Peru - Irrigation Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7247 PROJECT PERFORMANCE AUDIT REPORT PERU IRRIGATION REHABILITATION I PROJECT (LOAN 1403-PE) May 20, 1988 Operations Evaluation Department This document has a restricted distribution and nay be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS ATDR Administracion Tecnica del Distrito de Riego (Technical Administration of the Irrigation District) BAP Banco Agrario del Peru (Peruvian Agricultural Bank) CAAR Comite de Administraci6n de Areas Rehpbilitadas (Managing Committee for Rehabilitated Areas) CENDRET Centro de Drenaje y Recuperacion de Tierras (Drainage and Soil Reclamation Center) CIPA Centro de Investigacion y Promoci6n Agraria (Agricultural Reserach and Extension Center) DGA Direcci6n General de Aguas (General Directorate for Water) DGASI Direccion General de Aguas, Suelos e Irrigaciones (General Directorate for Water, Soil and Irrigation) FAO/CP Food and Agriculture Organization/World Bank Cooperative Program GDP Gross Domestic Product I&D Irrigation and Drainage INAF Instituto Nacional de Ampliaci6n de la Frontera Agricola (National Institute for Expansion of the Agricultural Frontier) INP Instituto Nacional de Planificaci6n (National Planning Institute) INIPA Instituto Nacional de Investigaci6n y Promoci6n Agraria (National Institute for Agricultural Research and Extension) LAC Latin America and the Caribbean Regional Office (World Bank) MA Ministerio de Alimentaci6n (Ministry of Food) MAG Ministerio de Agricultura (Ministry of Agriculture) O&M Operation and Maintenance OED Operations Evaluation Department (World Bank) ONERN Oficina Nacional de Evaluaci6n de Recursos Naturales (National Office for the Evaluation of Natural Resources) PCR Project Completion Report PCR1 PCR prepared by the World Bank PCR2 PCR prepared by Peru's National Planning Institute and the Government of the Netherlands PCR3 PCR prepared by Peru's Ministry of Agriculture PPAM Project Performance Audit Memorandum PPAR Project Performance Audit Report REHATIC Proyecto Especial de Rehabilitacion de Tierras Costeras (Special Project for the Rehabilitation of Coastal Lands) PLAN-REHATIC Plan Nacional de Rehabilitaci6n de Tierras Costeras (National Plan to Rehabilitate Coastal Lands) SAR Staff Appraisal Report SENAMA Servicio Nacional de Maquinaria (National Machinery Service) SUDRET Sub-Direccion de Re,uperaci6n de Tierras (Subdirectorate of Land Reclamation) THE WORLD BANK O M M ONLY Washnton. D.C. 20433 U.S.A. ONK of DrcttW-GeWA Opeations avaluation~ May 20, 1988 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report - Peru Irrigation Rehabilitation I Project (Loan 1403-PE) Attached, for information, is a copy of a report entitled "Project Performance Audit Report - Peru Irrigation Rehabilitation I Project (Loan 1403-PE)" prepared by the Operations Evaluation Department. Attachment This document has a restricted distribution and may be used by recipients only In the performance of their offcial duties. Its contents may not otherwise be disclosed without Workl Bank authorization. FOR *FCUL US& ONLY PROJECT PERFORMANCE AUDIT REPORT PERU IRRIGATION REHABILITATION I PROJECT (LOAN 1403-PE) TABLE OF CONTENTS Page No. Preface ......... .................................................. * Basic Data Sheet ............... ....... . .... .*.*. ... . .... . *4 0111 Evaluation Summary ........................................... vi PROJECT PERFORMANCE AUDIT MEMORANDUM I. BACKGROUND .............t...... ......................... 1 Country Economic and Social SettinS ...................... 1 The Resource Base and the Project's Setting .............. 2 Project Design .... ....................... 2 Related Experience ........ . ......... ....... 3 II. PROJECT IMPLEMENTATION AND OUTCOME ........................ 4 Drainage Infrastructure ........ *... ............ .... 5 Agrarian Reform ........... 5 Project Costs .. ....... ... .. .................... .... 5 Project Outcome ......... 6 Environmental Effects .............................. 7 Follow-on Project ............... ............. 8 III. CONCLUSIONS AND MAIN ISSUES ............................... 8 overview 0.. .. . .... .. ... ..... ........... 8 Requirements for Sustainability .................. ..... 8 Organization and Financing of Operation and Maintenance of Infrastructure ..* ......... ... 9 Changing Role and Responsibilities of REHATIC ......... 11 Inadequate Preparation of the Project ................... 11 Attachment - Comments from REHATIC ................................ 13 This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authorization. sble of Contents, cont. PROJECT COMPLETION REPORT Page No. I. INTRODUCTION ............... ........ ......... 17 II. PROJECT FORMULATION ................ # .......... .......... i8 III. IMPLEMENTATION ............................... .......... * 21 IV. PROJECT IMPACT ......................................... o ... 24 V. INSTITUTIONAL PERFORMANCE .................... ........... 28 VI. PERFORMANCE OF THE BANK ................................ 32 VII. CONCLUSIONS .................... . . ...... ........ *so. 33 Annexes: 1. Table 1 - Project Costs ............................. 35 Table 2 - Project Financing ........ ......... . .......... ... 36 2. Table 1 - Status of Reclamation of Works ................. 37 Table 2 - Withdrawal of Proceeds of the Loan ............. 38 Table 3 - Project Expenditures Related to Methods of Procurement s ......... .. ......... . . ......... .. ....... 39 3. Yield Increases in Rehabilitated Areas .................... 40 4. Farm Income ....... .......... .... .................... 41 5. Economic Analysis ......................................... 49 6. Socioeconomic Studies - Estimated Yields ........*........ 51 Chart I - Project Implementation Schedule ..............00......... 52 Map - IBRD 12130R - Location of Project Areas PROJECT PERFORMANCE AUDIT REPORT PERU IRRIGATION REHABILITATION I PROJECT (LOAN 1403-PE) PREFACE This is a performance audit of the First Irrigation Rehabilitation Project in Peru, for which Loan 1403-PE was approved on April 12, 1977 in the sum of US$25 million and closed on December 31, 1985, final disbursement taking place on October 9, 1986 with no cancellations. The audit report consists of an audit memorandum (PPAM) prepared by the Operations Evaluation Department (OED) and a project completion report (PCR1), dated June 3, 1987, prepared by the Latin America and the Caribbean Regional Office (LAC). PCR1 was based on: a completion report (PCR2), dated October 24, 1985, prepared by a joint team composed of staff from Peru's National Planning Institute and the Government of the Netherlands (Directorate General for International Cooperation); another completion report dated October 1986 prepared by the Ministry of Agriculture (PCR3); and a visit to Lima by LAC staff in September 1986. The PPAM is based, in addition, upon: a review of the Appraisal Report (No. 1189-PE) of March 17, 1977, the President's Report (No. P-2026-PE) of March 29, 1977, and the Loan Agreement of May 20, 1977; and a review of earlier related experiences through PPAR of Peru - San Lorenzo Irrigation and Land Settlement Project (OED Report 1858) dated January 17, 1978, an Impact Evaluation of the same project (OED Report 3933-PE) dated May 24, 1984, and on the progress of a follow-on project, Lower Piura Irrigation Rehabilitation II, Loan 1771-PE. Correspondence with the Borrower, Board minutes and internal Bank documentation have been consulted and Bank staff associated with the project have been interviewed. An OED mission visited Peru in October 1987, almost two years after project completion, thus permitting an assessment of project benefits after they had some time to stabilize, an important consideration in irrigation/drainage projects and particularly in this project, the first of its type in Peru. Discussions were held with officials of the Ministry of Agriculture, who included present and former project staff. A field trip to visit the project area and project facilities was undertaken and information obtained in the field was used to test the validity of the conclusions of the completion reports of the Bank and those of the Governments of Peru and the Netherlands. Although each PCR has a different audience and emphasizes diiferent aspects of the project's cycle and project results, the audit finds all three PCRs to be of high standard, candid and with well-documented analysis in their respective areas of emphasis. The PPAN agrees with the Bank's PCR conclusions. In addition to summarizing the project's objectives and results, the PPAM expands on the issues of requirements for project sustainability and inadequate preparation of the project. A copy of the draft report was sent to the Borrower on March 29, 1988 for comments. A telex received from REHATIC appears as an Attachment to the audit memorandum. The valuable assistance rendered by the Government of Peru and project staff met in the course of the country visit is gratefully acknowledged. - III - PECT PERMMANCE AUDIT RPORT IMIATIM REHAILITATION I PROJECT (LOAN 148-PE) BASIC DATA SHEET KEY PROJECT DATA AppralseI Actual or Acøul as of EatImeto Estoi.ad Actual Appreal Eet . Tee PrJes C (M6 000 i11.e) oirgial 46.9 viMed 36.La U.9 189 L~us Anå~a (MN ali1lea) 25.0 26.9 l0 9st omord Apprgel - 4/12/77 ftw of Effs6~v..ha 67/26/77 08/02/77 - kat P~1eiel Ceampsae~ CWmpleted 12/81/88 12/31/86 146 Pre.sr61es 16e. Completed (9) 100 96 86 Cewlap 9e es8/88 12/81/f6 142 £sesle n et of (te S () 1 29 111 kude et SIrssBenleI.rles 4, fallie 8,0 feæl I 1 75 CMLATxVE ESTIMATED AM ACTUAL DZSBMSEMENTS (a USS million) P_UFY* FYS2 FYØ8 C94 FYØS FYSS Appr~ie 1h41ame 9.1 1.8 7.8 11.7 17.2 28.9 26.9 - - AseS - - 6.2 1.7 4.8 8.7 14.2 21.9 26.9 Astel e 61øsse - - 2 16 28 38 67 87 1a PriesUpal epsid to 98/2/0o 11. 18 Bete et Plael S1ubusessea6 October 9, 1868 STAFF INPUTS (Staff Weeka) F¥74 FY76 FY76 FY77 FY78 FY79 FY&Ø FY*t MY2 FYS FY*4 FYS FY88 FYS? TOTAL Pro- appraisal 7.3 87.2 23.2 87.7 Appralsal 61.6 6.4 56.4 Helgotiation 9.7 9.7 Supe.vision 1,7 8.4 11.1 88.9 18.8 19.8 26.6 27.4 13.7 13.8 18.3 184.6 Other 1.8 6.3 8.8 1.9 Total 7.3 37.2 75.5 17.1 6.4 11.1 88.9 18.9 19.9 20.0 27.4 13.7 13.6 13.8 320.3 MISSION DATA Date No. of Man-days Speciølizations Perf,r.manco Types of Mission (Mo./Yr.) Persons in Field Reopresnted lc Rating Id Trend le Problem. lf Identificatlon 04/74 4 14 b,b,d,e - - - Preparatlon I 19/74 4 21 b,b,f,g - - - Preparatlon II 63/76 8 28 b,c,d - - - Appraieal 12/75 6 18 b,c,4,d,h - - - Supervision 1 89/77 2 16 &,d 1 1 F Supervision 2 62/78 2 16 a,e 1 1 m Supervision 3 88/78 1 9 G 1 1 M,F Supervision 4 8/79 2 21 *,b 2 1 M,T Supervislon 5 89/79 8 9 b,c,d 2 1 M,T Supervision 8 83/86 8 14 b,c,d 1 2 P,M,T Supervision 7 12/88 2 15 b,c 2 1 M,T Supervision 8 68/81 2 11 a,b 2 1 M,F Supervision 9 83/82 2 11 b,d 2 1 M,T Supervision 18 88/82 1 12 b 8 2 M,F Supervision 11 Ø8/88 8 12 b,d,* 8 2 M,F Supervision 12 18/88 8 12 c,d,e 3 1 M,F Supervision 18 87/84 1 1 b 2 1 F,T Supervision 14 6/85 1 1 b 2 1 P,F Supervision 15 18/85 1 12 c 8 3 P,F Supervision 18 68/88 2 19 b,Q 2 2 P,F Total (SPN) il 289 Completlon 89/86 2 12 b,l * v - OTHER PROJECT DATA Borrower Republic of Peru Executing Agency Ministry of Agriculture, Proyecto Especial (REHATIC) Fiscal Year January 1 - December 81 Nam, of Currency (abbreviation) Intl (1/.) /b Currency Exchange Rate: Appraisal Year Average US81. W 1/. 0.95 Intervening Years Average US81.0 = 1/. 2.28 Completion fear Average US21. a 1/. 14. Follow-on Project: Name Second Irrigation Rehabilitation Project Loan Number 1771-PE Loan Amount (USS million) 68.0 Date Board Approval 11/27/79 /a Miasion estimates based on evised costs prepared by REHATIC in January 1989. These costs reflect the development of four valleys instead of the six estimated at appraisal. Lb 1 I/. a 1,000 S/. (Soles), as of 1/1/86. /c a=Civil Engineer; balrrigation Engineer; caEconomist; duAgriculturallet; e=Agricultural Economist; fDrainage Specialist; g=Sociologist; h=Soile Specialist; and ImProject Analyst. /d 1Uproblem-froe or minor problems; 2saoderate problems; and 3amajor problems. /g 1mimproving; 2stationary; and Sadeteriorating. f F=Financial; M=Managerial; T=Technical; PoPolitical; ar- O Other. - vi - PROJECT PERFORMANCE AUDIT REPORT PERU IRRIGATION REHABILITATION I PROJECT (LOAN 1403-PE) EVALUATION SUMMARY Introduction The project was the third irrigation projectl/ to be financed by the Bank in Peru and the first irrigation rehabilitation project initiated by the Peruvian Government and financed partly by the Bank. Facing the problem of scarce land resources, a rapidly growing population and an unfavorable trade balance, Government decided in the early 1970s to initiate a nationwide program of rehabilitating existing or abandoned irrigation schemes before undertaking new projects. Objectives The project was expected to rehabilitate irrigation and drainage facilities within six valleys in the coastal area by: (i) reclaiming about 19,000 ha of salt-affected and waterlogged land to raise production and expand the agriculturally productive area; (ii) constructing irrigation and drainage (1) systems to improve water management for about 33,000 ha, including the 19,000 he to be reclaimed; and (iii) improving the operation and maintenance of existing I&D systems and providing agricultural extension services throughout the six valleys, which cover about 68,000 ha. The project cost was estimated at US$40.9 million, of which the Bank was to finance US$25 million, and the Kingdom of the Netherlands, US$1 million (for technical assistance). Implementation Experience Project implementation was affected from the outset by problems such as slow start-up because of the need to reconsider and complete basic studies; engineering designs; shortage of budgetary support throughout the early phases; and low Government commitment to project managerial continuity. The project became effective in mid-1977 and execution began in late 1979; project management was reorganized in 1984 and the scope of the project was reduced, providing rehabilitation of only the four largest valleys. Thereafter, counterpart funding, technical capacity and project performance were satisfactory. The six and one-half year project was completed in nine years, at a cost 242 above appraisal estimates. 1/ Quiros-Piurga Irrigation (Loan 114-PE, 1955-60), and San Loreazo Irrigation and Land Settlement Project (Loan 418-PE, 1965-76). - vii - In general, the project has been successful in the construction of all civil works foreseen at appraisal, although it was limited to four valleys instead of six. The project reclaimed 13,000 ha (682 of appraisal estimates), but rehabilitated 28,000 ha (twice the planned targets). The agrarlan reform program was completed as scheduled. The project is behind schedule, however, in establishing sound operation and maintenance (0&M) practices and is still failing to recover full O&M costs. Prolect Impact Reclamation has given quick results. Unlevelled, waterlogged plots of land with low quality forage growth have been converted to levelled land planted with crops. Using their own funds, some farmers have brought soil from other areas to raise the level of the field away from the water table and to decrease the need for pumping. Actual cropping patterns differ somewhat from appraisal expectations, but overall, the crops grown in the valleys are the same as appraised. A substantial increase has occurred in the area planted with cotton (an export crop) and rice (an import substitute). At completion, most yields exceeded the appraisal estimates at full development. Rice yields are some of the highest in the world, as high as 9 t/ha (50% above appraisal estimates). Although incremental incomes are below appraisal estimates, actual incomes are substantially higher now compared to the without project situation. At completion, per capita income increases (in 1986 prices) ranged from US$172 to US$368, and US$60 to US$450 depending on crop grown and on farm size. The ERR is estimated to be 20% at completion as compared with 18Z at appraisal, Sustainability At completion, the project's sustainability was uncertain because the irrigated/drained areas had not fully stabilized, some structures were not yet completed, and the long-lasting aftereffects of the exceptional 1984 floods, causing various degrees of water logging, sedimentation and soil erosion, were not yet fully evaluated. If the trends observed two years later at audit continue, the project would be deemed to have consolidated, containing the basic requirements for a continued flow of benefits. There are two areas, however, that require further progress to ensure the project's sustainability: proper organization and adequate financing to operate and maintain the irrigation/drainage infrastructurel and a clearer definition of the role of REHATIC in irrigation development, allowing the smooth transfer of some of its assets and activities to farmers and other institutions. Findings and Lessons Several findings and lessons emerge from this project experience. * The project was inadequately prepared. This led to pressure on REHATIC to quickly carry out basic studies and final design, and - viii - resulted in several project and cost revisions (PPAM, paras. 9-10, 14, 30-33; PCR1, paras. 2.09-2.10, 3.01, 7.02). * Insufficient Government commitment to the continuity of project management was also a cause of delays in the early stages of project implementation (PPAM, paras. 10-11; PCR1, paras. 3.04, 5.01-5.02, 6.03, 7.02). * The Bank contributed to the ultimate success of the project by acting quickly and effectively when the project was scaled down and REHATIC reorganized (PPAM, paras. 11; PCR1, paras. 3.04, 6.03). * OED's experience confirms that execution of land leveling works associated with irrigation/drainage projects are best carried out concurrently with other civil works (PPAM, para. 12; PCR1, para. 3.08).2/ * As is typical in irrigation/drainage projects, their outcome tends to be uncertain at completion, and can evolve positively only after the works have been operating and soils become stabilized (PPAM, para. 18; PCR1, paras. 4.01, 4.04).3/ 2/ PPAR of Tunisia-Sidi Salem Multipurpose Project (OED Report 7037), dated December 11, 1987. 31 PCR of Colombia - Second Atlantico Development Project (OED Report 4579), dated June 23, 1983. - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM PERU IRRIGATION REHABILITATION I PROJECT (LOAN 1403-PE) I. BACKGROUND Country Economic and Social Setting 1. The First Irrigation Rehabilitation project was prepared and appraised in the midst of a radical transformation of Peru's economy and society addressing sharp differences in wealth and opportunities between income classes and geographical regions. Since 1968 the new government pursued a development strategy aimed at linking economic growth to a transformation of society to achieve broader popular participation in the country's economic, social and political life. high rates of output growth in the early 1970s were accompanied by growing financial instability. The excessive growth of aggregate demand combined with the sharp rise in Peru's import prices since 1973 resulted in an acceleration of inflation and an increase in the current account deficit of the balance of payments. In 1975 the Government approved a series of tax and price measures to reduce growth of aggregate demand and to stimulate growth of food output and exports. These measures were insufficient to reverse the deteriorating central government deficit. The main objectives of Bank lending to Peru were to aid in the creation of a physical and social infrastructure capable of sustaining the evolution of the country's productive capacity in crucial sectors--mining and agriculture. 2. Although contributing only 15% to Peru's GDP, agriculture employed more than 40% of the labor force. In addition, agro-based industries accounted for around 302 of employment and 40% of value added in manufacturing. Agricultural output, and especially food production, had lagged behind population growth (2.9% annually) since the early 1960s. The resulting growth of food imports had placed increasing pressures on the balance of payments. 3. At about the same time, the agrarian reform, begun in 1969, dominatee the agricultural scene through a massive program of transferring large holdings to farmers' cooperatives and other associations. This effort absorbed a large share of the national budget. The National Development Plan for 1975-78 aimed at consolidating the agrarian reform and increasing the growth rate of agricultural output, particularly of import substitutes. - 2 - The Resource Base and the Project's Setting 4. Of the total of 3.6 million ha of cropland, 1 million ha are potentially irrigable, of which 770,000 ha are located in 52 small valleys in the coastal region of Peru. This region produces two-thirds of the country's agricultural output. Irrigation is essential for agricultural production because the coastal region is almost totally arid. Where water is available conditions are favorable for high crop production owing to potentially good soils and near optimal solar radiation and temperature regimes. Many of the coastal irrigation schemes were developed in the 1930s and 1940s as large, private holdings. Excess irrigation in the upper parts of the salleys and lack of drainage in their lower parts led to salinization, a gradual decrease in yields and ultimately abandonment of the land. 5. Facing the problem of scarce land resources, a rapidly growing population and an unfavorable trade balance, the Government decided to initiate a nationwide program to rehabilitate existing schemes instead of investing in costlier, new undertakings. (A similar policy decision for basically the same reasons was taken by Colombia in the early 1970s, which proved to be largely successful.)./ Preparation of the Irrigation Rehabilitation I Project for Coastal Lands (REHATIC) was launched in the late 1960s by the Drainage and Soil Reclamation Center, and continued during the early 1970s by the Subdirectorate of Land Reclamation with technical assistance of the Government of the Netherlands. Government and a Bank/FAO/CP mission identified some degraded lands in six valleys in 1974 which had the following featuress (a) potential for increasing production and bringing back to prod-ction valuible agricultural land in the short term; and (b) relative high level of agricultural development in the non- degraded areas of the valleys. Prolect Desian 6. The project was prepared as a first in a series of irrigation rehabilitation undertakings under the Government's new irrigation policy. As appraised in December 1975, the project was expected to rehabilitate six valleys (south of Limat Mala, Cafiete and Pisco; and in southern Peru: Majes, Camana and Tambo) by: (a) reclaiming about 19,000 ha of salt-affected and waterlogged land, directly benefiting about 4,000 families; (b) rehabilitating and constructing irrigation and drainage (I&D) systems for about 14,000 ha, in addition to the 19,000 ha to be reclaimed, to improve water management; 1/ PPAR of Colombia - Cordoba II Agricultural Development Project (OED Report 7052), dated December 21, 1987. - 3 - (c) improving the operation and maintenance of existing I&D systems, covering 68,000 ha and 15,000 farns, and strengthening of support services to farmers, with emphasis on soil and water management; and (d) providing consulting services to assist with: (i) additional field investigations, final design and specification, and preparation and management of the whole tendering and contracting of civil works; (ii) establishing adequate O&M services in the valleys; (iii) supervising a program of groundwater investigations; and (iv) organizing extension and training services. 7. Although the project area was fairly advanced in the process of the Agrarian Reform Program (Decree/Law 17716 of June 24, 1969), the Bank required completion of the reform by projects' end on individual holdings exceeding 50 ha, through a Loan Agreement clause but without any financial support or other measures under the project (para. 13). 8. Following the normal procedure in Peru for large and complex projects, a special unit known as REHATIC was established in 1977 under the administration of the General Directorate for Water (DGA) and within the Ministry of Agriculture (MAG). REHATIC would be responsible for executing the project and similar projects in other coastal valleys, as well as coordinating the participation of other agencies. As appraised, the project was to be implemented over six and a half years (1977-83), with the period 1977 to early 1979 devoted to preparing final designs, specifications and tender documents. Total costs were estimated at US$40.9 million. The Bank loan of US$25 million was to finance 61% of total project ccets, covering the foreign exchange component and the equivalent of US$10.4 million in local currency. The Government of the Netherlands was to provide US$1 million equivalent of technical assistance. The balance of local costs (US$14.9 million) was to be financed by Government. The economic rate of return was estimated at appraisal to be 18%. Related Experience 9. Although the Irrigation Rehabilitation I Project was the first of its type in Peru, an earlier irrigation project--the San Lorenso Irrigation and Land Settlement (Loan 418-PE)--experienced two problems between 1965 and 1974 which affected the Irrigation Rehabilitation I Project, i.e., uneven Government commitment to the project unit, and inadequate project preparation. In the first case, an independent agency was created to carry out.-all aspects of the project. Its management strategy at first produced favorable short-term results but later on inevitable problems surfaced because it depended on personalities and patronage, both transitory factors. The independent agency--Irrigation and Land Settlement of San Lorenzo (ICSL)--performed very well during project execution given the budgetary and staff constraints, and institutional friction with other -4- national departments as a result of its "independent" status. Towards the completion of that project, as with most completed work programs, ICSL suffered from relatively low priority, inadequate budget allocation, understaffing and general lack of special interest.2/ In the second case, inadequate preparation of the project's drainage component resulted in substantial delays; it took nine years instead of one to prepare the component, which was not successful. In addition, the project was appraised in 1964 without zeexamining important technical parameters affecting the reliability of agricultural production such as water availability and soils.3/ An Impact Evaluation undertaken in 1981 for the San Lorenzo Project revealed that the few completed drainage works were not efficient and drainage problems had worsened in the project area.4/ II. PROJECT IMPLEMENTATION AND OUTCOME 10. Project implementation was affected from the outset by the problems of a slow start-up, shortage of budgetary support throughout the early phases of project implementation, and low Government commitment to the manager4al continuity of REHATIC. Project execution started only in 1979, following about two years of reconsideration of basic studies and completion of engineering designs, issues which are discussed further in paras. 31-34. The consulting team financed by the Netherlands joined the project in July 1977 but only in the capacity of individual advisors, which reduced the team's impact and, at times, made coordination with local consulting firms difficult. Initial progress was hindered by insufficient technical personnel to carry out the tasks. To accelerate preparation of designs and bidding documents, private engineering firms were contracted in late 1980. After gaining momentum during 1981, project execution slowed down iu 1982 and deteriorated further in 1983. The delays were a result of managerial problems, physical calamities (El Niio, droughts and floods), and inadequate counterpart funding. Between 1977 and 1983, REHATIC changed directors five times resulting in repeated losses of operational momentum. 11. Project implementation showed considerable progress after the project unit was reorganized in 1983 and 1984. With the agreement of the Bank and the Government of the Netherlands, the following significant modifications ultimately resulted in completion of the project: (a) exclusion of the valleys of Mala and Majes; (b) closure of regional offices; (c) creation of a revolving fund; (d) increase in disbursements for civil works from 60 to 90% due to a Bank special action program; (e) 2/ PPAR of Peru San Lorenzo Irrigation and Settlement Project (OED Report 1858), dated January 17, 1978, para. 14. 3/ 9. cit., PCR, 4.24-4.28. 4/ Impact Evaluation of Peru - San Lorenzo Irrigation and Land Settlement Project (OED Report 3933-PE), dated May 24, 1982. - 5 - creation in REHATIC of a Directorate to coordinate and strengthen the agricultural aspects of the project; (f) appointment of a new project director in 1984, who had proven experience in running large, complex engineering projects and who served until project completion; and (g) extension of loan closing date by two and a half years to December 1985. Drainage Infrastructure 12. In general the project has been successful in the construction of all civil works foreseen at appraisal, but limited to four valleys instead of six. As compared with the revisions made in 1984, all eight river intakes were completed; 294 km of main and secondary canals were constructed or 121% of estimates; 206 km of main and secondary drains or 80% of estimates; 25 km of piped collector drains or 67%; and 461 km of tile field drains, or 115%. All pumping plants and service centers were constructed (PCR, 3.11). During implementation, experience showed that the entire field drain system should be of subsurface tile type. In order to ensure quick implementation and quality of execution, construction of field drains was done through packages of contracts instead of having farmers individually arrange for such works. OED experience confirms that such works are best carried out in bulk and concurrently with the drainage works because of the complex use of sophisticated machinery and the difficulty of organizing large numbers of farmers. Agrarian Reform 13. The Agrarian Reform Program started in 1969 with the objective of expropriating nationwide some 16,000 estates covering 43% of the country's gross farm area (10.3 million ha) and of transferring the property rights to agricultural workers, small farmers and peasant communities. By end 1979 only about 200 estates nationwide were left to be expropriated. In the project area (six valleys) about 43,000 ha had been acquired by January 1980, 88% of which had been allocated to individual farmers. At project completion, the only pending area for titling is the Iberia y Punta de Bombon subproject in Tambo Valley (1,018 ha). Project Costs 14. In 1977, total project costs were estimated at US$40.9 million for the rehabilitation and improvement works for six coastal valleys. Actual project costs for four valleys were US$50.9 million, which represents a 24% increase over appraisal estimates for six valleys. The increases in costs are caused by: (a) lack of detailed engineering studies which led to underestimation of unit costs; (b) some structures and works were not included in the original cost estimates; (c) larger quantities of works required during implementation; (d) higher than expected domestic and foreign inflation; and (e) implementation delays. Most cost increases were borne by Government of Peru and by the Netherlands, which increased its technical assistance component from US$1 to 3 million. -6- Project Outcome 15. The two valleys excluded in 1984 during project redesigning (Mala and Majes) were of relatively small size and had a low proportion of existing irrigated areas which could be rehabilitated and a high proportion of area to be reclaimed. As shown in the table below, the project reclaimed 13,000 ha (68% of appraisal estimates) but rehabilitated twice the planned amount of existing areas. Physical Development of Areas Appraisal Scaled-down Estimate Project Actual (1977) (1984) (June 1986) (6 valleys) (4 valleys) (4 valleys) --------------------ha ----------------- Irrigable Area in Valleys 68,300 57,600 58,855 /a Total Benefited Area 33,250 42,300 40,635 Irrigable Area to be: Rehabilitated 14,250 27,900 27,659 Reclaimed 19,000 14,400 12,976 La Families Benefiting from Reclaimed Area (No.) 4,000 3,222 3,179 /a Includes 2,135 additional ha reclaimed during project execution. Source: Staff Appraisal Report and PCR3. 16. All together, the total benefited area at completion exceeded appraisal estimates by 22% and was 96% of the redesigned estimates. During the lengthy process c: field investigation and final design in 1980-84, more suitable areas in each valley were identified and incorporaLed to project targets. The time lost during redesigning was more than compensated for by the benefits of additional areas in production and by the lower unit costs of rehabilitating existing areas. 17. The aggregate weighted average cost of investments up to the farm level (river intakes, irrigation and drainage) for the four valleys amounts to US$832 per ha. In addition, the cost of on-farm drainage amounts to US$720. When pumping is required for drainage, the total investments required amount to US$2,400 per ha. About 3,000 ha in three valleys require such pumping. These costs are reasonable, comparable to international standards, and well below those of new irrigation schemes in Peru (US$5-10,000). - 7 - 18. Two years after project completion, the project area has generally stabilized, and progress in achieving the agricultural development targets have been generally good. A visual comparison of contiguous unreclaimed and reclaimed areas strikingly shows the positive effects of the project. Reclamation has helped unlevelled, waterlogged and salt-affected plots of land with low quality forage growth suitable only for feeding goats to be converted to levelled plots planted with cotton, rice, beans or sorghum. Using their own funds, some farmers have brought soil from other areas to raise the level of the field away from the water table and to decrease the need for pumping. Although actual cropping patterns have differed somewhat from appraisal expectations, overall the crops grown in the valleys are the same as appraised. A substantial increase has occurred in the area under cotton (an export crop) and under rice (an import substitute). At audit, yields for all crops but one are higher than appraisal estimates at full development. The 1987 average rice yields wtre 9.5 t/ha (one of the highest in the world as compared with 6.2 t/ha at appraisal). Actual yields in 1987 (t/ha) compared with appraisal estimates (in parenthesis) are as follows--beans: 1.1 (1.5); cotton: 2.2 (2.3); maize: 5.2 (3.7); garlict 7.7-9.0 (7.5); and alfalfa: 80.0 (50.0). These yields are slightly higher than the ones recorded at completion time (PCR1, para. 4.06) demonstrating that at full development the project could experience further positive increments. 19. The appraisal estimated income increases from the without to the with project situation (full development) in the range of 66-149% in the reclaimed irrigated areas. Actual incomes and their projections indicate substantial income increases. At completion, projected income increases in 1986 prices ranged between 114% and over 1,000%. Typical equivalent per capita increases range from US$172 to US$368 and from US$60 to US$450 depending on the crop grown and on farm size. The acquisition of a large number of new farmer-owned pickup trucks and farm equipment in the project area attest to the fact that incomes have increased. 20. PCR1 estimates the economic rate of return (ERR) at completion to be 20% as compared with 18% at appraisal (paras. 4.08-4.11). The Ministry of Agriculture's PCR3 estimates the ERR at completion to be 24%. The audit finds both ERR estimates to be reasonable. Environmental Effects 21. Despite a recent finding that environmental issues do not normally receive careful attention in drainage projects,5/ due attention was given at appraisal and during project implementation. A member of the appraisal mission's sole task was to review in each valley the source and cause of salinization, the groundwater situation and drainage needs, and water efficiency in the irrigation system. During the 1977-81 process of final design of the project structures, similar attention was given to the above factors. Some project areas had had by end 1987 two soil leachings while other areas had one. 5/ OPS/AGR FY86 Project Implementation Review, November 7, 1986. -8- Follow-on Project 22. A follow-on project to Irrigation Rehabilitation I is the Lower Piura Irrigation Rehabilitation II (Loan 1771-PE), which was appraised in 1978, approved by the Board in 1979 and completed in December 1987. The Lower Piura project is similar to its predecessor in design, organization and managerial arrangement. It did, however, add features which were not part of the Irrigation Rehabilitation I. They weret a construction company was scheduled to finalize final design prior to project implementation; a component for strengthening and financing agricultural extension activities; and on-the-job and abroad training for local staff on all project related matters, especially on agriculture and on operation and maintenance of irrigation/drainage systems. The five year project closed eighteen months behind schedule in late 1987 and had completed almost all civil works targets. The project's major deficiency was the slow progress made, due to budgetary shortages, in on-farm development (98% of target) and the delay in training water users in O&M and in transferring the O&M program to the users association. III. CONCLUSIONS AND MAIN ISSUES Overview 23. From the point of view of public and private productive investments, the overall impact of the project is favorable. The project area is a source of outputs and incomes which generate spillovers through the demand for services, output processing and farm inputs in the cities located in the four valleys. The project was the first undertaking carried out by REHATIC right after its creation. In spite of major initial delays --lack of thorough feasibility studies and budgetary funds--REHATIC completed the project at the design level and has become a leading autonomous institution in the public agricultural sector. Its success, however, is offset by (a) the issues arising from areas that require improvement to ensure the project's sustainability (discussed in paras. 25-30), and (b) the consequences to the project from inadequate project preparation (paras. 31-34). Requirements for Sustainability 24. At completion, the project's sustainability was uncertain because the irrigated/drained areas had not fully stabilized, some structures were not yet completed, and the long-lasting aftereffects of the exceptional 1984 floods, causing various degrees of water logging, sedimentation and soil erosion, were not yet fully evaluated. If the trends observed at audit two years later were to continue, the project would be deemed to have consolidated and to now contain the basic requirements for a continued flow of benefits. There are two areas, however, that require further progress to ensure the project's sustainability: proper organization and adequate - 9 - financing to operate and maintain the irrigation and drainage infrastructure (paras. 25-27); and a more clearly defined role for REHATIC in irrigation development, to allow the smooth transfer of some of its assets and activities to farmers and other institutions (paras. 28-29). 25. Organization and Financing of Operation and Maintenance of Infrastructure. The system of organizing, managing and collecting water charges to finance irrigation operation and maintenance activities in Peru is complex. It is affected by traditions, precedents and exemptions. Among others, it distinguishes between existing and new irrigation systems, uses water charges to recover costs of producing water and costs of land improvements, allows for exemptions on collections during physical calamities, or imposes different water charges depending upon location of the farm within the same valley. The General Water Law (Decree Law 17752 of July 24, 1969) was enforced in 1971 after all of its regulations were approved. In 1981 a new set of regulations (Decree 2) pansed on to farmers' associations (Junta de Usuarios) of Irrigation Districts the responsibility for proposing, in collaboration with the Technical Administrator of each district, the annual water tariff, which would cover all O&M costs.6/ The tariff is to finance three elements: a fee (canon) of 10% to be kept by Treasury; and the remaining 90% to finance all O&M costs and a portion of the investment. In addition to tariffs, there are charges (cuotas) which can be established by each irrigation district to cover expenditures not covered by the tariff (including new rehabilitation and drainage works); and then there is the "tarea", to cover expenditures of on-farm or small common works. 26. Because of the relatively new nature and complexity of irrigation rehabilitation and drainage, Government policy has been to issue presidential decrees for each set of "projects" or investments, regulating the administration of charges to recover this type of investment. This policy also ensures homogeneity in the treatment of the valleys and farmers within a single project. In 1983, Government began in the project area to promote farmers' associations to support the operation and maintenance of these works. The process culminated with the establishment in 1985 of Committees of Irrigation and Drainage (I&D) in any area where REHATIC has operated or will operate (Presidential Decree 067-85/A-DGASI of July 13, 1985).7/ These committees represent individual or corporate beneficiaries of the works. By the same decree, Managing Committees for Rehabilitation Areas (Comites de Administraci6n de Areas Rehabilitadas) were established in each valley, comprising representatives of the REHATIC management, the Irrigation District of the valley and the I&D committees. The Managing Committees set broad policy, establish tariffs, and own and run machinery 61 An Irrigation District is established by the Ministry of Agriculture for the area served by a single irrigated system. 7/ Subdirectorate of Agricultural Development, REHATIC, Information Bulletin No. 3, August 1986. - 10 - and facilities to operate and maintain the system. Because the Managing Committees have not operated for long and staff training and technical assistance is insufficient to run a complex set of tasks, REHATIC, with Bank accord, is scheduled to transfer assets to the Committees and to train staff during a period of five years following project completion. This arrangement of passing on to users the full responsibility of organizing, carrying out and participating in the operation and maintenance of irrigation/drainage schemes is novel because of the absence of the proper institutions in the San Lorenso Project (para. 9), a similar arrangement emerged. Another example is Mexico's Rio Yaqui Irrigation Project, where a successful system of 0&M has functioned for many years.8/ In the Philippines, the National Irrigation Administration has, since 1980, successfully turned over to water users' organizations the management and financing of several communal and small-scale O&M systems (below 1,000 ha).9/ These successful experiences overcame the inherent risks in these arrangements. The risks are related to the following: (a) programming the water allocation and delivery is a complex procedure, involving many agricultural factors and several agents, often having to take into account conflicting objectives; (b) the hiring of a relatively large number of staff with varied specialties is a necessity; (c) during the establishment of the OM system, a great deal of specialized training needs to be given by experienced Government institutions to system employees and to farmers; and (d) managerial actions require tact to ensure flexibility and timeliness in water delivery and equity in water delivered. 27. Although unit costs of O&M are well calculated and known, there is evidence that subsidies are being built into the system. First, the annual budgets approved at the project level are not sufficient to cover all O&M requirements for that year, while some significant requirements are postponed. Second, farmers' contributions to the approved operation budget in 1986 was 30% of the total and 70% financed by Treasury through the local Irrigation Districts and REHATIC. Third, farmers' overall contributions to the maintenance budget are 56% of the total (including labor), while 17% was financed by REHATIC and 27% did not have any financing. The works that are not financed are postponed, which in effect means that the irrigation/drainage systems are decapitalizing. A rough estimate for 1986 indicates that apparent financial subsidies amounted to about US$18/ha, which at the aggregate level of 40,000 ha in the four valleys is equivalent to an untenable fiscal position for the current expenditures budget in the agriculture sector. Fourth, during the transitional period of transferring project assets and the O&M process to water users, REHATIC is and will continue to provide a substantial amount of its own staff time and administrative expenses. These financial subsidies also decrease REHATIC's resources for completing minor works and for replicating the O&M process in other schemes. The same situation, and with a similar magnitude, is being experienced by the follow-on project--Lower Piura.10/ 8/ OED, Impact Evaluation Report - Rio Panuco and Rio Sinaloa Irrigation Projects (under preparation). 2/ Word Development Report 1988 (under preparation). 10/ Aide memoire to Government, Supervision Report dated January 22, 1988. - 11 - 28. Changing Role and Responsibilities of REHATIC. Evolving from a difficult beginning in 1977, and surviving two reorganizations, REHATIC is presently attached to the Vice-Ministry of Natural Resources and Rural Development in the Ministry of Agriculture. During the Irrigation Rehabilitation I Project, REHATIC's technical and administrative staff grew from about 40 in 1977 to about 400 in 1985, in line with the design and implementation of the First Project and the preparation of almost all feasibility work for a follow-on project, which is almost ready to seek external financing. Because REHATIC has a relatively large pool of experienced staff and has shown a successful capability to manage or implement infrastructure projects in rural areas, other public institutions are requesting its assistance to carry out a variety of activities. In 1985, while REHATIC was carrying out five subprojects and preparing two more, it became active in 15 subprojects in 1987 and had seven under study. These additional construction or developmental activities are carried out in collaboration with provincial development corporations and with other national projects. Without denying the validity and need of such assistance, it is evident that REHATIC is tackling too many activities; its technical staff had grown to about 800 by 1987, and a measure of the added activities are clearly beyond REHATIC's central role of irrigation and drainage development. 29. Additionally, as part of Government's policy initiated in 1987 to streamline and decentralize agricultural interventions to the provincial level, Government is studying the idea of converting REHATIC into a national program which would support rehabilitation and drainage activities nationwide. The "program" status should give REHATIC further administrative and financial autonomy, and ensure sufficient resources to implement and intensify its central role of irrigation/drainage development. Inadequate Preparation of the Project 30. The phases of preparation, appraisal and early stages of project implementation are instructive for the lessons they provided regarding the need for flexibility in properly scheduling the project, and the adverse consequences of excessive rigidity In premature scheduling. 31. Preparation for investments in irrigation and drainage began in 1968 with the creation of the Drainage and Soil Reclamation Center (CENDRET) attached to the Agricultural University - La Molina. Under a technical cooperation agreement between the Government of Peru and the Kingdom of the Netherlands, Peruvian agricultural engineers were trained while surveying the incidence of drainage and salinity problems in all coastal agricultural lands. Pilot areas were used to carry out research and testing on drainage techniques, costing of structures and the adaptation of crops during soil leaching. After training was completed, CENDRET was transferred to the Ministry of Agriculture and Food and renamed as the Subdirectorate of Land Reclamation (SUDRET) in order to coordinate - 12 - and implement rehabilitation proje- ts. Between 1974 and 1975 SUDRET initiated the "National Plan to RehaKilitate Coastal Lands" (REHATIC) for the purpose of systematizing the information available to prepare feasibility studies in selected valleys and to seek foreign financing. An IBRD/FAO/CP mission identified the project in April 1974 and a final preparation mission took place in March 1975. SUDRET's well qualified but limited staff was faced with further required soil investigations, budget shortages and a tight timetable to preptre work at feasibility level. The project was scheduled for Board presentation in FY76. Without denying the intrinsic merits of the project, there is evidence that some Bank staff felt that additional work, requiring much more time, needed to be done to bring the project to appraisal level. The Bank agreed to forego the usual procedure of having a complete preparation report for study in Washington prior to departure of the appraisal mission if the report were to be finished by September 1975. Because in mid-1975 only half of the budget required was approved by Government, basic studies had to be delayed. 32. The appraisal took place in December 1975, and an Issues Paper and Project Brief were issued on January 26, 1976. While the Issues Faper dealt with two issues (amount of the loan and agricultural interest rates), a consulting engineer on the appraisal mission submitted a detailed draft appraisal report annex on January 20, 1976. That annex included the following: "Since complete useful soil salinity maps were not available, it was not possible to determine whether the full needs for drainage and disposal of saline leaching effluent would be met by the proposed drainage facilities. ... Most of the drainage arises from upslope seepage and in a number of places it is almost certain that construction of deep 'interceptor drains' across the prevalling slope would intercept large volumes of seepage water from upslope and considerably decrease the need for drainage facilities below such drains." The audit finds that insufficient project preparation should have been raised as an issue at this stage. 33. The project, as presented to the Board in April 1977, was based on a six and-a-half year undertaking, and showed that substantial disbursements would not occur until the first semester of 1979. The SAR also showed that engineering surveys and design would extend over the first three years of the project, and the first construction could only take place 18 months after project startup. Because the loan carried only a three and one half year grace period and because substantial disbursements did not start unil mid-1981, the Bank received commitment fees beginning in October 1977 and loan repayments beginning in April 1981, before the project actually got underway.11/ Since the Bank loan did not contemplate the financing of preparation or design expenditures (which were financed by Government), and on-site consulting services financed by the Netherlands were available, lending for the project was premature. ll/ Supervision Report of Peru - Irrigation Rehabilitation I Project, September 18, 1981, (US$1.7 million repayed as of June 30, 1981). - 13 - ATTACHMENT COMMENTS FROM REHATIC Telex translated from Spanish 14 APRIL 1988 FROM: REHATIC L-XA, PERU TO: MR. GRAHAM DONALDSON, DIVISION CHIEF OPERATIONS EVALUATION DEPARTMENT IBRD WASHINGTON, DC WITH REFERENCE TO YOUR LETTER OF 29 MARCH 1988 REQUESTING OUR COMMENTS ON THE PROJECT PERFORMANCE AUDIT REPORT OF THE IRRIGATION REHABILITA- TION I PROJECT (LOAN 1403-PE), WE HAVE REVIEWED THE REPORT WITH MUCH INTEREST AND ARE IN AGREEMENT WITH ITS CONTENTS, CONCLUSIONS AND RECOMMMENDATIONS. REGARDS, AMILCARE GAITA EXECUTIVE DIRECTOR LEHATIC - 15 - PERU IRRIGATION REHABILITATION PROJECT I LOAN 1403-PE PROJECT COMPLETION REPORT June 3, 1987 Latin America and the Caribbean Regional Office - 17 - PERU IRRIGATION REHABILITATION I PROJECT (LOAN 1403-PE) PROJECT COMPLETION REPORT I. INTRODUCTION 1.01 Agriculture plays an important role in the Peruvian economy, although it contributes only about 15% to Peru's GDP. Agricultural output, and especially food production, has lagged behind population growth for the last 20 years. 1.02 Peru has a total of about 2.8 million ha of cultivated land, of which about 900,000 ha are irrigated. 1.03 The coastal valleys have for centuries been the primary source of food production in the country. In this practically rainless area, agriculture is possible only under irrigation. Some 750,000 ha are irrigated by the 52 rivers which traverse the desert between the Andes and the Pacific. Many of the irrigation schemes in the coast were developed in the 1930s and 1940s as large, private holdings. Excess irrigation in the upper parts of the valleys and lack of drainage in their lower part caused build-up of groundwater table and washing of salts towards the lower areas. The resulting salinization of low-lying agricultural land caused a gradual decrease in yields, and ultimate abandonment of the land. 1.04 Following the agrarian reform started in 1969, private sector investment declined significantly. Many coastal irrigation systems had become antiquated and were generally inadequate to achieve efficient water management and proper use of soil and water. 1.05 Being aware of the seriousness of this situation and facing the problem of scarce land resources, a rapidly growing population and an unfavorable trade balance, the Government of Peru decided to initiate a program aimed to rehabilitate irrigation and drainage (I&D) systems servirg the coastal zone. The Government considered rehabilitation of existing systems to be an important means to increase agricultural production rapidly and to consolidate its agrarian reform program. Rehabilitation would bring back into full production lands, which, over the years, had their production continuously reduced or even abandoned. It would also halt further deterioration and consequent reduction of presently cultivated lands and respective yields. 1.06 In 1970, the Government formed the Sub-Directorate of Land Reclamation (SUDRET), under the auspices of the Ministry of Agriculture (MAG), to coordinate the rehabilitation works. A major task for SUDRET was the "National Plan to Rehabilitate Coastal Lands" (PLAN REHATIC), to be executed in several stages. The REHATIC I project, encompassing six valleys along the coastal area in the southern half of Peru, was envisaged as a first - 18 - stage in a long-term program to improve and rehabilitate existing irrigation systems and to increase agricultural production. These six valleys were chosen after analyzing a number of factors: (a) the potential for increasing production and bringing back into production valuable agricultural land in the short term; (b) the relatively high level of agricultural development in the six valleys; and (c) the deficient water supply and lack of major infrastructure in other valleys which would have required long-term programs of high investment to achieve a noticeable impact. II. PROJECT FORMULATION Identification and Preparation 2.01 Preparation of the REHATIC I project was launched by SUDRET in the early 1970s, with the technical assistance of the Government of the Netherlands. The possibility of Bank financing stemmed from the Bank's 1973 agricultural sector survey of Peru. 2.02 An IBRD/FAO/CP mission visited Peru in 1974; it identified some 18,000 ha of degraded lands in the valleys of Mala, Canete, Pisco, Majes, Camana and Tambo that could be brought back into full production. This would be achieved by drainage and reclamation, including on-farm development. Total project costs were roughly estimated at about US$20-25 million and the implementation period was expected to be five years. The mission defined the preparation requirements which included the following: (a) management and organization arrangements needed to be determined; (b) construction methods--contract or force account--to be used for the installation of field drains needed to be selected; and (c) farmers' repayment for investments in on-farm drainage systems needed to be assured through a credit operation or by drainage quota attached to the water charge. 2.03 Project objectives were broadened during final preparation (assisted by IBRD/FAO/CP), to include works and activities that within a limited cost would: (a) rehabilitate and construct I&D systems to cover an area of about 33,000 ha; and (b) improve operation and maintenance (0&M) and water management of existing irrigation systems throughout the six valleys covering about 68,000 ha. Appraisal and Negotiations 2.04 The project was appraised in December 1975. After appraisal, major issues were raised relating to: (a) total project cost and the related amount of loan; and (b) rate of interest on agricultural development credit loans. The total project cost was estimated at US$36.2 million; the proposed loan amount was US$22.0 million (60%) including local cost financing of US$8.0 million. The project proposed to establish a development credit fund, under the management of the Agricultural Bank (BAP), to provide long-term credit for on-farm works to individual farmers and cooperatives. The Government's policy was to maintain a very low interest rate (5%-7%) when the overall inflation rate was running about 25% in 1975. It was agreed that the rate for development loans under the project would not be less than 10% per - 19 - annum, however, it was generally recognized that this rate will have to be increased in the future, parallel with the expected increase in the repayment capacity of the farmers. 2.05 A revised cost estimate in February 1976 resulted in cost increases of about 20% (to US$39.2 million), including contingencies but excluding interest during construction. Due to the devaluation of the Peruvian currency and greater cost increases than projected earlier, costs were revised again prior to negotiations and increased from US$39.2 million to US$40.9 million. The loan amount was also increased to US$25 million, while retaining the Bank financing at about 60%. 2.06 Negotiations were held in February 1977. Major topics discussed during negotiations were the Borrower's creditworthiness, counterpart funds, cost recovery and the very low (about 1.2%) disbursement scheduled for 1978. A special clause was added to the Loan Agreement to ensure recovery of investment costs of I&D systems. Board presentation took place on April 12, 1977, the Loan Agreement was signed on May 20, 1977, and the loan became effective on August 2, 1977. Project Objectives 2.07 The project was expected to rehabilitate six valleys in the coastal area, by: (a) reclaiming about 19,000 ha of salt-affected and waterlogged land; (b) rehabilitating and constructing irrigation and drainage (I&D) systems for about 33,000 ha (including the 19,000 ha to be reclaimed), to improve water management and halt further degradation of land (by providing adequate drainage); and (c) improving inadequate operation and maintenance of existing I&D systems and providing agricultural extension services throughout the six valleys that cover about 68,000 ha. Project Description 2.08 In order to achieve its objectives, the project included: (a) reclamation works consisting of (i) construction of open or buried field and collector drains; (ii) land clearing, levelling and preparation for soil leaching process; and (iii) construction of tertiary irrigation systems; (b) rehabilitation and construction works for (i) eleven new river intake structures; (ii) main and secondary irrigation systems (340 km new and 68 km rehabilitated); (iii) surface drainage systems (235 km new and 109 km rehabilitated); and (iv) four drainage pumping plants. - 20 - (c) expaneion and improvement of 0&M services throughout the six valleys, covering about 68,000 ha. In addition, strengthening of support services to farmers, with emphasis on soil and water management was also included; (d) consultant services to assist in: (i) establishing adequate O&M services in the valleys; (ii) supervising a program of groundwater investigations; (iii) organizing extension and training services; and (iv) preparing feasibility studies for a similar project in other coastal valleys; and (e) provision of subloans (to farmers and farmers' associations) to finance on-farm irrigation and drainage works required to reclaim about 19,000 he of salinized and waterlogged land. Project Costs and Financing 2.09 In 1977, total project costs were estimated at US$40.9 million for the rehabilitation and improvement works envisaged within the six coastal valleys. In 1980, a revision of project targets and costs was made, based on final designs, that resulted in a 6% reduction in area and a 20% increase in costs. Cost increases were caused by lack of detailed engineering studies at the time of the initial cost estimate and were mainly due to underestimation of unit costs for main irrigation canals and main drainage systems (the cost of structures was not included in the original feasibility study estimates), and for on-farm development works. 2.10 In 1984, mainly because of deLays in project implementation, project targets and scope were reduced; the revised plan included the development of four valleys, instead of six planned at appraisal. For purposes of comparison, a revised estimate was made of the costs of developing four valleys using the 1980 cost update prepared by REHATIC management (Annex I, Table 1). Actual project costs were US$50.9 million, showing a 39% cost overrun compared to the 1980 revised estimates. This overrun was caused primarily by: (a) larger quantities (longer canals and drains); (b) high local inflation; (c) higher than expected foreign inflation; and (d) implementation delays. The Dutch Government's technical assistance program was extended until project completion, resulting in a 230% cost increase in the program (from US$1.0 million planned in 1980 to US$3.3 million actual expenditures). 2.11 At appraisal, the Bank loan of US$25.0 million was expected to f.nance 61% of total project costs, covering the foreign exchange component and the equivalent of US$10.4 million in local currency. However, over the life of the project, the Borrower financed 44% of total project costs, the Bank financed only 49%, and the Dutch Government 7% (Annex I, Table 2). - 21 - III. IMPLEMENTATION 3.01 Project execution started only in 1979, following about two years of reconsiderations of basic studies and completion of engineering designs, without which construction could not commence. Initial progress was hindered by inadequate and insufficient technical personnel required to prepare contract documents. In order to accelerate preparation of designs and bidding documents, private engineering firms were contracted towards the end of 1980. After gaining momentum during 1981, project execution was slowed down in 1982, due to managerial problems. The situation deteriorated further in 1983 due to inadequate counterpart funding. In view of the critical budgetary constraints and given the limited implertentation capacity of REHATIC, it was agreed at the end of 1983 that both the scope and focus of the project should be reduced to allow project completion by the end of 1985. 3.02 The loan was approved in April 1977. It became effective in August of the same year. The first supervision mission was carried out in September 1977. The SAR assumed a six and one-half year implementation period with project completion expected in December 1983. Actual project implementation was about eight and one-half years. The project was closed on December 31, 1985. Sixteen supervision missions and one completion mission were carried out over this period involving 205 man-days with an average of about two persons per mission. 3.03 Surveys and investigations commenced in early 1977 in the valleys of Canete and Camana, and gradually extended into the other four valleys. An agreement was signed in July 1977 between the Governments of Peru and the Netherlands to provide technical assistance. 3.04 Project implementation started to show considerable progress only after scaling down the project and reorganizing project management (April 1984). Following project reorganization (para. 5.03), progress of implementation was satisfactory. All civil works contracts were signed prior to December 31, 1985, and construction was completed on schedule. 3.05 RERATIC is implementing, at present, the laying of the remaining field drains in the Pisco Valley scheduled to be completed in 1987. On-farm development works are in progress in the Canete and Pisco Valleys and are in the final stages of the legal process to reach an agreement with squatters who settled in the previously abandoned areas (due to excessive salinity and subsequent decrease of yields), of the Tambo valley. These illegal settlements took place during the last 2-3 years, slowly and unnoticed by the authorities, until too late. The squatters, landless farmers, were attracted by the rehabilitation works in the vicinity, hoping to benefit from the imminent rehabilitation of these abandoned lands. The uncertain legal status hindered the awarding of agricultural credits; hence, no on-farm works were started as yet in the 1,018 ha of Tambo Valley. Soil leaching is in the final process in most of the areas where it is required. Soil leaching of 1,937 ha (abandoned lands) is scheduled to be completed by the end of 1988 (Annex II, Table 1 and Chart I). - 22 - Civil Works 3.06 In general the project has been successful in the construction of all civil works foreseen at appraisal, but limited to four valleys instead of six. These works included: (a) construction and reha*ilitation of main and secondary irrigation systems, headed by permanent-type river intakes; (b) construction and rehabilitation of main and secondary drains and of drainage pumping plants; and (c) construction of service centers for project administration, operation and maintenance. On-Farm Development 3.07 Execution of on-farm development works suffered serious delays and gained momentum only in 1986, after most of the field drains were installed and farmers agreed to apply for credits to finance the cost of on-farm works. 3.08 Works to be financed through subloans to farmers (or cooperatives) initially included land levelling and preparation for the soil leaching process, construction of on-farm irrigation systems and the construction of collector and field drains. During implementation, experience showed that the entire field drain system of about 500 km (in six project valleys), should be of subsurface pipe type. In order to keep a reasonable implementation schedule and to ensure quality of execution, it was agreed in 1981 to include the construction of field drains in the civil works program, thus ensuring procurement followed ICB procedures. Operation and Maintenance (O&M) 3.09 Initial attempts to provide O&M equipment and machiner; through the National Machinery Service (SENAMA) failed to materialize and in 1984 the Loan Agreement was amended to enable project management to carrv, out this task. All the required O&M equipment was purchased through Bank financing and is still owned and operated by the project. The equipment will be transferred to the farmers' organizations over the next five years. Service Cer!ers 3.10 One service center in each of the project valleys was constructed. The service centers provide an operating base for all activities carried out by REHATIC, the Irrigation District, INIPA (the National Institute for Agricultural Research and Extension) and the users' associations. Each center has office space, machinery repair shop and a warehouse for spare parts and construction materials. Although the service centers started to operate only a short while ago, they have already proved to be an important means in coordinating the administration, O&M and agricultural extension services. Achievements by Components 3.11 Project achievements in construction and rehabilitation are summarized in Table 3.1 next page: - 23 - TABLE 3.1: Construction and Rehabilitation - Suamary of Achievements As Actual As Appraised As Revised Completed vs. Components Unit in 1977 in 1984 in 1986 Revised % River Intakes1/ No. 11 8 8 100 Irrigation Systems 1/ Km 405 243.1 294.4 121 Drainage Systems: - Main and Secondary Drains (Open) 1/ Km 344 258.6 206.3 80 - Collector Drains (Pipe) Km 44 37.4 25 67 - Field Drains (Pipe) Km 527 399.5 442.5 111 - Pumping Plants No. 4 3 3 100 Service Cazters No. 6 4 4 100 1/ New and rehabilitated. Disbursements 3.12 Total disbursements under the project amounted to US$25 million, or 100% of the loan amount (Annex II, Table 2) and about 49% of actual project costs. There were no disbursements in the first two years of project implementation and insignificant disbursements (US$180,000) began in 1980 after procurement procedures were revised to meet Bank guidelines. The slow rate of disbursements can be attributed mainly to: (a) over-optimistic appraisal estimates in terms of the readiness of the project for execution and capacity of the implementing agencies; and (b) cumbersome Peruvian procurement regulations which required a long time to bring them in line with Bank guidelines. 3.13 Beginning in 1981, disbursements improved but for the following three years they lagged behind appraisal estimates. Disbursements rose significantly in 1984 (US$8.45 million) and remained high in 1985 (US$5.56 million), disbursing until the end of 1985 95.2% of the total loan amount, as budgetary allocations to the project were increased. Procurement 3.14 The original Loan Agreement provided for purchase of goods and civil works to be contracted on the basis of ICB. Exceptions were made for construction of service centers, laying of drainage pipes and minor equipment purchases, not exceeding US$50,000, for which LCB was permitted. On-farm works were added to the list of contracts permitted by LCB in 1979 and - 24 - expanded again in 1984 to include all civil works. In retrospect, the initial threshold was low and was raised twice (in 1979 and in 1984), ultimately to US$500,000 per contract with an aggregate limit of US$3,000,000. For purchase of vehicles and tractors, the threshold was raised to US$75,000 per contract and US$500,000 aggregate limit (Annex II, Table 3). 3.15 As a result of experience gained, in 1980 REHATIC revised and improved the general conditions for civil works contracts and restructured the technical specifications. Until that time, all civil works that had not been carried out by force account were procured under TCB procedures;. however, no foreign firms expressed interest in participating. Reporting 3.16 The executing agency prepared semiannual progress reports that were submitted to the Bank on a timely basis. A draft PCR was submitted to the Bank's completion mission in September 1986. Additional data requested by the Bank were provided during a subsequent unrelated visit to Peru in November 1986; at that time the final PCR was also submitted. The data were found to be consistent with the information provided and were taken into consideration in preparing this report. Accounting and Auditing 3.17 Bank supervision missions reported that project accounts were adequately maintained so as to reflect the financial operations, resources and expenditures of the project. Audit reports were submitted between two to six months after the due date. These delays were caused by lengthy procedures of the Contraloria General in complying with audit requirements. All audit opinions were unqualified. Compliance with Covenants 3.18 Compliance with covenants was satisfactory except for establishing a system of water charges to cover O&M costs and allow a reasonable recovery of investments. As has been the case with all other irrigation projects in Peru, during the same time period, water users resisted paying realistic water charges. Actual payments varied from one valley to another. In 1986, there was a significant, but still insufficient, increase in the water charges, covering from 30% to 49% of total estimated O&M costs. IV. PROJECT IMPACT Physical Development 4.01 As of June 1986, the project had successfully reclaimed about 11,000 ha (81% of revised estimates) of land, including about 4,000 ha currently in the process of soil leaching. About 2,000 ha still require on-farm development works, out of which about 450 ha will also need field drains. In the areas already reclaimed, about 4,000 ha formerly had restricted production and 240 ha were abandoned, due to excessive soil salinity (Annex II, Table 1). This reclamation process prevented further deterioration of existing I&D systems and stopped the spread of soil salinity and waterlogging. - 25 - 4.02 Improvement and rehabilitation of main and secondary irrigation and drainage systems (para. 3.06 above) affected some 40,000 ha land (148% of revised estimates), including the about 13,000 ha reclaimed land. Despite the relatively recent construction of these sys,ems the impact has been impressive. Availability of a reliable water supply system and an adequate drainage system contributed significantly to increasing cropping intensity, improving on-farm level operation and maintenance practices (which are still in process of enhancement) and boosting farmers' participation in on-farm development works. Water users' associations, which previously resisted paying reasonable water charges, have now agreed to increase significantly these payments and contribute in labor to the maintenance of unlined irrigation canals and secondary drains. Agricultural Impact 4.03 As a result of project implementation, agricultural production was expected to increase significantly. Cropping intensities were estimated to grow from their pre-project levels of about 100% to about 130%. It was assumed that there would be no significant change in cropping patterns in the project and surrounding areas which included 19,000 ha to be reclaimed, and a total 33,000 ha area to benefit from the improvement and reconstruction works. Yields in the reclaimed areas were expected to increase steadily and were assumed to reach levels of yields in areas not affected by salinity. To achieve these targets, assurances were obtained from the Government that: (a) adequate credit would be provided; (b) the agrarian reform program for acquisition and settlement of lands in excess of 50 ha individual holdings would be completed during the course of project; and (c) supporting services, including extension, would be strengthened. 4.04 During appraisal emphasis was placed on reclaiming land and incorporating it into production as quickly as possible to reach productivity levels similar to those of areas not affected by salinity; thus, full development was expected to be reached between five and seven years after project implementation began. Due to serious delays in project implementation, full development is now expected to be attained throughout the four project valleys between 1994 and 1997. Nevertheless, the yields expected to be reached at full development, and even those already reached, surpass considerably the full development target yields at appraisal (Table 4.1). 4.05 Progress in achieving the agricultural development targets have been good. There has been a substantial increase in the area under cotton (an export crop) and under rice (an import substitute). Yields for most crops have increased, and it is expected that at full development yields will surpass those estimated at appraisal. Nevertheless, only four valleys were developed instead of the six planned at appraisal; as a result, 13,000 ha are being reclaimed instead of the 19,000 ha planned at appraisal. Because of implementation delays it will take some time before the full impact of the project can be observed and measured. - 26 - 4.06 Based on preliminary data collected under the monitoring and evaluation program1/, the table below shows average yields in the four project areas. While there have been important yield increases for most crops, these have not yet reached maximum levels expected at full development; further improvements will depend on the Government being able to continue to provide support services to the farmers. Initial field surveys conducted under the monitoring and evaluation program included only farms of the reclaimed areas, thus it is not possible to compare yields of these areas with yields in the rest of the valleys. TAKE 4.1: Averaie Yields of Principal C (tons/ha) % of ull Developoent Withto Appraisal Full Full Cnepared to Appraisal Crops Proct D. Target Actual a/ Developoent Target Rice 4.5 6.2 8.0 - 10.2 9.0 - 10.0 145 - 161 Beans 1.0 1.5 1.1 1.5 100 Cotton 1.5 2.3 1.7 - 2.4 2.0 - 2.5 87 - 109 Maise 2.3 3.7 2.5- 4.2 3.8- 4.5 103- 122 Potatoes 11.8 16.0 18.0 - 20.0 20.0 - 22.0 125 - 138 Garlic 6.0 7.5 4.2- 5.8 9.0 12D Squash 9.5 11.5 11.1 17.5 152 Alfalfa 45.0 50.0 60.0 60.0 12D a/ Based on surveys conducted In the valleys of Canete, Camna, PisoD and Taobo during the 1984/85 crop smason (Annec III). 4.07 Farm incomes are expected to increas( considerably when the project is fully completed. Projected increases in farmer income range between 114% to 1000%+ per ha at full development (Annex I). Economic Impact 4.08 The economic rate of return (ERR) for the project has been estimated at 19.7% which is slightly above the appraisal estimate of 18.1%. Due to the preliminary nature of the data gathered to date by REHATIC, the ERR should be considered indicative. However, the sensitivity analysis (Annex V) shows that reduction in benefits and increases in costs of 20% would rqsult in an ERR still above the estimated opportunity cost of capital of 12%. Even an additional delay of three years in obtaining project benefits would only reduce the ERR to 14%. 1/ The monitoring and evaluation program was set up under the project and began operations in late 1984. At the time of project completion only preliminary information on yields, prices and costs of production was available making it difficult to obtain accurate measurement of the project's full impact on agricultural production and productivity, and on-farm incomes. - 27 - 4.09 Project benefits were calculated based on the following assumptions: (a) a total of 13,000 ha fully reclaimed and properly maintained; (b) yields continuing to increase until they reach full development by 1997 in all four valleys; (c) cropping intensities also increasing until they reach 130% at full development in the Valleys of Canete, Pisco and Tambo and 160% in the Camana Valley, whose main production is rice and beans; and (d) farmgate prices remaining at 1985 levels in constant terms for both traded and non-tradable commodities. 4.10 The ERR does not include indirect benefits resulting from improved water distribution in areas adjacent to the reclaimed project lands. Intangible benefits of the project include: (a) the reclamation of land that would have continued to deteriorate and may otherwise have suffered irreversible damage due to waterlogging and salinity; and (b) institution-building that helped REHATIC become an effective government agency capable of successfully preparing and managing similar types of projects. 4.11 All project costs for the reclamation of 13,000 ha were included in the calculations, including those for the completion of works that remain to be done in 1987 (para 3.05). Administration costs were included at a declining rate until they reach 10% of 1985 costs in 1996 and remain constant after that time. This was based on the assumption that the users would gradually take over project administration duties. Operation and maintenance costs, at a declining rate, were included over the life of the project; it was assumed that beginning in 1990 the Government will bear no more than 20% of the total cost of operating and maintaining the irrigation systems in the project area, to cover the budget of the irrigation districts' management and administration. Environmental Impact 4.12 The reclamation of salt-affected and waterlogged areas has improved environmental conditions. The construction of drainage systems, the decrease in abandoned lands and the accompanying hydromorphic vegetation have had a favorable effect on reducing and controlling undesirable insects and reducing fungus. A special case was the Iberia drainage unit of the Tambo Valley. This unit was previously a habitat of a large variety of local and migrating birds. During construction a number of national and international organizations expressed their concern regarding the future resting place of these birds and the danger of them becoming extinct. After studying the matter, the Peruvian Government created the natural reserve of "Lagunas de Mejia" and constructed complementary structures to ensure its preservation in the future. Additional Irrigation Rehabilitation Projects 4.13 In accordance with the objectives of this project, the following additional irrigation rehabilitation projects have been identified: (a) the Lower Piura Irrigation Rehabilitation Project which was appraised in 1979 and is currently in its last year of successful implementation. It covers 35,000 ha in the Lower Piura Valley located in the northern coastal area of Peru; and - 28 - (b) a follow-up project to rehabilitate the irrigated lands of additional coastal valleys, which was initially identified by an FAO/CP mission in November 1982. Preparation began in 1984, after a consulting firm (ILACO) was hired to carry out feasibility studies, which were completed in February 1986. The main objective of this project would be to reincorporate into full production about 44,000 ha of irrigated land, by improving and rehabilitating existing infrastructure. It would also give particular emphasis on strengthening the O&M of the four valleys rehabilitated under the present project. V. INSTITUTIONAL PERFORMANCE 5.01 PE-REHATIC (or REHATIC) was the agency responsible for project implementation. It was created in 1977 and operated under the general supervision of the General Directorate for Water (DGA), an entry within the MAG. REHATIC had a central office in Lima, two regional offices in Canete and Arequipa and field offices in each of the six valleys included in the project. 5.02 In a reorganization that took place in 1981, RERATIC was attached to the National Institute for Expansion of the Agricultural Frontier (INAF), but in practice it worked as an independent organization. The executing agency was again reorganized in 1984. The inefficient regional offices were closed, and their staff were transferred to the four remaining field offices. With the appointment of a new project director in April 1984, coordination of works at the Lima headquarters and the performance of the field offices improved substantially. 5.03 In 1985, REHATIC initiated a study to improve the institutional set-up to enable better and more effective operation and maintenance of the rehabilitated I&D systems, and to enhance technical assistance provided to the farmers. The study, published in May 1986, recommended the following actions: (a) to strengthen the agricultural development activities in order to achieve maximum benefit from reclaimed areas; (b) to establish the institutional framework of state and users' organizations to ensure optimum operation of I&D systems; and (c) to achieve efficient O&M of I&D systems and enhanced utilization of machinery and equipment and thus proper management through collaboration between REHATIC, the irrigation districts and the users' associations. Project management within its budget constraints is in the process of implementing the above recommendations. Operation and Maintenance 5.04 The project suffered delays in its efforts to establish sound operation and maintenance practices mainly because of: (a) insufficient dialogue and coordination with project beneficiaries before civil works were started; (b) inadequate budgetary support during the critical period after works were completed; and (c) inadequate level of funding and staffing of the institutions responsible for implementing existing water laws. - 29 - 5.05 With the launching of this project, the Government decided to put the National Machinery Service (SENAMA) in charge of maintenance of the rehabilitated works and strengthening of the irrigation districts to ensure proper operation. During the first three years of project implementation neither SENAMA nor the irrigation districts were able to provide even minimal 0&M services mainly due to lack of budget and qualified personnel. To remedy the situation, REHATIC hired a local, specialized consulting firm in 1981, to assist in organizing an efficient O&M service. However, the final study published in 1984 did not meet with the approval of either the project management or DGASI (the Directorate General for Water, Soil and Irrigation, normatively in charge of the irrigation districts) mainly because the recommendations were impractical and lacked an operational focus. 5.06 At the end of 1983, project management established users' committees for maintenance of equipment purchased by the project in an attempt to overcome the difficulties created by the inability of central agencies to provide adequate O&M services and to promote extensive farmer participation. In July 1985 a Presidential Decree was issued concerning the rehabilitated areas within the REHATIC project. Under this decree, I&D committees were established within the users' associations in each project valley. These committees were supposed to: (a) be in charge of 0&M of I&D systems implemented and/or rehabilitated by the project; and (b) manage the equipment and machinery, while the irrigation districts remained responsible for operating existing I&D systems. In practice, however, the districts have always been severely understaffed and underequipped and the users' associations, including the I&D committees, are not entirely prepared to carry out their responsibilities especially financial contributions. Thus, the project continued to be in charge of 0&M, having its own 0&M staff in each valley. 5.07 In May 1985, REHATIC management and a Bank supervision mission agreed that at the Closing Date (December 31, 1985) neither the irrigation districts nor the users' associations would have the institutional or financial capability to take over the O&M of the rehabilitated or improved project features. It was agreed, therefore, to retain REHATIC services after completion of project works for a transitional period of two to three years. 5.08 In February 1986, the project management published an O&M Plan, according to which the project will gradually transfer O&M responsibilities to the users' associations during a five-year transitory period. During this time training will be offered and detailed 0&M manuals prepared for each of the four project valleys. A preliminary yearly budget has been prepared for 1987 to 1991, providing gradual increase in the three forms of farmer participation: (a) water tariffs aimed to cover 0&M costs of common features (such as main and secondary I&D systems); (b) quotas, within irrigation committees, to cover costs of specific maintenance works (machinery, equipment, material, operating costs and amortization of machinery and equipment); and (c) farmers' contributions of manpower for small maintenance works. -30- 5.09 Farmers' contributions to the 0&M budget were calculated based on estimated farmers' ability to pay in each particular unit. According to this proposal, farmers will contribute about 40% of the 0&M budget in the first year, gradually increasing their contribution towards the fifth year to 100%. The State will cover about 45% of the budget in the first year, gradually decreasing its participation towards the fifth year. The remainder, about 15% from the first year's budget, is part of the replacement costs of maintenance equipment, to be recovered by the farmers after the fifth year. Water Management 5.10 Improvements in water management practices have been slow, and large amounts of water are still wasted. This situation is mainly due to: (a) tradition of over-consumption of water, especially in rice growing areas where unusually high yields are considered by farmers to be mainly a result of continuous, unmeasured irrigation; (b) weakness of the irrigation districts in control of water distribution; (c) unconvincing promotion campaign for saving water; and (d) lack of legal power to enforce realistic water charges and discontinue water supply in case of abuse. 5.11 According to the July 1985 Presidential Decree, Managing Committees for Rehabilitated Areas were established in each valley, made up from representatives of REHATIC management, the Irrigation District and the I&D committees. These committees were given the responsibility to decide on major issues concerning water management and O&M, and to ensure that water charges will be increased gradually, within a period of not exceeding five years, to finally cover the full O&M costs. 5.12 In May 1986 the Minister of Agriculture issued rules of organization and operation of the managing committees. These rules enacted detailed water management guidelines, including inter-alia:(a) regulations for establishing seasonal water requirements, based on approved cropping plans and predicted water availability; (b) methods for collection of the combined water charges, as follows:(i) water tariff, to be paid on a volumetric basis, based on water measurements at gated farm turnouts; (ii) quota, paid on seasonal cropped area basis; and (iii) farmer's manpower contribution, based on predicted manual maintenance works and occasional emergency maintenance works, if required. 5.13 Water tariffs based on seasonal volumetric measurements ware selected to enforce water deliveries according to schedules, thus assuring that farmers at the lower reaches of canals will not be biased by those at the upper reaches. This is especially important during low river-flow season, when diverted discharges are limited and a balanced water distribution is mandatory. 5.14 At present water is controlled at headworks and at bifurication points. Water quantities are not yet measured at turnouts, consequently water tariffs are calculated on two cropp/hectares basis. According to the O&M program, suffi-ient control structures and measuring devices will be gradually installed, to allow adequate water measurements. - 31 - Water Charges and Cost Recovery 5.15 There has been a significant, but still insufficient increase in water charges imposed on the users. Water charges to cover full 0&M costs could be levied only if the present water law is amended accordingly; this matter is currently being studied by a senate committee. 5.16 In compliance with the loan agreement, the Borrower prepared terms of reference for the preparation of a socio-economic study in 1979, to determine the extent to which investment costs could be recovered. The study was revised several times and was finalized in September 1985; however, costs and benefits needed to be updated to reflect significant changes due to inflption. Project management revised and published the updated study in Felcuary 1986. The study's main conclusions were that only those farmers who have holdings of five ha or more and do not haioe to pay pumping charges to evacuate drainage water will be able to cover the full O&M budget, at full development stage. 5.17 In February 1986, REHATIC published the study "Operation and Maintenance Project and Agricultural Development Actions". This study concluded, inter alia, that farmers in all the four valleys, regardless of their holdings size, would be able to pay full O&M costs five years after completion of all project works. 5.18 The fundamental differences between the conclusions of these two studies stem mainly from the following: (a) incremental benefits with, versus without project and yields expected in the fifth year are much lower in the first study, especially in the 3 ha farm model (see Annex VI); (b) the first study multiplied the "Minimum Family Income", considered vital by the Government, by a factor of 1.5; (c) the first study deducted a 40% "economic incentive" from the net available benefit in order to establish the real ability to pay; and (d) the first study considered average yields for each valley, while the second study analyzed individually, present and future yields, in "with and without project" situations, for: (a) areas without prod-iction; (b) with restricted production; and (c) in full production. Agricultural Extension 5.19 The extension service is still not effective. CIPA's (the local agency of INIPA) staff is too small and suffers from a high turnover. Insufficient number of vehicles and extremely low budget for operation of vehicles makes the extension service sporadic and thus inefficient. 5.20 Following unsuccessful attempts to boost extension activities by using a study prepared for this purpose by a joint foreign/local consulting firm during 1981-83, an agreement was reached in 1983 between REHATIC and INIPA to start intensive agricultural extension activities. INIPA was to provide all staff while REHATIC was to ensure transportation and provide logistic support. However, lack of qualified staff and constant budget restrictions prevented INIPA from providing efficient extension support. Some limited extension activities were carried out by other entities, such as BAP, REHATIC, private extension agents and a few leading farmers. - 32 - 5.21 Following the reorganization of REHATIC, agricultural extension was given higher priority. Project management, through its field offices (one in each of the four valleys) coordinates and supports the limited extension program carried out by CIPA. Agricultural Credits 5.22 In 1983 the Sixth Agricultural Credit Project (loan 2302 - PE) was launched, enabling future agricultural credits to be disbursed from this loan, through the Peruvian Agricultural Bank (BAP). An amendment to the 1403-PE loan agreement, dated 09.19.84, provided, inter-alia for the reallocation of loan proceeds among disbursement categories. The agricultural credit component was reduced significantly from US$6.0 million to US$0.3 million, finally disbursing from this category US$0.2 million. 5.23 As of late 1984 and until December 1986, BAP ai. ributed agricultural credits under loan 2303-PE, through its branches in each of the four project valleys. Farmers within the four valleys received during this period about 6,500 short-term subloans, totalling about US$16.0 million equivalent, and about 300 medium and long-term subloans amounting about US$1.9 million. These subloans were granted at variable interest rates, which were positive (in real terms) during 1985, but due to the high inflation rate prevailing in the country, had been negative through 1986. Overall, agricultural credit allocations have been satisfactory, sufficient funds being made available to eligible farmers. VI. PERFORMANCE OF THE BANK 6.01 At appraisal, in 1977, it was assumed that all project works would be completed over a period of six and one-half years. In retrospect, the results suggested that this schedule was too ambitious, especially in view of inadequate and incomplete preparation of technical documentation, implementation capacity constraints and difficulties encountered regarding allocation of Government counterpart funds, which could not have been foreseen in 1977. The Bank found in 1979 that the preparation of bidding documents was significantly lagging and suggested actions to be taken, such as: (a) the appointment of an experienced technical advisor to the project director; (b) improve the Dutch consultant's participation in project implementation; and (c) expedite (by hiring consultants and increasing the technical staff) the completion of the bidding documents. 6.02 Despite a substantial field supervision effort, Bank performance was less successful in promoting compliance with Loan Covenants related to O&M and water charges. Although these issues were raised by all supervision missions from September 1979 onward, and recommendations given through Aide-Memoires and several letters addressed to the highest concerned authorities, results were partial and late. - 33 - 6.03 The decision to insist on project and management reorganization, which began in April 1983, was crucial in getting the project on track in 1984, thus enabling successful completion, as rescheduled. 6.04 Continuity and frequency of supervision was reasonable. Supervision was effective in promptly detecting major shortcomings in project execution. However, it was generally unable to bring about changes to remedy some of these shortcomings. VII. CONCLUSIONS 7.01 The project was the first phase of an ambitious national plan to rehabilitate irrigation projects. In general, it was successful in the construction of civil works foreseen at appraisal (within the reduced four valley program), and there has been asignificant increase in crop yields and adoption of improved farming practices. However, it suffered delays in its efforts to establish sound operation and maintenance priorities and it still fails in collecting sufficient water charges. 7.02 The project was overly ambitious given Peru's technical and institutional inexperience in such programs. Progress in the early stages of implementation was hindered by: (a) frequent changes in administrative hierarchy; (b) lack of qualified technical staff; (c) inadequate cooperation between institutions who were supposed to contribute to project development (e.g., O&M and extension); and (d) a lack of continuity in project management. 7.03 A number of lessons learned from the implementation of this project should be taken into consideration in the evaluation and execution of similar projects: (a) A careful evaluation should be made of farmers' acceptance of project components; farmers' involvement from early project stages is essential to ensure their support and participation in execution of on-farm development works and full payment of water charges. (b) Country procurement procedures usually require streamlining to ensure compliance with Bank guidelines, to facilitate, inter alia, an active participation of foreign bidders. (c) Early establishment of an effective Monitoring and Evaluation system is crucial to focus project management on project impact as well as to measure progress regularly. (d) Progress reporting should be concise and clear, show project execution clearly and identify bottlenecks encountered, propose solutions and recommend actions to be followed up. - 34 - (e) Adequate budgetary support during the initial period after completion of works is essential to ensure proper OM until the beneficiaries are able to fully finance OM costs. (f) Proper institutional framework and adequate level of funding and staffing of all supporting services is vital to ensure maximum increase in farmers benefits following completion of project works. - 35 - E i Tabla 1 1HIGAIG (l T R TA1E(~ 1 f~Ec (WOMkI 1403-E) I'RU=C (omfEZm 1~10 l ti te R ~ FEtaete / AMW A~ of Qpnnslocal Foreig~ 1btal Incal Foreig 1btal local lilefmg 1btal Revised Estime CLvil Workb 6.49 2.33 8.82 8.80 10.34 19.14 ) ) 8.45 21.33 29.78 135 Q-FarmDvelop. 3.64 1.55 5.19 1.18 1.77 2.95 ) Equt 1.11 5.21 6.32 0.84 6.90 7.74 0.18 3.50 3.68 48 n e nd 5.75 1.21 6.96 6.00 0.75 6.75 b/ 9.8 4.0 13.96 b/ 207 T.amcl Serv. Opermt & - - - - - - 3.47 - 3.47 - säotal 16.99 10.30 27.29 16.82 19.76 36.58 21.98 28.91 50.89 139 1 eysicalQt. 1.70 1.03 2.73 - - - - - Pri t. 6.9 3.93 10.89 - - - - - - 1MrAL 25.65 15.26 40.91 16.82 19.76 36.58 21.98 28.91 50.89 139 al N~nsim estl ba e ~ n revised cmts p ~epaned by EMTC in ~an=ry 1980. 1ee cts refleat the develpet of four valeys ira~tea of the iu ett~e t «a~ap 1. bl Twi,L guperv~at of work, st~ and tecimi 1 asaoce provd by the Iki Q rmnxt (M$1.0 million in the revied estle ad ES$3.3 millio in arnal ch e. u). - 36 - ANNEX I Table 2 PERU IRRIGATION REHABILITATION I PROJECT (LOAN 1403-PE) PROJECT COMPLETION REPORT Project Financing (US$ Million) Appraisal % of Z of Estimate Total Actual Total IBRD 25.00 61 25.00 49 Borrower 14.91 36 22.59 44 Government of the I-etherlands 1.00 3 3.30 7 Total 40.91 100 50.89 100 -37 - ANNEX II Table I PERU IRRIGATION REABILITATION I PROJECT (LOAN 1403-PE) PROJECT COMPLETION REPORT Status of Reclamation Works-Summary Table a, (in Ha) Status of Production Prior to Reclamation Status of item Implementation b/ No Restricted Full Production Production Production Total Areas Benefittimg from Reclamation Works - Total 2,279 3,968 6,729 12,976 - Implemented 242 3,968 6,729 10,939 - In Execution 1,019 - - 1,019 - To be implemented 1,018 C/ - - 1,018 On-Farm Development - Required 2,279 1,117 213 3,609 - Implemented 242 1,117 213 1,572 - In execution 1,019 - - 1,019 - Tb be implemented 1,018 C/ - - 1,018 Field Drains - Required 2,178 1,586 1,191 4,955 - Implemented 1,732 1,586 1,191 4,509 - In execution 446 - - 446 Soil leaching - Required 3,839 2,408 213 f,460 - Implemented - - 213 213 - In process- In production 1,660 2,408 - 4,068 - In process- without production 242 - - 242 - To be implemented 1,937 - - 1,937 -f In the valleys of Canete, Pisco, Camana and Tambo. f Figures as of June 30, 1986. J In Tambo valley 1018 ha are In legal process. - 38 - ANNEX II Table 2 PEZU IRRIGATION REBABILITATION I PROJECT (IDAN 1403-PE) PROJECT COMPLETION REPORT Withdrawal of the Proceeds of the loan Amount Actual Amount of the Actually Disbursements/ Category loan Allocated Disbursed Amount Allocated (US$ Equivalent) (US$ Equivalent) (%) (I) Project Works 8,000,000.00 20,478,485.57 256 (II) Agricultural 6,000,000.00 195,886.15 3 Credit (on-farm development) (III) Equipment, vehicles 7,000,000.00 3,452,052.20 49 and supplies (IV) Consultant services, 600,000.00 683,413.54 114 Training abroad (V) DUallocated 3,400,000.00 - - (VI) Project Managers 190,162.54 - S-rvices TOTAL 25,000,000.00 25,000,000.00 100 IRRIATIæ !ATr.1'åATI= I 1Fa=C (I=Yi 1403-FE) Project Expnditures Rela~ed to Hatd af Proumnt (in miu114n U$) METROD OF PROCUREMENT ICB 1oal Procedure Ot~rs D/ T~tal / Catory mt~raan 1UB No. % åamt M% Nb. % himt % >. % Amt % N. Amunt CLvil Woks 27 36 23.740 (82) 5 8 3.711 (13) 33 56 1.417 (5) 59 28868 / lquimnt 4 22 3.266 (95) 2 11 0.071 (2) 12 67 0.095 (3) 18 3.432 Q alta 3 10 0.30 (44) - (- 27 90 0.399 d (56) 30 0.707 28 - 27.314 - 7 19 3.782 - 72 - 1.911 - 107 33.007 a/ As of nanrdhar 31, 1985. b/ Ither m.e: for ac nt ud diect c~tractig. c ælamUr US$1,324 iulIn finat ettirely fra loal fuds. ~ l 1 MHw I$35,000 for tnintig ar~d ~f project peromel. PERU IRRIGATION REHABILITATION I PROJECT (IDAN 1403-PE) PROJECT COMPLETION REPORT Yield Increases in Rehabilitated Areas BEFORE PROJECT FEASIBILITY ACTUAL YIELDS BASED ON YIELD ICREASES DRAINAGE YIELDS STUDY (1975) SURVEY RESULTS CCMPARED TO VALLEY UNIT CROPS MINIMUM MAXIMUM TARGET YIELDS AVERAGE DATE MINIMUM MAXIMUM FEASIBILITY (kg/ha) (kg/ha) (kg/ha) (kg/ha) % % STUDIES (1) (2) (3) (4) (4/1) (4/2) (4/3) Cotton 000 1.410 2,500 1,500 August 84 - 106 60 CERRO AZUL Maize 000 2,250 4,700 3,900 August 84 - 173 83 Sweet Potato 2.000 6,000 17,000 16,910 August 84 745 216 99 Potato 000 15,000 20,000 18,000 Aumst 84 - 120 90 Cotton 1,600 2,040 2,500 2,680 August 84 168 131 107 CANETE SAN ANTONIO Maize 2,500 4,156 4,700 4,190 August 84 167 108 89 Sweet Potato - - 16,000 17,570 August 84 - - 109 Potato 10,000 15,000 20,000 20,000 August 84 200 133 100 Cotton 1,360 1,860 2,500 2,180 August 84 160 117 87 SAN FRANCISCD Maize 2,000 4,000 4,700 3,200 August 84 160 80 68 o Sweet Potato 10,000 14,000 15,000 21,880 August 84 218 156 145 Potato 10,000 15,000 20.000 - August 84 - - - LA BIOA Rice 4,000 4,670 9,500 8,020 October 84 200 173 84 Beans 500 666 1,300 1,120 October 84 224 168 86 CANANA PUIOCUN Rice 500 5,986 8,500 7,350 October 84 147 123 86 Beans 500 666 1,100 1,070 October 84 214 161 97 SAN JOSE Rice 5,000 9,0T7 9,500 9,020 October 84 180 95 95 Beans 500 1,215 1,500 1,080 October 84 216 89 72 Cotton - 1,410 2,040 - October 84 - - - IBERIA Garlic 4,893 6,000 7,500 5,840 October 84 119 97 78 Alfalfa 31,000 45,000 54,000 60,000 October 84 193 133 111 Rice 4,000 4,990 5,500 10,240 October 84 256 205 186 TAMB0 SAN FRANCISCID Garlic 5,300 6,000 7,500 4,600 October 84 87 77 61 Potato 7,500 8,769 12,000 18,250 Oatober 84 247 206 152 PUNTA Garlic 5,000 6,508 7,800 4,250 Weober * 5 66 54 DE Alfalfa 40,000 45,000 54,000 60,000 October 84 150 133 111 BONBON Squash 8,500 9,500 11,600 11,140 October 84 131 127 96 Sweet Potato 5,500 7 13,000 13,680 October 84 215 195 105 Left River Cotton 1,140 1,500 2,250 1,500 June 85 132 100 66 PISCO Bank Haize 2,200 2,835 4,500 2,725 June 85 136 96 61 Right River Cotton 20 qq 24 qq 45 qq 38 qq June 85 190 158 84 Bank Maize 1,300 1,725 4,000 2,470 Jue 85 190 144 62 NT: Cotton yields refer to cottoneseed. SOURCB: Monitoring and Evaluation Unit, RERATIC, Lis, Peru. - 41 - ANNEX IV FARM INCOME The impact of the project on its beneficiaries was analyzed for six farm types considered to be typical in the project area. Below is a summary table that shows the estimated farmer incomes in the without and with project situations at full development (year 15). Table 1: ESTIMAED NT FAl@R INummS 1, (in US$/ha) 3 ha Farm 5 ha Farm 10 ha Faim Valley Without With % Witbout With % NIttout With % Project Project Increase Project Project Increase Project Project Increase Caete 344 735 114 250 730 192 - - - PIsco - - - 20 350 1650 65 370 470 Camana - - - 600 690 115 - - - Tamo 120 900 650 - - - - 1, Cmopled fran data presented in Anex IV, Tables 2.1 to 6.1, usirg 1IS$ - 14.0 Itis (official exchaqg rate prevailing in 1986). While these figures are based on preliminary data on prices, costs of production and yields, real farmer incomes are expected to increase considerably when the project is fully completed. Projected increases in income at full development range between 114% and 1650% per ha. Projected net benefits to farmers were derived reflecting the realities of low interest rates and gradually increasing O&M costs because (a) agricultural credit for small farmers is still subsidized by the Government, thus lowering the farmers' costs if borrowing money for farm improvements; and (b) the Government is still responsible for O&M of the irrigation systems in all the project areas. Farmers are not yet being charged water use rates sufficient to cover the costs of O&M, but it is expected that farmers in the valley of Canete will pay the full cost of 0&M in Year 7, those of Pisco and Camana in Year 8, and farmers in the Tambo Valley in Year 11 of project development. - 42 - ANNEX IV Table 2: VOLUME OF PRODUCTION (in NT '000) Without With Project Crops Project Year 8 Year 15 Year 15 (Est.) (1986) (Estimate) Canete Maize 2.0 4.9 6.4 Potatoes 15.4 15.4 16.0 Cotton 2.0 4.6 5.6 Sweet Potatoes - - 20.5 Pisco Maize 0.8 1.9 1.4 Lima Beans 0.5 0.4 0.3 Cotton 0.9 3.1 4.6 Camana Rice 16.8 29.4 41.4 Beans 1.6 1.9 2.3 Tambo Rice 2.2 4.8 6.1 Potatoes 2.7 10.3 23.6 Garlic 2.2 3.2 5.4 Alfalfa 8.6 16.0 42.0 Squash 0.3 1.1 5.2 Onion - - 9.4 PER 1I1MTIM N EMILITATIf I (LOM 1403-PE) TABLE 1.1 CAMETE IRRI8ATEB (3 M FMN) Fött odel FIMCIAL BUDGET (lsj Ii., CLEDA YEA wihut Withl Pro~t 1 to 40 1 to 3 4 5 6 7 8 9 10 11 12 13 14 15 to 40 Main Production MIZE 12^042.8 129042.8 12#042.9 12*042.3 16.583.0 16t934.9 17t521.4 179912.4 189303.4 18428.8 18.549.5 1084.0 18,607.0 18v630.0 COTTOM 23Y333.4 239333.4 239333.4 23,333.4 36,957.6 379584.0 38.210.4 38836.8 399150.0 399150.0 39.150.0 39:150.0 399150.0 39.150.0 Sub-Total Nain Production 35.376.2 35#376.2 35m376.2 351376.2 539540.6 54#518.9 55,731.8 56.749.2 579453.4 571678.8 57v699.5 579734.0 57t757.0 57.780.0 #et value of Production 359376.2 351376.2 35,376.2 35,376.2 53,540.6 54,518.9 55p731.8 56s749.2 57.453.4 571678.8 57,699.5 57t734.0 579757.0 57,780.0 Production Cout Invesent Of-fRN BEVELPIENT - - - 20t745.0 - - - - - - - - - - Operating Inputs COST PROIETION - IZE (CaMETE) la 7p221.6 7p221.6 7.221.6 7p221.6 8M923.1 8,923.1 8.923.1 8#923.1 8,923.1 8,998.2 8^998.2 8r998.2 8998.2 8.998.2 COST OF POMMCTION - COTTON (CiETE) la 9,864.0 99864.0 9,864.0 9,864.0 11,565.0 119565.0 11.565.0 11.565.0 11,565.0 11P565.0 11t565.0 l1b65.0 11,565.0 119565.0 0N 1.185.0 1.185.0 1t185.0 2.467.0 3,092.0 3.123.0 3.123.0 31123.0 3.123.0 39123.0 3,123.0 3123. 23.0 3,123.0 Sub-Total Inuts 18t270.6 189270.6 18270.6 199552.6 232580.1 23,611.1 23s611.1 239611.1 23.611.1 23.686.2 23T686.2 23*686.2 23c686.2 23t686.2 Hired Labor Lmin 2#656.5 29656.5 29656.5 2p656.5 3.205.5 3t205.5 3.205.5 3.205.5 3.205.5 3,213.0 3,213.0 3p213.0 3p213.0 3213.0 Sub-Total Operatin 20.0927.1 209927.1 209927.1 22.209.1 26,785.6 26.816.6 26t816.6 26t816.6 26t816.6 26,899.2 26^199.2 26e899.2 26.99.2 26#899.2 Sub-Total Production Chst 20s927.1 20.927.1 20:927.1 42,954.1 26.785.6 26.816.6 26.816.6 26,816.6 26816.6 26^899.2 26899.2 26899.2 2699.2 26.899.2 CASM FLOW BEFOE FINAIM 14o449.1 14449.1 14449.1 -7:57.9 26.755.0 29702.3 28.915.2 29,932.6 30.636.8 30.Y79.6 30.800.3 30%834.8 309857.8 309880.8 Sourcet Ot Finance Dbursments On Lon6 Term Lon - - - 19,707.8 - - - - - - - - - - Transfer Fron Previos Period 20.927.1 20t927,1 20.927.1 23,246.4 26M785.6 26.816.6 26.816.6 26.816.6 269816.4 26899.2 26~899.2 26^899.2 269899.2 26:899.2 Leh Transfer To #ext Period 209927.1 20927.1 23p246.4 26p785.6 26p816.6 26t816.6 26t816.6 26v816.6 26^899.2 26#899.2 26899.2 26899.2 26.999.2 26.899.2 Sub-Total Sources Of Finance - - -2:319.3 16168.5 -31.0 - - - -82.6 - - Len Repaments Loai Ter* Principal - - - - - - 3#941.2 3^980.6 4.020.4 49060.6 4.101.2 - - - Lonä Ter* Interet - - - - - - 201.0 161.6 121.8 81.6 41.0 - - - Sub-Total Loan Repaments - - - - - - 4,142.2 49142.2 4.142.2 4.142.2 4.142.2 - - - MT FINAING - - -29319.3 16p162.5 -31.0 - -4.142.2 -4.142.2 -4,224.8 -49142.2 -4j142.2 - - - FAN FMYILY IFTS AFTE FIMAIEIN 149449.1 14.449.1 12t129.9 8,590.6 ?6p724.0 27,702.3 24,773.0 25t790.4 269412.0 26.637.4 26m658.1 30.834.8 309857.8 30880.8 Februarn. 6.1987 14'44 la Excludes labor :osts. PERU IRRIGATION REMBILITATION I (LOM 1403-PE) TABLE 2.1 CAETE IRRIGATED (5 NA FAM) Fare Model FINANCIAL UDGET (In l/. I CALENDAR YEAR wiUut vith Project I to 40 1 to 3 4 5 6 7 8 9 10 11 12 13 14 15 to 40 Nain Production MIZE 12751.2 12t751.2 12751.2 12751.2 18s225.2 18,597.8 19,218.8 19,632.8 20,046.8 20497.6 20,539.0 20.608.0 20654.0 20700.0 POTATOES 15,041.6 15041.6 154041.6 1M041.6 21,280.0 22,400.0 239520.0 24,060.0 249640,0 24o640.0 24,640.0 24640.0 24t640.0 24,640.0 COTTON 38889.0 38,889.0 38889.0 38P889.0 61,596.0 624640.0 639684.0 64729.0 659250.0 65.250.0 63P250.0 65v20.0 65250.0 65250.0 Sub-Total Main Production 66#681.8 66F681.8 66681.8 66r681.8 101.101.2 103,637.8 106t422.8 1089440.9 109P936.8 110,387.6 110,429.0 110,498.0 1109544.0 110590.0 Net Value Of Production 66P681.8 66p681.8 66,681.8 66r681.8 101101.2 1039637.8 106t422.8 108,440.9 109P936.8 1109307.6 110P429.0 110,498.0 110,544.0 110V590.0 Production Cost Investment O-FARX DEVELOPHT 34*575.0 - - Operating Inputs COST OF PRODUCTION - MAI2 (CMETE) la 7,646.4 7,646.4 7646.4 7646.4 9847.8 9847.8 947.8 9Y847.8 9.847.8 9998.0 9.99.0 9.990,0 9,998.0 9,998.0 COST OF PRODUCTION - POTATOES (CMETE) la 189322.0 18t322.0 18322.0 189322.0 19P220.0 199220.0 19,220.0 19t220.0 19t720.0 19220.0 191220.0 19,220.0 19P220.0 19P220.0 COST OF PRODUCTION - COTTON (CMETE) /a 16,440.0 16,440.0 16440.0 16,440.0 19t275.0 19,275.0 19P275.0 19.275.0 19,275.0 19275.0 19,275.0 19,275.0 19P27..0 19P275.0 DI 1975.0 1,975.0 1,975.0 49112.0 5153.0 59205.0 5,205.0 5205.0 3,205.0 5.205.0 5.205.0 5205.0 5,205.0 5.205.0 Sub-Total Inputs 44,383.4 44383.4 44383.4 469520.4 53*495.8 53547.8 53P547.8 53.547.8 53547.9 53,698.0 53,698.0 53.698.0 53.698.0 53P6T4.0 Hired Labor UNSK 4,713.0 49713.0 4713.0 4713.0 5670.0 56/0.0 5,6)0.0 5,470.0 5670.0 59685.0 5685.0 565.0 5i665.0 59685.0 Sub-Total Operating 499096.4 49096.4 49P096.4 51#231.4 59165.8 59,217.8 59.217.8 59,217.8 599217.8 59383.0 59.383.0 SVP383.0 59383.0 59,383.0 Sub-Total Production Cost 49,096.4 49,096.4 49,096.4 85.808,4 59o165.8 59,217.8 59P217.8 59,217.8 59P217.8 59383.0 59383.0 59,383.0 59383.0 5933.0 CASH FLO BEFORE FINANCIMS 17585.4 17.585.4 17.585.4 -19126.6 419935.4 44.420.0 47P205.0 4223.0 509719.0 51,004.6 51,046.0 51115.0 51W61.0 519207.0 Sources Of Finance Disburseents On Lang Term Lo,s - 3246.3 - - Tr.msfer From Previous Period 49096.4 49P0V6.4 49Y096.4 52P962.2 59465.8 59,217.8 59t217.8 5M.8 52174 59P383.0 5938.0 59,383.0 59o383.0 599383.0 Lets, Transfer To Next Period 49,096.4 49#096.4 52996?.2 59,165.8 59P217.e 59.217.8 59,217.8 59.217.8 59o383.0 59r.38, 599383.0 59t383.0 5YP383.0 59.383.0 Sub-Total Sources Of Finance -3465.8 26.642.6 -52.0 - -165.2 - Loan Repauaents Lad Ters Principal - 6PUB-1 6434.3 6700.6 676/4 &M.3 - - Lani Term Interest - LS. 269.4 203.0 136.0 68,4 - - Sub-Total Loan Repaments - - - - - 6t903M 6,903.7 WOW3. 6,903.7 60903.7 - -- NET FINANCING - - -3t865.8 26642.6 -52.0 - -6903.7 -6903.7 -7p068.9 -693 -693 - - - FARM FAMILY PENEFITS AFTER FINACING 17,585.4 17,505.4 13.719.7 7516.0 41,883.4 44420.0 40,301.3 42319.3 43.650.1 44#100.9 44#142.3 5115.0 519163.0 51.207.0 Februarv 6# 1987 14:44 /a Excludes labor costs. PEW IRRIATION REMBILITMION I (LON 1403-f) TALE 3.1 PISCO IRRIGATED (5 MA FM) Fare Noel FlhMCIWA IDGET (In 1.) CALED YEAR MithDut ith ProJftt I to 40 1 to 3 4 5 6 7 8 9 10 i 12 13 to 40 Rain Production MIZE 12,190.0 12,190.0 12190.0 12,190.0 14v547.5 17250.0 19P550.0 219850.0 23,000.0 23,000.0 23,000.0 23000.0 COTTON 39t585.0 39P585.0 39#585.0 399585.0 51r16.0 54810.0 56,332.5 59,377.5 60900.0 60,900.0 609900.0 60,900.0 Sub-Total Main Production 510775.0 51775.0 51,775.0 51775.0 65,703.5 72060.0 75P892.5 91,227.5 93,900.0 83,900.0 83r.9000 83900.0 Net Value Of Production 51,775.0 51775.0 51#775.0 51775.0 65703.5 72,060.0 75,892.5 81,227.5 93v900. 83,900.0 8390.0 83,900.0 Production Cost Invstamt - ON-FARN BEYELOPMENT - - - 23.750.0 - - - - - - - - Operatus Inputs COST OF PRODUCTION - MAIZE (PWISCO) /a 12,245.0 12,245.0 12245.0 1245.0 13P935.0 13,935.0 13,935.0 13935.0 13935.0 13.935.0 13,935.0 13935.0 COST OF PRODUCTION - COTTON (PISCO) /a 25,627.0 25,627.0 25t627.0 25627.0 29.134.0 29P134.0 29,134.0 29P134.0 29.134.0 299134.0 29134.0 29434.0 I 1660.0 IP660.0 1660.0 1,701.0 19781.0 1,781.0 1855.0 1955.0 1855.0 1,85.0 1v55.0 .855.0 Sub-Total Inputs 399532.0 39t532.0 399532.0 39579.0 44850.0 44850.0 449924.0 44924.0 44t924.0 449924.0 44,924.0 44,924.0 Hired Labor UNK 119028.0 11,028.0 119028.0 11P028.0 14700.0 149700.0 14,700.0 14,700.0 14700.0 14,700.0 14000.0 14,700.0 Sub-Total Operatind 50560.0 50S560.0 50560.0 50,607.0 59550.0 595D.0 599624.0 59,624.0 59624.0 59624.0 59t624.0 59#624.0 Sub-Total Production Cost 50560.0 50,560.0 50560.0 74,357.0 59550.0 59,50.0 59,624.0 59624.0 59,624.0 59t624.0 599624.0 59P624.0 CASH FLOV BEFORE FINANCIS 1215.0 1215.0 1P215.0 -22582.0 6,153.5 12510.0 16.258.5 21P603.5 24276.0 249276.0 249276.0 24P276.0 Sources Of Finance Disbursemnts On Lan Ter Loan - - 22,562.5 - - Transfer From Previous Period 50,560.0 50560.0 50P560.0 51,794.5 59,550.0 59550.0 59F624.0 59,624.0 59,624.0 599624.0 59624.0 59624.0 Les Transfer To Next Period 50P560.0 50,560.0 51,794.5 59.550.0 599550.0 59624.0 59,624.0 59624.0 59,624.0 59,624.0 59,624.0 59,624.0 > , Sub-Total Sources Of Finance - --19234.5 14807.0 - -74.0 - - - - - - Loan Repavents < Long Term Principal - - 4512.1 4557.2 4602.7 4648.8 4695.3 - Low Term Interest - 230.2 J85.0 139.5 93.4 47.0 - Sub-Total Loan Repasents - - - - - - 4742.2 4,742.2 4742.2 4742.2 49142.2 - NET FINANCIN - - -1#234.5 14,807.0 - -74.0 -4742.2 -4742.2 -4742.2 -49742.2 -4.742.2 - FARM FAILY BENEFITS AFTER FINMCIN 1215.0 1,215.0 -19.5 -7775.0 6W153.5 12,436.0 119516.3 16,861.3 19s533.8 19*533.8 19,533.8 24,276.0 Februarv b 1997 14:44 /a Excludes labor costs. PEOW IRRIMTION MILITATION I (LM 1403-PE) TNU 4.1 PISCO IMIGE (10 M FM) Fara hl FIMiCIL UET (In I/.> CALE~ vEa iut~ with Promct i to 40 1 to 3 4 5 6 7 8 9 10 11 12 13 to 40 Nain Production I1E 149628.0 14v626.0 14.628.0 14p62Z.0 179457.0 20700.0 23460.0 26922.0 27*600.0 27900.0 27p600.0 27~600.0 LIM EMS 1016.0.0 10. t0vM.0 10460.0 119520.0 12.360.0 13200.0 14:040.0 1490.0 14^80.0 14.^0.0 14^.0 COTTf 79,170.0 799170.0 799170.0 799170.0 1024312.0 109620.0 112.665.0 118p755.0 121#80.0 121800.0 121800.0 1219800.0 Sub-Total Pain Poduction 1049478.0 104t478.0 104,478.0 104.478.0 131289.0 1420680.0 1490325.0 1599015.0 164,210.0 164,20.9 164930.4 164,20.0 het galee of Production 1049478.0 104.478.0 104,478.0 1049478.0 131239.0 142v680.0 149.325.0 159*015.0 1642*.0 16420.0 164929.0 164^.0 Proctin Cost wA-Ffi E~LW i - - - 479500.0 - - - - - - - - uperatint InPuts COS F PRITA0I - MIZE (PISCO) /a 14.694.0 141694.0 14#694.0 14:694.0 16,722.0 169722.0 16,722.0 16.722.0 16722.0 16,722. 16722.0 6.722.0 COST PONEVTIM - LIM EMS (PISCM) /a 5.900.0 5.900.,0 5~8 5.900.0 6766.0 6.766.0 6,766.0 6766.0 W7. 606 6,766.8 6.76.0 COST F PRaCTIO - COTTON (PISo) /a 51,254.0 519254.0 519254.0 51,254.0 58268.0 9268.0 5268.0 2268.0 5.268.0 5%.268.0 58.268.0 5 *268.0 N 39320,0 39320.0 3320.0 3p413.0 3.562,0 39562.0 3#710.0 3710.0 3710.0 3.710.0 3010.0 3.710.0 Suv-Total 1ts5 75.168.0 75p168.0 759168.0 75p261.0 85,318.0 85,318.0 85466.0 85~4.0 8594.0 8466.0 85466.0 85.466.0 Hired Labor 18lSK 20o130.0 20t130.0 20130.0 20*130.0 26.65.0 26p650.0 26,650.0 26.650.0 26.65.0 26t650.0 269650.0 26.650.0 Sub-Total Offratina 95v298.0 95.298.0 95.298.0 95.391,0 1119%0.0 111,968.0 112.116.0 112:116.0 112#116.0 1129116.0 112.116.0 1121116.0 Sub-Total Production Cost 95.298.0 95 8 95298.0 142,891,0 111,968.0 11168.0 1129116.0 1129116.0 112.116.0 1129116.0 1129116.0 1129116.0 »6SH FLM EFIE FIMINB 9.180.0 9.180.0 9.180.0 -38.413.0 19,321.0 30.712.0 371209.0 46899.0 52.164.0 529164.0 52.164.0 52P164.0 Sources Of Finonce Disburseents On Lan Term Lon - - - 45125.,0 - - - - - - - Transfer Fros Previos Period 95,298.0 951298.0 95,298.0 97.766.0 11168.0 1111968.0 112,116.0 1129116.0 112116.0 112,116.0 112P116.0 112p116.0 Less Transfer To HMt Period 95v298.0 95,298.0 97766.0 111.968*0 111.968.0 112.116.0 1120116.0 1129116.0 112116.0 112,116.0 1129116.0 112.116.0 Sub-Total Source Of Finance - - -2,468.0 30.923.0 - -148.0 - - - - - Lomn RPa~ents Lang Term Principal - - - - - - 99024.1 9.114.3 9,205.5 9.297.5 9.390.5 - Lonn Term Interest - - - - - - 460.3 370,1 218.9 1.9 93.9 - Sub-Total Ln Rep~amts - - - - - - 9.484.4 9.484.4 9484.4 9.484.4 944.4 - ET FIMIN - - -2.468.0 30,W23.0 - -148.0 -9,484.4 -9p484.4 -9.484.4 -9.484.4 -9.484.4 - FPM FMILY BEEFITS TER FIlaOEN 9,180.0 9.180.0 6.712.0 -7949*.0 199321.0 30O564.0 279724.6 37.414.6 429679.6 42,679.6 42*679.6 52t164.0 Februav 6. 1987 14:44 la Excludes labor costs. PERU IMIATION REIlWILITATION 1 (LmN 1403-PE) TAwE 5.1 CnA IRRIOATEO (5 Ma FAM Far ladel FIlMEIAL NUET (In I/.1 mitheut Lih P,o.et 1to40 1t03 4 5 6 7 9 9 10 11 12 13 to 40 Nain Pduction RICE 859610*0 05#6e0.0 859680.0 Elb680.8 91.245.0 979230.0 99,750.0 101,850.0 105,000 I0 .0 105t00.0 105900.0 KEAm 159400.0 169ö20* 16720.0 16,720.0 169416.0 16p720.0 16p544.0 209216.0 22^900.0 22800.0 2200.0 22^900.0 Sub-Total Nain Productan 101,060.0 102#400.0 102s400.0 102#400.0 107.661.0 113950.0 1189294.0 122066.0 127900.0 127800.0 127800.0 127.00.0 ket valu t Prdtian 101060.0 1029400.0 102.400.0 102#400.0 107p661.0 113950.0 1189294.0 122066.0 127,00.0 127^9^127,0 127.00.0 Prodctiu Cat OM-Fl IE9EMENl - - - 4.950.0 - - - - lperatins Iruts COST 9F PIKETIf - RICE Ma la 35,750.0 35750.0 35,750.0 35,750.0 41,900.0 41,00.0 41,900.0 41^900.0 41,00.0 41,900.0 41,9^0.0 41^800.0 CST OF PRETIN - KMl6 (Clla 9,702.0 10.5,6 töp533.6 10.533.6 11.004.8 1.004.8 11004.8 1pmög 1t.0 11.004.8 11.O04.t 1100.9 om 2,9885,0 2^8 2.885.0 11t510.0 11o802.0 12093.0 13t404.0 13.404.0 139404.0 13*494.0 139404.0 139494.0 sub-Total lImuts 48,337.0 49,168.6 C9168.6 57793.6 64v606.8 6497.8 .20.8 6620.8 M20.8 66208.8 åkM20.8 6620.8 Nired Labor Uf 11302.0 11p473.6 11,473.6 11t473.6 139571.2 13.571.2 139571.2 13.571.2 13.571.2 139571.2 13.571.2 13.571.2 Sub-Total Oeating 5969.0 60,642.2 609642.2 69p267.2 78,179.0 789.46.0 79,7^0.0 79,70.0 79,70 M7. 790790.0 79.79.0 Sb-Total Productoan Cost 79639.0 609642.2 60.642.2 741217.2 78,178.0 78469.0 79P790.0 79,7.0 79.70.0 79.70.0 79780.0 79,70.0 CAIN FLI19 9FnE FIMIEiN 41,441.0 41.757.8 41757.8 29.182.8 299493.0 35.481.0 3.514.0 42,296.0 .020.0 .020.0 4020.0 4020.0 Sorcrs Of Fånance Disburmnts On Lo Tem Lom - - - 4.702.5 - - - - - - framser Frm Provaus Period 59,639.0 60.642.2 60,642.2 699514.7 78,178.0 789469.0 79,780.0 79.790.0 797 79.0 79 0 79.780.0 79,7~0.0 Loss Transftt To hx Period 59.619.0 60.642.2 69,514.7 78p13.0 78,469.0 79,700.0 79790.0 79.70.0 79,780.0 799790.0 79.780.0 799790.0 SM-Tutal Sources Df Fiance - - -8,9872.5 -3,960.8 -291.0 -1311.0 - - - Lon Repants Lyd Torm Princif>l - - - - - - 940.4 949.8 959.3 968.9 978.6 - Lad m M - - · - - - 49.0 38.6 29.1 19.5 9.8 - sub-Total Lu Reprm ts - - - - .- 994 988.4 988.4 98.4 988.4 - HET FIMEIN - - -8,872.5 -3,960.8 -291.0 -1.311.0 -98.4 -98.4 -98.4 -986.4 -989.4 - FAR FMILY iEIVTS FTER FIMIWN 41,441.0 419757.8 32~.85.3 24.222.0 29,192.0 34.170.0 379525.6 41.297.6 47,031.6 47t031.6 47,031.6 4020.0 Februörm 6. 1987 14:45 /a Excludes labor costs. PERU I TIG REMBILITATII I (LOM 1403-PE) TAKE 6.1 TO IMI6OATED (3 gA FAR) Farm Nodel FINMCIAL ~SDGT (In I/M> måthout With ProJect i to 40 l to 3 4 5 6 7 8 9 10 11 12 13 14 15 te 40 Nain 'roduction RICE 19.950.0 19,950.0 19,950.0 19,950.0 40,698.0 40.698.0 40p698.0 409698.0 409698.0 40,698.0 40,698.0 40699.0 40,698.0 409699.0 POTATES 15#120.0 159120.0 15s120.0 151120.0 30660.0 31p920.0 32,760.0 33#600.0 33,600.0 339600.0 339600.0 33v600.0 33,600.0 33,600.0 LIC 69230.0 69230.0 69230.0 69230.0 7,855.0 8615.0 9,615.0 1(p615.0 12.115.0 11v370.0 119750.0 12.250.0 12.750.0 13500.0 Sub-Total Nain Production 41#300.0 41.300.0 41300.0 41,300.0 79o213.0 81p233.0 83.073.0 84,913.0 86.413.0 85668.0 86048.0 86.548.0 87,048.0 87p598.0 §et Valuf Of Productiorf 41300.0 419300.0 41#300.0 41300.0 79p213.0 81.233.0 83907.0 84.913.0 86.413.0 85668.0 86.04.0 86548.0 87^048.0 87798.0 Production Cost Instment, M-FM|EAJPENI - - - 6.840.0 - - - - - - . - - - Operating COST OFPRCIETIM - RICE (TMO) la 15v817.5 15.817.5 15.817.5 15.817.5 16*530.0 169530.0 16.530.0 169530.0 16.530.0 169530.0 169530.0 169530.0 16530.0 16.530.0 COST OF PRITI - POTATS (TMU00) /a 159529.5 15.529.5 15.529.5 15,529.5 18p073.5 18t073.5 18.073.5 Ifts073.5 18.073.5 18.073.5 18.073.5 18c073.5 18.073.5 18.073.5 COST OF PROiETIM - BAOLIC (TUN0) /a 2v850.6 2,850.6 2,850.6 2.850.6 4316.3 4.316.3 49316.3 4.316.3 4316.3 4336.5 46.3. 4.336.5 4.336.5 6336.5 DIN 1,704.0 19704.0 1704.0 1.217.0 2,433.0 3,687.0 3,68/.0 3p687.0 3.687.0 3.687,0 3p687.0 3687.0 3.687.0 3,687.0 Sub-Total Inuts 359901.6 359901.6 35.901.6 35p414.6 41*352.8 42,606.8 429606.8 42.606.8 42p606.8 42627.0 42s627.0 42.627.0 42t627.0 429627.0 Hird Labr LIm 5777.9 5777.9 5,777.9 So777.9 6,953.4 6p953.4 6.953.4 6.953.4 6953.4 7.015.8 7t015.8 7.015.8 7,015.8 7.815.8 Sub-Total Operating 41t679.5 41p679.5 41.679.5 419192.5 48.306.2 49P560.2 49P560.2 49~,60.2 49.560.2 49^642.8 4Y#642.8 49p642.8 49.642.8 49~642.8 Sub-Totl Production Cost 41.679.5 41.679.5 41p679.5 48,032.5 48.306.2 49.560.2 49P560.2 49P560.2 49.560.2 49.642.8 49.642.8 49.442.8 49.642.8 49.642.8 CASN FLN MU FIIMIlB -379.5 -379.5 -379.5 -6,732.5 30906.3 31.672.8 33p512.8 35,352.8 36p852.8 36025.2 369405.2 369905.2 37.405.2 38.155.2 Sourcus Of Finance Disburaents (b Lond Tern Lomn - - - 6.49.0 - - - - - - - - - . Transfer Fra Previus Period 41p679.5 419679.5 41,679.5 419534.5 48p306.2 49.560#2 49.560.2 49560.2 49560.2 49.642.8 49.642.8 49.642.8 49O642.8 49642.8 . Lesf Transfer To lext Period 41679.5 41,679.5 419534.5 48.306.2 49,560.2 499560.2 499560.2 49.560.2 49,642.8 49.642.8 49.642.8 49,642.8 49.642.8 49c642.8 Sub-Tol Sources Of Finanm - - 145.0 -273.7 -1.254.0 - - - -82.6 - - - - - Lom Repaments Lönw Tora Principal - - - - - - 1.299.5 1,312.5 1*35.6 1338.8 1r352.2 - - - Lont Tera Interest - - - - - - 64.3 53.3 40.2 26.9 13.5 - - - Sb-Total Loa 8epaseptt • - - - - - 1365.8 1,365.8 1.365.8 1,365.8 1,365.8 . - - ET FIIMi - - 145.0 -273.7 -1254.0 - .1,I48 -1.365.8 -14M.4 -1P365.3 -1365.8 - - . rm F~lLt nMFIS oFm8 Fem -379.5 -379.5 -234.5 -7406.2 29.652.8 31,672.8 32147.0 3h7.f 0400.4 34659.4 .89.4 36^90.2 374^.2 ,M5.2 Fb~ br 1987 l4a c /a ExCludec labor css PERU IRRIGATION RENAILITATION I (LOAN 1403-PE) ECONOKIC ANALYSIS MILLIONS OF 1985 S/ 1 2 3 4 5 lp 7 8 9 10 11 12 13 14 15 16 17 19 19-40 PROJECT BEEFITS CANAA - - - - 9752 9752 12128 17235 21796 34309 39514 3990 40522 41296 41777 43417 43417 43417 43417 PISCO - - - - - 2 1625 3132 5421 6006 5711 6027 6127 6133 6572 6795 6820 6820 6920 TAMU - - - - - - 4717 12279 14341 16388 20227 20227 27599 28887 34134 38415 40004 40185 40351 CAETE - - - - 4197 4088 20119 22558 24899 29340 30307 31406 32119 32548 32578 32313 32313 32313 32313 TOTAL REEFITS - - - - 13949 13842 40588 55204 66457 86043 95759 97566 106367 108865 115061 120939 122554 122735 122901 PROJECT COSTS CIVIL WORKS 3146 4990 17148 13489 42891 43308 50263 42624 6981 16 - - - - - - - - - ON-FARK KVEL0~NT - 430 5368 369 3902 589 132 - - - - - - - - - - - EQUIPENT - - 7375 3345 6017 172 8651 1078 420 1150 1150 1150 1150 - - - - - - ADMINISTRATION MD TA 13189 12611 13791 12830 13101 5519 5213 5908 3467 3467 3121 2774 2429 2082 1735 1389 1043 696 350 OPERATION AND MAINTEMANCE - - 2782 3209 5282 5808 4950 2559 1819 1820 1413 1007 600 600 600 600 400 600 600 ==ý== ~ ~ ~ ~ ~ ~ 3333 _= =±±_.=_ = ý == = ~== . - ==2: - - - - - - - - --==-_= ==~ = ==== TOTAL COSTS 16334 18030 4463 33241 71193 55396 69209 52169 12686 6453 5684 4931 4178 2682 2335 1989 1643 1296 950 TOTAL ET INCREENTAL BEEFITS -16334 -18030 -46463 -33241 -57244 -41553 -28620 3035 53771 79591 90075 92635 102189 106183 112726 118950 120911 121438 121951 March 15, 1988 11137 0 Intmal Ra of Retu of et Stream N.1 19.671 PRESENT VALES OF HET 9TMS AT A DICIT RATE OF 12% 8.1 UP 10% 20% U 50% W01 10% D011 20Z II 50% LM I YER LA 2 YEAR LM 3 EMS C.1 186,057.0 2269378.2 266,99.4 387,662.8 145,735.9 105,414.7 -15s54.8 142,855,8 104283.3 690843.5 UP 101 164341.6 204,662.7 244,9^3.9 3659947.4 124,020.4 83,699.3 -37,264.2 121:140.3 829567.8 48,129.0 p 20 142,626,1 182,947.3 223,268.4 344,231.9 102,305.0 61,983.8 -58,979.7 99,424.9 60,852.3 26,412.6 UP 50Z 77,479.8 117,800.9 158,122.1 279065.4 37,158.6 -3,162,6 -124,126.0 34,278.5 -4,294.0 -389733.8 M 10 207,772.5 248,093.7 28,414.8 409P379.3 167,451.3 127,130.2 69166,7 164p571.3 125,998,7 919550.9 DM 20! 229,488.0 269,809.1 3109130.3 431,093.8 189p166.8 148,845.6 27,82.1 186,286,7 147,714.2 113,274.4 Dm1 50! 294,634.3 334,955.5 375,276.6 4969240.1 254p313.2 213,992.0 93,02.5 251,433.1 212t860.5 178,420.8 LM 1 lER - - - - - - - 1669122.4 127,549.8 93,110.1 LAS 2 YERS - - - - - - - - 1489323.5 113^983.8 LA6 3 YEARS - - - - - - - - - 132p431,7 INTEEML RATES OF EM OF ET STREMU 8.1 up 10% P 20% 50% O 0 10% 501 20% 50 LA I YE LM 2 EMS LM 3 YEARS C.1 19.672 21.097 22.463 26.266 18.180 16.609 11.236 17.429 15.732 14.390 UP 101 18.318 19.672 20.970 21,587 16.901 15.408 10.297 16.310 14.774 13.548 P 201 17.142 18.434 19,672 27.126 15.789 14.365 9.478 15.329 13.928 12.903 UF 50% 14.365 15.510 16.609 19,672 13.164 11.998 7.524 12,980 11.863 10.985 oIm0 10% 21.252 22.760 24.204 28.218 19.672 18.009 12.328 18.724 16.34 15.352 01 201 23.126 24.730 26.266 30.526 21.444 19.672 13,621 20,244 18.118 16.467 0m 502 31.848 33,877 35,809 41.126 29.711 27.449 19.672 27.135 23.832 21.360 LAS 1 YER - - - - - - - 19.672 17.429 15.732 LAS 2 YEARS - - - - - - - - 19.672 17.429 LA 3 YEARS - - - - - - - - - 19.672 SUITCHIND ALS AT 12% APPlRASAL SUITCHIN PERCENTAGE STREM VALE UALE CHl 8.1 403,211.61 2179154.57 -46.141 C.1 2179154.57 403,211.61 85.68% Nt Preset Valu. at GCC 12% = 186,057 Interal Rate of Retum = 19.72 Cawn Emivalent Rate of Retum s 22.5% - 51- REKVI IRIGAT(~ RAI.TATT( I PF ' (IAN 1403-ME) rw MIEl E!R' Socio-Fæoc Studi-Est1 rte vii,1 (T/Ha) ATA STUDY RERATIC STUDY FOM pE vaney Wrop athout ath t«thout th Farm Sie Farm Size Production Product:l 3 Ha 10 Ha 3 Ha 10 ha Restricted F11 Year 1 Year 5 Caee (btton 1.5 2.0 1.8 3.4 1.0-1.5 2.5-2.6 2.6-2.7 2.7 com 3.1 - 3.5 4.5 - 4.2 4.6 5.0 Itatoe 14.1 14.1 14.5 19.5 - 22.0 2.0 25.0-30.0 Pisco Cbtn 1.7 1.7 1.8 2.3 1.6 2.0 2.0 2.3 Cbm 3.0 3.5 4.0 2.0 2.0 3.5 3.5-4.1 4.5 Can Rie 6.9 8.1 7.6 10.6 6.3 8.0-8.8 8.5-10.0 10.0-11.0 Beas 1.1 1.1 1.2 1.7 - 1.1 1.3 1.4 Tabo Rice 6.5 6.7 6.8 7.2 - 10.0 10.0 10.0 Alfalfa 50.0 50.0 60.0 60.0 50.0 55.0 55.0-57.0 60.0 Botates 10.0 12.4 10.2 13.1 17.0 18.0 22.0 25.0 (bm - - - - - 3.0 3.2 3.5 PrJJECT IMPLEMENTATION SCHEDULE DESCRIPTION 1978 1979 1980 1981 1982 1983 1984 1965 1986 DESIGN CIVIL WORKS - EQUIPMENT PURCHASE C ANETE ON-FARM DEVELOPMENT DESIGN = CIVIL WORKS EQUIPMENT PURCHASE PISCO ON-FARM DEVELOPMENT DESIGN CIVIL WORKS CAMANA EQUIPMENT PURCHASE - ON-FARM DEVELOPMENT - - DESIGN - CIVIL WORKS EQUIPMENT PURCHASE TAM8O ON-FARM DEVELOPMENT 0.4 Plan Actual MAP SECTION ㅑ》‘&‘씻