India - Irrigation Projects

Docm The Wor FOR OMCIA ReportNo. 9716 PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKE IRRIGATION PROJECT (CREDIT 788-IN) GUJARAT MEDIUM IRRIGATION PROJECT (CREDIT 808-IN) SECOND MAHARASHTRA IRRIGATION PROJECT (CREDIT 954-IN) SUBERNAREKHA IRRIGATION PROJECT (CREDIT 1289-IN) ANDHRA PRADESH IRRIGATION AND CAD COMPOSITE PROJECT (LOAN 1251-IN) JUNE 28, 1991 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only I the performance of their official dudes. Its contents may not otherwise be disclosed without World Bank authorization. Abbreviations and Acronyms AD - Agricultural Departmnt AEO - Agricultural Extension Officer AP - Andhra Pradesh ARDC - Agricultural Refinance and Development Corporation CAD - Command Area Development CADA - Command Area Development Authority CCA - Cultivable Command Area CWC - Central Water Commission DISNET - Distribution Network DRP - Dam (Safety) Review Panel ERR - Economic rate of return FAO/CP - FAO Cooperative Program GOAP - Government of Andhra Pradesh GOB - Govornment of Bihar GOG - Government of Gujarat GOI - Government of India GOK - Government of Karnataka OO - Government of Orissa ha - hectare HYV - High Yielding Varieties ICB International Competitive Bidding ID - Irrigated Dry IDA - International Development Association IAS - Indian Administrative Service !FAD - International Fund for Agricultural Development tW - Irrigated Wet Kharif - Wet Season: June to October km - Kilometer LA - Loan Agreement LCB - Local competitive bidding IMC - Left Main Canal M&I - Municipal & industrial (water) NDS - Micro distribution system MIS - Management Information System NSP - Nagarjunasagar (Irrigation) Project OM - Operation & Maintenance OED - Operations Evaluation Department PBP - Pochampad (Irrigation) Project PCR - Project Completion Report R&R - Resettlement and Rehabilitation Rabi - Dry Season: November to April RMC - Right Main Canal SAR - Staff Appraisal Report SDP - State domestic product SIS - Subernarekha Irrigation System TBP - Tungabhadra (Irrigation) Project THC - Thousand million cubic feet UK I - Upper Krishna I UKS - Upper Krishna Scheme VLW - Village Level Worker WALMI - Water and Land Management Institute WAPCOS - Water and Power Consultant Services Ltd. (New Delhi) WHU - Water Management Unit THE WORLD SANK FOR OFFICIAL USE ONLY Washington, D.C. 20433 U.S.A. Offc of Diecior-Cenwa Operatio EvAution June 28, 1991 SUBJECTs Project Performance Audit Report on India Karnataka Irrigation Project (Credit 788-IN) Gujarat Medium Irrigation Project (Credit 808-IN) Second Maharashtra Irrigation Project (Credit 954-IN) Subernarekha Irrigation Project (Credit 1289-IN) Andhra Pradesh Irrication and CAD Comosite Project (Loan 1251-IN) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on India Karnataka Irrigation Project (Credit 788-IN), Gujarat Medium Irrigation Project (Credit 808-IN), Second Maharashtra Irrigation Project (Credit 954-IN), Subernarekha Irrigation Project (Credit 1289-IN), and Andhra Pradesh Irrigation and CAD Composite Project (Loan 1251-IN)" 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 official duties. Its contents fr v not oth,'rwise be le' "' s witt --t Wnrld nk - * w ' FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA IRRIGATION PROJECT (CREDIT 788-IN) GUJARAT MEDIUM IRRIGATION PROJECT (CREDIT 808-IN) MAHARASHTRA IRRIGATION II PROJECT (CREDIT 954-IN) SUBERNAREKHA IRRIGATION PROJECT (CREDIT 1289-IN) ANDHRA PRADESH IRRIGATION AND CAD COMPOSITE PROJECT (LOAN 1251-IN) Table of Contents PaSe No. Preface * * * * * * * * * * * * * * * * * * . . . . . . . . . .i Basic Data Sheets . . . . . . . . . . .iii Evaluation Summary . . . . . . . . . . . . . . . . . . . . . . . xv I. BACKGROUND * * * * * * * * * * * * * * . . . . . . . . . I II. THE PROJECTS . . . . . . . . . . . . . . . . . . . . . . . 4 A. Andhra Pradesh Irrigation and CAD Composite Project . . 4 B. Karnataka Irrigation Project . . . . . . . . . . . . . 7 C. Gujarat Medium Irrigation Project . . . . . . . . . . 9 D. Second Maharashtra Irrigation Project . . . . . . . . 11 E. Subernarekha Irrigation Project . . . . . . . . . . . . 13 III. PROJECT OUTCOMES . . .. . . . . .. . .. . . . . . .. 16 IV. FINDINGS AND ISSUES . . . . . . . . . . . . . .. . . . . 20 A. Evaluating Phased Projects . . . . . . . . . . . . . . 21 B. Defining Project Phases . . . . .0. . .. . . . . . . 23 C. Irrigation Sub-Sector Analysis . . . . . . . . . . . . 25 D. Mixing Gravity and Lift Irrigation . . . . . . . . . . 28 E. Competition for Interstate Waters . . . . . . . . . . 29 Annexes 1 Description of AP I Project . . . . . . . . . . . . . . . 31 2 Description of UK I Project . . . . . . . . . . . . . . . 32 3 A. Description of GMI I Project . . . . . . . . . . . . . 33 B. Procedures for Appraisal and Progress Monitoring of Medium Irrigation Projects in GMI I . . . . . . . 33 4 Description of MAH II Project . . . . . . . . . . . . . . 34 5 Description of SUB I Project . . . . . . . . . . . . . . . 35 6 Additional Borrower Comments on Subernarekha PCR . . . . . 36 MAPS IBRD 14198R IBRD 11874R1 IBRD 13257R IBRD 13043R1 IBRD 16235 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - L - PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA IRRIGATION PROJECT (CREDIT 788-IN) GUJARAT MEDIUM IRRIGATION PROJECT (CREDIT 808-IN) MAHARASHTRA IRRIGATION II PROJECT (CREDIT 954-IN) SUBERNAREKRA IRRIGATION PROJECT (CREDIT 1289-IN) ANDHRA PRADESH IRRIGATION AND CAD COMPOSITE PROJECT (LOAN 1251-IN) PREFACE This is the Project Performance Audit Report (PPAR) on the Andhra Pradesh Irrigation and CAD Composite Project (AP I), Karnataka Irrigation Project (UK I), Gujarat Medium Irrigation Project (GMI I), Maharashtra Irrigation II Project (MAH II), and Subernarekha Irrigation Project (SUB I), involving a loan and credits totalling US$693 million to India. The common objective of all five projects was to assist the Borrower to finance surface irrigation development and supporting services. The dates of loan/credit approval, effectiveness, closing and final disbursement together with the credit amounts approved and canceled at the request of the Borrower were as follows: AP I UK I aI I "a II SUB I Loan/Credite Lu. 1251 Lr. 788 Cr. 808 Cr. 954 Cr. 1289 Amount approved US$ 145.Om US$126.Om US$85.0m US$210.0m US$127.Om Date of approval 05/04/76 04/04/78 05/23/78 10/16/79 08/17/82 Date of effectiveness 09/07/76 08/10/78 10/31/78 06/06/80 01/10/83 Planned date of closing 12/31/82 03/31,'84 06/30/84 12/31/85 03/31/87 Actual date of closing 06/30/85 03/31/86 06/30/84 12/31/85 04/30/89 Date of final disbursement 01/16/86 10/14/86 05/18/84 02/19/86 08/18/89 Amount canceled US$8.55m US$8.36m US$. US$- US$. The PPAR is based on the Project Completion Reports (PCRs) of the projects prepared wholly or in part by the Asia Regional Office, the FAO/World Bank Cooperative Programme and the Borrower and issued between 1987 and 1990,1/ the Staff Appraisal and President's Reports, the loan/credit documents, the transcripts of the Executive Directors' meetings at which the projects were considered, a study of project files, and on discussions with Bank staff. An )A/ ORD Report No. 8804, June 26, 1990 (AP I); OED Report No. 7544, December 22, 1988 (UK 1); OED Report No. 6841, June 24, 1987 (GM1 1); OED Report No. 7580, December 30, 1988 (MAN II); and OED Report No. 8535 dated April 18, 1990 (SUB 1). - ii - ORD mission visited India in August/September 1990 and discussed the effectiveness of the Bank's assistance with the Government of India's Ministry of Water Resource., the Central Water Commission and, for four of the five projects, with the Stata Irrigation Departments, project authorities, other participating agencies, and farmers. Their kind cooperation and valuable assistance in tb preparation of this report are gratefully acknowledged. In the case of the Gujarat Medium Irrigation Project, the audit mission did not undertake any field visits to project sites, nor did it visit Gujarat to discuss the project with GOG officials, this being a "desk audit" as far as GMI I is concerned. The PCRs provide a largely satisfactory account and assessment of the projects' experiences and discuss the performance of the Bank and the project executing agencies. The PPAR elaborates on particular aspects, such as: difficulties of evaluating ph:aed projects, sequencing the contents of project phases, effectiveness of irrigation sector analysis, mixing gravity and lift irrigation, and competition for interstate waters. Following standard OED procedures, copies of the draft PPAR were sent to the Government of India and State Governments for comment but none were received. - Ili - UMOJCT Z3JU19MCK AUDIT REOT IMIA ANDRA PRADESH IRRIGATION AND CAD COMPOSITE PROJECT (Loan 1251-IN) BASIC DT aT Actual or Actual as 2 Appraisal Estimated of Appraisal Estimate Actual etimate Total Project Cost (US$ million) 297.0 196.8 66 Credit Amount (US$ million) 145.0 136.5 94 Date Physical Components Completed 06/30/81 06/30/65 Economic Rate of Return (Z) 15 4 27 PROJECT TIMETABLE Item Date Planned Date Revised 1/ Date Acual Identification (BPS) Preparation Appraisal mission 8/05/75 Loan Negotiations 3/29/76 Board Approval 5/04/76 Loan Signing 6/10/76 Loan Effectiveness 9/07/76 Loan Completion 6/30/81 6/30/84 6/30/85 Loan Closing 12/31/82 12/31/84 6/30/85 STAFF WEEKS Fiscal Year 74 75 76 77 78 79 80 81 82 83 84 85 86189 TOTAL PREAPPRAISAL 20.2 97.7 28.0 . . . . . 10.4 . . . . 156.3 APPRAISAL . . 216.1 . . . . . . . . . . 216.1 NEGOTIATION . . 7.1 . . . . . . . . . . 7.1 SUPERVISION . . 10.4 30.6 16.7 33.1 69.6 38.6 27.4 32.4 47.9 30.0 8.2 344.8 OTHER . . 4.7 .0 .0 . .1 .0 . . .3 . . 5.2 *TOTAL 20.2 97.7 266.2 30.6 16.7 33.1 69.7 38.7 37.7 32.4 48.2 30.0 8.2 729.4 * EXCLUDES TIME SPENT BY YOUNG PROFESSIONALS. •• it - State o? Iojeot M~nth/ w~uber of Daya in Spec1ations Protomn~ Type. of Toar pr*on fiøld reproonted / ratins sl probloma 1. BefreAmjmraial ål 7/75 4 U/9C/AG Pro-appra~a 8/75 2. Ans~ to Boar A2^rva « Appra~sal 10/75 10 XN/EC/AG 4/76 1 7RoC 3. od a to Effetivnlt Al 5/76 2 3 T 6/76 2 gu 4. &Mi o Supervilon 12/76 1 12 En 2/2 l Supav~lon 1/77 1 PROC 7/77 2 SEMC /T/N/iR sup*rvtlon 10/77 1 10 E 2/1 F Sygt~ Opg. 2/78 1 OP 3/78 3 El u/LE Road Caf. 6/78 1 4 En 1N/OR/T Sygtema Opg. 7/78 1 4 OP T 7/78 3 15 gu/EC/OP AG/OR02/T Eten6n revie~ 7/78 1 3 kG 8/78 1 e 10/78 2 3 EN/OP T Sygt~ Op. 12/78 1 3 OP 1/79 2 2 El T 3/79 3 3 El/OP T . v - PROJECT PERFORMANCE AUDIT REPORT INDIA UAR IRRIGATION PROJECT (Credit 788-IN) BASIC DATA SHEET KEY PROJECT DATA Actual or Actual as 2 Appraisal Estimated of Appraisal Estimate Atal Estimate Total Project Cost (US$ million) 284.4 478.6 168 Credit Amount (US$ million) 126.0 117.6 93 Date Physical Components Completed April 1983 July 1987 Si Proportion then Completed about 502 95% Economic Rate of Return UKS Stage I 162 not estimated UK Phase I 102 9.5% h/ Malaprabha and Ghataprabha 452 not estimated Cultivable Comand Area Stage I 425,000 ha n/a Phase I 105,000 ha 97,330 ha 93 Number of Direct Beneficiaries 472,000 Number of Project Aifected Families 13,000 13,903 107 (reservoirs only) a/ Excludes Almatti dam. k/ Not strictly comparable with BAR (see chapter V). CUMULATIVE ESTMATED AND ACTUAL D1sBURSEMENTS 1979180 80/81 8182 I2L83 83L84 84/85 8Ll 86/87i Appraisal Estimate (US$ m) 12.0 38.0 69.0 101.0 126.0 Revised (US$ million) g/ 14.0 34.5 66.0 94.0 117.6 Actual (US$ million) 23.1 30.4 51.8 64.4 74.9 94.1 113.6 117.6 Actual as 2 of Appraisal 19? 80 75 64 59 75 90 93 Actual as 2 of Revised 165 88 78 69 64 80 97 100 a/ Credit was reduced in June 1979 by US$8.4 million due to concellation of tunnals from financing. h/ Disbursement :ontinued till September 30, 1986. PROJECT DATES Orininal Actual Preparation Report FA0/CP March 1977 March 1977 Negotiation Feb. 1978 Feb/Mar 1978 Board Approval March 1978 April 4, 1978 Crei Signing May 12, 1978 May 12, 1978 Effectiveness date July 1978 August 1978 Credit Closing March 31, 1984 March 31, 1986 Fiscal Year 77 78 79 80 81 82 83 84 a5 86 87 88 TOTAL PREAPPRAISAL 109.4 31.9 . . . 2.1 6.0 . . .0 . . 149.4 APPRAISAL . 90.6 , , . . . . . . . . 90.6 NEGOTIATIGH . .5 . . . . . . . . ..3 SUPERVISION . 8.0 21.7 15.6 15.i 22.6 27.8 56.6 40.0 24.6 14.4 6.1 253.2 OTHER . 2.0 .0 .0 .1 .3 . . . . . . 2.5 *TOTAL 109.4 133.0 21.7 15.7 15.9 25.0 33.8 56.6 40.0 24.7 14.4 6.1 496.2 * EXCLUES TIME SPENT BY YOUNG PROFESSIONALS. MISSION DATA Missio Sent bZ Month No. of Staffdays Specialization Performance Type of Year Persons in field Represented Al Ratina h/ Trend c / Problem d/ Preparation FAOICP Mar. 77 Preappraisal HQ Apr. 77 Appraisal HQ Sep. 77 8 A,E,E,Fs,II,R - - - Superv. I HQ May. 78 a/ 3 15 E,I,I 1 - H Superv. II H1 Mar. 80 2 14 1 1 1 M Superv. III KDO Dec. 80 2 8 1,1 2 1 WF Superv. IV NDO Jun. 81 2 8 I,R 2 1 MF Superv. V NDO Feb. 82 2 12 I,I 2L/ 2 HO Superv. VI NDO Mar. 83 2 16 11 2 3 MTO Superv. VII NDO Sep. 83 3 24 I,I,R 2 2 XTO Superv. VIII NDO Apr. 84 3 27 0,,R 2 1 HO Superv. IX NDO Nov. 84 3 21 I,A,R 2 2 TF Superv. X HQ Jun. 85 7 91 1,I,1,1,R,A,P 2 2 T Superv. XI NDO Dec. 85 6 30 1,I,1,R,P 2 PCR FA0/CP Sep. 86 3 I,A,E l/ I a Irrigation Engineer; F n Financial Analyst; E * Economist; R = Roads Engineer; P - Procurement Engineer; 0 - Projects Officer; A - Agriculturist. b/ 1 * Problem free or minor problems; 2 - Moderate problems 3 a Major problems. c/ I - Improving; 2 w Stationary; 3 - Deteriorating. 4/ F - Financial; H - Managerial; T - Technical; P * Political; 0 * Litigational. A/ There was continuing dialogue in Delhi, Bangalore and on site between the first two fozmal supervision missions. f/ Supervision mission rating. Acting Division Chief considered 3 more appropriate. Additional road supervision reports were prepared in Dec. 1978, March 1979, April 1980 and March 1981. - %1L - OTHER PROJECT _VATA lorrovers Government of India Executing Agencys Goverment of Karnataka Fiscal Yeart April 1 - March 31 Proposed Follow-up Project: Upper Krieha Irrigation Project Phase !I Name of Currencyt Indian Rupee (Re) Currency Exchange Rate 1978 Re. 8.60 - US$1.00 1978/79 Re. 8.206 - US$1.00 1979/80 Re. 8.076 w US$1.JO 1980/81 Re. 7.893 w US$1.00 1981/82 Re. 3.929 * US$1.00 1982/83 Re. 9.628 w US$1.00 1983/84 Re. 12.312 = US$1.00 1984/85 Re. 11.890 w US$1.00 1985/86 Rs. 12.20 - US$1.00 - viii - PROJECT PERFORMANCE AUDIT REPORT IWIA G'JJARAT nDJUN IRRICATION PROJECT (Credit 808-IN) BASI DATA SHEET KEY PR('CT DATA Actual or Actual as 2 Appraisal Estimated of Appraisal Estimate Actual Estimate Total Project Cost (US$ million) 170.5 344.1 a/ 202 g/ Credit Amount (US$ million) 85.0 85.0 100 Date Physical Components Completed b/ 06/30/83 06130/84 Proportion Completed (2) l/ Dam 94 78 d/ Main Canal 79 48 d/ Distribution System 71 14 3/ / Economic Rate of Return (%) 202 302 150 A/ Institutional Performance Satisfactory Agronomic Performance b/ NA Amber of Direct Beneficiaries 23,000 94,200 410 g/ CU%ULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS VY79 FY80 FY81 U82 FY83 FY84 Appraisal Estimate (US$ m) 3.0 16.0 33.0 52.5 72.5 85.0 Actual (US$ million) 2.2 9.3 21.4 34.2 61.3 85.0 Actual as 2 of Revised 73 58 65 65 85 100 Date of final disbursement June 4, 1984 PROJECT DATES Negotiation Board Approval 05/25/78 Credit Signing 07/27/78 Effectiveness 10/31/78 Credit Closing 06/30/84 A/ Project was designed to support part of GOG's investment program for medium irrigation projects. The project left 'tonsiderable freedom to the borrower in deciding on the subprojects to be financed under the project once these projects fulfilled specified engineering and economic criteria. The exact number of projects as well as detailed project costs or number of beneficiaries were not exactly know at the time of appraisal. Comparisons of "actuals" with appraisal estimates are therefore not very meaningful. h/ Only one of the projects financed under this time slice was partially operational at the closing date of the credit. I/ The physical quantities of works (such -s earthworks in m3), estimated to be required to completion, for the basis for these calculations. The projected (or actual) quantities completed up to a specific time are expressed in percentage of the overall quantities required. 4/ The achievements are given as a percentage of the revised targets. j/ Comparison to appraisal estimates not relevant in that actual sub-project composition of project not known at time of appraisal. . is * STAFF WEEKS Fiscal Year 75 76 77 78 79 80 81 82 83 84 85 86187 TOTAL PREAPPRAISAL 3.3 16.7 84.8 17.3 . . . . . . . . 122.1 APPRAISAL . . . 50.8 . . . . . . . . 50.8 NEGOTIATION . . . 1.4 . . . . .7 . . . 2.1 SUPERVISION . . . 1.6 8.7 21.3 43.3 29.3 30.2 46.8 18.0 6.5 205.6 OTHER . . . .3 . . .0 . . . . .3 *TOTAL 3.3 16.7 84.8 71.4 8.7 21.3 43.3 29.3 30.9 46.8 18.0 6.5 381.0 * EXCLUDES TIME SPENT BY YOUNG PROFESSIONALS. MISSION DATA Mission RAt& No. of Specialization Performance Type of (month/day) Peraons Reproented A/ Uttins k/ Trend S/ Problem d/ Identification 1977 Preparation 6/77 3 - Appraisal 8-9/77 4 -- - Supervision 1 5/80 3 EC, WM, E 2 2 FHT Supervision 2 12/80 3 EC, WK 2 2 Mp Supervision 3 10/81 3 EC, 3, F 2 1 M Supervision 4 5/82 2 EC, E 2 1 MF Supervision 5 11/82 2 EC, E 2 1 IAT Supervision 6 5/83 2 EC, E 2 1 h1 Supervision 7 11/83 3 1 2 1 M Supervision 8 6/84 4 E 2 2 MT /a E - Engineeri F - Financiall WK = Water Management Specialists; EC - Economist /k I - problem-free or minor problem, 2 * moderate problems, 3 - major problems. /I I * Improving, 2 - stationary, 3 * deteriorating. /4 F - Financial, M - Managerial, T a Technical, P a Political, 0 a Other. OTHER PROXECT DATA Borrower: Government of India Executing Agencys Government of Gujarat Fiscal Year: April 1 - March 31 Follow-on Project Names Gujarat Medium Irrigation II Project Credit Number: 1496-IN Credit Amount (US$ million): 172.0 Date Board Approvals June 12, 1984 Name of Currency: Rupees (Re) Currency Exchange Rate Appraisal Year Average US$1.00 a 8.60 Intervening Years Average US$1.00 * 8.8 Completion Year Average US$1.00 a 11.89 * x . PROJECT PERFORMANCE AUDIT REPORT MAHARASHTRA IRRIGATION II PROJECT (Credit 954-IN) BASIC DATA SHEET KEY PROJECT DATA Actual or Actual as 2 Appraisal Estimated of Appraisal Estimate Actual Estimate Total Project Cost (US$ million) 1/ 452.9 496.19 110 Credit Amount (US$ million) g/ 210.0 210.00 100 Date of Effectiveness 10/1979 6/1980 Date Board Approval 10/1979 Date Physical Components Completed 9/1984 1990 Closing Date 3/ 12/1985 12/1985 Economic Rate of Return (2) 15 0.6 (1.4) 4/ (Weighted Average of Six New Schemes) 1/ Excluding 1AD Credit - US$ 50 million. 2/ Source: SAR Vol. III: SAR Vol. I states US$ 451.0 million. 1/ According to Credit Agreement. Z/ Figure in brackets gives a second investment option, explained in Chapter VI. CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS FY0 FY1 Fll FYll I84 ll FY86 Appraisal Estimate (US$ m) 5.0 36.0 84.0 150.0 198.0 - - Revised (US$ million) - - - * 158.0 195.0 210.0 Actual (US$ million) 8.8 35.9 75.3 119.5 162.9 191.7 210.0 Actual as 2 of appraisal 176 100 90 80 80 93 100 revised estimate STAFF WEEKS Fiscal Year 77 78 79 80 81 82 83 84 85 86 87 88 TOTAL PREAPPRAISAL 3.1 105.9 150.4 . . . . . . . . . 259.5 APPRAISAL . . 15.2 20.0 . . . . . . . . 35.2 NEGOTIATION , . . 21.1 . . . . . . . . 21.1 SUPERVISION . . . 25.5 80.0 78.5 59.8 55.7 24.7 26.5 20.2 1.2 372.3 OTHER .1 .1 .3 .0 .4 .6 .2 .0 . . . . 1.7 *TOTAL 3.2 106.0 165.9 66.7 80.4 79.1 60.0 55.8 24.7 26.5 20.2 1.2 689.7 * EXCLUDES TIME SPENT BY YOUNG PROFESSIONALS. MlSSION DATA Missla ent by EL& StatIdAzo, ppecialization A/ Perfomnce Ratta (manth ogsgIn f ield represented 1/ 41 year) Sgatus Trgad Ws of Preparation* Appraisal HQ Feb. 79 10 Superv. I EDO Apr. 80 1 12 I 1 1 - Superv. I NDO Mar. 81 3 29 1,1 1 2 T,M,F Superv. III HDO Dec. 81 2 19 111 2 1 T,M,F Superv. IV NDO May 82 2 21 1,1 2 1 TIM Superv. V KDO Nov. 82 2 32 1,1 2 2 T,M Superv. VI NDO May 83 2 24 I,I 2 2 T,M Superv. VII NDO Sep. 83 5 51 1,1,I,A,A 2 2 TIM Superv. VIII EDO Mar. 84 5 27 1I,I,1R,A 2 2 FIN Superv. I EDO Sep. 84 4 30 1,I1,R 2 2 F,M Superv. X EDO Mar. 85 5 27 1,I,1,R,A 2 2 F,M Superv. XI EDO Nov. 85 6 40 I,I,I,I,R,A 2 2 F.M A/ PCR FAO/CP Feb. 87 * Prepared by 00 in cooperation with WAPCOS, WBA and FAO/CP in 1977/79. &I I - Irrigation Engineer; F * Financial Analyst; E * Economist; R Roads Engineer; A - AgrL.ulturist. b/ I 1 Problem free or minor problems; 2 - moderate problems; 3 * major problems. D I 1 improvingi 2 - stationary; 3 - deteriorating. d/ F -financial; M - managerial; T - technical; P a political. ./ New format introduced, rating adjusted to previous system. OTHER PROJECT DATA Borrower: Government of India Executing Agency: Government of Maharashtra Fiscal Years April 1 - March 31 Name of Currency: Rupee (Re) Currency Exchange Rate: 1979/80 US$ 1.00 a 8.076 1980/81 - 7.893 1981/82 * 8.929 1982/83 * 9.628 1983/84 * 10.312 1984/85 - 11.887 1985/86 * 12.237 . Kit - PRMJCT PERFOMIANCZ AUDIT REPR (Credit 1289-IN) BASIC DATA BogET KSY PROJECT DT Actual or Actual as Z Appraisal Estimated of Appraisal Estat* Actual___ 9ststo Total Project Cost (US$ million) 181.9 255.8 141 Credit Amount (US$ aillion) 127.0 143.6 Economic Rate of Return (2) 17 7 PROJECT TIMETABLE 1n Date Planned Date Revised 1/ Date Actual Identification (EPS) Preparation 9/78-11/81 Appraisal Mission 12/81 Credit Negotiations 7/82 Board Approval 8/17/82 Credit Signing 11/9/82 Credit Effectiveness 1/10/83 Project Completion 3/31/86 3/31/88 4/30/89 Credit Closing 3/31/87 3/31/88 4/30/89 1/ At mid-term review 1/86 pTAFF WEEKS Fiscal Year 79 80 81 82 83 84 85 86 87 88 89 TOTAL PREAPPRAISAL 77.1 8.7 2.7 17.9 . . . . . . . 106.5 APPRAISAL . . . 79.9 * * * * * * * 79.9 NEGOTIATION . . . . 5.0 . . . . . . 5.0 SUPERVISION . . . . 18.7 21.5 18.6 43.1 69.9 53.3 29.2 254.3 OTHER . . . 1.3 .1 .0 . . . . . 1.4 *TOTAL 77.1 8.7 2.7 99.1 23.8 21.5 18.6 43.1 69.9 53.3 29.2 447.0 * EXCLUDES TIME SPENT BY YOUNG PROFESSIONALS. - xi1i - HISSI.QNS State of Project Honth/ Number of Days In Specialisations Performance Types of Year persons field represented L/ rating ,/ problems Preparation 9/78 Preparation 11/78 3 EN Preparation 5/79 2 EN/EC Preparation 10/79 3 EN/EC/AG Preparation 2/80 6 EN/EC/AGIBYD Preparation 2/80 2 EN/EC Preparation 9/81 2 6 EN Appraisal 11/81 9 14 EN/EC/AG/PROC Pollution review 2/82 3 5 IN/BNY Appraisal 3/82 1 3 EN Appraisal 3/82 1 3 EC Dam safety/design 4/82 3 5 EN/HYD Appraisal 4/82 3 2 EN/EC Supervision 10/82 2 5 EN 1/2 H Procurement 11/82 2 3 PROC/FIN B. WALHI 11/82 1 4 TRG Procurement 1/83 1 2 PROC B. WAIXI 1/83 1 8 TRC Supervision 4/83 2 5 EN 2/2 K/PR Supervision 7/83 2 4 PROC/FIN Canal Operations 9/83 3 5 EN/EC/OP Supervision 10/83 2 5 EN 2/2 H/R B. 12/83 1 4 EN B. WALMI 3/84 2 TRC Supervision 6/84 2 5 EN 2/2 HIF/LA/RR/T/ST/AG B. WAII 7/84 2 3 TRC Supervision 8/84 2 4 PROC/FIN Supervision 3/85 2 5 EN 2/2 H/F/LA/ST/TRG B. WALKI 5/85 1 2 TRG Supervision 7/85 2 4 PROC/FIN Supervision 9/85 2 5 EN/AG 3/2/1/3 F/M/ST/LA 0. WALMI 10/85 1 5 TRG B 12/85 1 1 MAN Kid term review 1/86 10 11 MAN/EN/EC/AG 2/2/1/3 H/T/LAIAG/TRG B. Procurement 2/86 1 4 PROC B. Tunnel mission 3/86 1 4 EN B. WALMI 4/86 2 6 TRG Supervision 5/86 3 5 EN 1/2/1/2 HIT/ST/LA B. 7/86 3 5 EN/SO T/RR/ST/LA B. R&R 8/86 1 3 so 0. WAIMI 9/86 1 4 TRG Supervision 10/86 6 6 EN/AG 1/2/1/2 HIT/AG/AU/LEG 0. WALMI 11/86 1 5 TRC Economic review 11/86 2 10 EC/AG Supervision 1/87 1 4 PROC Supervision 2/87 7 5 EN/AG/SO 1/3/1/3 H/AG/RR/LA/ST Supervision 9/87 3 5 EN 1/2/2/2 H/AG/TIRR/ST B. Tunnels 9/87 1 3 EN Supervision 9/87 2 4 PROC/FIN B. Study TOR 12/87 1 5 EN Supervision 2/88 5 5 EN/AG 1/2/2/2 H/T/AG/RR B. Tunnels 2/88 1 5 EN 0. Studies 5/88 1 1 EN B. R&R Studies 6/88 4 4 EN/EC/SO Management 7/88 2 2 MAN/EN B. Management 8/88 2 1 MAN/EN B. Hydromet TOR 8/88 1 6 HYD 0. Water managent. 8/88 1 4 EN B. R&R 8/88 1 3 so Final supervision 2/89 5 5 MAN/EN/AG/SO 2/2/2/3 H/RR/F/AU/AG * xiv - 1/ IN a engineers EC - economist; AG w agriculturist; PROC - procurement specialists FIN a financial analyst; TRG = training specialists MAN a manager; SO a sociologists MTD * hydrologists OP - system operation specialist. gi Performance ratings: (a) Two indicatoro (old system) let indicator a 1 * minor problems; 2 - moderate problems 3 * serious problems 2nd indicator : 1 - Improving 2 * static 3 = deteriorating (b) Four indicators (new system) - all indicators: 1 * minor problems; 2 - moderate problems; 3 - serious problems being addressed by borrower; 4 - serious problems not being addressed by borrower. 3/ V - management problems. including staffing,. infrastructure, attention to project components; T - technical (engineering) deficiencies; LEG - serious covenant non-compliance; F - financial problems; PR - procurement infringement; AG * agricultural deficiencies; RR - resettlement and rehabilitation deficiencies; LA * land acquisition problems; AU - audit non-compliance; ST * inadequate or delayed studies. f/ B a Bihar component only; 0 - Orissa component only. All other entries common to both components. - xv - PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA IRRIGATION PROJECT (CREDIT 788-IN) GUJARAT MEDIUM IRRIGATION PROJECT (CREDIT 808-IN) SECOND MAHARASHTRA IRRIGATION PROJECT (CREDIT 954-IN) SUBERNAREKHA IRRIGATION PROJECT (CREDIT 1289-IN) ANMHRA PRADESH IRRIGATION AND CAD COMPOSITE PROJECT (LOAN 1251-IN) EVALUATION SUMMARY Introduction average; mandatory land development below those outlets; rotational water 1. Over the fiscal years 1961-90, supplies; and increased direct water the Bank committed US$4.2 billion for charges. Some of these technical 41 gravity irrigation and drainage improvements became embedded in schemes in India. Domestic political "command area development" (CAD), support for this kind of public sector which Gol had initiated several years intervention was strong, and the Bank before the period 1976-82 when the shared the belief that such five projects were approved. CAD's investments were essential to India's purpose was to remove apparent drive to increase foodgrain output. obstacles to exploiting irrigation Irrigation costs were large enough potential created by previous also for this sector to provide an investments in dam and canal civil ideal channel for resource transfer. works. Another idea was to channel The five projects under audit drew Bank assistance towards completing Bank commitments of US$693 million. partially-built schemes, of which Taking stock of their achievements there were allegedly too many, and should tell us something about the thus to accelerate the onset of crop effectiveness of this program. Only production benefits. Yet another idea eight other projects have been audited was to define Bank assistance as a 4- previously. Those audit reports to-6 years "time slice" of what was portrayed a successful program. All deemed to be a much ,nger (10-20 reported favorable reestimated ERRs. years) needed investment program, Nevertheless, they also referred to giving rise initially to a first phase needed improvements. project. To some extent, this approach was a way of fitting the Bank 2. Several ideas for improvement into local irrigation planning and its and some new lending strategies helped pace of construction. A further idea shape the design of the five projects was "sector lending". This was included in this audit. An evolving intended to move the Bank's focus set of proposals, largely developed by beyond individual investment projects irrigation engineers, became an agenda to a state's entire irrigation for renewal: more extensive lining of program. its role was in part to canals; improved construction strengthen indigenous appraisal and standards; regulated outlets serving supervision capacity, starting with irrigable areas no larger than i ha on - xvi - smaller irrigation schemes, and in 7. The objective of Gujarat Medium part to expedite resource transfer. Irrigation Project (GMI I) was to finance a five-year time slice of 3. A cluster audit like this one Gujarat's investment program for tends to sift through common elements medium irrigation schemes, i.e. among its projects. It clarifies schemes with command areas between repeated messages. The significant 2,000 ha and 10,000 ha. Appraisal of story in this case is that time individual sub-projects was to be slicing, sector lending, and certain handled by GOI's Central Water other issues attract more attention Commission. The Bank believed it was than the technical improvement financing Mjt of GOG's medium measures. It is hard to know at this irrigation program with its sector time whether the latter measures are "line of credit", although it did not succeeding or not. make this explicit in the legal agreements. objectives 8. The Second Maharashtra 4. While they share some Irrigation Project (MAH 11) bore some characteristics, the five projects resemblance to GMI I insofar as the selected for this audit are diverse. Bank helped finance a substantial portion of Maharashtra's program for 5. The main objective of Andhra major irrigation schemes, i.e. schemes Pradesh Irrigation and CAD Composite larger than 10,000 ha, as a time Project (AP 1) was to complete the slice, sector lending operation. Nagarjunasagar Irrigation Project However, the Bank carried out its own (NSP), an 872,000 ha scheme that was sub-project appraisals. The main under threat from future water supply objective was to partially complete constraints and its own profligate use five major ongoing schemes and to of water for rice growing. This upgrade two others. Its costs required AP I to support command area represented less than half the costs development, stem water losses in the of full completion, making it distribution system, introduce effectively a first phase project. it dramatic changes in cropping patterns sought to improve water distribution away from rice, and to use the water in command areas by rotating so saved to irrigate the two "tail irrigation according to a fixed end" portions of NSP to be constructed schedule and allocating water in under AP I. proportion to the size of service areas. 6. The objective of the Karnataka Irrigation Project, also known as 9. The Subernarakha irrigation Upper Krishna Phase I (UK I), was to Project (SUB I) was to be the first complete part of a larger irrigation part of a very large irrigation and scheme that had been under flood control system serving the construction since 1962. The UK I states of Bihar, Orissa, and West part was a five-year phase or "time Bengal. Its objectives were to slice" of a projected 15 year program. achieve partial completion of several The economic analysis concentrated on major civil works - dams and canals - the 15-year program, signalling some and to undertake supporting activities arbitrariness in the physical makeup such as studies of how to operate the of the time slice. system when completed. SUB I was thus - xvii - another Phase I time slice, but for a 13. GMI I experienced such delay. scheme just beginning. and cost overruns that a second operation, approved in 1984, was needed to help complete it. The Imilementation Experience aggregate area to be irrigated by its 28 sub-projects grew to be three times 10. All five projects experienced larger than had been expected. The considerable difficulties during Bank has argued that GOG did not implementation. The most common of appreciate how the expanded physical these was inadequate budgetary size of sub-projects would jeopardize allocations, which arose in some cases their economic viability, given well before the onset of cost overruns budgetary constraints. made financing even more difficult. Shortages of key staff were also 14. MAH I's physical achievements fairly common, along with shortages of remained well below SAR targets cement, steel and fuel. On average, overall. By closing date, it was the projects required an extra 32 expected to take a further five years months for completion, and their US to complete, much longer than the dollar cost was about one-third more nominal time overrun recorded (14 than expected. months). Dams and main canals progressed much better than minor 11. AP I had to be modified systems and CAD works. Lining of extensively because canal seepage field channels shrank considerably in losses proved higher than forecast. response to financial constraints. As part of the redesign, GOAP and the Bank agreed to enlarge canal 15. SUB I experienced a similar capacities, despite considerable imbalance between its major works disruptions to irrigation, defer the (dams and main canals) on the one hand development of part of the command and m3nor works more closely related area, and pursue stronger water to irrigation on the other. Some of allocation measures. After four the delays and cost overruns siere years' delay in completion, the Rupee attributable to incomplete survey and costs were on target, the US dollar investigations. Resettlement and costs were well under target. But rehabilitation of displaced families Nagarjunasagar Project continued to became a severe problem. it had not have problems of excessive and uneven achieved any irrigation as of water use and a rice-dominant cropping September 1990. pattern. Results 12. UK I experienced design, funding and execution problems with its 16. With one exception, the PCRs resettlement program. The slow estimate that the projects, or the progress of one of its dams was larger investment programs of which perhaps fortunate - its construction they were a part, achieved ERRs that was premature. The other dam reached are substantially less than the ERRs operational status in advance of its estimated at appraisal. The four ERR completion and supported reasonable shortfalls ares for AP 1, 7 points progress in providing irrigation water (down from 11% at appraisal to 4% at to farmers. completion); for UK , 6 points (16% to 9.5%); for He l , 14 points (15% to 1%); and for SUB e, 10 points (17% - xviii - to 7%). For the most part, both Findings And Legsons appraisal and completion estimates of ERR are more speculative than usual, 19. The audit's main findings are because they embody returns also to that the performances of UK I and GMI investments projected in later phases. I were satisfactory; AP I, MAH II, and (The PCR for UK I questions in SUB I were unsatisfactory. addition the comparability of the ERR estimates.) However, the accounts of 20. The design of the phased, time implementation difficulties - cost slice projects (i.e. all except AP I) overruns, delays in "completion", made their evaluation difficult, funding difficulties, etc. - are all obscuring accountability and lesson consistent with diminished project learning (paras. 4.2 and 4.7-4.10). performance. Consequently, the of necessity, the project SARs and reductions in ERR estimates are highly PCRs could not provide a distinct plausible. In the two cases where economic analysis of each phase large investments in later phases separately, because that analysis figure prominently in both SAR and PCR could not distribute overall benefits calculations of ERR, i.e. MAN II and between phases. The ERRs that were SUB I, the estimated ERR slippage at calculated were for two or more phases completion implies even lower combined. This has weakened the "imputed" ERRs for these Phase I performance assessment of the Phase I efforts. projects. Since markedly better analysis is not possible, the 17. In the case of GMI I, the evaluation difficulties suggest that reestimated ERR (30%) exceeds the designers of phased projects should appraisal ERR (20%). Accounts of try to maximize the integrity of the implementation delays and other first phase as a stand-alone difficulties seem to contradict any investment, which slides us into the ERR improvement. The audit concludes next issue. that the PCR's ERR estimate, which pertains to program investments 21. Several of the phased projects extending beyond GMI I, gives a did not sequence their investment misleading impression of the activities efficiently in time and performance of this first phase space. For example, the configuration project. A revised estimate will of SUB I*s component civil works could emerge in due course when the second have been more cost effective had more phase project is completed. attention been paid to their sequencing. The audit has concluded Sustainability that a blind embrace of time slicing suppressed the application of more 18. Three of the projects - AP I, logical principles for defining the MAN II, and SUB I - are associated boundaries between project phases. It with ERRs that are too low to be recommends that any appraisal consistent with sustainable economic evaluation of phased investments performance. It is still too early to should assure the Board that its address the sustainability of UK I and proposed configuration of a Phase I GMI I, although the Narayanpur project has resulted from a irrigation system of UK I holds consideration of alternatives, promise. Evaluations of the second including the alternative of scaling phases of both projects offer another the project upwards and, if necessary, opportunity for review, accelerating its ultimate completion - xix - by eliminating phases. If the be more skeptical about project proposed configuration appears to be data and behavioral assumptions the result of a political decision, as at preparation/appraisall was the case with SUB I, the SAR should inform the Board of the coek more policy content in estimated cost of that decision sector lending operations, (paras. 4.3 and 4.11-4.16). Tho especially as regards priorities Bank's regional staff have expressed for expenditures; reservations about these recommendations on sequencing and * be wary of designing technical handling time-slice investments. improvement measures that expand Their views on this and on some of the the public cost of irrigation; other issues are recorded against the and relevant paragraphs of the main text. * seek more ways of reducing the 22. The PCRs are relatively silent exposure of gravity irrigation on the performance of the technical to rent seeking behavior. irrigation improvements embodied in the project designs. Delays in (Paras. 4.4 and 4.17-4.25). construction and the lower priority given to works at the ends of the 24. All five project proposals distribution networks left many of tended to ignore the additional these improvement measures untested at potential they created for final completion. Evidently though, such delivery of irrigation water by measures were not broad enough to deal private lift, whether from groundwater with the problems encountered during or directly from reservoirs and implementation. The frequency of canals. All five PCRs also largely complaints about "inadequate funding" ignore such potential. The policies and the GMI I experience of growing adopted in Maharashtra in favor of physically too large suggest that the private lift from reservoirs and Bank's financial assistance canals to irrigate areas outside exacerbated an over-commitment of project gravity commands warrant close resources to too many discrete study for lessons on future project projects. This helps explain why the design (paras. 4.5 and 4.26-4.27). experiments with sector lending were disappointing. The Bank's underlying 25. Finally, the audit feels obliged sector analysis had been too timid. to speculate that the framework for allocating river basin waters among 23. Highly subsidized public sector riparian states in India probably irrigation attracts strong support contributes to the syndrome of from rent seeking interest groups. excessive numbers of civil works Had the underlying sector analyses starts und drawn-out irrigation emphasized rent seeking behavior as a implementation (paras. 4.6 and 4.28- common source of many of the sector's 4.30). problems, the thrust of these five projects might have been different. Closer scrutiny of this type of behavior on the part of farmers and others would have led Bank staff to: PROJECT PERFORMANCE AUDIT REPORT INDIA KARNATAKA IRRIGATION PROJECT (CREDIT 788-IN) GUJARAT MEDIUM IRRIGATION PROJECT (CREDIT 808-IN) SECOND MAHARASHTRA IRRIGATION PROJECT (CREDIT 954-IN) SUBERNAREKRA IRRIGATION PROJECT (CREDIT 1289-IN) ANDRA PRADESH IRRIGATION AND CAD COMPOSITE PROJECT (LOAN 1251-IN) I. BACKGROUND Audit Context 1.1 The Board had received, as of the end of June 1990, 19 PCRs or PPARe on Indian gravity irrigation projects. The following list of these projects, ordered by their Board approval dates, distinguishes the eleven then unaudited projects with an asterisk(*); the five of those selected for this group audit are underlined: Loan/Credit Approval Date PCR Number (Month/Year) No. Date Kadana Irrigation Cr. 176 Pochampad Cr. 268 * Rajasthan Canal Cr. 502 Godavari Cr. 532 Chambal CAD (Rajasthan) Ln. 1011 Chambal CAD (Madhya Pradesh) Cr. 562 * Periyar Vaigai Cr. 720 * Andhra Pradesh Irrization Ln. 1251 4/76 8804 06/90 Maharashtra Cr. 736 Orissa Cr. 740 * Karnataka Irrigation Cr. 788 3/78 7544 12/88 * Guiarat Medium Irrigation Cr. 808 5/78 6841 06/87 Haryana Cr. 843 * Punjab Cr. 889 * Kandi Ln. 1897 * Second Maharashtra Irrigation Cr. 954 10/79 7580 12/88 * Karanataka Tanks Cr. 1116 * Subernarekha Irrigation Cr. 1289 8/82 8535 04/90 * Second Orissa Cr. 1397 1.2 This choice of projects for the current audit was driven partly by an interest in river basin planning issues. At the time of selection, OED was examining the prospects for a study of Sri Lanka's Mahaveli River basin projects. The idea of pursuing a companion study in India, centered on the Krishlua River basin, led to a decision to audit - as an interim step - the three projects in that basin, one from each of the states involved: Maharashtra, Karnataka, and Andhra Pradesh. The decision to add Subenarekha -2- grew out of its multi-state character (it impacts on Bihar, West Bengal and Oriesa) and the prospect that it too would pose similar basin-type issues. The decision to add Gujarat Medium Irrigation grew out of its PCR's treatment of time-slicing - a Bank approach to project financing and design used in three of the other four projects - and a felt need to review it. Time-slice projects have become commonplace and explicit in the Indian irrigation project portfolio. They are less common elsewhere. Sector Context and Project Design 1.3 The Bank Group's support of public gravity irrigation and drainage schemes in India has been long-standing. Over the fiscal years 1961-90 IBRD and IDA committed a total of US$4.2 billion towards 41 such projtcts. The reason for this prominence given to irrigation was the belief - shared by the gove-mments of India and the various Indian states and the Bank - that irrigation in general and certainly this irrigation program were essential to India's drive to increase foodgrain output. 1.4 Audits of earlier projects in this program pointed to its being relatively successful. The eight audited projects all had favorable reestimated ERRs, only one of which was clouded with any marked uncertainty. Nevertheless, there were a number of problems. Implementation delays and cost overruns were fairly common, even if not all that disruptive. Several audits noted a prevalence of flawed systems of water allocation and the desirability of rotating water supplies among distributaries. Cost recovery was generally unsatisfactory, and farmers had demonstrated their unwillingness to finance compulsory on-farm development works. However, the first three of these earlier audits were iss4ed in the period 1981-82, i.e. in time to influence only Subernarekha Irrigation Project. 1-5 The five projects selected for audit were approved over the period 1976-82. Their designs reveal Bank and Indian thinking about how to make gravi.y irrigation schemes more effective. In the previous three decades (i.e. since Independence), this type of irrigation had been designed and operated to protect vast areas under kharif field crops against monsoon failure. The earliest schemes often featured barrages that supported "run-of- the river" diversions. Yet the spread of HYVs under the green revolution had made crop irrigation requirements more exacting than could be met by this approach. Water supplies had to be more timely and reliable than previous extensive designs and operating systems allowed. The Region's sector work, recognizable as a common refrain among the project SARs, proclaimed a number of other problems as well: i) more projects being started by the States each year than could be finished expeditiously, with available resources being spread thinly, resulting in protracted, wasteful construction periods* -3- ii) construction standards varied even within states, design and construction specifications were not always followed, with consequent lowering of quality of construction work and rapid deterioration of structures, and there were concerns about dam safety; iii) even when completed, the irrigation potential so created was not matched by comparable utilization rates, as areas actually irrigated lagged considerably; iv) irrigation sur.lies at the typical public distribution outlet that served about 40 ha were unreliable, development below the outlet was uneven, and cooperation among farmers in water distribution was poor; v) farmers close to the outlet managed to secure 150% to 200% more water than tail-enders; more generally, those located in the upper reaches of the distribution network monopolized water deliveries in periods of high water demand/low supply; vi) cost recovery from farmer beneficiaries continued to be minimal in most states, lagging well below expenditures on operation and maintenance; and vii) water losses from canals were excessive. 1.6 In their broad design, all five projects involved canal irrigation from storage reservoirs. Consequently, they permitted significant irrigated cropping outside the main monsoon period. In response to the more specific >roblems, the projects generally incorporated design criteria and covenants that favored: adoption of improved construction standards, establishment of quality control units, and dam safety reviews; regulated outlets serving irrigable areas no larger than 8 ha on averag (instead of the typical 40 ha.); greater lining of canals down to an 8 ha outlet; mandatory land development - land levelling, realignment of iield channels, etc. - below the outlet, and more specialist extension to accelerate utilization rates; minor canal capacities that allowed rotational irrigation; and encouragement to collect more direct irrigation revenues. The designs largely accepted the extensive irrigation philosophy and, while the Bank recognized as common practice State governments starting too many projects in relation to their physical and financial implementation capacity, it did not negotiate any covenants to use as explicit leverage against such practice. Prolect-Areas 1.7 The five project areas are diverse indeed. The region to benefit from the Andhra Pradesh Irrigation and CAD Composite Project was vast, so much so that its average annual rainfall rose from 680 m in the west to 1,110 mm -4- near the coast. It enjoyed two rainy seasons, the main one being the south- west monsoon lasting from June to September. The principal irrigated crops were paddy in kharif and paddy, groundnuts, and cotton in Rabi. The Karnataka Irrigation Project was to serve a semi-arid tract in the northern part of the state receiving 650 mm of rainfall. The principal crops were to be sorghum, maize, groundnuts and cotton in kharif and cotton, wheat, and sorghum in Rabi. Gujarat's Medium Irrigation projects were to be spread over the whole state, most of which received 500-800 mm of rainfall concentrated in the one monsoon season (kharif). The principal crops under irrigation were sorghum, paddy, cotton; tobacco, and wheat. Maharashtra's project areas were drought prone, with rainfall of 600-800 um, and suitable for irrigation of several types of cereal crops, sugarcane, vegetables, cotton, and groundnuts. Bihar's Subernarekha Irrigation project area enjoyed the highest rainfall, 1,300 mm, most of which came in the south west monsoon. The principal kharif crop was paddy. Likely Rabi crops were paddy, wheat and potatoes. II. THE PROJECTS 2.1 The following paragraphs give summary outlines of each project, its passage through the Board, and the course of its implementation. Annexes 1-5 give more detailed descriptions taken from appropriate schedules to the legal agreements. A. Andhra Pradsh Irritation and CAD CoMposite Project (AP 1) 2.2 Dean and Obectives. AP I comprised several components designed to complete the Nagarjunasagar Irrigation Project (NSP)t the final (end) sections of both the Left and Right Main Canals, totalling 94 miles in length; public irrigatioi distribution networks and drainage networks serving about 330,000 ha; 1,575 km of new or improved village roads; and command area development (CAD) cm about 32,000 ha. In addition, there were several other components, includ- ig about 40,000 ha of CAD in the Pochampad Irrigation Project area and Tunpabhadra High Level Canal Area, and various studies of water losses, and distribtttion efficiencies (Annex 1). Total project cost over five years was US$297 million. The SAR estimated the following ERRs: (a) on all previous and planned investments in NSP, 15Z; (b) on all planned investments (which included future completion of the CAD program throughout WSP), 20 to 252; and (c) on CAD and extension alone, 45% (SAR, para. xiii). It acknowledged, however, that returns to the new canal infrastructure with supportive CAD and extension in new NSP areas only were relatively low: 9% to 132 (SAR, %rra. 7.19). The audit has interpreted all this to mean that the main AP I investments would return about 11%. 2.3 AP I pursued a much broader agenda than might be apparent from such a summary description. The main storage works, Nagarjunasagar Dam, and the first 188 miles of the Left and Right main canals and an initial distribution network serving a command area of about 541,000 ha had already been completed at a cost of about US$500 million (SAR, para. 7.14). This partially-completed NSP was usinb some 300-400 thousand million cubic feet (TMC) of water each year to grow mainly rice. Under the terms of the 1973 Krishna Waters Tribunal, NSP was allocated only 264 THC. It could exceed that entitlement in practice only because the upstream states of Maharashtra and Karnataka had not utilized fully their entitlements, thus making surplus water temporarily available to NSP and other parts of Andhra Pradesh. To allow NSP to live within its water allocation in the longer term, AP I sought to accomplish several dramatic changes. 2.4 First, it sought to stem known sources of water losses in the main distribution system, identify other causes of loss extending to below the Irrigation Department's outlet, and stem those as well. 2.5 Second, it sought to introduce radical changes in cropping patterns away from rice, a heavy water user, towards "irrigated dry" crops such as cotton. Technical specialists pointed out also that whatever rice growing remained should be shifted towards areas where soils were heavier and the soil profile less porous, generally located in the lower parts of the valley landscape. 2.6 Third, it sought to curb water consumption by farmers in the head reaches of the existing canal delivery systems and to establish reliable supplies to farmers in the lower reaches. The head reach farmers had been appropriating whatever amounts of water they deemed necessary to grow their rice, to the detriment of farmers below them who had been experiencing great uncertainty of water deliveries. 2.7 Fourth, it sought to save sufficient water by all these means before about 1995 (when surplus water for NSP was expected to end), not only to lower overall consumption to the 264 TMC, but to redistribute a good portion of that lower amount away from existing irrigated areas to irrigate the two "tail end" extensions of NSP to be constructed under AP I. Note that the total designed area to be irrigated under NSP, a huge gross command area of 872,000 ha, was consistent with broad policy objectives of public gravity irrigation in India: to serve as many land holders as possible, requiring water to be distributed over long distances to large areas, a feature conducive also to high water losses. 2.8 In presenting AP I to the Board, Bank staff stated that India's development program for the next decade emphasized completion of irrigation projects already begun and accelerated CAD. The CAD program would cover the whole State. CAD programs had been initiated by GOI about three years earlier, and this would be the fourth Bank-assisted project with a CAD component. The risks confronting the CAD investments were considered marginal. The Nagarjunasagar infrastructure component, however, faced "some risks". The loan of $145 million was the largest financial support to that date for agriculture and irrigation in India. - 6 - 2.9 Board liscussion. One of the Executive Directors asked about the track record of these types of projects in terms of their ERR performance and how soon one could expect the real performance of this project to be measured. The Staff acknowledged that the return to Nagarjunasagar infrastructure would be modest. One half of the project area was already irrigated and used almost all the water. Extension of the project meant losing some production from existing areas due to reallocation of water, and only modest incremental benefits overall. They felt that a retrospective ERR verdict could be reached within ten years. The Bank's President, presiding as Chairman, intervened to clarify that projects like this one, involving as they do massive reorganization of human relationships, carried considerable risk of failure. 2.10 Implementation. Even before disbursements had begun, the Bank's first supervision mission in December 1976 reported indications of likely GOAP funding difficulties. By September 1979, the Bank was considering a suspension of disbursements because of continuation of inadequate funding, farmer reluctance to finance the on-farm development part of CAD works, and other problems giving rise to delays in implementation. By around that time, three years into implementation, the Bank had disbursed US$31 m, principally for NSP's main canal construction, some roads, and the irrigation distribution system, mainly on the Right Bank, compared to target disbursements of US$60 m. It had become clear also that, because of excessive seepage losses and inequitable "upstream" use in the non-Bank area of NSP, the Bank-assisted areas would not receive sufficient water to achieve adequate project benefits. GOAP and the Bank agreed to reformulate the project. 2.11 The reformulation mission's main findings were that surplus Krishna waters offered considerably more than the NSP legal entitlement of 264 THC "for the next 15-20 years", suggesting that impending water constraints might impend for longer than had been expected. However, the project works needed modifications a command area of 872,000 ha could be sustained only if canal capacities were enlarged and a more equitable water allocation, e.g., between non-Bank and Bank areas, were vigorously implemented; the LM Canal would need enlargement and lining in the upper reaches, with attendant disruptions to water supplies over the ensuing five dry seasons; selected reaches of the RM Canal would also need lining. Because of the extra costs of these works, a reformulated project would have to defer the irrigation distribution system for 44,000 ha on the Left Canal and some other works to beyond the new project completion date of June 1984. Both L&R Main Canal investments were still thought to be viable. All field channel and field drain construction would be deleted from CAD works in the Pochampad and Tungabhadra schemes. The reformulation was agreed by April 1980, and loan closing was extended to June 1984. 2.12 Bank staff considered subsequent progress to be reasonably adequate until mid-1983 when, in their view, canal construction and remodeling and road construction slipped badly behind targets. The PCR finds that, by the actual loan closing date of June 1985, nost of the components achieved close to their - 7 - (reformulated) targets. Collection of water charges did not improve (PCR, Table 7).1/ B. Karnataka Irrisation Project - U. Krishna Phase I (UK I) 2.13 Design and Objectives. This project, also known as Upper Krishna Phase I, comprised several components that would develop part of the Upper Krishna Scheme (UKS) in Karnataka, which had been under construction since 1962: completing Almatti and Narayanpur Dame; completing Narayanpur Left Bank Main Canal; constructing distribution and drainage networks serving 105,000 ha; CAD works for 25,000 ha; a resettlement program; roads; and other activities. In addition, the project was to provide irrigation and CAD works for about 31,000 ha within the Malaprabha and Ghataprabha schemes, both of which lie outside UKS (Annex 2). While the above-mentioned completion of Almatti Dam is consistent with the wording of the legal agreement, the SAR clearly intended its part completion only. Project costs amounted to US$284.4 million. 2.14 By the time UK I was presented for Board approval, the Bank staff involved claimed that it represented something of a departure from previous lending. They pointed out that earlier IDA interventions in India's irrigation had tended to be timed near the end of the construction period, to assist in the completion of India's projects in progress. With the increase in state budgeted allocations in recent years, relatively new projects, i.e., projects on which little progress had been made, were now coming to IDA. These projects were typically large and had long implementation periods. The Bank foresaw that changes in design were still possible; in this case of UK I, it had advocated improvements in conveyance systems, operational procedures, and water use below the outlet. To finance such large investments from inception to completion would require excessively long periods of disbursements: in the case of UKS, 15 years (despite almost 20 years of at least some effort towards construction). To cope with this, the Bank had adopted the phase, or "time slice" approach: in this case, financing a 5-year phase of the (remaining) 15-year implementation program for UKS. This phased approach to lending was considered new. It was not now possible to speak of specific benefits to 5 years of construction; costs and benefits of the total UKS project (involving a much larger irrigated area of 425,000 ha) must be treated as a whole. Hence, the appraised ERR of 16% (which incorporated, incidently, all prior investments) was the return to the 15-year UKS, whose investment phase was expected to be completed by 1993, i.e. well beyond UK I's scheduled completion year of 1983. The Bank acknowledged that this return was sensitive to the rate of completion of UKS following disbursements for UK I. Consequently, the Bank had sought, and GOK provided, assurances that UKS would 1/ Loan 2662 and Credit 1665-IN for a follow-on Second Andhra Pradesh Irrigation Project were approved by the Board in March 1986. Except for its part reliance on Krishna waters upstream of Nagarjunasagar, it had little connection with AP I. - 8 - be completed within the 15 years irrespective of whether IDA financed subsequent phases. 2.15 What distinguishes this UK I time @lice is how it was defined. Narayanpur Dam and its command constituted a relatively self-contained irrigation scheme, even if the remaining works of UKS after completion of UK I were to be abandoned. By comparison, the (upstream) Almatti Dam component of UK I did not offer commensurate benefits to UK I even if completed, as then proposed in the SAR, to within 12 meters of full reservoir level. The project was to make provision for later installation of a 150 MW hydro-power plant at Almatti, but no provision (in this first phase) for irrigation from Almatti except indirectly through the Narayanpur system, which did not need the extra storage. Almatti's final completion, scheduled for 1986, and completion of its irrigation and drainage networks, scheduled for 1990, were meant to happen in subsequent time slice investments. 2.16 Board Discussion. The Board's only queries concerned the resettlement of the 13,000 families expected to be displaced by the two reservoirs: what was GOK's previous experience with resettlement? would oustees enjoy other amenities besidei provision of land? what were the arrangements for administering resettlement? and would oustees enjoy any consultation over terms? Staff said that no consultations were expected, but that oustees would experience neither undue hardship nor loss. 2.17 Implementation. Following a slow start, the Bank's third supervision mission (in December 1980) flagged several constraints: inadequate local funding, shortages of technical staff, and slow land acquisition. The mission foresaw eventual cost overruns and was critical of planning activities. By April of 1982, supervision staff were expressing deep concern about lack of progress with CAD, unbalanced and slow progress with DISNET construction, and likely slippage of completion. A year later, around the scheduled completion date, supervision staff reported that completion could be delayed by up to 4 years; none of the project components had then been completed. The Bank's final supervision in January 1986 reported that the project was progressing satisfactorily and was 72% completed. Narayanpur dam was nearly completed (it had allowed irrigation to begin as early as 1983); Almatti Dam was 63% completed. Water charges appear to be much less than operation and maintenance costs (PCR, para. 6.18). 2.18 Resettlement became a late concern. The Bank discovered that oustees resulting from dam construction were not being treated in accordance with legal agreements. The numbers of affected people were large: about 130,000 to 140,000. Pending satisfactory arrangements for resolving this problem, the Bank informed GOK that it would not appraise UK II. The Board subsequently approved Credit 2010-IN for the follow-on Upper Krishna Phase II Irrigation Project in May 1989. This includes provision for resettlement of UK I oustees. - 9 - 2.19 As seen through the eyes of the PCR, the main implementation problems weres (a) inadequate planning and procurement (far too many small contracts); (b) lack of management accountability and inadequately trained and insufficient staff; and (c) insufficient understanding of the magnitude and complexity of the resettlement and rehabilitation operations which resulted in this operation being poorly designed, funded and executed. In addition, the PCR concludes that the construction of the Almatti dam was premature because it did not contribute to irrigation in Phase I. Although there had been two one-year extensions of the Credit closing date, the infrastructure was not completed. There were also serious costs overruns. At Credit closure, actual expenditures incurred were more than 50% higher in Rupee terms and more than 352 higher in US$ terms (due to the depreciation of the Rupee). About 822 of the civil works proposed under the project had been completed, and about 60% of the target had been reached in providing irrigation waters to farmers. C. Guiarat Medium Irriaation Project (GM! I) 2.20 Desian and Objectives. GM I comprised two main parts: completion of ongoing and execution of new medium irrigation projects2/ (MIPs); and modernization of existing MIPs (Annex 3A). The SAR refers to it variously as a sector credit and a five-year time slice of Gujarat's medium irrigation program (SAR, pares. 5.01 and 5.13). The PCR refers to it variously as a "line-of-credit" project and a time slice (PCR, pares. I and 3). 2.21 The Bank's appraisal did not extend to technical appraisal of individual MIPs. Instead, the Bank appraised the Borrower's capacity - in the form of an Appraisal Committee of the GOI's Central Water Commission (CWC) - to appraise MIP proposals submitted to it by GOG (Annex 3B). The Bank set minimum investment standards for designs, along the same lines as those developed previously for Orissa Irrigation Project (Credit 740-IN). GOG decreed that one of these standards, full lining of the distribution network down to the 8 ha outlet, would be applied broadly across the stat". GMI I objectives included institutional development: strengthening GOG's preparation of projects; and consolidating GOI'a capability to appraise irrigation projects. Expected project cost was US$170.5 million, and the expected ERR, based on "typical" cropping patterns and cost norms for model schemes, was 20%. 2.22 SAR estimates of project cost rested on expectations that the completion of ongoing and execution of new MIPs would involve about 63,000 ha, and the modernization of existing MIPs about 55,000 ha, or 118,000 ha in all. The combined base cost for these items fell only slightly short of the SAR's expectations of GOG's medium irrigation program cost for the five years 1978/79 - 1982/83 (SAR, para. 4.23). This indicates that the Bank believed it a/ A medium-sized irrigation project in India is one having a cultivable command area in the range 2,000 ha to 10,000 ha. Larger schemes are called major, smaller ones minor. - 10 - was financing a2st of GOG's program. It is also clear from the SAR (para. 5.13) that the IDA credit would not necessarily be sufficient to complete MIPs started after 1978/79. 2.23 Board Discussion. The main questions raised in the Board involved cost recovery, Bank supervision, and India's economy. In answer to questions as to where the money came from to finance the 84% of costs not recovered from beneficiaries, and whether India could continue the heavy subsidies of public irrigation, staff said such subsidies came from the budget and that their continuance was problematic. Asked why 60% of the project investment program should be subject to prior IDA review and approval when the arrangements for CWC involvement were claimed to be adequate, staff replied that it was just meant to enforce accountability. Asked whether India's economic take-off was imminent in view of the country's favorable foreign exchange and food reserves, staff felt that the current government budget was sufficiently daring, but did not commit themselves further. 2.24 Implementation. The Bank's first supervision report on the project in May 1980 listed its major concerns as being inadequate staffing of technical and professional personnel, deficiencies in funding, and "normal difficulties encountered in attempting to accelerate an ongoing low intensity program". The report anticipated that some 10 sub-projects might be completed within the five year time slice, leaving another 24 or so (as perceived then) to be completed within a total of 8 years. Subsequent supervisions highlighted (a) problems with quality control of construction, especially of lining and control structures down to 8 ha outlets; (b) continuing inadequacies of project staffing; (c) serious delays relative to the original implementation schedule; and (d) slow disbursements. In addition, the project file reveals Bank staff concern about persistent deficiencies in the water delivery systems caused by poor design, substandard construction, and inequitable operation. The final Bank supervision letter to government in May 1984 refers to only one MIP being substantially completed by the closing date against five planned for completion by GOG. It reports that irrigation potential at the 8 ha block level would be only 57% of the revised target set as recently as July 1983. It attributes the major shortfalls in physical targets to low budgetary allocations and inadequacies in the planning and implementation of canals and distribution systems. 2.25 The PCR reports that CWC appraised 23 MIPs, both new and ongoing, and 6 modernization sub-projects. IDA approved all but one MIP proposal, leaving a total of 28 sub-projects to be implemented. By the closing date, June 1984, only one MIP was partly completed and operational, while the remaining 21 MIPs were at various stages of construction. Modernization sub- projects were even more behind schedule; the main distribution system of only one was substantially completed. GOG increased water charges in 1981 and 1983 to cover O&M costs in full. 2.26 The PCR also reports that the Rupee cost per irrigable ha of new MIPs proved 22% greater in real terms than appraisal estimates, and the cost - 11 - of modernizing older works 35% greater. Because of greater-than-expected areas irrigated, however, total project costs were likely to be as much as 102% greater than appraised (PCR, para. 4). Actually, the schemes proposed to and approved by IDA appear to involve three times more irrigable land than expected (see below). Hence, costs could prove much higher, as suggested also by the PCR: Appraisal and Completion Cost Estimates IDA CWC GOG Appraisal Appraisal Revised Actual Expenditures Cost Cost Cost up to June 1984 R----------------------e million--------------------- 22 New MIPs 3,171 4,774 2,972 6 Modernizations 865 1,140 379 TOTAL 1,455 4,036 5,914 3,351 Excess over IDA appraisal cost estimate (%) 0% 177% 306% 130% Source: PCR, Table 3 and SAR, para. 5.15. In short, project costs in current Rupees will probably be at least four times the IDA estimates. D. Second Maharashtra Irriaation Proiect (MAB II) 2.27 Design and Objectives. MAN II bears some resemblance to GMI I insofar as the Bank set out to help finance a substantial portion of Maharashtra's irrigation development program for the ensuing five years. The main differences were that MAH II focussed on maior schemes rather than medium ones, it was highly specific about the works to be financed, and the Bank preferred to appraise sub-projects itself rather than devolve this responsibility to other parties. According to the SAR, the operation was to assist the continued construction of six schemes (Bhima, Krishna, Kukadi, and Warne in the Krishna River basin and Upper Warhda and Upper Penganga in the Godavari River basin) during the five year period starting from October 1979 through September 1984, and the partial modernization of the existing Girna and Mula schemes. However, the SAR also treats the Bhima scheme separately insofar as it was to be financed by IFAD. The IDA legal agreements for MAR II exclude Bhima and describe the items to be financed as: work on 11 dame, 900 km of new main and brarch canals and some modernization thereof; associated distribution networks and 620 km of roads; command area development; vehicles; and programs for land and water management and monitoring and evaluation. Total project cost of these items was US$451 million. 2.28 Significantly, the SAR did not expect MAH II to complete all the specific works: in the case of Kukadi, for example, its dame were expected to - 12 - be 81% complete at project completion, its major canals only 54% complete, and so on (SAR, para. 3.01). To put the project coats of US$451 million and the US$100 million cost of Bhima into perspective, therefore, the grand total cost of all eight schemes, i.e. including Bhima, from conception to final completion was US$1,269 million. This indicates the extent to which MAH II was viewed as a first phase time slice of a significantly larger investment program.l/ Appraisal estimates of ERR focussed on these larger investments, not on the time slice which defined the extent of HAB II. The appraisal ERR for MAH II (excluding Bhima) thus calculated was 15%. 2.29 The preparation of MAH II followed an intensive Bank staff review of the irrigation sector in Maharashtra. From this review, staff identified not only the broad components of MAH II, but also specific approaches to design, operation and management. Though some of these approaches were evident in previous Bank projects in India, they were given increased emphasis as a result of the sector work. Three of the approaches deserve mention here. 2.30 First, staff concluded that the Bank's traditional approaches to project financing would have only a marginal impact unless it moved to (state- wide) sector lending. MAB II represented the first step towards sector lending for major irrigation projects in that it supported six of that state's 20 ongoing major projects. (Orissa and Gujarat Medium Irrigation Projects had already anticipated this approach to lending, but for smaller sized schemes.) 2.31 Second, the existing system of water allocation in the state, which responded to farmer applications to grow specific areas of specific crops, gave unfair advantage to a few farmers (especially sugar and banana growers). Staff argued that the best way to reform was to allocate water in proportion to size of holding. That is, instead of designing water deliveries to service specific crops or crop rotations, the system ought to deliver water in proportion to farm service areas and on a fairly strict schedule to lower uncertainties of amounts and timing of supplies. The decision on what crops ought to be grown would thus be left to farmers; it would no longer require sanction by government officials. This, it was argued, would promote both efficiency and equity. 2.32 Third, project documentation (the SAR) argued for delivery and management systems that would allow a pre-kharif watering, giving kharif crops an early start, thus allowing an early start also to subsequent rabi crops. 2.33 Board Discussion. NAH II drew no queries from Board members. I/ No prior or subsequent Bank operations have had any relationship to the items financed in MAH II. In particular, MAH H has not been linked with either Maharashtra Composite Irrigation I (Cr. 736-IN) approved in July 1977, or Maharashtra Composite Irrigation l (Cr. 1621-IN) approved in July 1985. - 13 - 2.34 Implementation. Judging from early supervision reports, construction progress was satisfactory except for delays caused by cement and fuel shortages. By March 1982, the supervision reports were blaming instances of slow progress on faulty planning, poor logistics and staff shortages. They observed that progress of dams and earthworks for main canals was satisfactory but minor systems and CAD works lagged. Two years later, such reports recognized financial constraints as a major problem as cost overruns set in. As a measure of economy, GOM decided to restrict lining of field channels to 20Z of their length; cement shortages persisted. By closing date, December 1985, physical achievements remained well below SAR targets which were expected to take a further five years to complete. 2.35 As explained in the PCR, not more than 7 of the 11 dams mentioned in the DCA were actually meant to be financed under the IDA credit. Of these, two had been completed by the closing date, four had reached 70%-95% of target, and one 30%. Other physical components also reached less than their project targetes main and branch canals, 831; distribution network, 662 (with lining and canal structures lagging considerably); OFD works, 88Z; lining down to 8 ha outlet, 68%; and road works, 781. 2.36 The main factors cited by the PCR for these implementation shortfalls are: until 1984, severe shortages of cement, steel and fuel; slow land acquisition and disruptions caused by disputes over resettlement of affected families; and cost increases. Although total actual costs exceeded appraisal estimates by only 9.61, the actual works carried out were much reduced because of financial constraints. Resource reallocations favored major works (dams and main canals) at the expense of works more closely related to irrigation. Revenue from water charges remained low, below O&M costs. E. Subernarekha Irrixation Proiect (SUB I) 2.37 Desien and Objectives. SUB I was to be the first part of a very large irrigation and flood control system serving the states of Bihar, Orissa, and West Bengal. This larger Subernarekha Irrigation System (SIS) was expected to take ten years to complete and cost $900 million in 1983 prices. The main components of SUB I were the partial completions of several major civil works, starting mostly from scratch: Chandil Dam and its Left Canal, the Ichha Dam and canals, the Galudih Barrage and canals, and the Kharkai Canals. Other components included distribution networks serving 21,000 ha lying outside SIS, establishment of two training facilities for water management in Bihar and Orissa, and studies. The studies were to establish criteria and methodology for managing the multi-state system when completed, and provide detailed planning for the remainder of SIS, including how the system would be managed. The partial completions of civil works - 50% of Chandil dam, 30% of its Left Main Canal, etc. - were to be executed in a four- year time slice, also referred to as Phase I (Annex 5). Total project cost was estimated at US$182 million. The project ERR offered in the SAR was the ERR for the entire SIS system: 171. - 14 - 2.38 SUB I's design followed from an agreement at high political level worked out among the cooperating States: Bihar, Orissa, and West Bengal. This formal, Tripartite Agreement required that all the works be taken up together, mostly to ensure that intended allocations of SIS waters between Bihar and Orissa be seen to be backed up by supportive civil works. All these civil works were located in Bihar, and Orisse's financial contribution was tied to the construction of Ichha Dam and its appurtenant works, the Galudih Barrage and its Right Canal. While it was physically possible for some overall authority to supply water to Orissa with only one of the two dam systems in place initially and some provision was made for that scenario in the Agreement, the two states could not agree on a basis for constructing the dame in sequence. The Bank accepted this essentially political decision without any strenuous challenge. 2.39 All parties concerned were willing to accept the possibil!ty that the Bank might not support a follow up time slice or second phase. This wus a major risk for such a large construction program whose phase one would still leave major structures incomplete and scarcely functioning. The SAR considered that the risk of either GOB or GOO not proceeding with the full scope of the project after completion of this time slice was small. One of the reasons offered was that "with the works completed under the first phase becoming 'sunk costs,' the economic viability of the remaining works, especially in the Chandil complex, will be high." The SAR did recognize "a risk that the rehabilitation of displaced persons will encounter greater than anticipated difficulties and delay implementation" (SAR, para. 8.09). 2.40 Board Discussion. The importance of appropriate cost recovery policies and volumetric water charges received some support during Board discussion of SUB I. Asked about the progress of some on-going studies of cost recovery in other projects, staff replied that these studies were incomplete, but that there had been some substantial increases in water charges in certain states. 2.41 Implementation. The first few Bank supervision reports after approval in 1982 expressed concern about lack of sanctioning and posting of key staff. By March 1985, the major problems they listed were inadequate budgetary allocations, shortages of staff, and difficulty in transfer of forest land to project use; completion was expected to be delayed by two years. Six months later, in September 1985, the Bank considered the project to be in deep trouble. Components then regarded as progressing fairly well were Chandil Dam, Chandil LBC, Galudih Barrage, Galudih Right Canal; Ichha Right Canal and Kharkai Right Canal. Components still not started included Ichha Dam and dikes on both flanks; Ichha Left Canal; distribution systems; micro irrigation network; and pilot minor irrigation schemes (all of which started up within another 12 months). Estimated costs had increased by more than 60Z due to increases in unit rates and substantial increases in quantities of work previously underestimated due to inadequate survey and investigations prior to Board approval. By February 1987, i.e. within one month of the original closing date, supervision staff considered the project - 15 - to have a completion delay of 60%, a cost overrun of 74%, and a disbursement lag of 562. The Bank expressed concern to GOB about aspects perceived to be deteriorating: staffing, both engineering and management; designs; construction of Kitanala dam (a small balancing reservoir on Chandil Left Canal), and Kharkai RB Canal; and the various studies under the project. Other aspecte previously reported to have problems and not improving were project management, supply of materials, construction of Ichha Dam, the distribution system, the micro-distribution system; roads; pilot irrigation studies; and agricultural extension and research. 2.42 The PCR adds to this account of implementation highlights by pointing out that resettlement and rehabilitation of displaced persons had been inadequately planned and managed and had turned out to be a severe problem (the Bank suspended disbursements for awhile in 1988/89 on this account). Some components, mainly major works, managed to exceed their physical targets by the extended closing date of April 1989: Chandil Dam, 64% complete against an appraisal target of 50% complete; Chandil LMC, 58% vs. 30%; Iccha Dam, 25% vs. 20%; Iccha RMC, 48% vs. 20%; Iccha LMC, 26% vs. 202; Galudih Barrage, 86% vs. 36%; Galudih RMC, 62% vs. 22%; Kharkai RMC, 40% vs. 02. The latter achievements for Kharkai RMC reflect a decision reached during implementation to include a section of the Kharkai main canal to convey water from the Iccha Dam via a link canal to three Kharkai distributaries. (Other . changes, such as adding a hydro electric plant at Chandil LMC, were also made.) However, implementation was characterized throughout by an imbalance between the major works (dame and main canals) just listed on the one hand, . and of irrigation distribution systems, preparation for water management and agricultural extension and training on the other. To illustrates for Chandil Dam distribution system, SUB I attained only 60% of the earthworks and none of the lining or structures projected at appraisal; for Chandil micro DISNET, 200 ha vs. 14,875 ha; for Iccha RMC DISNET, 60% of earthworks and none of the lining or structures; for Ichha LMC DISNET, 38% of earthworks and none of the lining or structures; and for Ichha micro DISNET, zero ha vs. 2,844 ha at appraisal.4/ 2.43 At the time of the audit mission's visit to SUB I in September 1990, this Phase I project had stored considerable water behind Chandil Dam, but had still not created any potential for irrigation as the relevant distribution systems remained incomplete. A/ The Borrower's comments on Part I of the PCR inspired certain rejoinders by the Bank in the form of footnotes beginning on page 14 of the PCR. In turn, these rejoinders generated further comments by the Government of Bihar after the PCR was issued. For completeness, this audit has attached GOB's further comments on the PCR as Annex 6. - 16 - III. PROJECT OUTCOMEES 3.1 The PCR is pessimistic about the consequences of these investment*s areas irrigated overall in NSP by 1988-89 had reached 861 of target on LMC, only 632 on RMCI paddy remained the dominant crop; main canal capacities had been reached, indicating little scope for further increases in irrigation without reduction in paddy growing; the project had had minimal influence on institutional development; income inequalities had widened between head- and tail-end farmers; and the ERR would reach 7% if the designed cropping pattern etc. could be achieved, 4% if not. 3.2 The audit mission's visit to the command area in September 1990 confirms the PCR*s pessimism. Paddy still remains the dominant irrigated crop. Farmers in the head reaches of canals monopolize available water supplies. Farmers have damaged most (some say virtually all) control structures located below major distributaries. The extent of damage lessens as one moves up the canal hierarchy, but even structures on main canals are not immune from attempts by farmers to control water distribution in their favor. On the LMC overall, the Irrigation Department has some 14,000 control structures which are supposed to be operated on a daily basis. Seventy-five percent of these have been rendered partially or fully inoperative. Structures in lower reaches are generally fully intact, but only, it seems, because there is no water for them to control. Naturally, this makes it impossible to operate the system as designed, even if GOAP were to solve the "law and order" problem overnight. Inadequacies in the O&H budget, also problematic for AP I, obviously cannot be measured against the original design standard. The 42 ERR looks the more likely estimate. 3.3 The PCR finds it inexplicable that the Bank sought no assurances from GOAP to adhere to the revised cropping pattern (PCR, para. 16). It is confident though that the SAR, as amended in the Reformulation Report, provided sound bases for project execution (PCR, para. 38). If these particular retrospective views are widely held, the audit believes that the Bank still does not really understand the nature of the process which this project sought to tame. This is taken up below in Part IV. UK I 3.4 Significantly, the PCR had no difficulty in estimating an ERR for the Narayanpur Dam system of Phase 1: 9.5%. It declined, however, to estimate an ERR for UKS (Phase& I and II) including Almatti Dam, "on account of inadequate data available ... to provide a reasonable estimate of future benefits and costs" (PCR, para. 5.3). Recall that the SAR estimate of ERR (161) was for the UKS scheme. Including Almatti Dam expenditures, but - 17 - deferring its completion reduced the ERR from 9.52 to 8.5%. Despite delays in realizing benefits, some reduction in Narayanpur's area to be irrigated from 105,000 ha (SAR) to 97,340 ha, and a fall-off in cotton production, overall crop production has increased because of favorable shifts in cropping patterns. The PCR is especially critical though of the costs of this progress borne by about 6,450 families forced to resettle. 3.5 The audit mission's field visit in September 1990 confirmed the PCR's recognition of shifting cropping patterns. Farmers are growing much larger areas of sunflower and groundnut than had been anticipated at appralaal and even at completion. In view of cotton's decline, these developments are promising.5/ 3.6 The audit believes that UK I's realized development of an extremely deprived area has made the investment worthwhile, despite its shortcomings, including resettlement problems.l/ The issue of sequencing Almatti Dam investments is taken up in Part IV. MI 1 3.7 The outcome of GMI I is partly summed up by its need for a sequel. In June 1984, the Board approved Credit 1496-IN for Gujarat Medium Irrigation II, which is in reality an attempt to complete the 28 sub-projects of CI I. Consequently, GMI I was truly a first phase operation, although apparently it was not designed intentionally as one. 3.8 The main summary measure usually relied upon for evaluation, the ERR, is decidedly problematic in this case. The PCR for CI I estimated that the new MIPs would enjoy an ERR of around 13% when completed, the modernization schemes an ERR of 53% when completed, giving a (weighted) average ERR for GMI I of 302 when completed, compared with the appraisal estimate of 20%. However, because the modernization schemes suffered (even) more severe implementation delays than the new MIPs, they were hardly begun under Phase I: "the majority of the expenditures for modernization works will occur in the first years under Phase II..." (PCR, para. 6.01). 3.9 To be mors precise, the PCR's calculations of ERR are based on four representative sub-projects: three MIPs and one modernization project. The cost stream for the representative modernization scheme, presented in Table 6d of the PCR, was estimated as follows: I/ Regional staff have commented that these larger areas of sunflower and groundnut are not really that promising, because India has little comparative advantage in these crops. They declare that such shifts in cropping pattern are "only favorable because domestic prices are artificially unfavorable." g/ A separate OED report on this topic, now under preparation, will review the resettlement experience of UK I, MAH II, and other projects. - 18 - 124 1 JL986 .L9. 1988 .OTAL Economic Cost (Re M) 14.96 27.22 52.53 51.40 49.13 195.24 Percentage 8% 14% 272 26% 25% 100% So on the basis of this representative modernization sub-project, on which expenditure began shortly before the (extended) closing date and which earned an ERR of 53%, the PCR was able to boost the overall project ERR from 13% (for the 3 MIPs) to a weighted average (for the 4 sub-projects) of 30%. 3.10 These calculations have shown that the so-called completion ERRe for the modernization schemes are little better than appraisal ERRs. Such schemes can hardly be considered achievements of GMI I. It is thi, failure of evaluation to discriminate between the performance of phases (i.e., projects) of a program of time slices that deserves attention. The same issue arises in at least four of the five irrigation projects under audit, but the circumstances of GMI I make the need to discriminate between phases particularly striking. This issue is taken up in Part IV. 3.11 Supervision reports for GMI II reveal that its performance in relation to its appraisal objectives has been somewhat similar to that of GMI I. As of December 1990, physical completion of GMI II was expected by June 30, 1992, i.e., three years later than the scheduled date of June 30, 1989. The closing date has been extended twice. 3.i2 GMI I's impact on institutional development was mixed. The PCR concludes that the CWC's Appraisal Committee made a positive contribution; the reason why the AC appraised its first modernization sub-project as late as 1981 was that GOG accorded higher priority to planning and implementing new MIPs, which dominated the proposals put to CWC. The interaction among irrigation engineers of GOG, CWC and the Bank appears to have stimulated creative solutions to evolving issues of irrigation design and operation. Nevertheless, their efforts were continually frustrated by the gap between budgets and overall physical targets. In reflecting on the expansion of intended irrigated area from 118,000 ha at IDA appraisal to 344,000 ha at CWC appraisal, the Bank PCR argues in retrospect that "the cumulative approval of sub-projects should have much more closely reflected the overall financial and implementation capacity of the State" (PCR, para. 9.02(a)). Put more bluntly, GOG did not appreciate how the expanded physical size of its sub-projects would jeopardize their economic viability given the budgetary constraints (PCR, para. 9.03). This criticism drew objections from GOI and GOG (PCR, Annex 4, page 4), implying their view that irrigation sector planning was outside the scope of the Bank credit. The audit concludes that both sides in this exchange were correct, which points to a major weakness in the Bank's original concept of GMI I as a sector line of credit: GMI I was never designed to recognize budgetary limitations as the major constraint. This helps to frame the sector analysis issue, also taken up below in Part IV. - 19 - 3.13 GMI I contributed much less in physical terms to the 28 sub-projects than will be inferred from the PCR's estimate of a 30% ERR. The next PCR installment, for CMI II, should try to make a more convincing economic assessment of the contributions of the two phases. In the meantime, this audit concludes that GMI I's performance overall was satisfactory. MAR II 3.14 The PCR concludes, ironically, that MAH II's response to financial constraints has reproduced the same imbalance between irrigation potential and its utilization that this project was supposed to help close. Only 14% of the command area was fully developed by the closing date (PCR, para. 8.1). Undoubtedly, this is one reason why the PCR's reestimated ERR are in the range of 0-7% compared with 14-18% estimated at appraisal and average 1% compared with 15% at appraisal. Another reason is the alleged appraisal over- estimates of crop yields and irrigation intensity. The planned efforts to reform Maharashtra's system of water allocation and to introduce some form of rotational water supply fell well short of their goals. 3.15 The audit mission visited only one of the sub-projects - Kukadi - and can add just four points to what is a relatively exhaustive PCR review of the several sub-projects. First, the audit endorses the PCR's observation (PCR, para. 8.10) that it is extremely difficult to evaluate time slices of long term programs that leave so much of the infrastructure incomplete and the agricultural development and benefit phase so distant. Second, the PCR questions the logic of lining the smaller canals early to save water during the typically long development period when water is abundant. The significance of this reality - lack of water scarcity - in the initial phases of surface water developments seems to have been overlooked before: not just in the planning of cropping patterns for MAR II, but also for AP I. Third, the PCR comments critically that canal capacity will permit no more than 50% of the commands to be irrigated during kharif (PCR, paras. vi and 5.6), implying that canal designe were inadequate. The audit's review of this puzzle in the field was not conclusive. However, the problem may lie with SAR (and PCR?) expectations that the kharif irrigation season would start early (on June 1) with a pre-monsoon irrigation (SAR, para. 1.18(d) and PCR, paras. 13 and 5.7). COM irrigation officials have pointed out that they designed their canal capacities to meet peak crop requirements in the Rabi season (PCR, Attachment I, page 3). The PCR's complaint about canal capacities may therefore hinge (uneasily) on the notion that a pre-monsoon irrigation should cover all kharif crops. Whatever the technical merits of such a practice, any expectation that it could be adopted as the norm was probably utopian. Finally, the PCR refers briefly to GOM sanction of lift irrigation from project water supplies and recommends that the Command Area Development Authority become involved in such lift irrigation areas (PCR, paras 3.20 and 8.6). The audit agrees with GON's comment (PCR, Attachment, page 4) that such CADA involvement is unnecessary. More on this topic of lift irrigation and public sector interventions in Part IV below. - 20 - UB 1 3.16 The PCR's reestimate of overall ERR for the SIS is 7%, down from an appraisal estimate of 172. Part of this drop is due to lower commodity prices, but most is caused by the cost overrun and delays in benefit accrual that mark SUB I performance. The Bank is still reviewing proposals that it help finance a second phase. 3.17 The PCR makes no attempt to distribute the ERR slippage of ten percentage points (from 17% to 7%) between SUB I and the expected performance of remaining investments in Phase II, etc. to complete SIS. It leaves the reader to infer the worst: that the imputed return to Phase I has to be lower than 72. An issue woeth considering further in Part IV. 3.18 The PCR makes a vital point about the planning of investments. It contends that, in retrospect, the project attempted to start too many SIS components at the same time (PCR, para. 13(c))t "Greater emphasis should have been placed on the completion of the Chandil irrigation system to provide early benefits, with considerably more conveyance, distribution and micro-distribution systems to be completed, while the Ichha system should have been limited to dam design and site investigations instead of initiating its construction at an early etage of SIS development. Also Galudih barrage and its right main canal should have been targeted for completion within the time slice to permit Orissa to derive earlier benefits." The audit shares that concern. In fact, SUB I illustrates even more vividly than UK I the extraordinary dangers of pro forma approaches to investment phasing, such as time slices. The audit returns to this topic in Part IV. IV. FINDINGS AND ISSUES Overview and Issues Arising 4.1 The PCRs have provided a rich documentation on the five projects, and the audit agrees with earlier broad assessments _f their performance based on PCR findings alone. As far as can be determined at this stage, two of the projects (UK I and GMI 1) are judged satisfactory, and three (AP I, MAR II, and SUB 1) ire unsatisfactory. Both the audit and PCRs hedge their two favorable assesaments by referring to substantial shortcomings during implementation, particularly in the case of GMI I. - 21 - 4.2 Several findings reached tentatively in Part III strike the audit as important. First, SAR. and PCRs were not able to evaluate with any precision the economic performance of the time slice operations. Of necessity, their ERR calculations at appraisal and completion attempted to measure the outcome of some lGnger term investment program, not of the operation put to the Board. This evaluation quirk has obscured accountability and lesson learning. It poses the first issue explored below: evaluating phased projects. 4.3 Second, several of the projects, notably SUB I and UK I, did not sequence their investment activities efficiently in time and space. These failures to define project phases sensibly suggest a weakness of analysis and lack of common sense objectives. The approach to phased project definition deserves to be explored further. 4.4 Third, the audit has come to the conclusion that, however necessary the irrigation renewal or improvement strategies may yet prove to be, they were hardly sufficient for the five projects under review. The key to understanding their insufficiency lies in the relative absence of political and social factors in the irrigation sub-sector analysis that inspired them. A review of this issue below argues that the Bank will have to confront these other factors more realistically. - 4.5 Fourth, all five project proposals tended to ignore the additional potential they created for final delivery of irrigation water by lift, whether from groundwater or directly from reservoirs and canals; at least, this is . arguable from reading the Bank's appraisal and completion reports. The conjunction of gravity and private lift irrigation deserves discussion as a missing feature of the projects' design and a potential ingredient of a more flexible approach to irrigation planning in India. 4.6 Finally, the audit suspects that the process by which river basin water resources are allocated among Indian states may have contributed to the overstretched character of investments in irrigation civil works. A. Evaluating Phased Proiects 4.7 A May 1985 audit report on the first phase of a medium irrigation project, that for India Orissa Irrigation (Credit 740-IN), expressed reservations about PCR estimates of that project's ERRt "the delay in completion of MIPs, combined with the fact that no HIP is yet fully operational, makes the calculations more hypothetical than is usual for most Bank-supported projects at this stage in their cycle." Foreshadowing the same PCR approach to evaluation described already for GMI I, the Orissa I PCR's estimate of an ERR was the revised ERR for a fully completed investment program embodying Orissa I and the follow-on project, Orissa II (Credit 1397- IN), which the Bank decided to support to complete the MIPs and make them operational. - 22 - 4.8 The August 1977 SAR for Orissa I had presented an ERR of 20%. The June 1984 PCR for Orissa I (and May 1983 SAR for Orissa II) revised that ERR to 19%. The PCR for Orissa II, issued to the Board in May 1990, now confirms the misgivings expressed by the audit of Orissa 1. It estimates that the ERR for the two phases combined (since the Bank's ERR analysis did not distinguish between them) is 6%. This finding raises two issues that surface in the current audit also. First, the interval between Board approval of Orissa I and the PCR for Orissa II was 13 years: a rather long time for substantive feedback on Orissa I's investment performance; and much too long for allowing judgments about accountability and for applying lessons in the subsequent operation. Second, the ERR evaluation analysis does not discriminate between the contributions of Phase I and Phase II. Yet one phase could have been disastrous, the other brilliant. To know only the total (or average) of their contributions is frustrating for evaluation. Orissa II is currently under separate OED audit. 4.9 The same frustrations for evaluation, though perhaps in an enhanced form, arise with GMI I (and its unfinished sequel, GMI II). As described earlier, the high-return modernization components of GMI I experienced such delay that they largely slipped out of GMI I, into GMI II. Apart from these specific grounds for distinguishing between the two phases, the audit agrees with the PCR that we have little option but to evaluate GMI I's mainly uncompleted tasks by projecting their completion under GMi II. Consequently, the PCR estimate of an ERR pertaining to GM1 I is more hypothetical than is usual, and it is possible that good or outstanding performance in Phase II might disguise poor or even disastrous performance in Phase I. Whether Phase II performance is estimated ex ante or ex post is not the issue here; both (SAR and eventual PCR) estimates for Phase II probably disguise Phase I performance. The PCR's estimate of a 30Z ERR for GMI suffers all these defects. Similar remarks apply, though with varying and probably less justification, to the ERR evaluations of MAH II, UK I, SUB I and even AP I. The need for better accountability than this for Bank operations alone suggests that this is an unsatisfactory situation.7/ 4.10 Finally, the audit concludes that evaluating the early phases of large investment projects is especially difficult if such projects are not also designed to stand alone. The Bank's blind embrace of time slicing, Z/ The PCR for MAH II agrees: "To make an accurate evaluation of such time slices is difficult, ... The conclusion of such PCRs must be viewed with great scepticism since they must be largely derived from educated guesswork rather than facts.' It goes on to suggest an alternative approach to evaluation of time slices at completion, one that *would involve an in-depth assessment of physical progress and of agricultural achievements but would not seek to re-estimate the ERR.* (PCR, pars. 8.10). Misleading PCR evaluations of Phase I projects also arise in less complicated circumstances. See the audit of Nepal's Sunsari Morang Irrigation and Drainage Project (Cr. 812-NEP), paras. 48-54, OED Report No. 8670, May 29, 1990. - 23 - probably guaranteed that they did not stand alone. It suppressed the application of more logical principles for defining the boundaries between phases. This review of how the phasing aspects of the five projects were evaluated leads directly, therefore, to consideration of whether their phasing could have been improved, examined next. B. efining Proiect Phases 4.11 Of the five projects, SUB I poses most dramatically the issue of whether a large investment program could have been phased more successfully. Its PCR contends that one better solution would have been to reconfigure the first phase as follows: construct to completion Chandil Dam, its Left Main Canal and related irrigation system, Galudih Barrage and its Right Canal. This reconfiguration would have meant deferring Iccha Dam and its Canals and perhaps the Kharkai Canals to Phase II. Intuitively, the merit of this suggestion is that it remakes Phase I into a (relatively) self-standing project. With resources thus concentrated on fewer components to achieve earlier benefits, such a first phase could have offered potential economic justification, even if not followed Imediately by a second phase, without sacrificing the basic objectives of delivering irrigation water to Bihar and Orissa and flood protection benefits to W. Bengal. Such a project definition would not have been consistent, however, with the relevant interstate agreement. 4.12 The Tripartite Agreement between the three signatory states (Bihar, W.Bengal and Orissa) reached in August 1978 reflects their failure to agree on priorities for constructing the project's civil works. Though not a party to this Agreement, the Bank effectively concurred in it, the wording of which said: "The execution of the Kharkai [Ichha] and Chandil Dams and Galudih barrage project along with the right bank main canal up to Orissa border will be taken up together at a time". As it has turned out, construction of both dame has been delayed, particularly Ichha, but it is arguable that lack of priorities and proper phasing help explain why there is still no irrigation (as of September 1990) anywhere in the system. 4.13 Review of the (Bank's) project preparation file reveals that several ways of configuring the project were anticipated even as late as 1981, some of which were at variance with the Tripartite Agreement. However, there appears to have been no formal analysis of what sequencing of Phase I components and their residual Phase II offered (a) a broadly acceptable set of Phase I achievements, (b) if possible, a viable Phase I if Phase II were delayed, and (c) the highest net present value. Individual staff recorded quite cogently what was at stake in the sequencing of investments, but there was no formal, system-wide analysis. The SAR and PCR both point to the Phase I configuration as being imposed politically, i.e., by the compromise reached in the Tripartite Agreement. Neither of these project evaluation documents, however, provides any hint of whether the true cost of such a political decision was - 24 - known in advance and considered by the policy makers and the Bank. The audit concludes that the necessary economic analysis to evaluate plausible phasing options was not carried out and that this was a major procedural weakness in Bank processing. Similar issues arise in respect of the Almatti Dam component. of UK I, and the scale aspects of GMI I and MAH II. 4.14 Why weren't these problems of sequencing investments in time and space taken more seriously at preparation or appraisal? As suggested already, over-eagerness to time slice probably cast a fog over this question. Another reason was a tendency on the part of Bank economists to concentrate their benefit/cost evaluation on the final project design, and to underuse its potential for selection of that design. Considerable staff effort went into analysing some design questions, such as the economics of lining (MAR II) or the value of incorporating poverty weights into the ERR (AP I). Less effort went into sequencing aspects. Not enough attention was paid to resource constraints, the demands of other programs in the sector, and the economic costs of the proposed designs in terms of production foregone by dismissing other phasing options. 4.15 The lesson to be gained from this experience is that appraisal evaluations of phased projects should assure the Board that the proposed configuration of a Phase I project has resulted from a consideration of alternatives, including the alternative of scaling the project upwards and, if necessary, accelerating its ultimate completion by eliminating phases. If the proposed configuration appears to be the result of a political decision, the SAR should inform the Board of the estimated cost of that decision, measured in terms of the fall in NPV relative to other technically feasible solvtions. Such a practice would require, of course, that the supporting analysis be performed well upstream in the project cycle, not later than in preparation documents, i.e. prior to Bank appraisal. 4.16 Finally, the audit concludes that the practice of defining a first phase investment project as a "time slice" offers no logical way of approaching the issue of phasing and should be avoided.8/ 1I Regional staff have commented that the audit should have recognized that some projects are inevitably going to be time slices of a larger investment program extending over a long period of time (e.g. the Narmada program). Its suggestion that each time slice project should, as far as possible, be a discreet, and at least partly self-contained entity, is a good one, but may not always be possible. An alternative solution is to agree the optimum sequence of operations (and the associated critical path scheduling and dependencies) and follow that sequence during the time slice. That way, if item X gets delayed for 2 years, making Y irrelevant during the time slice, then item Y automatically drops out. What we have tended to do is identify the pieces that should happen in the time slice, then do a selectio., of them (due to slippages, unexpected problems in procurement, or whatever) without referring back to the linkages which determine what is relevant as things change-ending up with a random selection of complete and incomplete components. - 25 - C. Irrigation Sub-Sector Analysie 4.17 There are several signs that the Bank pulled its punches in its irrigation sector analysis. First, its recognition that too many separate irrigation investments were being undertaken concurrently across the country should have brought forth a more definite response. The situation probably called for increasing commitments to some ongoing investments and deferring many others. The addition of Bank resources could be beneficial if they eased the pain of setting priorities and brought technical assistance. The Bank's five projects brought with them the latter in the form of engineering design ideas and supervision dialogue, but not the former. The frequency of complaints during implementation about "inadequate funding" and the GMI I experience of growing physically too large suggest that the Bank's financial assistance simply exacerbated an over-commitment of resources to too many discrete projects. That this should happen to the two sector lending operations is disappointing.,/ 10/ 4.18 Second, the design improvement criteria of greater canal lining, reduced chak size, and mandatory land development below the 8 ha chak outlet not only deepened the public sector's involvement in surface irrigation, but also made the projects even more expensive than had been required already by the policy of extensive, protective irrigation. Although some of the additional costs, e.g., certain costs of command area development, were meant originally to be financed by farmers using agricultural credit, various difficulties in effecting this led to their financing from State budgets and attempts to recover such expenditures through (additional) cost recovery efforts. The added costs further strained sector program possibilities and compounded state governments' political problems of satisfying the demands of their many constituencies for geographical balance in irrigation investment. 4.19 Note that this latter criticism concerns the political economy of making public irrigation more expensive. It does not address the productivity of the technical improvement measures. Unfortunately, the five projects have not provided a critical test of such measures. Their delays in implementation and especially their deferral of many of the investments close to the point of 2/ Regional staff have commented that MAH II was not a sector credit, as the term is used today. JA/ A forthcoming audit of the First Railway Project in China (Loan 2934-CHA) reflects critically on the Bank's time slice sector lending approach to financing India Rail's investment program in its first 13 lending operations between 1949 and 1975. The Bank eventually abandoned this approach, in favor of project specific lending, on the grounds it was not achieving any notable institutional impact or measurable technical improvement. - 26 - irrigation have caused their PCRe to be unusually silent on whether or not the new design and operating standards are successful.11/ 4.20 Third, and most important, the sector analyses lacked a coherent theory to explain the concurrence of so many problems with Indian irrigation. Hence it should not be surprising if the proffered remedies (i) appear now as somewhat ad hoc and piecemeal and (ii) did not deal with the types of problems encountered during implementation. One must pose the questions what sector strategies might have evolved had the various problems been "explained" more systematically? 4.21 Mick Moore of the Sussex Institute of Development Studies has recently reviewed the application of rent seeking analysis ("public choice," "the economics of politics," etc.) to irrigation policy in the third world.12/ Drawing on Robert Repetto's 1986 critique of irrigation policy in developing countries and the United States,13/ he concludes that: "... as diagnosis his (Repetto's) analysis appears very powerful. A relatively simple model which accords closely to the facts appears to explain a wide range of irrigation-related phenomena: not just aggregate overinvestment and the high priority given to construction over water management, but also the extended phasing of construction activities, characteristic patterns of engineering design, and farmers' agricultural practices on irrigated land. It is difficult to justify any attempt to diagnose broad issues of irrigation policy which does not at least begin by exploring the validity of Repetto's analysis. And this in turn implies that rent-seeking analysis is a useful diagnostic tool." The audit believes that the absence of this kind of analytical treatment of irrigation phenomena in India over 1976-82 limited the Bank's capacity to conceptualize an adequate range of possible remedies. Whether such a treatment was feasible in those days is not the focus of interest here. JI/ Regional staff have commented that, while the report points accurately to the Bank's move towards "sector" lending, it is not properly noted that the projects in question covered only a small proportion of the "sector" as far as the states were concerned, and had no real coverage of, or impact on, many lsector" issues such as budgeting, organization, planning, etc. Poor performance in these areas was at the heart of project failures, and the 'sector" issues identified in the SARs (rotational water supply; water charges; lining) were hardly relevant to these fundamentals. We are trying to do much better in these areas now. 12/ Mick Moore, "The Fruits and Fallacies of Neoliberalism: The Case of Irrigation Policy", World Development, Vol. 17, No. 11; 1989, pp. 1733-1750. jg/ Robert Repetto, Skimming the Water: Rent Seeking and the Performance of Public Irriation Svstoms. Research Report 4, Washington, DC, World Resources Institute, 1986. - 27 - 4.22 This is not the first audit to refer to rent-seeking behavior. Recent audits have raised it as an issue in designing irrigation projects in Thailand and a policy-based lending operation and a related technical assistance project in Kenya.14/ In the Kenya cases, the audit highlights the theme that "those who prepared, appraised and approved these projects misjudged the political opposition to some of the reforms intended for execution or even study." In the case of the five irrigation projects under current audit, the corresponding theme would be that we underestimated the political support not only for these projects but for countless other, similar investments that shared their characteristics. Common to all five operations and the others referred to is that governments offered large resources on very favorable terms, giving rise to "rents". In the case of public irrigation, even low return proposals rally support from beneficiaries when the service is highly subsidized; also, rents are easier to extract in canal head reaches, giving rise to the type of farmer behavior observed in AP I. Rent-seeking analysis was largely developed to explain why democratically achieved policies in "western" economies are often judged harmful to voters and society in general. Although such behavior of interest groups transcends form of government, it is highly appropriate that rent-seeking analysis be invoked to explain why there is widespread support for irrigation proposals in democratic India and why the implementation of these proposals and their operation get distorted. 4.23 hore attention to such analysis would have supported some design inclinations, and questioned others. It would have supported the preference shown for a rotational water delivery system. Said to be founded on equity and efficiency considerations, in practice this reform was meant to be pursued by deleting all control structures below the distributary and installing management systeme that, together, limited the discretionary power of the canal bureaucracy. In turn, this could constrain opportunities for improper water diversions by farmers in head reach sections of the delivery system. The projects' conditionality in favor of strengthening water charges and other cost recovery measures attacked in principle a root cause of rent-seeking. But in this latter case the project achievements ware modest, and GOI policy in this area was well established and known to be unsympathetic.15/ 4.24 Greater prominence given to the pervasiveness of rent-seeking should have made Bank staff wary of increasing the public sector's role in, and costs of, gravity irrigation. It would also have made them more skeptical of their appraisal data, their projections of farmer behavior, and their perceptions of MI OED Report No. 9205, Project Performance Audit Report, Thailand Irrigation Projects XI and XU (Loans 1787-TH and 2022-TH) December 21, 1990; OED Report No. 3862, Project Performance Audit Report, Kenya Agricultural Technical Assistance Project (Credit 1277-KE) and Agricultural Sector Adjustment Operations (Credits 1717-KBE and AF021-KB). June 29, 1990, pan. 5.06. JJ/ See OED Report No. 6283, World Bank Lending Conditionality: A Review of Cost Recovery m Irrintion Eldec. June 25, 1986. Comments on this subject from the Government of India (Annex 4) indicate the (policy) limits to irrigation cost recovery in India, which is a state matter. - 28 - governments' abilities to control sector expenditures. Beyond being more skeptical, however, how else might the Bank have responded? 4.25 One course would have been to seek consensus on a wider range of policy issues, including those involving the size of sector irrigation programs that proved elusive in CMI I and MAN II. That would not have been easy, given the sensitivity of GOI (and presumably the states) to Bank interventions in policy issues. Another course, also involving policy, would have been to devolve greater responsibilities and opportunities to the private sector in the design of public surface irrigation: e.g., a remedy such as the direct (private) lift option for final delivery, to be examined next. But, there may not be many options. Reviewed closely, consistent application of rent-seeking analyses tends to promote the more negative suggestions: i.e, that the Bank be far more skeptical of the economic feasibility of gravity irrigation schemes that continue to emphasize the public sector's domination of them.6/ D. Mixing Gravity and Lift Irrigation 4.26 The PCR for AP I expresses disappointment that GOAP is taking up small diversion and lift schemes in the lower reaches of the Nagarjunasagar Project command, viewing such schemes as confirmation that GOAP does not intend to operate the project as originally planned (PCR, para. 16). Yet it is arguable (a) that the original plans were utopian in assuming (and not specifying how) head reach farmers could be persuaded to cease diverting water from lower reach farmers, and (b) that lift schemes of some kind are the only practical way now of serving the lower reaches. Were AP I to be designed anew today, the audit feels that some combination of gravity feed to head reaches through canals and a circuitous delivery to lower reach farmers via drainage patterns and lift - but especially private lift - would be a practical design alternative worthy of analysis.17/ 4.27 The same issue arises in MAH II where, in Rukadi sub-project, the audit mission observed farmers making increasing use of private lift irrigation within the command, drawing on rising water tables, and using direct private lift from main canals to serve areas outside the official command. Maharashtra has allowed direct lift from canals and reservoirs since 1966. The area so irrigated was restricted until 1975 to 5% of the (gravity) 1§/ Regional staff have conmented that the audit's discussion on "rent-seeking" behavior appears to be a disguised way of talking about vested interests, pressure groups, politics and corruption. They think its criticisms are too general, with nothing in the way of specific recommendations that will help improve matters. They acknowledge the politics behind many of the projects, but declare that changes are often very difficult if not impossible. The two general solutions suggested - policy change and private sector involvement - 'will take a lot of time and enormous efforts at dialogue on the part of the Bank.* 12/ The same point is made in the Thailand Irrigation audits (OED Report No. 9205), while a forthcoming audit of Malaysia's Muda II Irrigation Project (Loan 1717-MA) describes how farmers pump to compensate for hydraulic instability in the canals. - 29 - comnand. The limit wac then raised to 10%. These realities do not appear to have featured in either the SAR design or PCR evaluation of MAH II nor does the potential for direct private lift figure in the design of the other four projects.18/ Evaluations of surface irrigation proposals cannot continue to ignore such opportunities for mixing gravity and lift delivery systems. For example, a proper evaluation of the extensive, protective irrigation design (relative to more compact command designs) has to consider its wider- scale supplementation of groundwater resources.191 E. Competition for Interstate Waters 4.28 The process by which water resources get allocated among riparian states may have made the competition for those waters a costly affair. This possible issue for the projects in the Krishna and Subernarekha river basins arose subsequent to the audit mission's field visits, so it was not discussed in India. 4.29 The issue grew out of a casual remark made to the audit mission that Almatti Dam construction was begun originally (in 1962) in part to stake a claim to Krishna water rights for the then Bombay State. The history of this dam's costly, drawn-out construction and the plausibility of this type of manoeuvering for water rights give the issue some credibility. The "cost of the political decision" argument referred to in connection with the Tripartite Agreement on allocation of Subernarekha waters gives the issue further credibility. 4.30 Such an issue deserves a place on somebody's agenda. JJ/ The SAR for MAH H specifically acknowledges that its evaluation ignores project impact on groundwater development (SAR, para. 3.06). Rath and Mitra have reviewed the ex ante evidence for such impact as estimated in the Project Feasibility Report. See N. Rath and AK. Mitra, Economics of Irrigation in Water-Scarce Regions: A Study of Mabarashtra." Journal of the Gokhale Institute of Politics and Economics, Vol. XXXI, No. 1. March 1989, page 101. JI/ Regional staff have commented that the idea that we should plan for pumping out of main canals and reservoirs is absolutely wrong. The main reason (aside from simple lack of political will) why states are unable to enforce discipline is that water supplies are unreliable. Allowing random (or at least uncontrollable) pumping from canals is a recipe for making that difficult problem impossible! - 31 - Annex.1 DMSCRIPTION Q! AP I ROJECT (...from Schedule 2 of the Loan Agreement) The Project which to designed to complete Andhra Pradesh's Wagarjunaseagar Irrigation Project, and to initiate the first of the projects to be included in the Borrover's composite command area development program, consists of the following partes A. (1) Completion of the USP Left Main Canal (about 65 miles) and NSP Right Main Canal (about 29 miles). (2) Construction of irrigation and drainage facilities to serve the WSP Left Dank area (about 190,000 hectares) and SP Right Bank area (about 140,000 hectares). B. Rehabilitation, upgrading or construction of about 1575 kilometers of village roads in the NSP coimand area. C. Command area development covering about 16,000 hectares of the NSP Left Bank area, about 16,000 hectares of the NSP Right Bank area, about 33,600 hectares of the Pochampad Irrigation Project area and about 6,400 hectares of the Tungabbadra High Level Canal area. D. (1) Studies of portions of the DSP irrigation distribution system to determine and evaluate system operation and seepage losses. (2) Modernization studies to determine possible modifications or additions to the irrigation system to achieve improved irrigation efficiencies. E. (1) Program to monitor crop yields in the Project Area and to monitor and define irrigation efficiencies below the turnouts in NSP Left and Right Bank areas. (2) Studies to define project benefits resulting from irrigation, command area development and extension service work in the Project Area. F. Strengthening of agricultural supporting services, especially extension in the Project Area. G. Assistance to the Project Preparation and Evaluation Group in the Borroer's Ministry of Agriculture and Irrigation. In this Schedule the term "hectares* shall be construed as hectaree of culturable command area. * * * * The Project is expected to be completed by June 30, 1981. - 32 - DZSCKIPT19M OF UK I PR=JCT (... from Schedule 2 of the Development Credit Agreement) The Project is a part (extending over a five year period from April 1978 through March 1983) of Karnataka's long term plan for construction of dams, canals and Irrigation distribution systems ad consists of the followings bELAs Within Uyier Krishna Scheme (1) The completion of Almatti and Harayanpur dams. (ii) The completion of Narayanpur left bank canal from approximately km 36 to 78, including the Rajankollur tunnel (3 km) and the Gundalgeri tunal (1 km); and the construction of Shahapur branch canal (76 hn). (iii) The construction of linedCstabilized Irrigation distribution and drainage systems to serve an area of about 105,000 hectares. (iW) The constructior -f linedlstabilized field irrigation channels to individual farms serving an area of about 80,000 hectares. (v) The rehabilitation and upgrading of about 70 km of existing village and link roads and the construction of about 530 km of new village and link roads. (vi) The construction of field drainage channels and on-farm works, including land shaping, farm irrigation and farm drainage ditches for about 25,000 hectares. (vii) The establisbent of a Land Development Training Center to train staff on the design, execution, and operation and management of land development works. (viii) Implementation of a program of monitoring the water use efficiencies and economic and social impact of the Project. (Ux) Resettlement of families displaced due to construction of deas under the Project. (M) Establishment of an agricultural development center, agricultural research stations and other facilities. part t Within Malaprabha Scheme Construction of lined/stabilized field irrigation channels, field drainage channels, and on-farm works including land shaping, farm irrigation and farm drainage ditches, for about 26,000 hectares. Part Cs Within Ghataprabha Scheme Construction of linedlstabilized field irrigation channels, field drainage channels, and on-farm works includirg land shaping, farm Irrigation and farm drainage ditches, for about 5,000 hectares. * * * The Project is expected to be completed by March 31, 1983. - 33 - A. DESCRIPTION OF CH! I PROJEC (... from Schedule 2 of the Development Credit Agreement) The Project consists of the followings gan Completion of on-going and execution of new HIPs in Gujarat. IS i Modernization of exieting MIPs in Gujarat. P*rt Cs Establishment of automatic discharge measuring stations, and acquisition of vehicles for their operation. Par: Jt Preparation of evaluation studies and monitoring of the Project. * * * The Project is expected to be completed by June 30, 1983. B. PROCEDURES FOR APPRAISAL AND PROGRESS MONITORING OF MEDIUM IRRIGATION PROJECTS IN CMI I (...from Schedule 3 of the Development Credit Agreement) A. The Central Water Comission under the Ministry of Agriculture and Irrigation of the Borrower shall maintain an Appraisal Committee which shall be responsible for appraisal and monitoring of the progress of individual HIPs. Except as the Association shall otherwise agree, the procedures for appraisal and monitoring shall be as follows: 1. Preparation. Gujarat shall be responsible for the preparation of each HIP. The Appraisal Committee shall monitor the progress of the preparation of MIPs through field visits and review of reports, plans, specifications, contract documents, construction and procurement schedules. 2. Apraisal. Gujarat shall submit each HIP to the Appraisal Committee for appraisal. The committee or its represenratives shall (a) visit the HIP area, (b) review reports, plans, designs and specifications to ensure that the HIP has been designed in accordance with (1) established technical criteria, and (ii) sound engineering practices with special emphasis given to the safety of the dam structure and to the drainage plan, (c) review and, if required, adjust cost estimates and schedules of expenditures to properly reflect the likely cost of the HIP, (d) review the cropping pattern to ensure that it is realistic and suitable for the NIP areas (e) review arrangements for resettlement of families affected by the MIP in accordance with Gujarat9s policies, and (f) retew the adequacy of extension, credit, input supply, transport and marketing facilities available to farmers in the KIP area. The review of the design of the dam structure with regard to safety referred to in paragraph (b) above would be made by the Central Water Commission with emphasis on hydrology, geology and structural engineering. 3. Apyroval. Any HIP that meets the established criteria, is designed in accordance with sound engineering practices, costs less than Re. seventy million excluding expected price increases, has a benefit cost ratio of not less then 1.0 as calculated in accordance with the established economic criteria, and has a cropping pattern that is realistic and suitable for the HIP area, may be approved by the Appraisal Committee for financing from the proceeds of the Credit. Any other HIP shall be submitted to the Association for approval. 4. Imlementation. The Appraisal Committee or its representatives shall visit the site of each HIP under construction, and review relevant records, plans, specifications and procurement schedules in order to (a) ensure that the HIP is constructed in accordance with the established technical criteria and sound engineering practices, (b) monitor the progress of the construction, and (c) assist Gujarat in solving any technical problems that might arise. 5. Operation and Maintenance. The Appraisal Comittee shall review for each HIP, for a period not exceeding two years after completion of each MIP, records maintained by Gujarat on (a) the area irrigated in each irrigation season, (b) monthly inflow and water release data, (c) costs of and organization for operation and maintenance of the MIP, in order to ensure that the MIP is operated and maintained in accordance with sound economic and engineering standards. B. Gujarat shall make available to the Appraisal Committee or its representatives plans, specifications, reports, contract documents, construction and procurement schedules and other records in respect of HIPs to be financed under the Project, as the Appraisal Committee might reasonably request. C. The Appraisal Committee shall prepare reports on the conclusions of its appraisal and monitoring, of such ti-ing, scope and detail, as have been agreed between the Borrover and the Association. - 34 - Annex.4 DESCRIPTION OF AR II PROJECT ... from Schedule 2 of the Development Credit Agreement) The Project is the continuation of irrigation development in the areas of the trishna, Kukadi, Upper Wardha, Upper Penganga, Varna, Girna, and Hula schemes over a period of five years. The Project consists of the following Partes Palm.As Work on 11 dames construction of about 900 kilometers of main and 1,ranch canales construction of distribution systems and draines and construction or modernization of about 620 kilometers of link roads. Part 3: Modernization of existing main and branch canal., distribution systas and drains in the areas of the Girnas and Mula schemes. Part C: Strengthening of the command area development authorities, including agricultural extension and applied research, modern management services and operation and maintenance in the Project Area. Patt D: Provision of vehicles and equipment for Project works and for operation and maintenance. Part E: Expansion of Maharashtra*a Pilot Water Management Program. Part F: Establishment of a program for Project monitoring and evaluation. Part GS Establishment of a training program for land development and water management specialists. * * * The Project is expected to be completed by October 31, 1984. - 35 - Annex 5 DESCRIPTION OF SUB I PROJECT (...from Schedule 2 of the Development Credit Agreement) The Project comprises the first phase (1982-1986) of the implementation of the SIS. The Project consists of the following Partes Part A: Construction works on the (i) Chandil Dam and Left Canal; (ii) the Galudih Barrage and Canals; (iii) Ichha Dam and Canals; and (iv) the Rharkat Canals. Part B: Construction works an the Minor Distribution Systems in an area of about 21,000 ha in the Project Area in Bihar. Part-C: Establishment ofs (i) pilot irrigation areas of about 250 ha each in Bihar and Orissa in the Project Area; (ii) facilities in Khagaul in Bihar and in Sambalpur in Orissa for training in development of Minor Distribution Systems and in Water Management techniques. Part D: Establishment of a water pollution control program in the Project Area in Bihar. Part 9: Research, studies, and monitoring evaluation. * * * The Project is expected to be completed by March 31, 1986. - 37 - Annex 6 Additional Comments from the Borrower* on Prolect Completion Report INDIA: Subernarekha Irrigation Project (Credit 1289-IN) (OED Report No. 8535, April 18, 1990) * See footnote to para. 2.42 of main text. No. P.M.C.3(T)(J)'114/80 / S 1h / From: Md. Hanif Ansari, - 38 - A Superintending Engineer, Planning & Monitoring Circle-3, Water Resources Department, Sinchai Bhawan,Patna-15. To, Mr. G.W. Fauss, Acting Chief,Ag. Unit, The World Bank, Resident Mission in India, 55 Lodi Estate, New Delhi 110003,India. Patna, the )71 July'90. Dear Sir, Ref: Your letter dated May 25,1990 regarding the Irrigation Sector Project complition Report (P.C.R) With reference to your letter under reference, the comments of Government of Bihar on the relevent points have already been submitted to Director(F.B),Department of Economic Affairs, Ministry of Finance, Government of India,New Delhi vide this departr-ent letter No. 638 dated 6,6,90. Copy of above letter along with copy of comments is enclosed herewith for your information and necessary action. End: As above. Yours faithrully, ( Md. Hanif Ansa Soperintending Enrineer. - 39 - No. / COVFEIMr OF BTUAR, WATER RESOUCES DIARNENT. From, Sri H. P. Singh, Engineer-in-Chief-cum-Additional Comesioner-cum-Spl. Secy. Water Resources Department, Sinchel Bhawan,Patna. To, Sri G. Iloldes, Director (F 1I) bepartmaot of Vconumic Affairs, Ministry of Pinance,Govn. of Indis, New Delh. Patna,dated / Sub:- Comments of Government of Bihar on the Draft Project Completion Report on 'ubernarekha Irrigation Project (Diher). Ref:- Your'D.O. No. 4/6/09-1l-11N addrossed to Irl Abhimanyu Uingh, the then Secretary,Water Resources Department,Govt. of Bihar. Sir, With reference to your lettbr under reference, the comments of Governmut of Bihar on the relevant points, raised by World Bank in thu foot note of Draft Projoct Completion report on Subornarokh., r-elect ardenclosed for your further action. . hcl . As stated above. Yours faithlully, ( f. P. Singh ) Engineer-in-Chief-cum-Addl. .-wmissioner -cum-Spl. Scrotary. Memo No. /Patna,dated / Copy with the report forwarded to Sri Navin Kumar,Director (F.4) Ministry of Water Rnsources,Govt. of Indie,New Delhi for inform@- tion and necessary action. V1s51- do staLed above. r-imissi,,ner-cum-Spl. SecretaLy. Memo No. 6 _ _ /vatna,vated / Copy wI.J . opy of the report forwarde. to n.eerintending t i,ay ur (Liaison), Water Resources Department, Govt. o. Dihar, M-13, Saket, Nuw Delhi Onr inform.-tion and necessary action. He i renuested to make contact wich Govt. of India for favourable disposal of matter. Fr;1:- As stated above. \ Fngincor-in-Lhief-cum-Addl. %rommissioner-culi 'pl. Soc .:Cary. - 40 - REJOINDER TO THE OBSERVATIONS OF THE WORLD BANK AS GIVEN IN THE FOOT NOTES OF THE PCR - PART II (b) - COMMENTS OF GOB ON BANKS REVIEW CONTAINED IN PART - I FOOT NOTES ITEM NOS: 1. The Staff Appraisal Report of the Bank which was prepared after preparation of the Feasibility Report by WAPCOS as per norms and standards prescribed by the World Bank; and the important aspect pertaining to inclusion of the subsystems in the first phase Credit Agreement had been gone into great detail before inclusion in the SAR. The intensive work that had gone into this exerclse will be evident from the fact that not only the subsystems but also the physical targets to be achieved against the various sub-systems by the end of the first phase Credit Agreement had been set. This would be seen from the extract of the Report vide Annexure-1. Further, the key events for the procurement actions for the various sub-systems were also decided in a staggered manner for achieving the set physical targets for the various sub- systems. It would be relevant to note that the key data for award of work for Chandil dam was kept as Nov.'82, for Chandil dam gates as July'86, that for various works of Chandil LBC up to KM 78 from August 1982 to June 1986, for Icha dam Oct.'84, Icha dam gates Dec.'87, Icha canals from Jan'84 to Oct'85, for Kharkai barrage canals from December 1983 to December 1986. Thus it would be seen that the procurement schedule and the implementation schedule for the various sub-systems of the Project were carefully planned after mutual discussions between the World Bank Teams and Project Officials. It is, therefore, not fair on the part of the World Bank to observe at this stage that the reason for simultaneous taking up of almost all sub-systems was more political than rational. As a matter of fact, this observation of the World Bank appear to be rather sweeping in nature and not supported by rational analysis of actual facts especially the successive events that preceded finalization of Work Programme in the SAR and those which followed in course of detailing procurement actions. Of course, the inclusion of different subsystems was in accordance with the spirit of the Tripartite Agreement, and if such adherence to the principles and policies reflected in the Agreement concluded at political level is considered more political than rational, one could do no more than lament on it. 2. The original SAR target for execution of Galudih Barrage was 30% and that of Galudih Right Canal 22% against which the achievement was 80% and 60% respectively. Govt. of Orissa should have taken measures to plan their Irrigation System simultaneously. The comment that earlier completion of Galudih barrage and right link canal might have induced Orissa to take up at least the planning and design of its sub-system earlier is hypothetical and unconvincing, more so, when the achievements have exceeded the targets set forth in the SAR. Moreover, there was resource constraint with Govt. of Orissa due to which they could not provide adequate share to execute the joint component. Hence it could not have been possible for Govt. of Orissa to execute their own scheme concurrently. From Annexure-Il, it would be seen that a total of amount of about Re 600 Million has been outstanding against expenditure incurred up to March'90. This has seriously hampered not only the - 41 - joint components of the Project but also the other sub-system of the Project under execution in Bihar including RR components of Chandil & Icha dams. However, the planning and design of the canals by GOO of their Project in Orissa, was not impeded by these issues since the designed capacity of the carrier canal entering at Orissa border was fixed much earlier. The GOO has already commenced the cinstruction of their canal in the head reach beyond the point where Galudih RBC terminates at Bihar Orissa border. 3. GOB still holds strong view regarding the need for early execution of Kharkai barrage and its canal system for which detailed justification has been given vide para-10(e) of the part-II (B) & rejoinder on the observations of the World Bank vide Foot Notes item 1 & 2 of PCR Part-II. It would be pertinent to point out in this context that the World Bank right from the beginning has been shifting their stand with regard to the feasibility of Kharkai barrage and Kharkai canals. In the first instance, the Bank suggested for incremental analysis to justify on its own the economic viability of Kharkai barrage and canals, though it was integral component of the Subernarekka Multi-Purpose Project from the very beginning. It may be pointed out that the SMP as formulated by GOB, technically cleared by CWC and appraised by the World Bank for Credit assistance comprised, inter-alia, construction of barrage on the river Kharkai at Ganjia, about 10 KM from Adityapur with canal systems on both the banks for providing irrigation and municipal and industrial supplies to a portion of the total SIS command area. The total area originally proposed to be served with irrigation supplies was 15,800 ha (GCA). Since the command area had an elongated disposition and the length of right bank canal and distributary canals being over 100 KM, the World Bank Appraisal Mission had suggested at the time of appraisal of the . Project to explore the possibility of including some more area into the command by detouring the canal system beyond Rakha Mines hill range for providing water to a flat cultural tract of about 10,000 ha by extending the length of the Murakati distributary. The water supplies for M & I usage as provided are 37 MCM from the right bank main canal and 49 MCM from left bank main canal, projected to cater to the needs of the area up to the year 2000. The very stand of World Bank to apply an incremental analysis for the economic justification of Kharkai barrage and Kharkai canals on its own was not justified because it was approved as an integral part of the SMP. It was neither a proposal for addition to or substraction from the approved project. Nevertheless this aspect was also examined by World Bank Appraisal Team and after being convinced of the non-feasibility of the alternative proposals for Kharkai customers, especially the pumping option due to acute scarcity of power in the region, the World Bank has agreed in principle over the construction of Kharkai barrage and canals at the time of executing the Credit Agreement. Only the question of optimal timing for taking up the construction of barrage was left to be decided subsequently, based on System Improvement Studies to be carried out by Consultants. This was also got done after getting the Terms of Reference for the aforesaid Study vetted by the World Bank. The Terms of Reference obviously did not provide for evaluation of the alternative pumping option for the Kharkai customers. For reasons stated before, neither the Project authorities considered this as a mutually exclusive choice nor the World Bank considered it worthwhile for further exercise. The Consulting Engineering Services who carried our the aforesaid - 42 - study gave considered recommendations in their Report of October 1986 to complete the Kharkai barrage by May 1990 even prior to the completion of Icha dam, so that partial benefits to the Kharkai command could start accruing forthwith from run-of-the-rivir supplies. The World Bank commented on this, though belatedly that the Studies carried our by the aforesaid Consultants were deficient and needed to be revised with additional data analyses and incorporating in the TOR the feasibility of pumping option as well. This was a total reversal of the stand earlier postulated by the World Bank Appraisal Team and the stipulations in Staff Appraisal Report. The World Bank inducted a team of FAO/CP in December'86 to review the comparative economic viability of the Rharkai barrage and canals and the alternative pumping option for the Kharkai customers. It is not known as to what prompted the World Bank to bring in these Consultants, except of course, the continued efforts of the Bank to constrain Bihar from utilizing the water resources out of its share through a control point, namely the Kharkai Barrage. The aforesaid team is reported to have preferred pumping options for Kharkai customers to gravity supplies through canal from Kharkai Barrage; after carrying out economic analysis of the proposals. The team appears to have gone by the feeling that Kharkai complex would not be completed before the completion of Icha dam in 1993. This assumption itself is prima facie in- correct. Further the team had complained of lack of data and on this consideration not much of reliance need to be attached on this report. Last, but not the least, because of lingering dismal position of power in the State the question of pumping option for Kharkai customers should not arise at all. Now the World Bank has stated vide item no. 2 of Table - 6D of Part-III of the PCR that the System Improvement Study be repeated and improved with additional data analyses and has observed that if the Studies are correctly done, the same will enable the planners for stage-II to decide whether Kharkai Barrage and canals are viable and if so which timing and design shall be most appropriate. GOB is of the firm view that construction of Kharkai Barrage with canal systems as an integral part of the SMP is a must, and no further studies to justify its economic viability separately is called for. All the same, efforts will continue to evolve the most beneficial plan. 4. No comments. 5. No further comments. 6. No comments. 7. The creation of Irrigation potential implies essentially the completion of MDS blocks for the specific area. The creation of partial irrigation potential from the project as originally envisaged has suffered set-back for a number of reasons as have been highlighted in the report. As per latest review of the implementation schedule for Phase-II, it has been planned to create an irrigation potential of 15,000 ha. by June 1991 and 25,000 ha by June 1992, which will increase progressively till the full potential is created by 1995-96. The land ecquisition cases for MDS works are being expedited and adequate funds being proided for accelerating the pace of progress of MDS works in the coming years. - 43 - 8. Dimna Lake was constructed in the year 1943. The live storage capacity of the reservoir has substantially and progressively decreased during the past 47 years due to increasing rate of sedimentation caused by lack of catchment control measures. Here it may also be noted that as per Design Practice of the period when this dam was built, the assumption used to be that all the silt trapped in the lake would settle down in the earmarked space below the Dead Storage Level. Later observations on numerous existing reservoirs had shown that sedimentation in reservoirs started eating into the live storage and only a small percentage of the trapped silt got deposited below the Dead Storage Level. The Bank has appropriately appreciated the issue of payment by the users of M&I water supply and thus the need for allocation of construction costs to this purpose and cost recovery, while working out the ERR of the Project. ．ー―…ーーーーーーーーーーーー国■ー国国国国■■■国■■国国■国■■■日園■ IBRO 14198R 一 IBRD 1187ÅRI l f0 M4GPUR 1 841-8 INDIA ANDHRA PRADESH IRRIGATION & CAD COMPOSITE PROJECT M A H A A 5 H T R A Addøhod SUB-PROJECT AREAS Pialect Afeos Command Alec, Døvelopment, Nottonal H,ghwcys Stalte Highways jagalpur, Broad Gauge Roiliroads POCEMMPAD f, Motel Gauge Rodroods DNtAA RESE~Mf A D H Y A Conols >ý - Stole ar Union fortitory øoundarics D:::,, Bound ries 44, ,:ct x"' D 1, lowns MionTabod PQCHAMPAD P R A D E 5 H 0 0tZ Towns IRRIGAYION PROJECT R.vers (CR-268-IN) Kanmna a, CD APPROXIMAlf S,lÉ OF STAGE I AREA -lEt- .... " . ...................................i D R _ýA J Sholopvr. P A D E ý1S" H I ýSangaredd, T,' "ogu em Gulbargo RABAD L Nalgonda 17-- Kok,na Al Mahbubnio al DA m & NAGARJUNASAGAR I RRI G PRQJECT Roichur ntur ock.l.pot." m U N T Ku,nool C C Ongole KJLOMETERS 0 20 ý0 6,0 80 T GABHADRA DAM & RESERVOIR 10 20 ý0 ý0 5ict -'s. MILES TUNGABiIADRA y f Thii, W-Id B-k ..d d. PROJECT I - rh. ..d -Royadrug- nontopur ..d th. b-sid-i., . -P d. r i.ply, .. th. f r" Wdd Bd 11 d th. f-.- dapoh C."- -,T, -Y iudg- t - th- f -y ftýt.,Y aiij, ., -pi- d."., Nellore 79. 82- ro MADRAS JUNE 1991 IBRD 1325 INDIA R A GUJARAT P A K I S T A N t Major and Medium Irrigation Projects 128 , COMPLETED ONGOING NEW 1'6a.,.s ...........L---I AM SITES I I BANASKA"TH 'A SIyES -...-.* PALANPUR MAJOR COMMANDS DANTIWADA 126 PROJECT 2 MAJOR ROADS i MAJOR RAILROADS 1 ,1 e C MEHSAN ..0 MAJOR TOWNS 82% K U T C H 6 2 2 2 - - - DISTRICT BOUNDARIES 15 %1 1 se e 4 ,GANDHI AGAR HATNAGAR 12 ME 5 6 AA7A120 --- - -- STATE OR UNIJN TERRITORY BOUNDARIES 15 83' 24 ..... 97 f 118- RIVERS M 15 5AHDAARANN OF KUTCH 141 AFIMDA6r 129 3 7 t16 11 -ý137 FOR EXPLANATION SEE SEPARATE TABLE 3149 -72 11l4 OOHAD' - SURENDRANAGAR 30K 2 R1 JAMNAGAR 56 67. 29 19 31 S-- -1 - .55 RAJKOT "3 -·· BARODAý 111i JAMNAGAR " ' " R40 w Jh8 BAROD4 1 3 142 .' 130 /' N1 138 49 130 2%.421 BHAVNAGAR 2- %143 AMRELI 3 131AC 19A H PORBANDAR - 0 A REL 5 1BRIACH 147 4, \ 38 AMRELI I' 132 13 10 'J JUNAGADH 1 136 7 39 SURAT4 135 ' 38' VERAVAL 3 7 0 2 1KIOMETERS 'r 4DANGSJ (- 0 's 3'2 4's s' AMRELI ALWA M1lES . N,> 72 MIL EES VALSAD Th. map ho. bcen prepored b> The World Bon's sto' e.etsrvely (or the oveneenre o the reoders ondt, exclustely (or the ,ento ueof The Werld Berl ond the · ern,ot.enal ioence Corporot.n The deno 1-0n,or .,ed end the L'obwdor.es sho.n n Ih-, mrp de ror ' pi >e the p port The World BnL ond the Internofionol inore C-pornr n an dgment o the ego' ttovt el ony terrory er eny endorseme.nt or O(Cernce el sch bonNo1et . ......--. - - JUNE 199 IBRD 13043R1 76° 70* This etp has boo. p,opored by The World SonC& sgola exclusively for the comromonco of tho roodert ond is exclusioly fot the internal sofTonl s: Cordofofon KARNATAKA IRRIGATION PROJECT The dcnoromswns used ond the boc,ndo,,ds sh. on 11i,s ..op do t ;pY; on h o prt o The Project Location World Bonk ond tho litorotoionl F>onco corporoon. ony todgmont on the ligol sttos of ony tertory or ony endorsomont or occeptonce of such boundoros 18'- 18Bdar* holapur - Gulborgo PPE11 R, KRISHNvA SCH EME -[ Project Areo H,ppog, Barrage(Planned UpperKrishna Scheme Almatt Irrigation Area (Planned) GM DAB Irrigation Area (E xisting) RaiChur Rivers, Dams and Weirs Irrigation Canals (Planned) Ror~ D Irrigation Canals (Existing) 6• -'"Major River Basin Boundories Minor River Basin BoundOries - Major Roads Dharwär Broad Gauge Rairoads TUNOADHADRA \- Narrow Gauge Railroads 0f State Headquarters e District Heodquarters Kr r State or Union Territory Boundaries -14' Sh-Ogo 14~- 8HADRA Ch,kmnagalurTunr Tumk~r ro mod'oj Mangolore *Hossan BANGALORE ISHNARA I/ Mandya Mysore -12- KILOMETERS 12.- 0 80 160 50 100 MILES JUNE 1991 - IBR D 162 쐼