turnout) - A structure that delivers water from a minor to a chak Adjustable proportional module (APM) - A device at the chak intake structure that modulates flow to the chak with the parent canal at full supply level Watercourse - A channel within the chak conveying water to outlet structures at 3-5 ha sub-chaks Sub-chak - A 3-5 ha subdivision of the chak Division box - A simple gated structure on the whole watercourse stream to 3-5 ha sub-chaks Field channel - Farmer-built channel within the sub-chak that delivers water to the fields Paddy - Unhulled rice Panchayat I - Village-level administrative unit Ward - An administrative subdivision of a panchayat Sajha - Cooperative organization of farmers that deals with the purchase of agricultural inputs  NEPAL LJNSARI MORANG IRRIGATION II PROJECT Credit and Project Summary Borrowers Kingdom of Nepal Amount: SDR 31.2 million (US$ 40.0 million equivalent) Terms: Standard Project The main objectives of the project are to increase agricultural Description: production and farmer's income by introducing an equitable, predictable, and reliable irrigation system in the Sunsari Morang irrigation scheme. The proposed project is the second phase of an IDA-supported program and would complete the development of irrigation and drainage infrastructure over about 26,450 ha (9,750 ha of Stage I and 16,700 ha of Stage II) served by the Chatra Main Canal (CMC) in the Kosi Zone of the Eastern Region of Nepal. The project, which would be implemented over seven years, would also provide for: further improvements to CMC, including desilting facilities; training of project staff; consulting services; funding for the incremental staffing, operation and maintenance; and monitoring and evaluation, and studies. Possible risks that could affect the achievement of project objectives include inadequate desiltation provisions, inadequate water management, insufficient funding for O&M, and delays in implementation. On the desiltation problems, HNGN would prefer a nonmechanical solution rather than implementing the already identified mechanical solution. Studies to identify nonmechanical solutions would be carried out and would determine what alternativi options, if any, were feasible. To help minimize any risk of implementation delay even after the optimal approach has been determined, disbursements after April 30* 1990 would be contingent upon HMGN's having initiated implementation of a satisfactory desiltation facility. On water management, automatic stream dividers would replace the traditional gates, thus minimizing the need for operators; water users' groups would be strengthened; and the proposed operational plan would reduce the possibility of unauthorized use of water. On O&M, HMGN would review its O&M budget with IDA annually; also, the assessment and collection procedures for water charges would be rationalized and the level of charges linked to O&K costs. Finally, the risk of delays in project implementation has been reduced as most procurement documents were made ready by appraisal, and experienced contractors with proven ability will be available. The project is not expected to have adverse environmental effects.  lum MUNSARI NORANG IRRIGATION II PRJEMCI STAFF APPRAISA RORT Table of Contents Wae No. I. !ACKGROn ND ............I.................................... 1 General I Agriculture and Irrigation in Nepal ...................... 2 Irrigation Development Prospects and Constraints 3 Bank Group Involvement in Irrigation Development 7 II. THE PROJECT AREA AND PAST EXPERIINCE ....... ... ..... 9 A. The Project Area ..*.... ....*....**.****.* .. 9 Location and Communications 9........................ 9 Natural Resources 9......9 Population, Farm Size, and Land Tenure ................... 11 Present Agriculture ...................................... 12 Agricultural Support Services ............................ 12 B. Irrigation Development in the Project Area .....0.......... 14 Early Development of the Project Area .................. 14 Sunsari Morang Irrigation and Drainage Project (Stage I) . 15 Lessons Learned ,..e..o...........,eo.oeeo..ee.*ee.o e 15 Rationale for IDA Involvement ......,............e., 17 III. THE PROJECT ......................i............. ,s l1 A. Project Scope and Objectives ............................. 18 Project Concept 4-.-...*. . +....... . .-.......... 18 Project Objectives ...............e........ 19 Summary of Project Components ...,..................... 19 B. Detailed Features *..O.0400000000so*ee Oeoeeoe 19 Improvements to the CMC .. ., 19 Irrigation and Drainage Works in Stage I and Stage II Areas .............. 20 Buildings ....... .. ... 21 Vehicles and Equipment *.e.oe.oo*o**oee*eoee**eee 22 Technical Support ... ........... 22 Support for Establishment and Maintenance Costs ..... ..... 23 C. Design and Implementation ............................... 24 This report is based on the findings of a Bank Mission which visited Nepal in November/December 1986, and comprised of Messrs. Yung K. Choi, P. Ram and R. Vick (part-time) (IDA); and Messrs. W. Barber, G. Peri and R.C. Mishra (Consultants). Messrs. B. Favcett (Irrigation Adviser to IMN) and J.E. Breslar (USAID/Katbmandu) assisted in the appraisal of the project. Word processing was done by Mrs. S. Douglas.  -ii- Paie so, IV. COST ESTInSTE. -FINANCING, AND DISBURSEMENTS .. ........ 0* 26 Project Cost Estimates **.*oo..o.oooo*eo6eeoo*o.eoooo.o... 26 Financing ..o..o.oo. o.o eoo.. oo.. oo.. oo.o.o. ooooo*...e... 27 Procurement ...............ooo ..... .0oo.ooo .ooe*.oooo.*. 27 Disbursement ***.**. ................................. 29 Accounts and Audits .......... ... .............eeeeee 30 V. ORGANIZATION AND MANAGEMENT *.e.oe...e........ee...... 31 General *eeeo..e...oe............e*e.oe**eeo..e... 31 Project Organization ..... .... ....... ..... 31 Water Management ***e**00006e00e90****00004 34 Quality Coutrol ............ 37 Monitoring and Evaluation .......... ............ 37 Agricultural Support Services ............................ 38 Regional and District Coordination Committees ............ 39 VI. AGRICULTURAL PRODUCTION. FARM INCOME. AnD COST RECOVER .... 39 Agricultural Production ...... **** ..........*......... 39 Market Prospects ..................... . 40 Prices ***************e***eg*** 41 Farm Incomes *e.o.eo........................,., 41 Capital and 06K Costs ...............e....e......,* 42 Cost Recovery ........................ .ee.. 42 VII. BENEFITS AND JUSTIFICATION 46 Project Impact 46 Economic Analysis ..e ...... . * 47 Sensitivity and Risk Analysis 48 Environmental Effects 50 VIII. AGREEMENTS REACHED AND RECOMMENDATIONS ................... 50 Agreemenat s ............ 50 Recomendations 53  -iii- Page No. SUPPORTING TABLES 1. Nepal - Production of Principal Crops ......................,.. 54 2. Salient Climatic Data ......o......o..eoao.... . . o.e .S55 3. Monthly Flow on Kosi River **,........,...........e.... 56 4. Estimated Importation of Suspended Bed Material from Kosi River to CMC **vv^e*