Turkey - Participatory Privatization of Irrigation Management and Investment Project

Document of The World Bank Report No. 16525-TU STAFF APPRAISAL REPORT TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT September 18, 1997 Rural Development and Enviromnent Sector Unit Europe and Central Asia Region  CURRENCY EQUIVALENTS Currency Unit = Turkish Lira (TL) AVERAGE EXCHANGE RATES (Turkish lira per US$1) 1994 32,000 1995 55,000 1996 95,000 (as of November) 1997 150,000 (as of August) WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CC Consultant Coordinator DSI Devlet Su Isleri (State Hydraulic Works) GDP Gross Domestic Product GOT Govermment of Turkey GDRS General Directorate of Rural Services Ha Hectares ICB International Competitive Bidding IIT Irrigation Investment Transfer (including management of irrigation investment) IMT Irrigation Management (mainly O&M) Transfer to Users IRR Internal Rate of Return IS International Shopping LTCs Long-term Consultants M Million NCB National Competitive Bidding NS National Shopping OCC Opportunity Cost of Capital OECD Organization for Economic Cooperation and Development O&M Operation and Maintenance PPII Participatory Privatization of Irrigation Investment (including management of investment) PPIM Participatory Irrigation Management RC Regional Coordinator SCF Standard Conversion Factor TA Technical Assistance TOR Terms of Reference WUA Water Users' Association WUO Water Users' Organization TERMS Consultants Consultants for project implementation; also called project consultants IIT and PPII These are used interchangeably IMT and PPIM These are used interchangeably Irrigation Ratio Ratio of area irrigated to irrigable area Transfer PPIM or IMT Transferred Schemes Schemes where irrigation management (mainly O&M) are transferred to WUOs TURKEY FISCAL YEAR January I to December 31 This report is based on the findings of a Bank pre-appraisal mission that visited Turkey in February 1997 comprising Joma Mohamadi (Mission Leader and Task Manager), Gurhan Ozdora (Projects Officer), and consultants Suha Satana (Economist) and Helen Shahriari (Sociologist). Herve Plusquellec, Richard Reidinger and Ashok Subramanian were peer reviewers.  TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT CONTENTS LOAN AND PROJECT SUMMARY 1. BACKGROUND .............................................. 1 A. IRRIGATION SECTOR .............................................. II B. O&M PROBLEMS .............................................. 2 C. IRRIGATION INVESTMENT PROBLEMS .............................................. 2 D. SOLUTIONS .............................................. 3 E. PROGRESS ON IMT AND RESULTS .............................................. 3 F. NEED FOR STRENGTHENING IMT .............................................. 5 G. PROJECT CONCEPT .............................................. 5 2. THE PROJECT AREA .............................................. 6 A. PROJECT AREA RELATED TO O&M EQUIPMENT .............................................. 6 B. PROJECT AREA OF PILOT DRIP IRRIGATION SCHEME .............................................. 7 3. THE PROJECT. 8 At. PROEC OBJECTIVES................................................................................................................................. A. PROJECT OBJECTIVES .......................8 B. PROJECT DESCRIPTION AND COMPONENTS ............................................. 8 C. DESIGN FEATURES OF THE PROJECT ............................................. 12 D. PROJECT COSTS .............................................. 13 E. PHASED FINANCING OF THE PROJECT ............................................. 14 F. THE PROPOSED GRANT ............................................. 15 G. ENVIRONMENTAL IMPACTS AND ASPECTS .. ........................................... 16 H. PARTICIPATION AND WOMEN'S ROLE ............................................. 16 4. PROJECT IMPLEMENTATION ............................................. 17 A. IMPLEMENTATION RESPONSIBILITY ............................................. 17 B. IMPLEMENTATION ARRANGEMENTS ............................................. 1 8 C. PROJECT COORDINATION AND IMPLEMENTATION SCHEDULE ......................................... 22 D. MONITORING AND REPORTING ............................................. 22 E. PROCUREMENT ............................................. 23 F. DISBURSEMENTS ............................................. 26 5. BENEF1TS, ECONOMIC ANALYSIS AND RISKS ............................................. 27 A. PROJECT BENEFITS ............................................. 27 B. ECONOMIC ANALYSIS ............................................. 29 C. JUSTIFICATION FOR THE PROPOSED GRANT ................................ ; 30 D. RISKS ............................. ... 31 6. AGREEMENTS ........................ 32 A. CONDITIONS FOR EFFECTIVENESS ........................ 32 B. AGREEMENTS REACHED DURING NEGOTIATIONS ................................... 32  CONTENTS (cont'd) ANNEXES A. COST TABLES B. PILOT DRIP IRRIGATION SCHEME C. MONITORABLE INDICATORS D. CONSULTANTS' TERMS OF REFERENCE E. IMPLEMENTATION SCHEDULE F. PROCUREMENT G. ECONOMIC AND FINANCIAL ANALYSIS H. LEGAL ASPECTS 1. SOCIAL ASSESSMENT J. DISBURSEMENT SCHEDULE K. COST OF PROJECT WITH INCLUSION OF ENVISAGED FOLLOW-UP LOAN L. COST OF O&M EQUIPMENT CONSIDERED TO BE PURCHASED UNDER THE ENVISAGED FOLLOW-UP LOAN OF US$17.5 MILLION MAP IBRD No. 28711  TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Turkey Implementing Organizations: Water User Organizations (WUOs), with the support and supervision of State Hydraulic Works and General Directorate of Rural Services. Beneficiaries: WUOs and Participating Farmers Poverty Category: Not applicable Amount: US$20 million Terms: Payable in seventeen years, including five years of grace, at the standard interest rate for LIBOR-based, US dollar, single currency loans. Commitment Fee: 0.75 percent of undisbursed credit balances, beginning 60 days after signing, less any waiver. Onlending Terms: Not applicable Financing Plan (US$ M): IBRD Total 20.00 Government 1.34 Subtotal WUOs 37.44 Total 58.78 Economic Rate of Return: 72% (excluding Pilot Drip Irrigation Scheme component for which ERR = 19%) Staff Appraisal Report: 16525-TU Map: IBRD No. 28711 Project ID Number: TR-PA-9072  TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT STAFF APPRAISAL REPORT 1. BACKGROUND A. IRRIGATION SECTOR 1.1 Role of Agriculture and Irrigation. Agriculture's share of Turkey's GDP is approximately 14%. It is the largest sector in terms of employment (42% compared with industry at 16% and services at 38%). Irrigated land accounts for 34% of agricultural GDP (excluding livestock). There are 28 M ha of arable land, of which 8.5 M ha are classified as economically irrigable, and 4.2 M ha (private and public combined) are irrigated. 1.2 Organizations Responsible for Irrigation. The State Hydraulic Works (DSI), the General Directorate of Rural Services (GDRS) and Water User Organizations (WUOs) have responsibility for irrigation development and management. All large irrigation systems in Turkey are developed by DSI, which is under the Ministry of Energy and Natural Resources. GDRS, under the Prime Minister's Office, is responsible for minor irrigation works and on-farm development of irrigation works completed by DSI. DSI has developed 1.63 M ha of the arable land in Turkey. Over 96% of these areas were operated and maintained by DSI until mid-1993, when it began a program of irrigation management (operation and maintenance) transfer (IMT) to users, with the Bank's persuasion and assistance (paras 1.9-1.11). IMT is actually participatory privatization of irrigation management (PPIM), involving transfer of this responsibility from government to participatory WUOs. The WUOs operate on the principle of participatory irrigation management and provide for a high degree of farmer involvement, both directly and through elected representatives. The WUOs consist primarily of farmers and encompass such structures as Water User Associations (WUAs), municipalities, village authorities with responsibility for irrigation management, cooperatives, and others who have responsibility for managing smaller irrigation schemes (see annex I for details). The most important category is the WUA, accounting for 93% of the area managed by WUOs. Due to various local conditions, the size of WUOs varies between 100 and 3 8,000 ha. As discussed below, WUOs are playing a major role in the Turkish irrigation sector. 1.3 Irrigation Sector Issues. The Bank's study and review of the irrigation sector in 1992 and 1993 revealed that the principal problems in the irrigation sector were (a) unsatisfactory operation and maintenance (O&M) services due mainly to inadequate government funding, and (b) highly inefficient irrigation investment.  - 2 - B. O&M PROBLEMS 1.4 Inadequate and declining public funding for O&M of the DSI managed area, whieh was particularly affecting irrigation systems maintenance and causing its deterioration, was a major problem and was threatening sustainable use of the multi-billion dollar public investment in irrigation. Low and declining recovery of O&M costs from users was also a problem. 1.5 Billing of O&M Costs. DSI operates on an accruals-based cost accounting system, which forms the basis for calculating water usage charges for O&M. Actual O&M bills are presented to users during the next crop year, with repayments due the following year, causing a two-year delay. There is no inflation correction in the billings, so this two-year delay in repayments causes considerable erosion in the real value of funds returned, particularly in Turkey's highly inflationary environment. Cost recovery rates could deteriorate further since the Council of Ministers may recommend politically motivated reductions of up to 50% in the total amounts billed to users. 1.6 Recovery of DSI O&M Costs. DSI's average recovery rate is 40% on accumulated outstanding repayments. Inflation's effect on the real value of repayments translates to less than 20% of the actual costs incurred by DSI to provide O&M service. If the billing's total is reduced by the government's decision, the value of recovery may fall well below 15%. For delinquent payments, there is a one-time penalty of 10% of the unpaid balance. This is a significant disincentive for users to pay on time since funds for any outstanding payment can bear substantial interest in excess of 70%. Additionally, water charges are calculated by DSI but are collected by the Ministry of Finance, so DSI has no incentive to collect payments. C. IRRIGATION INVESTMENT PROBLEMS 1.7 Turkey's irrigation investment problems consist of: (i) negligible cost recovery against an annual investment cost of several hundred million dollars, as described below; (ii) overextension of irrigation investment by including new schemes without adequate funding; (iii) inclusion of uneconomic schemes in the program; and (iv) an extended delay in the completion of schemes. This has resulted in poor utilization of funds which are spread over far too many schemes simultaneously under construction by DSI. These problems are exacerbated by lack of user participation in the planning, construction and financing of the irrigation schemes. There is also deficiency in the method of design of irrigation distribution canals. 1.8 Recovery of DSI Investment Costs. DSI charges annually an insignificant amount of TL 3,000-7,500/ha, or US$0.03-0.08/ha, payable over a specified number of years against an investment of around US$4,000/ha. Despite chronic inflation, these rates have remained unchanged.  - 3 - D. SOLUTIONS 1.9 In the past, the Bank's emphasis was on urging the government to improve recovery of irrigation O&M and investment costs, which was covenanted in the legal agreements of previous Bank-financed irrigation projects. This approach did not produce any results, so in 1992 and 1993 the Bank explored' the possibility of a more practical and sustainable solution of promoting IMT or PPIM. The possibility of irrigation investment transfer (IIT) to users (WUOs) or participatory privatization of irrigation investment (PPII) was also considered, but for the following reasons priority was given to focusing on IMT, and under the circumstances it was considered premature to pursue IIT: (a) A Bank review in 1993 revealed that there were some enabling factors in the country that could contribute to accelerated IMT to users, including: (i) the availability of an enabling law; (ii) successful experiences with IMT for a few small schemes to users who had established successful WUOs; (iii) the support of some DSI officials for this concept; (iv) the existence of a generally good working relationship between DSI O&M officials and farmers (a relatively rare phenomenon); and (v) the well-founded anticipation that the farmers would support such a transfer. (b) The highly positive experience of Mexico with large-scale transfer of irrigation O&M responsibility to WVAOs in the early 1 990s contributed to confidence-building among those concerned. E. PROGRESS ON IMT AND RESULTS 1.10 In mid-1993, with the Bank's persuasions and assistance in connection with the expanded scope of the its Drainage and On-Farm Development Project (Ln. 2663-TU), and with the support of Turkish farmers, DSI started a large-scale, successful program of IMT. Accordingly, management of about 1.2 M ha (about 75% of the area developed and managed by DSI) was transferred to about 590 WlJOs. The Bank's assistance was limited primarily to: (a) providing advice and encouragement and convening workshops in connection with project supervision; and (b) financing study tours for key DSI officials to the USA and Mexico to gain confidence in implementing a large-scale IMT. Annual progress of the transfer is shown in Table 1.1. 1993 supervision reports, of Drainage and On-Farm Development Project (Ln 2663-TU) and Irrigation Management and Investment Review (Report No. 11 589-TU).  -4 - Table 1.1 Annual Progress on IMT Year Area Annually Projected Area to be Transferred (ha) Transferred (ha) 1956-1992 63,000 (total) 1993 9,000 1994 195,000 1995 711,000 1996 222,000 1997 100,000 1998 80,000 1999 70,000 2000-2011 50,000 ha/year Source: DSI - O&M Department Presentation Report, April 1996, p. 26. 1.11 Main Results of IMT. Based on observations and user response, the following results have been obtained: (a) Better operation of irrigation networks leading to a more timely and equitable distribution of water, particularly in downstream and water- short areas. Successful implementation of nighttime irrigation by WUOs (which the government could not enforce), and keeping operators available as needed day and night and during holidays are the main contributing factors. The pumping stations now managed by WUOs, some of which are fairly large and sophisticated, are performing better. (b) Substantially improved maintenance and protection of the systems (canals, canalets, machinery and equipment). The availability of adequate funds, simple and streamlined administrative procedures, transfer of responsibility to users, and users' self-interest are among the main contributing factors. (c) Increased efficiency in resource allocation (financial, labor, materials, machinery and equipment, etc.). (d) A major and speedy shift in responsibility for financing irrigation O&M cost from GOT to WUOs. (e) Increase in agriculturalproduction as reported by users. (f) The impressivefinancialperformance by WUOs in gaining recovery of nearly 100% of member payments, accumulating savings and successfully managing their budgets, which exceed US$ 1 M for large WUOs. (g) An improved understanding of irrigation issues by users (farmers).  - 5 - (h) Overall satisfaction of users, reflected by the receipt of about ten complaints by DSI from users about irrigation problems in 1996, as compared to about 400 complaints received before IMT. The rate of success indicated above has brought Turkey to the forefront as a model (along with Mexico) for large-scale IMT. F. NEED FOR STRENGTHENING IMT 1.12 Despite the above success of IMT, the following issues still need to be addressed: (a) the lack of O&M equipment by WUOs; and (b) a need to strengthen DSI so it would successfully play a new role in its relationship with WUOs, providing technical support, performance monitoring, and training to WUO staff. A brief description of item (a), which requires more investment and is considered by WUOs to be the most urgent problem, is given below, and item (b) is discussed in Chapters 3 and 4. 1.13 Urgent Need of WUOs for O&M Equipment. WUOs have, so far, been unable to take over the entire O&M burden from DSI as they still depend on the agency for O&M equipment and use it on an ad hoc basis with little or no charge. Considering the status of DSI equipment, which is operating under unfavorable government procedures, continuation of this arrangement is uneconomical for the government and inefficient for WUOs. It also adversely affects the self-reliance and sustainable performance of WUOs. Since the inception of large-scale IMT in 1993, WlOs have expressed demand for such equipment (see para 3.4), which will enable them to avoid deferring maintenance and catch up with past deferred maintenance. This would avoid, to a large extent, the need for heavy investment in rehabilitating those parts of irrigation systems that would deteriorate as a result of deferred maintenance. In Mexico, the only other country where large-scale IMT has taken place, O&M equipment was transferred along with IMT to WUOs free of charge. (Mexico's WUOs are now contributing to the financing of equipment.) Through the Bank's persuasion Turkey's WUOs have shown preparedness to pay for a large portion of O&M equipment cost, which should ease the burden on the government, and to introduce PPII. G. PROJECT CONCEPT 1.14 Strengthening of IMT and Introducing IIT. The project concept is based on strengthening IMT and introducing IIT to meet project objectives as stated in para 3.1. Assisting WUOs with the purchase of urgently needed O&M equipment and providing training assistance for their staff will enhance their technical, managerial and financial capability and contribute to the sustainability of IMT and privatized irrigation management. The O&M equipment for WUO managed areas, which requires an ultimate investment of about US$110 M, would be about 70% financed by WUOs (see Chapter 3). This would also be a considerable step toward introducing the concept of transferring the responsibility for financing investment on irrigation-related matters from the government to users. Additionally, to introduce the concept of user-financing for irrigation schemes, there is a provision for the inclusion of one primarily user-financed pilot irrigation  - 6 - scheme (paras 2.5 and 3.9) to install a drip irrigation (partly micro-sprinkler) system. Another important concept introduced in the proposed project is transferring the responsibility for implementation of irrigation schemes or projects from the government to users. Therefore, the project is aiming at: (i) consolidating IMT or privatized irrigation management and making it sustainable; and (ii) introducing IIT, which also includes responsibility for implementation (in addition to financing about 70% of the cost, WUOs will have the responsibility of purchasing the equipment). 1.15 Rationale for Bank Involvement. The proposed project is consistent with the Country Assistance Strategy (CAS) approved on September 4, 1997. The new CAS supports efforts to promote privatization of irrigation. The Bank played an important role in encouraging DSI to initiate a large-scale irrigation management transfer in 1993, which made major progress. The project objectives related to the above concept are more likely to be achieved with Bank involvement. 2. THE PROJECT AREA A. PROJECT AREA RELATED To O&M EQUIPMENT 2.1 Assisting WUOs in the purchase of O&M equipment (paras 3.3-3.4) is the main component of the project. This component is envisaged for all WUOs to whom management responsibility for DSI-developed and managed irrigation schemes (para 1.2) has been or will be transferred. These schemes are located in different parts of the country and belong to one of the two irrigation zones -- coastal and interior. 2.2 Geographical Distribution of Existing Transferred Schemes. The coastal zone of the country comprises the four DSI regions of Izmir, Adana, Antalya and Aydin, covering 542,000 ha, or around 45% of about 1.2 M ha of irrigation land already transferred to the WUOs. The interior zone consists of the remaining 21 DSI regions covering some 660,000 ha, or 55% of the transferred areas. 2.3 Total Project Area. The forecasted cumulative areas of 1.5 M ha of the transferred schemes to be served by the project are shown in Table 2.1. These figures were obtained by extrapolating DSI data.  -7- Table 2.1 Distribution of Area of Transferred Schemes to be Covered Under the Project (ha) Type of Scheme Interior Coastal Total Percent Gravity, over 1,000 ha 616,000 648,000 1,264,000 84 Gravity, less than 1,000 87,000 16,000 103,000 7 ha__ _ _ _ _ _ Pumping, with a head 71,000 29,000 100,000 7 below 30m m__ Pumping, with a head 2,600 21,000 23,600 2 between 30-60 m _ Pumping, with a head 7,300 0 7,300 0 over 60 m Total 783,900 714,000 1,497,900 100 2.4 The distribution of WUOs in terms of type and size is given in the table below. Table 2.2 Distribution of WUOs by Area and Type (ha) Type of WUO Area Range No. Total Area Covered WUA below 1,000 41 15,239 1,000 - 5,001 110 295,187 5,001 - 10,001 51 375,876 10,001 - 23 324,792 20,001 3 81,904 above 20,001 Village below 1,000 209 30,439 1,000 - 5,001 1 1,165 Municipality below 1,000 112 31,725 1,000 - 5,001 12 19,857 Cooperative below 1,000 23 8,043 1,000 - 5,001 2 5,150 University below 1,000 3 957 Total 590 1,190,334 B. PROJECT AREA OF PILOT DRIP IRRIGATION SCHEME 2.5 Pilot Drip Irrigation Scheme (PDIS). The proposed scheme is located in the Uluborlu municipality of Isparta region and was completed in 1984. The dam serves a designed irrigation area of 1,600 ha via a concrete-lined main canal of 7 km with a capacity of 1.5 m3/s. The source of water for the dam and irrigation of the area is a local stream that is not part of an international river. The right river bank is served by a low pressure pipeline and the left bank by an open concrete lined canal. Currently about  - 8 - 1,200 ha are irrigated with inadequate water. A third of the irrigated area is under cherries and two thirds under apples, some of which is intercropped with young cherry trees. Tomato production is common as a mixed crop together with young cherry trees until these trees reach productive age. The trend is to convert the whole scheme to cherry production, which has a high return from export to Europe. 2.6 Water Resources at the PDIS. In the PDIS, water shortage is a serious problem and only two-thirds of the potentially irrigable area is irrigated. Installing a drip irrigation system would contribute to significantly more efficient use of the existing scarce water resources, and allow the 1,200 ha area to be converted to the highly lucrative cherry crop. 3. THE PROJECT A. PROJECT OBJECTIVES 3.1 The main project objectives are to: (a) strengthen irrigation-related institutions by supporting: (i) DSI and GDRS in providing guidance and technical support to WUOs; and (ii) WUOs in fulfilling their responsibility for irrigation management and investment (including the purchase of O&M equipment and improving irrigation systems) in an efficient and sustainable manner; (b) relieve the public sector of its traditional responsibility for funding and subsidizing the cost of irrigation O&M; (c) initiate a process of reducing public sector responsibility for funding and managing irrigation investment; and (d) promote efficient and sustainable utilization of irrigation systems which would contribute to improved agricultural productivity. B. PROJECT DESCRIPTION AND COMPONENTS 3.2 The project has been appraised for completion of the following three components of: O&M equipment; institutional strengthening; and a pilot drip irrigation scheme with estimated total cost of US$122.2 M (requiring a US$37.5 M loan), for which cost details are given in Annex K. To avoid a large undisbursed balance with respect to the large component of purchase of O&M equipment by WUOs (costing US$108 M, including the loan part of US$29.7 M), it was decided to split the funding of this component into two parts. Accordingly, the proposed loan in the amount of US$20 M would cover the institutional strengthening and pilot irrigation scheme components and the part of the purchase of O&M equipment needed in the first two years of the project, with an allocation of US$12.4 M (out of the above US$20 M). A summary of project  -9 - costs and th'e splitting of the O&M equipment component into two parts is shown in the table below. The Bank intends to finance the remaining cost of O&M equipment to be purchased during the last three years of the project, based on this appraisal, with a loan amount of US$17.5 M (see Annex L), subject to disbursement of 70% of the above allocation of US$12.4 M. Summary of Project Costs (US$ M) With Proposed Loan With Envisaged Loan With Total Combined Component of US$20 M of US$17.5 M Loan of US$37.5 M Total Cost Loan Total Cost Loan Total Cost Loan O&M Equipment 45.0 12.4 63.6 17.5 108.6 29.9 Institutional Strengthening 6.9 5.6 0.0 0.0 6.9 5.6 Pilot Drip Irrigation Scheme 6.9 2.0 0.0 0.0 6.9 2.0 Total 58.8 20.0 63.6 17.5 122.4 37.5 While the concepts and implementation arrangements stated in this report apply to both, the proposed and the envisaged follow-up loan, figures in the remaining part of Chapter 3 and in Chapter 4 apply mainly to the part of the project based on the proposed US$20 M loan. The project would be implemented in five years. Following is a brief description of components. Component 1: O&M Equipment (Base Cost US$44.01 M2) 3.3 The project would assist about 750 WVUOs covering about 1.5 M ha to purchase urgently needed irrigation O&M equipment. This number includes about 160 new WUOs covering about 300,000 ha that will be established as part of the IMT program. The major part of the cost of equipment (tables 3.2-3.3) would be financed by WJUOs, and the balance would be granted by government utilizing the Bank loan. Operations equipment includes wireless sets, motorcycles, vehicles and computers. The maintenance equipment includes cranes, winches and small backhoes/loaders (all mainly tractor- mounted), trucks, pickups, gradalls (truck-mounted machines with telescopic boom and wide bucket, primarily used for desilting canals and drains and removing weeds), graders, bulldozers, excavators and draglines. 3.4 The type of equipment and number of units to be purchased during the project period is listed in Annex A. The type and quantity of the above equipment was determined on the basis of WUOs' demand, verified in their written response to a questionnaire prepared and distributed to many WUOs by the project preparation team. The questionnaire asked them to state their need for O&M equipment and develop a purchase plan based on their priorities and financial ability to pay in cash for the major part of its cost. They were informed that the balance of less than 30% on average is 2 As discussed in para 3.2, the remaining part with estimated base cost of $63.6 million (see Annex L) is envisaged to be financed under a follow-up loan of $17.5 million.  - 10- envisaged to be provided as a government grant, financed by the proposed Bank loan. A streamlined procedure for disbursing the grant to the suppliers, soon after a WUO has paid its share, is described in Chapter 4. Component 2: Institutional Strengthening (Base Cost US$6.50 M) 3.5 This component would provide for: (a) consultants who would consist of two main categories of (i) a small group of long-term consultants, and (ii) short-term individual consultants or teams of consultants for completing specific tasks; (b) training and study tours; and (c) computers, office and training equipment, and vehicles. The recruitment of consultants would be subject to the Bank's approval of terms of reference (TOR) and qualifications. Preliminary TOR for consultants are given in Annex D. 3.6 Project Consultants. The long-term consultants (LTCs), comprising a team leader, assistant team leader and support staff, would be recruited to facilitate project implementation and coordination, particularly with respect to facilitating the procurement of O&M equipment and the drip irrigation system by WUOs. This team will also have responsibility for assisting in the recruitment of short-term consultants for specific tasks, and for coordinating and supervising preparation of a possible future project(s). To maintain direct and effective contact with participating WUOs and facilitate coordination between WUOs and concerned officials of DSI and GDRS, the team leader and assistant team leader would be locally recruited, with qualifications and TOR acceptable to the Bank. The LTCs would be assisted by short-term foreign and local consultants and support staff. Individual consultants or teams of consultants would be recruited to complete the tasks shown in the implementation schedule (Annex E). Their duties will include: (a) supervision of PDIS; (b) training and institutional strengthening concerning DSI, GDRS and WUOs in the project-related areas; (c) assisting DSI with establishing a Decision Support System concerning geographical information system, management information system, and determination of snow quantities in the mountains to forecast irrigation water availability and other matters related to irrigation and water; (d) resuming annual assessment of DSI irrigation schemes and transferring this capability to DSI staff. (This activity had started in connection with the Irrigation Master Plan for Turkey under Ln. 2663-TU, but was abandoned after loan closing.); (e) proposing arrangements for and promoting appropriate transfer of responsibility for the O&M of drains and the remaining O&M of canals to WUOs;  (f) assisting DSI and specifically WUOs with the selection of appropriate equipment for maintenance of drains and large canals; (g) selecting schemes for subsurface and surface drains installation, rehabilitation, and improvement, based on WMOs' demand and their commitment to share a reasonable part of the investment cost, and preparing or finalizing designs for such schemes; and (h) selecting schemes for irrigation development, rehabilitation, and improvement, based on WUOs' demand and commitment to pay the major share of the investment cost, and preparing or finalizing designs for such schemes. Consultant payment will be linked to successful completion of specific tasks or subtasks. 3.7 Training and Task-Related Study Tours. The project would provide training to concerned staff of DSI, GDRS and WUO in: (a) improving utilization of water in irrigation systems and in the basin; (b) improving irrigation distribution systems and increasing their efficiency; (c) enhancing DSI capability in effective and timely monitoring and evaluation of irrigation systems; and (d) assisting WUOs to enhance their capability in technical and managerial fields, including accounting, and providing training to the DSI and GDRS staff in related fields, including English language training. The participants would be trained mainly through workshops, participation in completion of consultant tasks (para 3.6), and attending classes and seminars as appropriate for each case. The project would provide for some study tours, which would be closely linked to specific tasks and achievements. English language training courses for DSI staff will also be conducted. 3.8 Computers, Office Equipment, and Vehicles. The project would finance the cost of computerizing the O&M department of DSI; training, and office equipment; and one field vehicle for O&M service in each region. Procurement of some computer hardware and software is also envisaged in connection with DSI-related Decision Support System and for GDRS, and it would be supported by an intensive and timely training program. This program would enhance the knowledge of staff who are already computer-literate and familiarize the remaining staff with computer use. Component 3: Pilot Drip Irrigation Scheme (Base Cost US$6.05 M) 3.9 The project would assist Uluborlu WUO in purchasing and installing a drip irrigation system for 1,200 ha. The WUO would finance a major part (about 70% ) of the cost. The balance would be paid from a grant financed by the Bank (paras 3.15-17). The  - 12- PDIS was selected from among five schemes on the basis of its WUO's preparedness to finance the above-mentioned percentage of the cost, and its high economic rate of return. Information on the pilot scheme is summarized in Table 3.1. Additional information is contained in Annex B. 3.10 The proposed drip irrigation system will receive water from the Uluborlu small dam (with storage capacity of 21 M cubic meters) through the installation of a pipeline system -- 5,200 meters on the left bank and 1,100 meters on the right bank. This system of pipes will provide enough pressure for drip irrigation and eliminate the need for electricity for pumps to create pressure. The pipeline will serve hydrants at each farm parcel. Farmers would attach portable drip systems to the hydrants. Service would be on a 24-hour basis involving 12-hour rotations at the tertiary level. Some cost savings may be possible at the detailed design stage following further dialogue with the WUO. Table 3.1 Summary of Primarily User-Financed Pilot Irrigation Scheme Description Amount Envisaged Change in Crops Expand/shift to cherry production Base Cost US$M a 6.0 Total Cost US$ Ma 6.9 ERR 19% FRR 24% Proposed WUO Financing 70% Bank Financing (US$ M) 2.0 WUO Response to such Financing Highly positive Number of Subscribers About 2,000 Planned Drip Irrigation Area (ha) 1,200 b a. Including the cost of main pressure pipe, accounting for about 55%. b. Based on average release of 8.5 M cubic meters of water from the dam. C. DESIGN FEATURES OF THE PROJECT 3.11 Some of the special features in the design of this project that involve innovative and non-traditional approaches are: (a) In sharp contrast with the almost completely subsidized public irrigation investment and O&M services in the country, WUOs would finance a substantial part of the costs involved. This would cover about 70% (on average) of the cost of O&M equipment and the pilot scheme. WUOs would have complete responsibility for operating and maintaining the equipment and the pilot scheme, and for making replacements. (b) The balance of the cost of O&M equipment and drip/sprinkler systems would be granted by the Government using the Bank loan (para 3.18). This  - 13 - method of providing transparent grant assistance was found to be the most effective as it: (i) encourages the WUOs to bear the major part of the cost of investment (purchasing the O&M equipment and drip irrigation system) and thus promoting privatization of irrigation investment; and (ii) substantially reduces the burden on the State for financing such developments, as it involves the least amount of subsidy compared to the current alternative of nearly 100% subsidized irrigation investment by the government (which takes place through DSI and GDRS). It also involves less subsidy compared to financing through the Agricultural Bank, which involves about a 50% subsidy and has an adverse effect on the financial system. The proposed grant for the O&M equipment involves limited public financing per hectare (about US$20), but with significant impact on meeting users' needs. (c) Project implementation is proposed on the basis of streamlined arrangements with minimum bureaucratic involvement. The responsibility for procurement of equipment and works would rest with the WUOs because of their financing of the major part of the cost and their interest in procurement with least delay. (d) This is a demand-driven project, which evolved on the basis of users' demand to respond to their urgent requirements. (e) The assistance for the purchase of O&M equipment would be available to all WUOs able to finance their share of the cost (there are no other eligibility criteria). (f) The project does not involve any increase in the creation of governmental posts. D. PROJECT COSTS 3.12 The estimated project cost is about US$58.78 M and is summarized in the following table: Table 3.2 Estimated Project Costs (US$ M) % Foreign % Total Component Local Foreign Total Exchange Base Cost 1. O&M Equipment 11.00 33.01 44.01 75 78 2. Institutional Strengthening 3.43 3.07 6.50 47 11 3. Pilot Drip Irrigation Scheme 4.88 1.17 6.05 19 11 Base Costs 19.31 37.25 56.56 66 100 Physical Contingencies 0.55 0.19 0.72 26 Price Contingencies 0.58 0.90 1.50 72 3 Total Project Costs 20.44 38.34 58.78 65 104  - 14- 3.13 These estimates are based on July 1996 prices, with the addition of taxes and physical and price contingencies. The foreign exchange part is estimated at about US$38.2 M, or about 65% of total project cost. No physical contingencies were included for the equipment, while 10% physical contingencies were allowed for the construction of the pilot (drip) irrigation scheme. Due to high inflation in Turkey, all costs are expressed in US dollars, on which a 2.2% annual inflation rate was assumed throughout the project life. Physical and price contingencies comprise 3.8% of the project base cost. Import duties and value added taxes amount to about 20.4% of the base cost. Project cost details are presented in Annex A. 3.14 A list of the O&M equipment showing the type, quantity and unit cost is given in Annex A. The estimate of the total quantity of equipment (see Annex K) is based on a total transferred area of 1.8 M ha including some 1.2 M ha already transferred to the WUOs, and an additional 600,000 ha expected to be transferred by the fifth year of the project. However, actual WU0 participation is expected on around 85% of the area, or 1.5 M ha. Investigations during the preparation phase (August 1996) revealed that the WUOs had already procured about a third of their equipment needs. Hence the project will target about 85% of the area managed by WUOs with 70% coverage of the total equipment requirements. Thus the estimate for the cost of outstanding needs is approximately US$108 M, around US$72 per hectare (based on the full cost of O&M equipment component). The area-based estimate for equipment assumes the sharing of equipment between adjacent WUOs, resulting in cost savings. E. PHASED FINANCING OF THE PROJECT 3.15 The main sources of finance are the WUOs and the government grant financed by the Bank loan. The proposed loan of US$20 M equivalent would finance 42.3 % of the total cost net of taxes. The proposed loan would cover 52.2% of foreign exchange costs. 3.16 No public counterpart contribution (beyond the above US$20 M plus the envisaged loan of US$17.5 M) would be needed for the O&M equipment and pilot irrigation components, and no additional public funding would be needed for component 2, with the exception of funds to pay the necessary taxes amounting to US$1.3 M. The grant portion of the cost of equipment would be directly channeled to suppliers through a designated local bank according to arrangements described in Chapter 4. 3.17 To avoid a large undisbursed balance with respect to the O&M equipment component, financing of this component was split into two parts as discussed in para 3.2. The proposed Bank financing of US$20 M is planned to be disbursed over the five-year project period. The envisaged follow-up loan of US$17.5 M is expected to be disbursed in the third, fourth and fifth years of the project.  - 15 - Table 3.3 Project Financing (US$ M) Item Base Total WUOs From Govt. Bank Loan Cost Cost Budget to Govt. O&M Equipment 44.01 44.99 32.62 0.00 12.37a Institutional Strengthening 6.50 6.94 1.34 5.60 Pilot Irrigation Scheme 6.05 6.85 4.83 0.00 2.03a Total 56.56 58.78 37.45 1.34 20.00 Contingencies 2.22 a. Bank loan to Government to be used as grant for financing a smaller part of the cost. F. THE PROPOSED GRANT 3.18 Various possibilities for assisting WUOs in purchasing O&M equipment were examined and the following arrangement was found to be the most practical and efficient under present conditions. About 70% (on average) of the cost of equipment will be paid by WUOs, using savings from their revenues. The remaining part of the cost (about 30% on average) will be a one-time-only grant for this purpose by the government to serve as a catalyst for promoting such self-financing. The WUOs will have the responsibility for operating, maintaining and replacing such equipment entirely from their own revenues. The proposed World Bank loan would finance the above grant under the standard terms for Bank loans. This type of financing, involving the provision of a government grant to stimulate equity contributions to investments, was used successfully in Turkey between 1985 and 1995 and was found to be highly expedient and practical in promoting agricultural investments in the country. The grant portion in this specific government experience ranged from 25% to 30% of the investment cost. 3.19 The percentage of grant financing for equipment in the two project zones will be specified in two standard participation agreements satisfactory to the Bank, one for each zone, to be signed by DSI and WUOs. Considering the higher productivity and net return in the coastal zone, the average aggregated grant-financing percentage for the coastal zone is about 20% and for the inland zone about 30%. The basis for proposing the percentage of grant financing was to use the lowest percentage that will be attractive to users. In each zone, the percentage varies for each category of equipment (higher for larger and more specialized equipment and lower for lighter equipment and vehicles), mode of use (higher for shared equipment and lower for sole use), and type of irrigation (higher for pumping scheme and lower for gravity irrigation). Uluborlu WUO has agreed to pay on average 70% of the combined cost of works and drip irrigation pipes. Therefore the grant would cover 30% of the combined costs of the above works and drip irrigation pipes, and 100% of consultant costs exclusive of taxes. However, to assist the WUO during the initial period of heavy investment and no return, the percentage of the  - 16- grant for the works (installation and equipment for the pipeline and main network) will be about 40% and for drip pipes about 16%. G. ENVIRONMENTAL IMPACTS AND ASPECTS 3.20 The field-based environmental review of the project indicates that the project would have a positive impact on the environment. The project's main component involves assistance to WUOs toward obtaining new O&M equipment which would run more efficiently, and thus consume less fuel and produce less pollution. These machines would facilitate efficient operation and maintenance of irrigation systems, contributing to more efficient use of irrigation water which is scarce in some areas, and reducing the possibility of serious problems with waterlogging and salinization. The pilot drip irrigation component would replace the current inefficient irrigation distribution system with a drip irrigation network which would alleviate water shortages by substantially increasing efficiency of conveyance and delivery of water to the plant. The drip irrigation system would also contribute to reducing the possibility of waterlogging and salinization. To avoid the possible (but limited) adverse impacts of construction of the pilot scheme, preventive measures will be taken that will require contractors to provide site stabilization, collection of construction wastes, and use procedures to ensure environmental protection and the safety and health of workers. The project has provisions for drip irrigation training in connection with the above pilot drip irrigation project. The training program would use or prepare a training manual which would cover related environmental considerations, particularly with respect to proper use of fertilizers. The proposed project would not involve involuntary resettlement and is not anticipated to have an impact on known archaeological or historical sites in any of the sub-project areas. 3.21 It is difficult to evaluate the environmental impacts of the project on a time and money basis. Conversion to drip irrigation would contribute to use of correct amounts of fertilizers, which would be applied through drip systems, avoiding waste that would otherwise pollute downstream drainage systems. Controlled application of water through drip irrigation systems is expected to reduce the growth of unwanted plants and thus the need for chemicals. Because of the scarcity of water in the pilot area, the negative impact of reducing seepage to groundwater would be negligible. H. PARTICIPATION AND WOMEN'S ROLE 3.22 Participation. The design of the project is based on a participatory approach. From the inception, the main stakeholders, i.e., concerned DSI and GDRS central and regional staff and particularly WUOs, have participated in project preparation. They were involved in the field reviews and in a study conducted to assess the needs of users for O&M equipment. The study covered 160 representative WUOs out of about 590, and included a questionnaire about needed O&M equipment, and their ability and readiness to pay for a major part of the cost. 3.23 To promote ownership, enhance the role of WUOs, and contribute to successful completion of the project, the responsibility for purchasing the O&M equipment is  -17- transferred to users. Thus the main implementing agency is the WUO. Nevertheless, government agencies (DSI and GDRS) would have an important supporting role in providing required advice and supervision, and in channeling the grant funds to the suppliers/contractors from whom WUOs would purchase equipment or works (in the case of the PDIS). 3.24 Women's Role in the Project. The newly developed WUOs have shown encouraging progress on participation of women in managing the WUOs. Women are working in almost all WUOs in various numbers and their positions in WUOs include manager (titled General Secretary), accountant, computer specialist, and secretary. Female farmers participate in and are aware of the importance of WUOs. The level of participation is roughly proportional to the size of holding. Some female farmers show a keen interest in having more active participation in the next WUO assembly election. 4. PROJECT IMPLEMENTATION A. IMPLEMENTATION RESPONSIBILITY 4.1 The following organizations or institutions will have primary responsibility for project implementation: (a) WUOs, assisted by consultants and supported by DSI, for the O&M equipment component; (b) Uluborlu WUO, assisted by consultants and supported by GDRS, for the PDIS component; and (c) concerned departments of DSI and GDRS with assistance from the project coordination unit and consultants, for the institutional strengthening component. 4.2 Key Persons with Responsibility for Implementation. The following would have major responsibility for implementing the project: (a) for WUOs, elected chairpersons who are responsible to their assemblies; (b) for DSI, one of the Deputy Directors General (as DSI Coordinator), Regional Heads of O&M (as DSI Regional Coordinators -- DSI RCs) on behalf of Regional Directors, and Heads of O&M and other relevant departments having technical responsibility for implementing related parts of institutional strengthening; (c) for GDRS, the Head of River Basin Development and Earth Dams Department (GDRS Coordinator), and one GDRS field engineer, with qualifications and TOR acceptable to the Bank (GDRS Regional Coordinator -- GDRS RC); and (d) Consultant Coordinator, discussed below, with responsibility for the PCU. 4.3 Since the project's main components of procurement of O&M equipment and procurement of works and drip irrigation pipes for the Uluborlu Pilot Scheme will be implemented by WUOs, it is not necessary to establish a project implementation unit  - 18- (PIU). However, to contribute to the satisfactory implementation of the project, the establishment of a PCU, discussed below, is envisaged. B. IMPLEMENTATION ARRANGEMENTS 4.4 Procurement of O&M Equipment. Based on the need and availability of funds to pay for their share of the cost, WUOs would purchase the O&M equipment from a pre- approved list. A list of WUOs' requests for O&M equipment to be purchased during the project would be updated and approved for WUOs by DSI RCs within 30 days of loan signing. This list would form the basis for an agreement, with a standard format, between DSI and each WUO, stating the main arrangements for procurement of equipment, payment of grant, and commitment of both sides. The form of agreement would be subject to Bank approval. The standard agreement would contain the list of percentages of the grant applicable to each type of equipment in inland and coastal zones. To procure the equipment and pay for the grant portion of the cost, the following actions would be taken: (a) WUOs would: (i) obtain quotations (as described in the procurement section below) for required equipment, select the supplier with the lowest responsive quotation and, before award, obtain RC's endorsement that the WUO procurement decision is consistent with procurement procedures; (ii) procure the equipment, pay their share of the cost to the supplier (about 70% on average, to be specified for various equipment in the agreement mentioned in para. 4.4), and present certification of payment to the supplier, to DSI RC for endorsement that the WUO has paid its share of the cost; (iii) send their grant applications to Consultant Coordinator to be endorsed by Consultant Coordinator and DSI coordinator or his/her alternate to be forwarded by CC to the agent bank (described below) for payment to the suppliers. The above quotations and receipt, previously endorsed by RC, would be attached to the application; and (iv) upon certification of payment to the supplier from the agent bank, obtain the equipment and use it for O&M purposes under the general supervision of RC, and not resell it within five years. (b) The DSI Regional Coordinator would promptly certify the two matters mentioned under (a) (ii) and (iii) above. If RC finds a deficiency in this respect, he would advise the WJUO without delay to correct the matter and return it for certification. The DSI RC would monitor the purchased  -19- equipment to ensure that the equipment is properly used for the intended O&M purpose and not resold within five years. (c) The Consultant Coordinator would forward the WUO's application to the bank within five business days of its receipt. The PCU staff responsible for procurement and disbursement would file the documents in an orderly manner and enter the required information in a computerized database to facilitate tracking of grant funds and preparation and handling of applications for replenishment of the special account and the project account by PCU. Such applications would be signed by DSI Coordinator or his/her alternate. (d) The Agent Bank (where a project account is opened by the government) would pay the supplier within four business days, upon receipt of WUO's application endorsed by CC and DSI coordinator or his/her alternate. Signatures of the CC and DSI coordinator or his/her alternate would be supplied to the Agent Bank. 4.5 Considering the current extended delays in procurement by government agencies and the large quantity of proposed procurement of O&M equipment for several hundred WUOs spread all over the country, there was some concern that this task might not be achieved in a timely manner. To address this concern, the above decentralized arrangement for procurement of equipment by WUOs, who urgently need it, is envisaged. 4.6 Procurement of Works and Drip Irrigation Pipes for the PDIS Component. In principle, the above arrangements for procurement of O&M equipment would apply, as described below: (a) For works, the WJUO would: (i) with the assistance of supervision consultant and general supervision of GDRS RC, invite bids and award contracts according to procurement procedures discussed in Chapter 4; (ii) pay contractors their share (60%) of contractors' bills for advance payments and payments against completion of works in stages according to the terms of contract, and send application(s) endorsed by CC and GDRS Coordinator or his/her alternate to the agent bank through CC for payment to the contractors of the balance (40%). Such applications prior to being sent to PCU, would be subject to the endorsement of the supervision consultant and GDRS RC. For drip irrigation pipe, members of WUOs would: (iii) obtain quotations (as described in the procurement section below), select the supplier with the lowest responsive quotation and, before  - 20 - award, obtain GDRS RC's endorsement that the procurement decision is consistent with the project procurement procedure; (iv) procure the pipe, pay their share of the cost (84%) to the supplier, and present the supplier's receipt of payment to RC for endorsement that the WUO member has paid its share of the cost; (v) send their applications to the consultant coordinator and GDRS coordinator or his/her alternate for endorsement and to be forwarded by CC to the Agent Bank, described above, for prompt payment of the balance (16%) to the supplier. The above quotations and receipt, endorsed by RC, would be attached to the application; and (vi) upon receipt of payment by the supplier from the bank, obtain the drip irrigation pipe, use it, and not resell it for five years. (b) The GDRS Regional Coordinator would promptly certify the two matters mentioned under (a) (ii), (iii) and (iv) above. If RC finds a deficiency in this respect, he/she would advise the WUO without delay to correct the matter and return it for certification. DSI RC would monitor the completion of works and the utilization of drip pipe to ensure successful implementation of the schemes and that the members do not resell the drip pipe within five years. (c) The Consultant Coordinator would forward the WlUO's and its members' applications to the Agent Bank within a time period as defined in the Participation Agreement. The PCU staff responsible for procurement and disbursement would file the documents in an orderly manner and enter the required information in a computerized database to facilitate tracking of grant funds. (d) The Agent Bank would pay the contractors and suppliers within four business days, upon receipt of WUO's application endorsed by CC and GDRS coordinator or his/her alternate. Signatures of CC and GDRS Coordinator would be supplied to the Agent Bank. 4.7 Implementation of Institutional Strengthening Component. The following actions would be taken for recruiting consultants, completing training tasks, and procuring computers, office equipment and vehicles. (a) Employment of Consultants: (i) DSI and GDRS would recruit consultants following Bank Guidelines, "Selection and Employment of Consultants by World Bank Borrowers" (Jan. 1997), whose TOR and qualifications would be acceptable to the Bank. The DSI Coordinator, in  -21 - consultation with the GDRS Coordinator, would initiate recruitment of the CC (whose qualification is critical to the success of the project), and complete it with urgency. With the assistance of CC, DSI would recruit assistants to CC and support staff expeditiously, taking into consideration the GDRS Coordinator's views. (ii) With the assistance of CC, GDRS will recruit consultants for supervision of PDIS in close consultation with the Uluborlu WUO. (iii) Other consultants, including trainers, would be recruited by the PCU in close cooperation with concemed departments, who will jointly prepare satisfactory TOR for each task. With respect to studies in connection with schemes to be considered under the next phase project, they will give attention to the following issues: (1) difficulty in finding consultants with experience in large-scale successful transfer of irrigation management; (2) different levels of preparedness of various WUOs to finance their part of the investment and engineering costs, and determination of which is an important part of the selection of schemes for investment; and (3) finding satisfactory arrangement for paying consultants on the basis of successful completion of specific subtasks (such as schemes that lead to financial participation of individual or groups of WUOs). In view of these issues, they will consider completing some initial or pilot study(ies). (iv) In preparation of TOR for selection of schemes for irrigation, emphasis will be placed on introducing improved designs for irrigation systems, particularly for canals. (b) Procurement of Computers, Office Equipment and Vehicles. The PCU, in consultation with concerned departments of DSI and GDRS, would prepare satisfactory and non-restrictive specifications, and the PCU would procure them in accordance with the procurement arrangements discussed below under the procurement section. 4.8 Familiarizing WUOs and Coordinators with Procurement Procedures. At the beginning of the project, CC would make WUOs and the coordinators familiar with the project procurement arrangements. With respect to O&M equipment, the focus would be on advising the WUOs to avoid errors or omissions in obtaining the required quotations, and selecting the lowest responsive offer to ensure prompt payment to the supplier. To contribute to timely action on procurement by WUOs for PDIS, CC would familiarize the GDRS Coordinator and RC and the consultants for detailed design3 and supervision, with the more involved arrangements needed for NCB. The CC would also familiarize 3 Includes preparation of bill of quantities.  - 22 - concerned officials of DSI and GDRS with the procedures and actions needed for procurement of the institutional strengthening component. C. PROJECT COORDINATION AND IMPLEMENTATION SCHEDULE 4.9 Coordination. Project Coordination would be maintained by the PCU. The PCU would comprise the DSI Coordinator, GDRS Coordinator and CC. The CC would be the Secretary of the Committee, reporting to the DSI Coordinator on matters related to DSI, and to the GDRS Coordinator on matters related to GDRS. Issues concerning both agencies would be discussed and handled by all three members, but issues concerning only DSI or GDRS would be handled between the coordinator concerned and CC. Meetings for discussing and resolving issues could be called by the coordinators or CC. However, the CC will have responsibility for discussing issues without delay for corrective action with the concerned coordinator or both coordinators. The CC would be the Secretary of the unit, and support staff would provide the required administrative support. The PCU would have responsibility for record keeping and disbursement of all three components, and for procurement of the institutional strengthening component. For the O&M and PDIS components, WUOs will have responsibility for procurement. 4.10 Implementation Schedule. The project implementation schedule is contained in Annex E, based on implementation of the project in a period of five years, from the fourth quarter of 1997 through the third quarter of 2002. The schedule is based on a reasonable speed of implementation considering the existing implementation rate of projects in Turkey. With more serious efforts by the members of the PCU, particularly the CC, it would be possible to advance the start and completion dates of project tasks. 4.11 Implementation and Mid-term Review. Considering the innovative nature of the project, there is a need for implementing the project under close monitoring and supervision by the PCU and the Bank to contribute to its successful completion. This also requires that simplicity and flexibility be observed in project implementation to the extent possible. While an attempt has been made during project preparation to use simplified procedures, if during implementation it is identified that certain steps envisaged now are not essential, urgent action should be initiated by the PCU or the Bank to correct the problem. On the other hand, if certain arrangements are found to be lax, prompt action would be initiated by the above for improvement. Such issues should be raised in the monthly statements and quarterly progress reports to be issued by CC (see para below on reporting) and in the Bank supervision reports. Also, a mid-term review would take place around December 2000. D. MONITORING AND REPORTING 4.12 Monitoring. The project coordination consultants would monitor progress on the implementation of the project components and tasks. The results of such monitoring would be regularly reflected in project coordination consultants' progress reports and monthly statements. The project would strengthen DSI's capability to carry out monitoring and evaluation (M&E) of WUOs' performance in a timely and efficient  -23 - manner. Special attention would be given to the monitoring of benefits of transfer, including establishment of baselines. DSI and GDRS would also monitor implementation progress and ensure project completion. 4.13 Reporting. Project consultants would submit brief monthly statements and quarterly progress reports on progress, status and issues to concerned governmental agencies and the Bank. The monthly statements would contain a summary of progress on main activities and quarterly reports will contain details, including: (i) progress on procurement of O&M equipment and completion of the Pilot Scheme; (ii) payments made to suppliers and contractors; (iii) progress on technical assistance and training activities; (iv) status of performance indicators and progress on M&E; and (v) problems and proposed measures to overcome them. Project consultants would submit a work plan for the project for the following year, along with an estimate of project-related expenditures by October 31, and submit a Project Completion Report within six months of project completion. E. PROCUREMENT 4.14 The Bank's guidelines on "Procurement under IBRD Loans and IDA Credits" (January 1995) would be followed for project procurement. Since this is an innovative project and the major part of the investment will be paid by WUOs, they will have responsibility for implementing the investment part of the project (for details see Chapters 3 and 4). The procurement methods considered for each component are: (a) O&M Equipment Component. The O&M equipment would be procured by about 750 WUOs, who will pay for about 70% of the cost (on average). Each WUO would buy the equipment according to its need and the availability of funds, adhering to the arrangements described in Chapter 4. In view of the ownership of individual WUOs, and that each will have a different schedule for procurement of equipment, it is not efficient or practical to combine the procurement for ICB. They will use national shopping for equipment costing less than US$100,000 with an aggregate cost of US$14 M, and international shopping for equipment costing US$100,000 to US$400,000 with an aggregate cost of US$31 M. The latter category accounts for about 70% of the total cost of O&M equipment. It is unlikely that there will be any package for O&M equipment under ICB. (b) PDIS. This is also a primarily user financed component. Works would be procured by the Uluborlu WUO, which would pay 60% of the cost, under NCB. Drip irrigation pipes would be procured by the members of WUO, who would pay about 84% of the cost, using NS procedure for lots costing less than $100,000. (c) Institutional Strengthening Component. To promote transfer of irrigation O&M and investment responsibility from the Government to  - 24 - WUOs, DSI and GDRS would recruit consultants and procure computers, office equipment and vehicles through the PCU. (i) Consultants. Consultants as teams or individuals for short term and special assignments would be recruited following Bank Guidelines for "Selection and Employment of Consultants by World Bank Borrowers" dated January 1997. Coordinator Consultant (CC) with TOR and qualifications acceptable to the Bank will be recruited with urgency to ensure timely start of the project. Since the project (and preparation of the next phase project) is based on WJUOs' investment and full involvement, the CC and Assistant CC should be selected among qualified local consultants. They would be recruited on the basis of local advertisement and comparison of qualification and experience for the job. Other consultants would be recruited on the basis of arrangements shown in the procurement plan, Annex F. (ii) Computers, Office Equipment and Vehicles. A package of computers and office equipment with estimated cost of US$1.46 M would be procured under ICB. For urgent and emerging needs, packages of computers and office equipment costing less than US$100,000 with a total cost of less than US$300,000 would be procured under NS. The vehicles would be procured under ICB. A summary of procurement arrangements is given in the following table. Further details on the procurement methods to be used are given in Annex F. Annex E gives the schedule for implementation of procurement actions. All ICB, NCB and consultants contracts will be subject to Prior Review by the Bank. The Bank will also pre-review the first IS and NS contracts for equipment in each region. During project launch concerned officials and WUOs would be made familiar with procurement methods and arrangements as described in Chapter 4. A general procurement notice is being prepared.  - 25 - Table 4.1 Summary of Proposed Procurement Arrangements (US$ M) Item ICB NCB Other Total Works * PDIS works to be procured by WUO 3.88 3.88 (1.55) (1.55) Goods * O&M equipment to be procured by WUO 44.99a 44.99 (12.37) (12.37) * Drip irrigation pipes to be procured by WUO 2.98 b 2.98 (0.47) (0.47) * Vehicles & computers to be procured by PCU 2.30 2.30 (1.86) (1.86) * Urgent computers & office equipment 0.30c 0.30 (0.24) (0.24) Technical Assistance & Training * Coordination consultants 0.67d 0.67 (0.54) (0.54) * Short-term consultants 0.55e 0.55 (0.44) (0.44) * Studies mainly for future project(s) 1.42f 1.42 (1.15) (1.15) * Irrigation Master Plan Study 0.11 0.11 (0.09) (0.09) * Training and study tours 1.11 h 1.11 (0.90) (0.90) * Operating the PCU 0.48i 0.48 (0.39) (0.39) Total 2.30 3.88 52.61 58.79 Total Bank (1.86) (1.55) (16.59) (20.00) Note: Figures in parentheses show Bank-financed procurement. a. About 750 WUOs will individually buy this equipment while paying about 70% of the cost and ICB is not practical for them. For larger equipment (comprising about 3/4 of total O&M equipment) costing US$100,000 to US$400,000, IS will be used, and for smaller equipment costing less than U$100,000, NS will be used. b. Drip irrigation pipes will be purchased by individual users in packages less than US$100,000 using NS. Users will finance 84% of cost. c. On NS basis. d. Quality-based selection will be used. e. With contracts less than $50,000, single-source selection will be used. f. Quality and cost-based selection will be used. g. To ensure continuation of service, single-source selection will be used. h. Single-source selection will be used. i. PCU will be maintained on the basis of local administrative procedures acceptable to the Bank.  - 26 - F. DISBURSEMENTS 4.15 The borrower has requested a LIBOR-based single currency loan denominated in US dollars. Proceeds of the proposed loan would be disbursed through a Special Account established at the Central Bank and a Project Account [an interim or passthrough account which will be denominated in US dollars; each time a sum of US dollars equivalent to about 30 days of expenditures which have been clearly identified will be transferred from the Special Account at the Central Bank to the "passthrough" account] opened in a local bank (agent bank), subject to the provision that disbursement to suppliers and contractors will take place within four business days from the receipt of application by the related bank. Special Account will be utilized for the Institutional Strengthening Component of the project while the Project Account will be utilized for the remaining two components: PDIS and O&M Equipment. The authorized allocation to the Special Account will be US$2.0 M equal to about four months' average disbursements. Applications for replenishment of the Special Account will be submitted monthly or when one third of the amount deposited has been withdrawn. Monthly bank statements of the Special Account that have been reconciled by the PCU will accompany all replenishment requests. 4.16 Proceeds of the loan would be disbursed according to the percentages given in Table 4.2. The grant portion is planned to cover on average about 30% of the cost of O&M equipment and PDIS. The disbursement schedule is given in Annex J. 4.17 Disbursements would be made against statements of expenditure (SOEs) for: (a) O&M equipment purchased individually by WUOs with contracts not exceeding US$400,000; (b) drip irrigation pipes purchased by the PDIS WUO or its members in small lots costing less than US$ 100,000; (c) computers and office equipment with contracts not exceeding US$100,000; (d) consultant contracts below US$50,000 for individual consultants and below US$100,000 for consulting firms and for training and study tour costs; and (e) PCU operating expenses. Full documentation would be provided for all other disbursements against contracts for PDIS works, purchase of vehicles, computers, and payment to other consultants. The SOEs would be prepared by the PCU. Table 4.2 Disbursement Categories (US$ M) Category Amount % of Expenditures to be Financed (1) Works 1.55 40 (2) Goods O&M equipment 12.37 28 (average) Drip pipes 0.48 16 Computers & vehicles 2.06 100 (3) Consultants & Training 3.15 100 (4) PCU operating expenses 0.39 95 TOTAL 20.00 34  - 27 - 4.18 Auditing. The PCU and concerned departments of DSI and GDRS will maintain separate accounts. All accounts will adequately reflect expenditures made with respect to the project, in accordance with sound accounting practices acceptable to the Bank. All annual financial statements of the project will be audited by the Government's Treasury auditors in accordance with the March 1982 Bank document (Guidelines for Financial Reporting and Auditing of Projects Financed by the World Bank). Audit reports will be submitted to the Bank within six months of the end of each accounting period and will include a separate opinion by the auditor on disbursements against certified SOEs. SOEs and other audit-related material will be made available to Bank supervision missions. 5. BENEFITS, ECONOMIC ANALYSIS4 AND RISKS A. PROJECT BENEFITS 5.1 The main benefits of the project are: (i) increased area under irrigation leading to higher cropping intensity and crop yields; (ii) improved and equitable water delivery; and (iii) reduced pressure on the fiscal budget from transfer of O&M work to WUOs. The project would also promote sustainable water user organizations by providing support to improve their managerial and technical capabilities. 5.2 The project would increase crop yields on about 1.5 M ha. of irrigated land, benefiting about half a million farming families from about 750 WUOs. By the end of the project period, the annual value of crop output would increase by US$720 M in economic terms, and over US$2 billion in financial terms, including an increase in food grain production of 480,000 tons/year (wheat and corn only). The area under irrigation would be expanded through more efficient water use. Increased intensity will also promote double cropping in certain areas where current irrigation ratios are high and close to 100%. The pilot drip irrigation scheme will have a profound demonstration effect on farmers, in turn encouraging them to adopt water saving farming practices. 5.3 The O&M equipment funded by the project will keep the momentum on the O&M transfer program that started seriously in Turkey in 1993. WUOs are presently using old worn-out equipment from DSI and are being charged a nominal user fee. This equipment is not always effective or efficient, and is often not available when the WUOs need them. The proposed grant, on a one time basis, will enable WUOs to buy their O&M equipment to perform their tasks in a reliable manner and take over O&M responsibility from DSI. WUOs will bear a major portion of the O&M equipment cost, which is expected to build greater ownership and commitment to the O&M task they have undertaken. At present, the average cost of O&M in a scheme managed by WUOs is about US$30 per hectare, which is only half the cost incurred by DSI in the irrigation schemes under its control. 4 Based on completion of the O&M equipment component of the project under the proposed loan of $20 M and the envisaged follow-up loan of $17.5 M (see para 3.2).  - 28 - 5.4 Cost recovery of O&M expenses has improved since responsibility has been transferred to the WUOs. Most of the WUOs have 100% cost recovery, against 20% recovery rates in DSI-managed schemes. By strengthening the WUOs, this trend toward increased cost recovery of O&M costs is expected to continue. 5.5 There will be substantial unquantifiable benefits from the institution strengthening efforts to make the WUOs sustainable, and the project agencies responsive to the needs of farmers. The project would strengthen the farmers' planning and implementation capacity by providing training and TA on technical, financial and managerial matters. The project has envisaged a major role for users in financing and implementing the project components, thereby ensuring greater user participation. 5.6 Fiscal Benefits of the Project. The project will have significant fiscal benefits. In the without-project scenario, the government would have to partially renew the existing DSI machinery inventory (mainly due to old age and obsolescence) to be able to provide them to WUOs to carry out their O&M services. The estimated cost of the incremental machinery needs (mainly heavy equipment) amounts to US$107 M, which would need to be acquired by the government over a period of ten years. In the with-project scenario, WUOs would procure their own equipment needs and contribute close to 70% of the equipment costs, which means that the cost to the government in equipment grants and accompanying technical assistance and training would be about US$35 M. Total government savings in net present value (in 1997) would amount to US$301 M for the period 1997-2011 at 15% OCC. 5.7 Without the project, it is also likely that WUOs will be forced to return the transferred areas back to DSI for them to carry out the entire O&M operation of the irrigation schemes, using their staff and equipment. If this happened, DSI responsibilities would increase and it would be unable to reduce its overhead costs and staff size. This could result in a fiscal burden of about US$57 M in 1997 increasing to US$82 M in 2011. In the with-project scenario, there would be a reduced role for DSI, leading to significant staff cuts. WUOs have proven that they can carry out the O&M operations more cost effectively than DSI. As a result, the burden on public finances would gradually decline, from US$24 M in 1997 to around US$15 M in 2011. In aggregate terms, during the period corresponding to the project life, 1997 through 2002, the government is expected to save US$226 M. During the post-project era, 2003 through 2011, savings due to the transfer, duly reinforced and consolidated by project interventions, would amount to about US$597 M (Annex G, Part 2, Table 1). 5.8 Savings to the Economy. Partial savings to the economy (partial because increased farmer income is not taken into account in the analysis) by reducing the O&M costs of the irrigation schemes through project support to make the transfer process sustainable was computed. This analysis reveals that over the project period, cumulative savings to the economy would be about US$170 M and could reach US$385 M by the end of the year 2011 (see Annex G, Part 2, Table 2).  - 29 - B. ECONOMIC ANALYSIS 5.9 Models. The incremental benefits are derived from modeling the production and cropping patterns for a set of representative WUOs. The overall economic analysis for the project excluded the pilot drip irrigation program for which the analysis is carried out separately. Annex G details the sample seven WUO farm models considered, the assumptions, calculations used, area and aggregate country models and their financial and economic rates of return. Details on the cropping pattern of WUOs with and without project, expected future yields with and without the project and the economic prices for the inputs and outputs used are in the Project Files. Major tradable outputs have been valued by considering and updating OECD's estimated farmgate prices for Turkey and averaging them over the last ten years to eliminate intertemporal variations. 5.10 Prices. The prices used in developing the farm models were gathered from June 1996 through January 1997. For the financial/economic analysis, averages were computed using the past 10 years' farn gate price data for wheat, corn, sugar beet and cotton, expressed in constant February 1997 US dollars. This is due to rather significant price movements on both the domestic and international markets, particularly for wheat and cotton. Financial and economic prices used are listed in Annex G, Part 2, Table 3. 5.11 Standard conversion factors. In the economic analysis, a SCF of 0.85 was applied to non-traded goods. For highly supported crops, such as wheat, cotton and sugar beet, a lower SCF of 0.75 was assumed. For labor, the SCF used was 0.80, while highly subsidized inputs were attributed a SCF of 1.4. 5.12 Investment Costs (non-production costs). These costs consist of O&M costs, equipment purchase costs, technical assistance and training costs to WlJOs. Also, investment costs for improving DSI staff planning and managerial capabilities, and their costs related to supervision, monitoring and evaluation have been included. Since no major adverse environmental effects are anticipated, the economic benefits have not been adjusted for any environmental externalities. 5.13 Economic Rates of Return. The gross economic rate of return for the project by discounting all project costs and benefits over 10 years was estimated at over 72% (see Annex G, Part 2, Table 4). 5.14 A sensitivity analysis was performed considering increases in project costs and decreases in expected incremental project benefits. The project is robust with respect to changes in the benefits and costs. However, significant changes in the benefit/cost ratios are unlikely. The analysis used conservative crop yield estimates and modest improvements in the yield figures. Realistic estimates were made on improvements in the irrigation ratios (from 77% to 80%) and an annual rate of increase in new WUOs of 6% over the project period.  - 30 - Table 5.1 Sensitivity Analysis for Variation in Costs and Benefits Benefits and Costs Benefits Down 20% Benefits Down 10% Benefits Unaltered Costs unaltered 45 59 72 Costs up 10% 34 48 60 Costs up 20% 24 28 49 5.15 Switching Values. Costs can increase by 60% or benefits decrease by 38% before the ERR could fall below the assumed 15% OCC. 5.16 Economic Analysis of the Drip Irrigation Pilot. The investment costs for the Uluborlu drip irrigation pilot include civil works, drip irrigation pipes needed for installing drip irrigation systems, farm inputs, and estimated incremental operation and maintenance charges. The economic analysis covered a period of 15 years. The economic costs per hectare for drip irrigation works is estimated at US$1,500, exclusive of construction costs. The economic benefits for the pilot will accrue from changes in the cropping pattern and increases in per unit productivity, resulting in significant incremental production. Of the 1,200 ha. in the pilot scheme, about 1,100 ha. of land will be allocated to cherry production and 100 ha. will remain under apples. It is expected that the current area under irrigation will remain the same at 1,200 ha. About 19,000 tons of high quality export cherries is estimated. The economic rate of return was 19% and the financial IRR was computed to be 24%. The net present value of economic earnings from the pilot scheme is estimated at about US$10.5 M. The switching values indicate that the project is robust to changes in costs and benefits -- costs can increase by more than 1 10% before the ERR will drop to 15% and benefits will have to fall by more than 50% for the ERR to drop to 15%. C. JUSTIFICATION FOR THE PROPOSED GRANT 5.17 Partial Grant Financing. For both components, O&M equipment support and the pilot scheme, the proposed grant represents an up-front one-time payment. An alternative to partial grant financing would be to subsidize agricultural credit to assist the WUOs in procuring their equipment needs. The Agricultural Bank's standard equipment loans involve a 50% interest rate (at least 35 to 40 points below the rate of inflation in the country), a seven year repayment period, and equal annuity payments over the seven year period. The amount of hidden subsidy in this type of financing is between 46% and 54%. The rate of the hidden state subsidy would increase if erosion in the principal amounts due to bad loans and losses due to delinquency are also included in the analysis. In this financing method, the fiscal burden on the state would be in the order of US$54 M for an overall machinery investment of US$107 M. 5.18 Besides, there is considerable merit to direct grant financing because such an arrangement will not distort the financial markets, avoids interference with resource allocation based on market mechanisms and price signals, and limits political favoritism  - 31 - that is often involved in the allocation of subsidized credit, which may be diverted to other uses. 5.19 WUO Equity Financing Capacity. The transfer of O&M responsibility from DSI to the WUOs has resulted in increased cost recovery and reduced O&M costs because of the higher operating efficiencies of WUOs. This has relieved the government of the funding obligation for O&M and a lower level of overall O&M cost to the economy. WUOs have made considerable savings from the funds normally collected as user fees. On a per hectare basis, an average WUO's budget is about US$33, of which only a little more than 50% is used for the current year's O&M expenditure, while the remaining amount is saved to meet future cash flow needs for machinery acquisitions, and to cover minor investments in building, land preparation, and contingency needs. In addition to raising additional funds from the participating farmers, it is expected that this resource will be used in financing a major part of their O&M machinery needs in the project. D. RISKS 5.20 The project risks have been identified and analyzed. Measures have been incorporated in the project to minimize their effect. The major risks associated with the project are: (a) Reversal of Transfer: There is a possible risk of a reversal in the transfer program, with irrigation schemes going back to DSI. The O&M equipment component in the project is an effort to support the WUOs which are in the early stage of assuming responsibility for the O&M works. By assisting the WUOs to acquire their much needed O&M equipment and providing TA and training, the sustainability of WUOs would be enhanced. (b) WUOs' Commitment: All WUOs interviewed have shown urgent need for O&M equipment and commitment to financing a major part of the cost. There is the possibility that some of them may not follow through on their commitment. There is also a possibility that WUOs may find used equipment, including some from DSI, at a lower cost, and may not buy all the envisaged equipment. This would reduce the disbursement, but involves no risk for the success of the project. The intended purpose will still be served. (c) Delay in Implementation: The risk of excessive delay in implementation of the O&M equipment component has been reduced by entrusting the responsibility for procurement of O&M equipment to WUOs. Also, the procedures involved in requesting grant funds for O&M equipment, getting their approval, and the actual procurement process have all been simplified. While recruitment of consultants according to Bank guidelines are necessary for transparency and competition, the time needed for processing and recruitment may slow down project implementation.  - 32 - Difficulty in finding consultants with experience with successful large- scale transfer of irrigation management and investment responsibility is also of concern. (d) PDIS: For the pilot scheme, the reliability of water resources is uncertain. Therefore, the design adopted has been conservative. Only 1,200 ha of the full engineering design area of 1,600 ha were considered in planning the project interventions, as the water available was assumed to be sufficient to improve irrigation on at least 1,200 ha. 6. AGREEMENTS A. CONDITIONS FOR EFFECTIVENESS 6.1 An Agent Bank, satisfactory to the Bank, has been selected by the Government, and the Government has entered into an Agency Agreement with the said Agent Bank for channeling the grant funds for implementation of the O&M equipment and PDIS components of the Project, under terms and conditions satisfactory to the Bank. 6.2 The Consultant Coordinator has been selected under terms of reference satisfactory to the Bank. 6.3 DSI and GDRS have respectively designated coordinators to serve in the PCU, with qualifications and experience satisfactory to the Bank. 6.4 The Project Account has been opened by the Borrower in the Agent Bank. B. AGREEMENTS REACHED DURING NEGOTIATIONS 6.5 During loan negotiations the Government agreed to: (a) ensure that DSI prepare a draft law for WUOs, satisfactory to the Bank, not later than December 31, 1997; and (b) take the necessary measures through the related line ministries to allow for the establishment of new WUOs.  - 33 - ANNEX A COST TABLES  Turkey Participatory Privatization of Irrigation Management and % % Total Components Project Cost Sunrnary (TL Million) (USS) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs 1. Operation and Maintenance Equipment 1,760,507 5,281,522 7,042,029 11,003,171 33,009,513 44,012,684 75 78 2. Institutional Strengthening 548,752 490,688 1,039,440 3,429,700 3,066,800 6,496,500 47 11 3. Pilot Drip Irrigation Scheme 780,113 187,431 967,544 4,875,705 1,171,445 6,047,150 19 11 Total BASELINE COSTS 3,089,372 5,959,641 9,049,013 19,308,576 37,247,758 56,556,334 66 100 Physical Contingencies 88,438 30,807 119,245 552,736 192,545 745,280 26 1 Price Contingencies 92,887 144,597 237,485 580,547 903,733 1,484,280 61 3 Total PROJECT COSTS 3,270,697 6,135,046 9,405,743 20,441,858 38,344,035 58,785,894 65 104 SUMCOM.XLS SUMCOM Page1 9/4/97 10:11 AM  Turkey Participatory Privatization of Irrigation Ma % % Total Expenditure Accounts Project Cost S (TL Million) (US$) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs I. Investnent Costs Vehicles for Agencies 33,600 96,000 129,600 210,000 600,000 810,000 74 1 Office Equipment 79,680 190,720 270,400 498,000 1,192,000 1,690,000 71 3 1 Field Equipment (O&M Equip) 1,760,507 5,281,522 7,042,029 11,003,171 33,009,513 44,012,684 75 78 w Training 104,240 61,120 165,360 651,500 382,000 1,033,500 37 2 @ Technical Assistance 223,200 38,400 261,600 1,395,000 240,000 1,635,000 15 3 1 Special Studies/Designs 108,032 104,448 212,480 675,200 652,800 1,328,000 49 2 PDIS Civil Works 491,690 63,822 555,512 3,073,065 398,885 3,471,950 11 6 PDIS Materials 288,422 123,610 412,032 1,802,640 772,560 2,575,200 30 5 Total BASELINE COSTS 3,089,372 5,959,641 9,049,013 19,308,576 37,247,758 56,556,334 66 100 Physical Contingencies 88,438 30,807 119,245 552,736 192,545 745,280 26 1 Price Contingencies 92,887 144,597 237,485 580,547 903,733 1,484,280 61 3 Total PROJECT COSTS 3,270,697 .6,135,046 9,405,743 20,441,858 38,344,035 58,785,894 65 104 SUMCOM.XLS SUMEA Page 2 9/4/97 10:11AM  Turkey Participatory Privatization of Irrigation Management and Project Components by Year - Totals Including Co (US$) Totals Including Contingencies 97/98 98)99 99/00 00/01 01102 Total a 1. Operation and Maintenance Equipment 22,008,047 22,983,530 - - - 44,991,577 2. Institutional Strengthening 2,629,040 1,353,201 926,247 1,272,113 757,449 6,938,049 3. Pilot Drip IrTigation Scheme 2,483,939 2,610,845 1,246,365 254,757 260,362 6,856,268 Total PROJECT COSTS 27,121,025 26,947,576 2,172,612 1,526,870 1,017,811 58,785,894 SUMCOM.XLS COMYRT Page 3 9/4/97 10:11 AM  Turkey Participatory Privatization of Irrigation Ma Expenditure Accounts by Component Operation and Pilot Drip (US$) Maintenance Institutional Irrigation Equipment Strengthening Scheme Total I. Investment Costs Vehicles for Agencies - 831,649 - 831,649 Office Equipment - 1,747,198 - 1,747,198 , Field Equipment (O&M Equip) 44,991,577 - - 44,991,577 Training - 1,106,764 - 1,106,764 Technical Assistance - 1,719,660 - 1,719,660 Special Studies/Designs - 1,532,779 - 1,532,779 PDIS Civil Works - 3,875,248 3,875,248 PDIS Materials - 2,981,020 2,981,020 Total PROJECT COSTS 44,991,577 6,938,049 6,856,268 58,785,894 Taxes 8,998,315 1,337,795 1,252,013 11,588,123 Foreign Exchange 33,743,682 3,257,803 1,342,550 38,344,035 SUMCOM.XLS EXCMTF Page 4 9/4/97 10:11 AM  Turkey Participatory Privatization of Irrigation Ma Expenditure Accounts by Years - Tot (US$) Totals Including Contingencies 97/98 98/99 99/00 00/01 01/02 Total 1. Investrnent Costs Vehicles for Agencies 521,676 309,973 - - - 831,649 w Office Equipment 1,277,586 209,660 126,083 131,663 2,206 1,747,198 Field Equipment (O&M Equip) 22,008,047 22,983,530 - - - 44,991,577 Training 281,816 288,016 305,968 155,136 75,828 1,106,764 Technical Assistance 419,565 346,136 348,471 302,177 303,310 1,719,660 Special Studies/Designs 128,397 199,416 145,724 683,137 376,105 1,532,779 PDIS Civil Works 2,483,939 1,391,309 - - - 3,875,248 PDIS Materials - 1,219,536 1,246,365 254,757 260,362 2,981,020 Total PROJECT COSTS 27,121,025 26,947,576 2,172,612 1,526,870 1,017,811 58,785,894 SUMCOM.XLS EAYRT Page5 9/4197 10:11 AM  Tulrkey P te P brvawaz6os of hpon t hy Ex_ooR Accouits UreAdnwn ConIL Pks (USS Phrvical Conhog lebs Price Contiefnd Price Bsae Cost Loel Loec Tot hcL Cont B_ se Codst+ Cono on LocW (ExdL DutrS & (led. Dutis & (Exee) Dutiks & Loeei (Eed. DLtie & Pflee Cost. Physi For. ExL Texs) Tex" Toed For ExS. Taxs) Tax" TotW Fo. tEe. Tax") Taxes Total For. Excb. Taxu) Twe. Tota os Bae Costs CosnL L hwvsfetmo Costs Vc)sefr Agoeebs 6,0000 41,000 102.000 e610000i - 4,800 1,200 6,000 11,938 581 3,130 15,849 611,038 53,381 . 186,330 831,049 825,583 8,0os COfie EquEmet 1,192,000 160,000 338,000 1,e60,000 16,000 4,000 20,000 24,080 6,670 7,440 37,198 1,218,0S 181,670 349,440 1,747,198 1.728,554 20,644 Field Eumieret (O&M Equip) 33,009,513 2,200,634 8,802,537 44,012,884 - - - * 734,169 40,945 195,779 078,893 33,743,062 2,249,579 8,888,315 44,991577 44,981,577 - Tehig 382,000 444,800 208,700 1,033,500 13,000 8,000 5,250 20,250 10,404 21,117 9,403 47,014 411,494 473,917 221,353 1,100,784 1,078,814 27,870 TedrwlAssistame 240,000 1,118,000 270,000 1,635,000 - . . 9 ,075 80,4e8 15,117 84,680 249,075 1,176,460 294,117 1,719,660 1,719,880 Spec*" Stl1.slO es)s 052,s80 409,600 265,600 1,328.000 02,400 20,800 20,800 104,000 54,000 20,015 20,155 100,779 769,208 457,015 306,550 1,532,779 1,420,791 111,987 PDIS Cid Works 398,885 2,378,675 694,390 3,471,950 39,689 225,320 66,302 331,510 9,470 47,960 14,358 71,788 448,244 2,651,805 775,050 3,875,248 3,537,329 337,879 PDIS Matrisals 7256 i300 412,032 2ze752Dw 7.25 13s01 41,203 257.520 44, 4 so.es02 23,728 ,300 894,306 1eos751 n8983 2ssio20 27100ts 2 Toted 37,247,758 9,140,317 11,160,259 66,558,334 192,545 413,980 130,755 745,280 903,733 291,438 289,109 1,404,320 38,344,035 8,853,735 11,588,123 08,785,894 58,010,445 775,449 SUMCOUCM.XLS EABRKF Page1 4W17 10:21 AM  Turkey Participatory Privatization of Irrigation Management an Components by Financiers I (I)S$) World Bank Govemment WUOs Total Local (Excl. Duties & X Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes O 1. Operation and Maintenance Equipment 12,372,684 27.5 0 - 32,618,893 72.5 44,991,577 76.5 33,743,682 2,249,579 8,998,315 2. Institutional Strengthening 5,600,254 80.7 1,337,795 19.3 - - 6,938,049 11.8 3,257,803 2,342,451 1,337,795 3. Pilot Drip Irrigation Scheme 2,027,062 29.6 0 - 4,829,206 70.4 6,856,268 11.7 1,342,550 4,261,706 1,252,013 Total Disbursement 20,000,001 34.0 1,337,795 2.3 37,448,099 63.7 58,785,894 100.0 38,344,035 8,853,735 11,588,123 FINANCEJXLS COMFIN Page 1 9/4/97 10:02 AM  Turkey Participatory Privatization of Irrigation Ma Expenditure Accounts by Financiers (US$) World Bank Government WUOs Total Local (Excl. Duties & Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes I. Investment Costs Vehicles for Agencies 665,319 80.0 166,330 20.0 - - 831,649 1.4 611,938 53,381 166,330 > Office Equipment 1,397,758 80.0 349,440 20.0 - - 1,747,198 3.0 1,216,088 181,670 349,440 Field Equipment (O&M Equip) 12,372,684 27.5 0 - 32,618,893 72.5 44,991,577 76.5 33,743,682 2,249,579 8,998,315 Training 885,411 80.0 221,353 20.0 - - 1,106,764 1.9 411,494 473,917 221,353 Technical Assistance 1,425,543 82.9 294,117 17.1 - - 1,719,660 2.9 249,075 1,176,468 294,117 Special Studies/Designs 1,226,223 80.0 306,556 20.0 - - 1,532,779 2.6 769,208 457,015 306,556 PDIS Civil Works 1,550,099 40.0 0 - 2,325,149 60.0 3,875,248 6.6 448,244 2,651,955 775,050 PDIS Materials 476,963 16.0 0 - 2,504,057 84.0 2,981,020 5.1 894,306 1,609,751 476,963 Total Disbursement 20,000,001 34.0 1,337,795 2.3 37,448,099 63.7 58,785,894 100.0 38,344,035 8,853,735 11,588,123 FINANCE.XLS EXP_FIN Page 2 914/97 10:02 AM  Turkey Participatory Privatization of Irrigation Management and I Disbursement Accounts by Financiers (US$) World Bank Government WUOs Total Local (Excl. Duties & Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes A. Uluborlu PDIS PDIS Civil Works 1,550,099 40.0 0 - 2,325,149 60.0 3,875,248 6.6 448,244 2,651,955 775,050 Drip Irrigatlon System 476,963 16.0 0 - 2,504,057 84.0 2,981,020 5.1 894,306 1,609,751 476,963 Subtotal Uluborlu PDIS 2,027,062 29.6 0 - 4,829,206 70.4 6,856,268 11.7 1,342,550 4,261,706 1,252,013 B. O&M Equipment for WUOs 12,372,684 27.5 0 - 32,618,893 72.5 44,991,577 76.5 33,743,682 2,249,579 8,998,315 C. Equipment and Goods DSI Related Equipment 609,488 80.0 152,372 20.0 - - 761,860 1.3 609,488 - 152,372 DSI Related Vehicles 611,938 80,0 152,985 20.0 - - 764,923 1.3 611,938 - 152,985 DSI Related DSS 606,600 80.0 151,650 20.0 - - 758,250 1.3 606,600 - 151,650 GDRS Related Equipment 181,670 80.0 45,418 20.0 - - 227,088 OA - 181,670 4S,418 GDRS Related Vehicles 53,381 80.0 13,345 20.0 - - 66,726 0.1 - 53,381 13,345 Subtotal Equipment and Goods 2,063,077 80.0 515,769 20.0 - 2,578,847 4.4 1,828,026 235,051 515,769 D. Technical Assistance DSI Related Consultants 489,577 89.1 60,126 10.9 - - 549,703 0.9 249,075 240,502 60,126 DSI Related Special Studies and Designs 759,960 80.0 189,990 20.0 - - 949,950 1.6 569,970 189,990 189,990 GDRS Related Special Studies and Designs 225,528 80.0 56,382 20.0 - - 281,910 0.5 169,146 56,382 56,382 GDRS Related PDIS TA 240,735 80.0 60,184 20.0 - - 300,918 0.5 30,092 210,643 60,184 Project Coordination Unit 935,966 80.0 233,991 20.0 - - 1,169,957 2.0 - 935,966 233,991 Subtotal Technical Assistance 2,651,766 81.5 600,673 18.5 - - 3,252,439 5.5 1,018,283 1,633,483 600,673 E. Training DSI Related Training 640,152 80.0 160,038 20.0 - - 800,190 1.4 260,418 379,734 160,038 GDRS Related Training 245,259 80.0 61,315 20.0 - - 306,574 0.5 151,076 94,183 61,315 Subtotal Training 885,411 80.0 221,353 20.0 - - 1,106,764 1.9 411,494 473,917 221,353 Total 20,000,001 34.0 1,337,795 2.3 37,448,099 63.7 58,785,894 100.0 38,344,035 8,853,735 11,588,123 FINANCEXLS DISFIN Page 3 9/4/97 10:02 AM  - 43 - Turkey Participatory Privatizaton of Irrigation Management and Inveatment Project Table 1. Institutional Strengthening Detailed Costs Quantities Unit Cost Base Cost Overall Cost Unit 97198 98199 99100 00101 01102 Total (USS) Total Total I. Investment Costs A. Support to DSI 1. Technical Assistance a. Short Term (Local) Legal Consultants pm 1 I - - - 2 5,000 10,000 10,221 Trainers pm 5 5 5 5 5 25 5,000 125,000 132,059 Otherstobespecified pm 5 7 7 6 5 30 5,000 150,000 158,347 Subtotal Short Term (Local) 285,000 300,628 b. Short Term (Intemational) Water Basin Management Specialist pm 1 - 1 - - 2 15,000 30,000 31,005 MIE System Design Specialist pm 2 1 1 - - 4 15,000 60,000 61,668 O&M Equipment Engineer pm 1 1 1 - - 3 15,000 45,000 46,503 Cost Accounting Specialist pm 1 1 - - - 2 15,000 30,000 30,664 Unspecified pm 1 1 1 1 1 5 15,000 75,000 79,236 Subtotal Short Term (intemational) 240,000 249,075 Subtotal Technical Assistance 525,000 549,703 2. Equipment a. Equipment for Regional Offices Photocopier item 6 6 6 6 - 24 5,000 120,000 125,383 Computer(desktop) item 11 11 11 11 - 44 2,500 110,000 114,934 Computer (laptop) item 6 6 6 6 - 24 4,000 96,000 100,306 Video camera item 3 - - - - 3 3,000 9,000 9,099 Video player item 3 - - - - 3 2,000 6,000 6,066 Slide projector item 3 - - - - 3 5,000 15,000 15,165 TV set item 3 - - - - 3 1,000 3,000 3,033 UPS item 3 - - - - 3 6,000 18,000 18,198 Data show device item 3 - - - - 3 14,000 42,000 42,462 Unspecified amount 15,000 15,754 Subtotal Equipment for Regional Offices 434,000 450,400 b. Equipment for O&M Head Office-Ankara Server PC item I - - - - 1 5,500 5,500 5,561 PC item 20 20 12 - - 52 2,000 104,000 107,113 Laptop PC item 9 - - - - 9 3,000 27,000 27,297 Laserprinter item 8 - - - 8 2,250 18,000 18,198 DeskJet printer item 9 - - - - 9 540 4,860 4,913 Portable deskjet pnnter item - 2 - - - 2 320 640 661 Data show devices item 2 - - - - 2 14,000 28,000 28,308 Local area network & related equipment amount 54,000 54,594 Scanner item 3 - - - - 3 2,000 6,000 6,066 Office fumiture and other equipment amount 10,000 10,221 Photocopier item 5 - - - 5 6,000 30,000 30,330 UPS item 3 - - - - 3 6,000 18,000 18,198 Subtotal Equipment for O&M Head Office - Ankara 306,000 311,460 c. Decision Support System Equipment Server item 10 - - - - 10 2,500 25,000 25,275 Computer item 80 - - - - 80 1,250 100,000 101,100 Modem item 40 - - - - 40 300 12,000 12,132 Structural Cabling item 50,000 50,550 Printer item 25 - - - - 25 1,000 25,000 25,275 Customized software code for DSS item 1 - - - - 1 80,000 80,000 80,880 Standard application packages la item I - - - - 1 80,000 80,000 80,880 Networking software item I - - - - 1 75,000 75,000 75,825 Plotter item 3 3 10,000 30,000 30,330 Digitzer item 15 - - - - 15 200 3,000 3,033 Scanner item 3 - - - - 3 5,000 15,000 15,165 COMPO123.XLS INS_STR Page1 914/97 9:54AM  - 44 - Detailed Costs QuantWes Unit Cost Base Cost Overall Cost Unit 97198 98199 99100 00101 01102 Total (US$) Total Total GIS software item 1 - - - - 1 125,000 125,000 126,375 CMI works software packages item 1 - - - - 1 80,000 80,000 80,880 Surveying software packages item I - - - - 1 50,000 50,000 50,550 Subtotal Decision Support System Equipment 750,000 758,250 Subtotal Equipment .1,490,000 1,520,110 a Field Vehicles for O&M Regional Offices vehicle 15 10 - - - 25 30,000 750,000 764,923 4. Staff Training (DSI+WUO) a. Overseasstudytours amount 225,000 232,516 b. In-country Training (DSI+WUO) amount 90,000 93,006 c. Seminars lb amount 156,000 161,211 d. English Language (DSI) amount 300,000 313,457 Subtotal Staff Training (DSI+WUO) 771,000 800,190 S. Project Coordination Unit Agricultural Economist/ Team Leader py I I 1 1 1 5 60,000 300,000 316,942 Assistant Team Leader py 1 t 1 1 1 5 40,000 200,000 211,295 Support Staff py 2 2 2 2 2 10 15,000 150,000 158,471 Olfice Rental and Related Costs amount 150,000 158,471 Equipment and Fumishings amount 60,000 60,660 Allowances and Travel amount 150,000 158,471 Other Operating Costs amount 100,000 105,647 Subtotal Project Coordination Unit 1,110,000 1,169,957 Subtotal Support to DSI 4,646,000 4,804,683 S. Support to GDRS In Ankara & Field 1. Technical Training in Drp Irrigation amount 50,000 59,623 2 Overseas Study Tours amount 162,500 188,845 3. Seminars amount 50,000 58,106 4. Office Equipment Computer item 5 5 - - - 10 2,000 20,000 22,487 Laser Prnter item 5 5 - - - 10 2,250 22,500 25,297 Photocopier item 2 2 - - - 4 5,000 20,000 22,487 Laptop computer item - 3 3 - - 6 3,000 18,000 20,683 Audio-visuals for training amount 20,000 23,743 Specialized software item - - - I - 1 15,000 15,000 17,807 Subtotal Office Equipment 115,500 132,503 5. Field Equipment Field Vehicle item 2 - - 2 30,000 60,000 66,726 Infiltrometer item 12 - - - - 12 2,000 24,000 26,690 Office equipment for field amount 10,000 11,121 Other topographical equipment amount 50,500 56,773 Subtotal idd Equipment 144,500 161,310 Subtobl Support to GODRS In Ankara a Field 522,500 600,387 C. Special Studies and Designs 1. Irrigaton Rehabilitation/Modemization + Design amount 400,000 478,768 2. Drainage Transfer/Drainage Equip. Study & Design amount 300,000 358,749 3. Irrigation Master Plan amount 100,000 11Z433 4. Selection and Design of Future GDRS Project(s) amount 240,000 281,910 5. PDIS Design and Contract Supervision amount 288,000 300,918 Subtotal Special Studies and Designs 1,328,000 1,532,779 Total 6,496,500 6,938,049 la Human resource management investment management project management cost accounting, budgeting, etc. \b Including the Water Pricing Seminar of 1998 COMPO123.XLS INS_STR Page 2 914/97 9:54 AM  - 45 - Turkey Participatory Privatization of Irrigation Management and Investment Project Table 2. Operation and Maintenance Equipment Detailed Costs Quanffbes Unit Cost Base Cost Overall Cost Unit S7198 98/99 99100 00D/0 01102 Total (USS) Total Total 1. Investment Costs A. Field Equipment 1. Small Equipment Computer item 36 36 - - - 72 2,500 180,000 183,982 Relay(radio) item 16 16 - 32 7,500 240,000 245,309 Motorcycle item 142 142 X - - 284 2,400 681,600 696,678 Hand-held radio item 194 194 - - - 388 600 232,800 237,950 Vehicle radio item 23 23 - - - 46 1,000 46,000 47,018 Fixed radio item 25 25 - 50 1,000 50,000 51,106 Trailer item 15 16 - - - 31 3,500 108,500 110,939 Concrete mixer item 7 8 - - - 15 3,000 45,000 46,029 Motor pump item 15 15 - 30 3,000 90,000 91,991 Other amount 106,084 108,431 Subtotal Small Equipment 1,779,984 1,819,431 2. Vehicles Single cabin pick-up Rem 25 14 - - 39 26,000 1,014,000 1,033,250 Double cabin pick-up item 24 25 - - - 49 30,000 1,470,000 1,502,852 Other amount 240,200 245,513 Subtotal Vehicles 2,724,200 2,781,615 3. LUght Duty Machines Dumper tnuck item 26 26 - - - 52 50,000 2,600,000 2,657,515 Truck iem 2 3 - - - 5 45,000 225,000 230,478 Truck for passengers Rem 10 10 - - - 20 50,000 1,000,000 1,022,121 Crane item 7 8 - - 15 40,000 600,000 613,717 Tractor item 14 15 - - - 29 20,000 580,000 593,053 Tractor with implement item 23 24 - - 47 50,000 2,350,000 2,402,540 Tractor+crane item 23 24 - - - 47 30,000 1,410,000 1,441,524 Sprayers item 9 9 - - - 18 1,750 31,500 32,197 Others amount 352,000 359,787 Subtotal Light Duty Machines 9,148,500 9,352,931 4. Heavy Duty Machines Grader item 20 20 - - - 40 190,000 7,600,000 7,768,120 Loader(dragline) (tracked) item 3 4 - - - 7 170,000 1,190,000 1,218,215 Loader-wheeled item 9 9 - - 18 120,000 2,160,000 2,207,781 Dozer D4 item 6 7 - - - 13 200,000 2,600,000 2,659,739 Gradall-Bantam excavator item 19 19 - - - 38 300,000 11,400,000 11,652,179 Tracked excavator item 5 5 - - - 10 150,000 1,500,000 1,533,182 Excavator (wheeled) item 11 12 - 23 170,000 3,910,000 3,998,384 Subtotal Heavy Duty Machines 30,360,000 31,037,599 Total 44,012,684 44,991,577 COMPO123.XLS O&M_EQUIP Page 3 9/4/97 9:54AM  Turkey Participatory Privatization of Irrigation Management and Investment Project Table 3. Pilot Drip Irrigation Scheme Unit Detailed Costs Quantities Cost Base Cost Overall Cost Unit 97/98 98199 99/00 00/01 01/02 Total (US$) Total Total I. Investrnent Costs A. Civil Works Steel Pipes (100-600mm) m 20,000 8,578 - - - 28,578 71.5 2,043,327 2,287,390 Labor (pipe welding) m 348,554 - 348,554 0.45 156,849 158,575 Excavations m3 200,000 36,528 - - - 236,528 1.822 430,954 480,892 Back Filling Hand m3 45,000 44,195 - - 89,195 4.26 379,971 427,172 Machinery Filling m3 100,000 35,333 - - - 135,333 0.24 32,480 36,328 Concrete Work m3 30t 46 - - * 348 22.39 7,747 8,641 Farm Work m3 2,000 651 - - - 2,651 0.565 1,498 1,675 Service Roads m 20,000 4,000 - - - 24,000 0.151 3,624 4,045 Hauling of Materials amount 78,625 87,650 Valves item - 184 - - - 184 226.9 41,750 47,451 Air Vales item - 2,600 - - - 2,600 13.75 35,750 40,632 Hydrant item - 377 - - - 377 688 259,376 294,798 Subtotal Civil Works 3,471,950 3,875,248 B. Drip Irrigation System Materials ha - 500 500 100 100 1,200 2,146 2,575,200 2,981,020 Total 6,047,150 6,856,268 COMPO123.XLS PDIS Page 4 9/4/97 9:54 AM  - 47 - ANNEX B PILOT DRIP IRRIGATION SCHEME  - 48 - ANNEX B Page 1 TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT ULUBORLU IRRIGATION SCHEME (ISPARTA PROVINCE) 1. DSI designed and built the Uluborlu Scheme in 1984. The dam serves a designed irrigation area of 1,800 ha via a concrete lined main canal of 7 km long and capacity 1.5 m3Y. The right bank is served by a low pressure pipeline system with California outlet valves into surface irrigation. The left bank continues as an open concrete lined canal system into field furrows or border strips. The general layout is shown in Figure 2.3. The scheme was transferred from DSI to the WUA seven years ago. Several years of drought conditions have caused serious water shortages and the WUA can only irrigate some 1,200-1,400 ha per year. They also under irrigate with only 3-4 irrigations per season at 30 day intervals. 2. The existing cropping is cherry (60%), apple (20%) with the remainder under vegetables and other crops. The aim is to have 1,100 ha of cherries and some 100 ha of apples. The existing border strip (8 m wide) irrigation on sandy soils is most inefficient (tree spacings 8 m x 8 m), the argument being that farmers want as much water as possible during their application in view of long irrigation intervals. The irrigation interval could be shortened considerably by constructing basins around trees interconnected by furrows. This would improve application times and efficiency. Under request by the WUA, GDRS have undertaken a feasibility study in October 1995 to convert the whole scheme to a closed drip system. The study report had not been prepared but the work undertaken so far has been taken over by this project. Uluborlu WUA (Uluborlu I.S) 3. DSI transferred operation and maintenance to the WUA seven years ago. They are fully conversant with their responsibilities and control irrigation supplies from the dam outlet. DSI is still responsible for the dam. The chairman of the Uluborlu WUA is the Mayor of the town who is energetic and gives the WUA much authority, strength and esteem. Operating under the same laws as the Municipality the WUA is able to secure bank loans without difficulty. The WUA undertakes annual maintenance for which they have adequate machinery consisting of a loader, truck, dozer and two graders. 4. On account of severe water shortages and trying to irrigate as much of the scheme as possible (1,200-1,400 ha instead of 750 ha as calculated by crop water requirements), WUA is very keen to convert to a closed pipe drip irrigation system. 5. The production of cherries in the scheme is of high quality and with increasing export demand and high prices farmers are converting to cherry at the rate of 100 ha per annum. The WUA, already in a healthy financial position, will become even stronger. When the scheme has  - 49 - ANNEX B Page 2 been agreed and construction programme determined the Mayor sees few problems with the WUAs ability to pay its share of the investment cost. Dam Storage Ratios 6. A summary of the important information concerning this scheme is given in the following tables. Item Normal maximum 21.39 storage (106/ mI3) Mean Annual Runoff (MAR) (10 6m3) 14.94 (18 yrs) Storage Ratio 1.43 Recent MAR (106m3) 7.42 1990-1995 Change in Storage 2.88 Ratio Source: DSI and TR-Engineering estimates. Existing Irrigation Areas Item Existing irrigation 8.56 releases (106 m3/yr) Proposed Existing Irrigation Areas (ha) La 750 LZ La Actual irrigation areas are greater on account of under-watering and use of wells. /b Actually under-irrigating 1,200-1,400 ha. Source: TR-Engineering estimates. 7. It is proposed to adopt an infield drip irrigation efficiency of 85% and a pipeline transmission efficiency of 95% to allow for both leakage and management of the system. Hence an overall 80% efficiency is adopted. This is conservative and a well managed drip system can achieve an overall 85% to 90% efficiency.  - 50 - ANNEX B Page 3 Proposed Crop Water Requirements Crop Req. (mm) Divers. Req. (mm) January February March April May 16.7 20.88 June 92.0 115.00 July 178.0 222.50 August 160.0 200.00 September 99.8 124.75 October 25.8 32.25 November December Year 572.30 715.38 Scheme Peak Design Module (Vs/ha) 0.85 Infield Drip Efficiency 85% Pipeline Transmission Efficiency 95% Overall Scheme Efficiency 80% Source: GDRS and DSI and TR-Engineering Estimates. 8. Based on average irrigation releases and annual diversion requirements the above table proposed areas which can be conservatively irrigated by closed drip systems are given in the table below: Proposed Irrigation Areas Under Drip Systems Item Existing irrigation 8.56 releases (106 m3/yr) Potential irrigation 1,200 Areas (ha) under drip systems  - 51 - ANNEX C j MONITORABLE INDICATORS  - 52 - ANNEX C TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT MONITORABLE INDICATORS Component Implementation Indicators Impact Indicators O&M Equipment Establishing conditions for WUOs to Satisfactory and sustainable be able to purchase required O&M performance with respect to: equipment when they have funds to operation of systems indicated by pay for their share of cost; delivery of water in a timely and disbursement of about $1.5 M/quarter equitable manner satisfactory to of the loan for purchase of O&M users; maintenance of systems equipment. indicated by the condition of irrigation systems; and reduction of government spending on O&M. Pilot Drip Irriga- Timely:' completion of detail design; Efficient use of scarce water tion Scheme award of contract for works; indicated by increased agricultural completion of works; and production as envisaged in the procurement and installation of drip economic analysis of the project. irrigation system. Institutional Timely:' recruitment of consultants; Strengthening DSI and WUOs in Strengthening procurement of computers and fulfilling their responsibilities with training materials; completing respect to irrigation development envisaged training, including study- indicated by: improved technical tours; and completion of specific qualification of persons trained and studies. technically supported; schemes identified for irrigation development through participatory privatization resulting from the studies; and further responsibility for irrigation management and investment transferred to users. 1 See Implementation Schedule (Annex E). Quantities of equipment to be purchased and works and parts of Institutional Strengthening component to be completed are given in Annex A.  - 53 - ANNEX D C ONSULTANTS TERMS OF REFERENCE  - 54 - ANNEX D Page I TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT TERMS OF REFERENCE FOR CONSULTANTS Following are the initial TOR for the consultants responsible for project coordination. TOR for other TA services would be prepared by CC according to the implementation schedule (Annex E), with the assistance of concerned departments of DSI and GDRS, and approved by the Bank. CONSULTANT COORDINATOR (CC) A. Qualifications 1. Higher level education (at least MS or MBA) in Agricultural Economics, Agricultural Engineering or Management Science. 2. 15 years experience abroad and in Turkey in implementing, evaluating and/or supervising agricultural development projects. 3. A high degree of familiarity with the salient features and issues of the irrigation sector in Turkey. 4. Leadership qualities to direct consultants and personnel and management/communication skills to effectively liaise between GDRS, DSI, other GOT agencies and the Resident Mission. 5. High level of proficiency in English. 6. Turkish speaking. 7. No restrictions on extensive travel. B. Description of Duties The main task for the CC would be to contribute to timely implementation of the project and its tasks. The CC would have particular responsibility for ensuring timely payment of grant fund to suppliers and contractors, from whom WUOs would be procuring equipment or works in accordance with the arrangements stated in Chapters 3 and 4. The CC would also have responsibility for ensuring the successful completion of the studies and other consultancy tasks stated in the above chapters. Following are detailed TOR. 1. Liaise between DSI and GDRS coordinators to expedite project implementation, and act as secretary to project coordination committee by calling for periodic meetings and disseminating decisions taken to interested parties, namely DSI, GDRS, the World Bank and the WUOs.  - 55 - ANNEX D Page 2 2. Assist with procurement with GDRS, DSI and WUOs for technical services and goods in order to complete the procurement effort in an expedient and speedy manner. 3. Supervise, direct and motivate core staff of project coordination unit (PCU) consisting of assistant team leader and support staff. 4. Prepare, with the assistance of concerned officials of DSI and GDRS, detailed TOR for studies and short-term consultants according to the implementation schedule (Annex E). 5. Assist DSI and GDRS to provide timely reports on monitoring and evaluation. 6. Project reporting: prepare and submit all required project reports consisting of monthly progress, statements of expenses, quarterly and annual reports. 7. Ensure satisfactory compliance with project audit requirements by facilitating appropriate mechanisms with the World Bank and the Government. 8. Help recruit Assistant CC and support staff following his/her employment at the project coordination unit and complete all other PCU related procurement to render the PCU functional. 9. Actively participate in/or facilitate all project related activities to ensure the timely flow of grant funds to the suppliers of O&M equipment, other goods and technical services, as stipulated in the loan agreement. ASSISTANT CONSULTANT COORDINATOR (ASSISTANT CC) A. Qualifications 1. Higher level education in agriculture, engineering, economics or management science. 2. At least five years' experience in development projects in Turkey or abroad. 3. Familiarity with DSI and GDRS functions and mandates. 4. Knowledge of World Bank procurement methods and procedures. 5. Turkish speaking and high level of proficiency in English. 6. Capability of setting up and running an internal accounting system to keep track of project activities and transactions. B. Description of Duties Reporting to the CC, the assistant team leader is expected to perform the following: 1. Assist the CC in all types of WUO, DSI and GDRS record keeping and correspondence for the project. 2. Set up and operate a project management information and accounting system to keep track of all project activities and disbursements. 3. Train or arrange for the training of project support staff in procurement, reporting and computers. 4. Contribute relevant parts to periodic project reports. 5. Travel to various DSI regions to follow up on project implementation and problems encountered. 6. Perform other tasks and duties assigned by the CC.  - 56 - ANNEX E IMPLEMENTATION SCHEDULE  ANNEXE TURKEY Participatory Privatization of Irrigation Managment and Investment Projcet 1998 1 1999 j 2000 2001 2002 ID Task Narne Durati Start Finish 23|41Q 0Q|3|Q 4|1 Q|IQ2 IQ3 1 4 01 IQ2 IQ3 IQ4 IQ1 I|Q2|Q3|IQ4|IQ 10 |Q1Q31IQ4 I Effecliv.ness Od 12/15/97 12/15/97 * 1211 2 StartIng the project & coordination 85d 1011197 1/27198 3 Designation of DSI and GDRS Coordcnators Ild 10/113197 10/27/97 4 Selecbon of CC 45d 10/1/97 12/2/97 6 Recruitment of CC by Id 12V22/97 12V22197 6 Agreement with Agent Bank 30d 1011(97 11/11/97 7 Selection & recruitment of PCU staff 30d 12/3/97 1/13/98 8 Opening of Special Account by Id 1V15/97 12V15/97 9 Finalize form of Participation Agreement 30d 10/1/97 11/11/97 10 Project Launch Workshop lOd 1/14/98 1/27/98 11 Start and continue project coordination 1289d 12/23/97 12/1/02 12 O&M Equipment component 1289d 12123197 12/1102 13 Make WUOs & officials familiar with procedure 30d 12/23/97 2/2/98 14 WUOs individually procure equipment 1259d 2/9 12/1/02 i - s- 16 Institutional Strengthening Component 1299d 1V23/97 12113102 16 PCU prepare docs for procurement of computers & vehicles 60d 12(23197 3/16/98 17 Procurement of urgently needed computers 30d 2/2/98 3/13/98 18 Procurement of Computers 150d 3/3/98 9/28/98 19 Procurement of vehicles 210d 4/15/98 2/2/99 20 CC prepare deCd TOR/schele for studies, consulfs & traing 90d 12/23/97 4/27/98 21 Recruitment of Consultants for Review of DSI irrig. schemes 45d 12Q23/97 2/23/98 22 Training in parallel or staggered packages 1299d 12123/97 12/13/02 23 Completion of studies during the period of 1110d 3/2/98 5/31/02 24 Pilot Drip Irrig. Scheme 941d 9/15/97 4/23/01 m i m i 26 WIO recruit consultants for detail design & supervision 45d 9/15/97 11/14/97 26 Detail design & preparation of bid documents 90d 11/17/97 3120/98 27 Bidding and award of construction contract(s) by WUO 120d 3/23/98 9/4/98 9/18/97 12:39 PM Div Disk@EC2AR@WORLDBANKIMOH\REFS\PP19-9.MPP Page 1  ANNEXE TURKEY Participatory Privatization of Irrigation Managment and Investment Projoet 97 1998 1999 2000 2001 ] 2002 10 Task Name Ourati Start Finish Q39 4j1 0Q2 0Q3 04 Q1Q2 13Q3 7 Q4 01 Q2 0 Q3 2 _4 2001 0 3 Q 2 28 Consiruction supervision by consultant 558d 9/7/98 10/25/00 29 Implementation of works by contractor(s) 550d 917l98 10/13/00 30 Purchase & installalion of drip irrigation pipes by farmers 500d 5/25/99 4/23101 31 Bank Supervision 1234d 12/23/97 9/13/02 . m - 32 Start-up workshop 10d 12/23/97 1/5/98 33 Superv'n misns around each March & Sep. 1175d 3116/98 9/1 3102 34 Mid-term review 10d 6/17/02 8/28/02 35 Processing of envisaged follow-up loan 90d 7/1/99 11/3/99 Un 02 9/18/97 12:39 PM Div Disk@EC2AR@WORLDBANK'MOH\REFS\PPI9-9.MPP Page 2  - 59 - ANNEX F PROCUREMENT  - 60 - ANNEX F Page 1 TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT PROCUREMENT PROCEDURES 1. Procurement of O&M Equipment. WUOs will procure O&M equipment in accordance with World Bank procedures and will use national shopping (NS) for equipment costing less than US$ 100,000 and international shopping (IS) for equipment costing US$100,000 to 400,000. For this purpose they will obtain at least three quotations from suppliers and for IS quotations will be obtained from suppliers from at least two countries (including Turkey). Procurement documents are not needed. 2. Procurement of Works and Equipment for Uluborlu Pilot Irrigation Scheme. The Uluborlu WUO will procure: (a) works on the basis of National Competitive Bidding (NBC) using the World Bank procurement documents; and (b) drip irrigation pipes on the basis of LS since these pipes would be purchased by the members of the WUO in small lots, as their procurement in bulk is not practical. 3. Recruitment of Consultants. DSI and GDRS will recruit long- and short-term consultants following Bank's "Guidelines on :Selection and Employment of Consultants by World Bank Borrowers." Recruitment of consultants will be subject to the Bank's approval of their TOR and qualifications (discussed in Annex D). 4. To avoid delay in project implementation, DSI will initiate action for the recruitment of CTL to make sure that the CTL would be available when the loan gets approved so the project activity could be started quickly. CTL would contribute to the recruitment of the remaining consultants. 5. Procurement of Computers. DSI and GDRS would procure computers on the basis of ICB. 6. Procurement of Vehicles. DSI would procure vehicles on the basis of ICB, using World Bank documents. 7. Prior Review by the Bank. Bank's prior review would be needed for procurement actions mentioned in paras 2(a), 3, 5 and 6. To avoid delay, a major part of such review would be carried out by procurement staff in Bank's office in Ankara.  Number Bank- Decitotmsr Total Cost Fance Procurement Estimated Description -PType (Items or Fa(US$ (US dM) Method Dates 1. O&M Equipment Dates given in O&M Larger Equip. Purchased by WUOs Goods 150 items 31.00 8.52 IS Implementation O&M Smaller Equip. Purchased by WUOs Goods 1,270 items 14.00 3.85 NS Schedule Subtotal 45.00 12.37 (Annex E) 2. Pilot Drip Irrigation Scheme Works & Drip Pipe Works Works 2-4 3.88 1.55 NCB Drip Irrigation Pipes - packages below $100,000 Goods Numerous 2.98 0.47 NS Subtotal 6.86 2.02 3. Institutional Strengthening A. Consultants _ Coordination consultants Consultant 2 0.67 0.54 QB Short-term consultants - contracts below $50 000 Consultant Over 30 0.55 0.44 SS a ,__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _0 .0 0 B. Training - Study Tours & Seminars Training Over 40 1.11 0.90 SS C. Studies, Technical Tasks and Capacity Building Supervision for PDIS Consultant 1 0.30 0.24 QCBS DSI lrr. Schemes assessment program, Master Plan Consultant 1 0.11 0.09 SS Studies for Future Projects/Investments & Transfer Consultant 5 1.12 0.91 QCBS D. Vehicles Goods 27 0.84 0.68 ICB E. Urgently Needed computers and Office Equipmen Goods 3-6 0.30 0.24 NS F. Computers and Other Office Equipment Goods 4 1.46 1.18 ICB Operating cost of PCU (rent, utilities, support staff, etc.) Support service 0.48 0.39 /a Subtotal 6.94 5.61 Total 58.80 20.00 /a According to local administrative practice acceptable to the Bank. MFItN for fPae cok1m 0.809 FINANCE.XLS PROCPLNJ Page 1 9/15197 7:30 PM  - 62 - ANNEX G ECONOMIC AND FINANCIAL ANALYSIS  ANNEX G - 63 - PART I Page 1 TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT FINANCIAL AND ECONOMIC ANALYSIS A. Markets and Prices Government Policy 1. The Turkish economy has been undergoing significant economic liberalization over the past decade, particularly in price, trade and financial policies. The intervention of the state has been reduced, allowing market forces to operate more freely. Agriculture has benefited from these liberalization policies, although Government still is heavily involved in the agricultural marketing process and price formation. 2. Goverment's policy objectives in agriculture include: ensuring adequate food supplies at reasonable prices; increasing production levels; increasing farm income levels and stability; increasing exports; and developing impoverished rural areas. 3. In pursuit of its agricultural policy objectives the government focuses on the support of producer prices complemented by fiscal policies, credit subsidies, trade related measures, the subsidization of farm inputs and transfers related to investment in infrastructure projects, particularly irrigation. In the crops sector, some domestic prices are bolstered through tariffs and domestic market intervention purchases. 4. A number of large state owned and state directed intervention bodies are in charge of operating the price support policies. However, the system of administering price support has become complex, cumbersome and riddled with financial problems, resulting in excessive stock piling and delayed payments to farmers. These problems are mainly due to administering support prices policies without due regard to differences in product quality, location or volume of sales, leading to poor quality, an inefficient spread of production, and benefits accruing mainly to the larger farmers. As a consequence, the government has been taking action to reduce the number of commodities for which support purchase schemes operate. 5. The five commodities that have consistently been supported through intervention purchases (cotton, sugar beet, tobacco, wheat and sunflower seed) account for 90% of the overall share of support purchases. By the end of 1970s, 30 commodities were benefiting from price supports, but in the aftermath of the economic stabilization measures of April 1994, only three commodities were retained on the list of products to be supported directly by the government. These crops are cereals, sugar beet and tobacco. 6. Generally, in contrast to the interventionist agricultural policies of the 1960s and 1970s, current policy is increasingly market oriented, with the aim of reducing both the financial costs  - 64 - ANNEX G PART I Page 2 of policy operation and the macroeconomic distortions produced as a result. In practice this means increasing the role of markets, reducing quantitative restrictions on imports, privatization of state agricultural enterprises and tighter control on the levels of direct payments and input subsidies. 7. Import restrictions and tariffs currently constitute significant barriers to imports, but the future trend is likely to be further reductions and simplifications of trade restrictions, with a view to harmonization of trade policies with EC and EFTA member state, and Turkey's joining of the EC Customs Union which became effective as of January 1, 1996. Markets 8. For a long period, Turkey has run a trade surplus in agricultural products. Geographical proximity to Europe, the Middle East and North Africa gives it easy access to large markets through the Black Sea, Aegean Sea and the Mediterranean. Its main markets include the European Community and the USA, mainly for dried fruit, nuts, cotton and tobacco, and the Middle East for fresh fruits, vegetables and meat. Sugar beet and cereals are primarily consumed within the domestic market. Given Turkey's high population growth rate and rapid urbanization the internal market for food products is likely to expand. 9. In summary, no major marketing constraints are envisaged since incremental production as a percentage of current total production is small. Wheat, beans, corn and fruit crops are primarily grown for the domestic market. There is currently excess demand for most crops in Turkey, with the deficit being made from imports. Major Crops on Irrigated Areas 10. Wheat. About 18% of the irrigated area is planted to wheat. Irrigated wheat production accounts for less than 5% of national production which is estimated to be around 18 million tons. Wheat is irrigated if spring rains are late or inadequate. In years of high precipitation irrigation ratios in Turkey decline because farmers choose not to irrigate the crop which was sufficiently rain-fed. The fact that wheat does not need to be irrigated in years of good rainfall causes erratic fluctuations in national irrigation ratios which vary from 60 to 75%. Wheat is grown usually in the interior parts of Turkey. It is practically non-existent on the coastal parts. Turkey is both an importer and exporter of wheat depending upon the year. The country is generally considered to be self sufficient in this basic staple. 11. Sugar beet. Sugar beet is controlled by a state monopoly in Turkey with set production quotas and prices. Turkey is assumed to be self sufficient in sugar although it may import in certain years of low production. Irrigated sugar beet accounts for less than 10% of the irrigation area while it contributes about half of the sugar beet production in the country.  - 65 - ANNEX G PART I Page 3 12. Corn. Irrigated corn occupies about 8% of the irrigation areas but provides more than a fourth of the national production. It is viewed as a good transition crop to replace cotton on the coastal areas. 13. Cotton. Cotton is the most significant irrigated crop representing 30% of the irrigated areas and contributing about 60% of the national output. Cotton is grown in the coastal parts of the country and the GAP area using irrigation water from the Euphrates river. Gradually, the crop will be displaced by higher value fruits and vegetables on the coast while increasing levels of production would be shifted over to Southern Anatolia which offers favorable economic and climatic conditions for the crop. Prices 14. The prices used in developing the financial farm models were gathered from June 1996 through January 1997. For financial analysis averages were computed using the past 10 years' farm gate price data for wheat, corn, sugar beet and cotton expressed in constant February 1997 dollars. This was mainly due to rather significant price movements on both the domestic and international markets, particularly for wheat and cotton. 15. In the economic analysis, a SCFf 0.85 was applied to non-traded or non-supported goods. For highly supported crops, such as wheat, cotton and sugar beet, a lower SCF of 0.75 was assumed. For labor, the SCF used was 0.80, while highly subsidized inputs were attributed a SFC of 1.4. B. Area Models for WUOs 16. Crop production models. Crop production models were developed for 10 important irrigated crops in the country. These crops consist of wheat, corn, cotton, sugar beet, fruit, tomatoes, dry beans, grapes, peaches and olives and account for about 80% of irrigated land in the transferred areas. 17. WUA or area models. Using these crop models, WUA area models were constructed for nine sample WUOs which were consolidated to seven WUA groups with adequate representation for different sizes (varying from a few thousand ha to more than 20,000 ha) and ecological conditions in the country. The analysis was restricted to WUAs only which are the predominant type of WUO in the country and accounting for 92% of the transferred areas. Data provided by WUA were used for determnining the specific crop patterns (both existing and projected) for each WUJA sampled. The WUAs selected are from Sanliurfa (inland), Bursa (inland), Manisa (coastal), Antalya (coastal), Adana (coastal), Kayseri (inland) and Konya (inland). They represent various size groups: below 5,000 ha, between 5,000 and 10,000 ha, between 10,000 and 20,000 ha and over 20,000 ha. 18. Aggregate Turkey Model. Next, these WUA area models were properly weighted to produce an aggregation for the entire country for the 1.5 million hectares which the project  - 66 - ANNEX G PART I Page 4 targets to achieve. Appropriate downward adjustments on areas were made to account for the fact that only WUAs were being analyzed. The resulting area on which the analysis was based measures about 1,379,000 ha where the cropping intensity (or irrigation ratio) was set at about 80% in the final year. 19. Inland and Coastal Zones. Given Turkey's ecological diversity, irrigated areas were planned in accordance with two distinct ecological divisions which consisted of inland and coastal zones. Indicative cropping patterns that might be expected are incorporated in the area or WUO models. The same crop models were used throughout the analysis for both inland and coastal zones. However, distinctions were made in the crop patterns between the interior and coastal zones. Sanliurfa (inland) in southeastern Turkey is an exception to crop-based segregation of the two ecological zones because it grows significant quantities of cotton, which is mainly grown on the coastal zone. Also, for the sake of simplicity less important crops and byproducts were excluded in the analysis. Incremental crop areas and yields for the whole country are in the Project Files. 20. Irrigation ratios. In 1995, DSI-reported irrigation ratio on untransferred areas was 56% while the same ratio was 70% on transferred areas. Although data are lacking, there are indications that the irrigation ratio on irrigated areas in 1996 has actually improved. The assumed baseline irrigation ratio for 1997 is around 77% which is expected to improve to 80% in ten years for the selected crops. C. Financial and Economic Analysis 21. The FRRs/ERRS of the seven WUAs or area models were calculated by discounting costs and benefits for ten years. As expected, the financial rates of return and the economic rates of return are quite high, on average above 50%. There are wide variations in the rates of return for the sample models depending on their cropping intensity, cropping pattern, current level of O&M equipment investment, and cost of pumping. For instance, in the Iznik and Boyalica WUAs, the economic rates of return are about 15% since they use pumping which is much costlier than gravity irrigation. In the Adala Left Bank model, much of the land is expected to remain under low yielding and low value crops because of the soil conditions, resulting in an ERR of only 18%. In Yedek, the ERR is expected to be quite high -- 128% -- since the cropping intensity is expected to be about 1 10%. Assumptions 22. The economic analysis of the project was performed with the following assumptions: (a) Inflation in Turkey has been very high in the last 20 years. Thus all cost tables and farm models were prepared in US dollars. Domestic inflation seems to have past its peak in 1994 (whole sale price index was 150% against 126% of CPI) and is forecast to gradually fall and stabilize over the life of the project. CPIs in both 1995 and 1996 were lower than 80%.  - 67 - ANNEX G PART I Page 5 (b) In addition to the depreciation of the TL, the cost of living and doing business in Turkey has risen in dollar terms over the last decade. This was reflected in computations by assuming a 25% dollar denominated inflation between 1989 and 1997 to adjust some production cost data which were originally compiled in 1989. (c) In forecasting the crop patterns, it was assumed that wheat (which is generally a rainfed crop) in the irrigated coastal areas would be gradually displaced by more lucrative higher value irrigated crops such as corn except for Southern Anatolia (Sanliurfa and environs) where production is expected to expand. (d) A standard conversion factor of 0.85 has been applied to the value of non-traded inputs, non-supported crops and non-foreign currency costs. This has been increased from SCFs previously used in Turkey (0.79), reflecting the government's efforts to reduce duties and limit the number of goods for which price support policies are administered. The Turkish economy is likely to become increasingly open over the life of the project consistent with the requirements of the Customs Union agreement of 1996. (e) A SCF of 0.75 was applied on all crops (wheat, sugar beet and cotton) to account for the high level of support. SCF assumed on fertilizers is 1.40 due to the high level of subsidization of these farm inputs. (f) Opportunity cost of labor: Wage levels reported during the harvest periods of cotton and grapes are very similar to those reported for construction work in local towns suggesting that at these times of the year, market rates are close to the opportunity cost. However, for most of the rest of the year, unemployment and underemployment are also problems perceived in the villages, reflecting the lack of attractive income generating opportunities. Labor is therefore shadow priced at 80% of the market rate. (g) In due consideration for capital scarcity in Turkey, OCC was assumed to be 15% in lieu of adopting the traditional level of 12%. Inflation rate on the dollar is assumed to be 2.2% per annum. (h) Baseline or without project crop yields assumed were derived from DSI's actual measurements in 1995. Yield improvements under the project are assumed not to exceed 5 to 7% distributed over 10 years. (i) The most common sources of NPK in Turkey are urea, TSP and potassium sulphate which were assumed to have been used on all crops to provide the nutrients needed. Gj) Due to methodological difficulties involved in their measurement, beneficial effects of the project on the environment, employment generation aspect by the WUOs, improved farmer education and the phenomenon of grass-roots democratization achieved by the transfers and the provision of machinery were assumed as non-quantifiable in the analysis.  - 68 - ANNEX G PART I Page 6 (k) A ten year planning horizon was assumed for analysis of returns from agriculture and 15 years for quantifying and estimating fiscal returns. Data Sources 23. The data needed for the analysis come from various sources. Crop Models: The crop models were based on studies conducted under the previous World Bank financed effort ': Drainage and On Farm Development Project (DOFDP), where the reported technical input/output coefficients were used without modification but input and output prices were updated by first converting them to current TL and expressing the resulting figures in US$ in constant 1997 dollars. 24. WUO-Related Information. The WUO-related information was collected from two sources. The first one was the Monitoring and Evaluation forms 2 developed and administered by the O&M Department since 1994. The second source was the O&M Equipment Questionnaire specifically designed for the needs of the project preparation effort. Additional information was extracted from various DSI O&M Department publications 3. 25. Prices and Other Information. Farm gate crop prices for wheat, corn, cotton and beans were obtained from the recent OECD study 4 on Turkey (by averaging these prices over the period of 1979-93 supplemented with additional price information from the SPO 5. Since, there exists a close correspondence between support prices and farm gate prices, the former served as a proxy to the latter where direct farm gate price data were not available. 26. Border prices for wheat, corn, cotton and beans were taken from the OECD study which uses CIF import reference price level for which Turkey is a net importer and FOB prices for commodities for which Turkey is a net exporter. I Revised Master Plan, Part I, Investment Strategy, Vol 6 - Supporting Tables, Drainage and On Farm Development Project, prepared for the DSI by DAPTA, Su-Yapi, Temelsu and Nedeco, Ankara, September 1991. 2 Report on Monitoring and Evaluation for Transferred Irrigation Schemes (for schemes greater than 500 ha), DSI, O&M Department, Ankara, 1997. 3Evaluation Report on DSI-Operated and Transferred Irrigation Schemes in 1995; and, Crop Counts for DSI-Constructed Irrigation and Land Reclamation Schemes in 1995, DSI O&M Department, Ankara, 1996. 4National Policies and Agricultural Trade, Case Study Turkey, OECD, Paris, 1994. 5Program for Year 1997, Seventh Five-Year Development Plan, SPO, 1996 and Special Expert Report on Fertilizers, SPO, 1966.  -69- ANNEX G PART 2 Table 1 Analysis for Reduction in the Government Burden _Without Project ('000 USD) With Project (000 USD ('000 USD) ('000 USD) ('000 USD) Burden on Burden on Machinery Difference Total Net Present Value State Machinery State Subsidy due to Unadjusted of Public Savings Budget Replacement Budget and Other Transfer Public Savings After Cost Cost for DSI After Cost Project and Project Period Years Recovery Recovery Costs I_for the Period 1985 37,458 42,100 -4,642 Pre ATP 1986 40,028 44,678 4,649 1987 41,455 39,818 1,638 1988 42,283 30,059 12,224 1989 43,979 35,041 8,939 PRE-ATP 1990 44,673 36,938 7,736 1991 46,279 42,581 3,699 _________ 1992 47,315 38,763 _ 8,552 33,497 1993 48,872 50,345 -1,473 ATP 1994 49,979 37,868 12,111 ATP 1995 51,810 28,034 23,777 1996 54,789 26,282 28,507 83,074 1997 57,280 10,700 24,177 3,500 40,303 Project 1998 59,200 10,700 23,325 7,000 39,575 PROJECT 1999 61,120 .10,700 22,253 7,000 42,568 IMPLEMENT FROM 1997 2000 63,040 10,700 19,880 7,000 46,860 PERIOD TO 2011 2001 64,960 10,700 19,355 7,000 49,305 at 12 % OCC 2002 66,880 10,700 18,760 3,500 55,320 226,119 $353,904 2003 68,800 10,700 17,875 61,625 2004 70,400 10,700 18,330 62,770 2005 72,000 10,700 17,100 65,600 Post- 2006 73,600 10,700 17,280 67,020 POST- at 15 % OCC Project 2007 75,200 17,460 57,740 PROJECT $300,891 2008 76,800 16,170 60,630 2009 78,400 16,335 62,065 2010 80,000 15,000 65,000 2011 81,600 15,150 66,450 596,5601 107,000 _ 35,000 939,249 Note 1: ATP stands for Acceleated Transfer Program which covers from 1993 to 1996 inclusive. Note 2: The figures in the savings column are current unadjusted values. Note 3: Negative savings result from higher than expected costs against averages (such as salary hikes due to labor unions).  Partial Analysis for Economic Savings Resulting From Transfers of Schemes to WUOs A B C D E F=B-C-D-E G=AxF x |F Transfered DSI DSI Incremental O&M Total O&M Irrigation O&M Supervision Incremental WUO Cost Related Related Area (ha) Cost and M/E WUO Cost for Operating Economic Economic Economic Saved Costs for O&M Equipment Savings Savings Savings (USD/ha) (USD/ha) (USD/ha) (USD/ha) (USD/ha) (USD) (USD) 1997 1,350,000 40 10 13 2 15 20,250,000 20,250,000 1998 1,430,000 40 9 13 3 15 21,450,000 41,700,000 Project 1999 1,500,000 40 8 13 3 16 24,000,000 65,700,000 < Period 2000 1,550,000 40 7 13 4 16 24,800,000 90,500,000 o 2001 1,600,000 40 6 13 4 17 27,200,000 117,700,000 2002 1,650,000 40 6 13 5 16 26,400,000 144,100,000 2003 1,700,000 40 6 13 6 15 25,500,000 169,600,000 2004 1,750,000 40 6 13 7 14 24,500,000 194,100,000 2005 1,800,000 40 6 13 7 14 25,200,000 219,300,000 2006 1,850,000 40 6 13 7 14 25,900,000 245,200,000 2007 1,900,000 40 6 13 7 14 26,600,000 271,800,000 Post- 2008 1,950,000 40 6 13 7 14 27,300,000 299,100,000 Project 2009 2,000,000 40 6 13 7 14 28,000,000 327,100,000 Period 2010 2,050,000 40 6 13 7 14 28,700,000 355,800,000 2011 2,100,000 40 6 13 7 14 29,400,000 385,200,000 Note: The above analysis is partial as it pertains only to the O&M costs and ignores benefits due to increased production and productivity. 3 I a,0  - 7 1 - ANNEX G Turkey PART 2 Participatory Privatization of Irrigation Management Table 3 ECONOMIC AND FINANCIAL PRICES Economic Financial (In US$) Prices Prices Unit Outputs Peaches tons 215.05 253 Wheat tons 120.00 160 Melons tons 100.30 118 Sugarbeet tons 33.75 45 Cotton tons 1,377.75 1837 Com tons 130.05 153 Dry beans tons 340.00 400 Tomatoes tons 115.60 136 Grape tons 246.50 290 Olive tons 620.50 730 Inputs Materials Olive planting material unit 3.23 3.8 Grape planting material unit 0.27 0.322 Chemical weed control Lt 79.80 57 N Fertilizer Kg 0.22 0.16 P Fertilizer Kg 0.38 0.27 K Fertilizer Kg 0.53 0.38 Farmyard manure ton 3.83 4.51 Fungicides Lt 29.81 21.29 Insecticides Lt 53.20 38 Pest control Lt 17.64 12.6 Packing material unit 0.55 0.645 Bags unit 0.38 0.451 Seeds Wheat seed Kg 0.21 0.251 Dry bean seed Kg 1.15 1.354 Melon seed Kg 64.60 76 Sugarbeet seed Kg 2.14 2.516 Cotton seed Kg 0.38 0.451 Com seed Kg 1.32 1.548 Tomato seed Kg 59.50 70 Farm machinery and transportation First ploughing hr. 10.97 12.9 Second ploughing hr. 10.97 12.9 Disc-harrowing hr. 10.97 12.9 Smoothing hr. 10.97 12.9 Ridging/furrowing hr. 10.97 12.9 Seeding/planting hr. 10.97 12.9 Hoeing by machine hr. 10.97 12.9 Bordering by machine hr. 10.97 12.9 Prune/train/stake hr. 357.85 421 Chemical weed control hr. 10.97 12.9 Fertilizing hr. 10.97 12.9 Picking/harvesting hr. 22.95 27 Drying/Grading hr. 10.97 12.9 Transport to farm store hr. 8.76 10.3 Transport to collect hr. 8.76 10.3 Machinery services hr. 10.97 12.9 Labor Highly skilled hr. 1.04 1.302 Skilled hr. 0.67 0.838 Casual hr. 0.57 0.709 Establ/Maint manday 6.70 8.38 Page 1  Turkey Parlicipatory Privatizatlon of Imrgafton Management and TURKEY: Country Level Aggregation Subproject Model ECONOMIC BUDGET (AGGREGATED) April *- March (in US$) Increments 1 2 3 4 5 I 7 8 9 10 Main Production Main Produds 23,973,842 49,199,494 108,026,695 205,646,656 354,516,996 557,563,504 798,674,524 1,019,660,237 1,205,804,136 1,338,028,872 Production Cost Purchased Inputs Materials 12,702,193 8,179,422 15,352,678 38,272,099 79,181,539 131,790,162 220,901,795 296,486,756 352,619,335 386,737,707 Seeds 1,216,089 2,566,669 4.047.595 5,690,625 7,495,442 7,878,414 8,262,081 8,644,716 9,028,383 9,411,592 Farm machinery and tansportation 11,430,625 20,493,769 30,655,580 42,156,793 56,995,967 57,359,236 63,382,273 69,099,157 74.472,345 76,175,878 Sub-Total Purchased Inputs 25,348,907 31,239,861 50,055,854 86,119,517 143,672,949 197,027,812 292,546,130 374,210,629 436.320,063 472,325,177 Labor All types of labor 20,429,550 33.057,282 50,784,391 72,551,812 96,936,111 95,519,138 110,051,265 118,606,418 123,464,405 127,177,814 Sub-Total Production Cost 45,778,458 64,297,142 100,820,244 158,671,330 240,609,060 292,546,949 402,597,394 492,817,048 559,784,468 599,502,991 Other Costs Other Costs 15,818,504 26,399,855 27,215,985 28,543,617 30,476,867 18,572,058 18,609,085 18,646,011 18,683,036 18,719,990 OUTFLOWS 61,596,962 90,898,998 128,036,229 187,215,147 271,085,927 311,119,007 421,206,459 511,463,059 578,467,504 618,222,981 Cash Flow -37,623,120 -41,497,504 -20,009,535 18,431,509 83,431,089 246,444,497 377,468,085 508,217,178 627,336,632 719,805,891 IRR 72.3%, NPV 936,984,908.09 t4 C Page I  - 73 - ANNEX H LEGAL ASPECTS  -74 - ANNEX H Page 1 TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT LEGAL ASPECTS EXECUTIVE SUMMARY The General Directorate of State Hydraulic Works ( DSI henceforth ), which operates under the Ministry of Energy and Natural Resources, can transfer the operation and maintenance responsibilities of the irrigation schemes to legal entities in accordance with the provisions of the law concerning the organization and responsibilities of DSI (Law no: 6200). Thus far, O&M responsibility has been transferred for about 1.2 million hectares with most of these transfers occurring after 1993 under the "Accelerated Transfer Program" (ATP). The transfer procedure/instruments of the schemes to Water Users' Organizations (WUOs), consisting of Water Users Associations, Cooperatives, Municipalities and Village Authorities, are set forth within the above mentioned law as transfer agreements and transfer protocols between WUOs and DSI. Due to differences in the legal status of various entities specified as Water Users Organizations, some problems occur in the process of both the transfers and the execution of the O&M responsibilities by the WUOs. This report was prepared in order to outline and emphasise the existing legal framework of the WUOs and the legal mechanisms which would assist toward the realization of the objectives of the PPIMIP-I. CONCLUSIONS AND RECOMMENDATIONS Introduction: This section intends to outline and emphasize the existing legal framework for the WUOs as well as make recommendations regarding further improvements and other possible mechanisms to be considered toward the realization of the project objectives. The discussion contained here is extracted from the Legal Report (Annex) which is based on studies conducted on existing legislation, interviews made with various water user leaders and their senior staff (particularly during Adana field mission), and meetings held with DSI's O&M officials and Legal Department in Ankara. The Legal Basis of Transfers by DSI: DSI is legally capable of transferring the operation and main- tenance responsibilities of irrigation schemes developed by the agency itself to other entities (persons or organizations) in accordance with the provisions of Law number 6200, which is the basic legislation governing both the agency's organization and responsibilities. Law no: 6200 allows for the transfer of integral (completed and functional) irrigation schemes or those that are either being constructed or  - 75 - ANNEX H Page 2 planned. The fundamental binding legal documents executed between the WUOs and DSI comprise transfer agreements and transfer protocols which are duly signed by both parties. Taxonomy of Water Users Organizations: Until present, irrigation-related O&M responsibilities have been transferred to users on schemes measuring about 1.2 million hectares. The bulk of these transfers occurred after 1993 under the so called "Accelerated Transfer Program" (ATP). Entities that took over O&M responsibility from the DSI are collectively called Water Users' Organizations (WUOs). Presently, the distinct legal forms for these entities comprise Water Users Associations (WUAs), Cooperatives, Municipalities, Village Authorities and Universities. This list is by no means an exhaustive one and further legal forms are possible under Law no: 6200 which lends itself to flexible interpretation. Presently, the most prevalent WUO type is the WUA, which may usually span over a number of villages and municipalities. The irrigation-based and joint village-municipal nature of the WUAs requires great efforts to interpret the current laws as such a land-based joint village-municipal structure per se does not exist in the law. Creation and Operation of Water Users Organizations: In addition to Law no: 6200 which makes transfers possible, the following laws are applicable for the creation and operation of the Water Users' Organizations: *. The Turkish Civil Law no: 743 *. The Turkish Criminal Law no:765 *. Turkish Rural Law no: 442 *. Municipality Law no: 1580 *. Provincial Law no:5442 *. The Law on the Protection of Farmers' Properties no: 4081 . The Environmental Law no: 2872 *. Other miscellaneous laws and regulations applicable Basic Legal Tools for Any WUO: In addition to the applicable laws, each WUO is governed internally by its statute. Next in importance are the transfer agreements (basic text of rules and regulations) binding it to the DSI and the transfer protocols, which contain the technical specifications of the O&M work to be executed under the transfer agreement. Possible Areas of Iinprovement: Due to the diversity of applicable laws and differences in the legal status of various WUO types referenced above, problems occur in the process of both the transfers and the execution of the O&M responsibilities by the WUOs. In light of the above mentioned studies, recommendations and conclusions are listed in the Legal Report in order to eliminate the obstacles and resolve difficulties arising from WUOs' present legal frame -- statutes, transfer agreements and protocols which regulate their relations with DSI. Below are key recommendations: New Legislation: Once sufficient experience is accumulated on existing problems and constraints, there may be a need for the preparation of a new WUA law. The most prevalent type of WUOs in existence in Turkey is the WUA. Existing provisions of the Municipality Law no: 1580 and the Rural Law no: 442, which are applicable for the WUAs, do not clearly address their objectives, responsibilities, rights and legal status. Other types of WUOs, namely Municipalities, Cooperatives and Village Authorities do not need new legislation strictly for the purposes of irrigation O&M. The new WUA law may stipulate/consolidate the following:  - 76 - ANNEX H Page 3 a) Appointment of senior staff and their status to be governed in accordance with the Turkish Labor Law. b) Advantages provided under Law n: 6183 concerning the collection of Public Revenues by WUAs. c) Tax and duty exemptions, at least for a given transition period during which the WUA completes its establishment. d) Capability of forming higher level structures, such as Unions of WUAs. To pass a new law, the established procedure is: a) A draft bill is to be prepared by the Ministry of Interior and then submitted to the Cabinet. b) The Cabinet approves the draft bill and presents it to the National Assembly to be routed through a specialized committee. c) The draft bill is voted into a bill by the National Assembly. d) The bill is signed into law by the President of the Republic. e) The law is published in the Official Gazette prior to enforcement. The time needed to accomplish each of the above steps cannot be predicted as much depends upon the working schedule of the Cabinet and the lobbying effort that accompanies the submission of the the draft bill to the Cabinet. It is useful to remember that the DSI Law no: 6200 remained unchanged over the past 40 years despite many attempts to introduce to it amendments and improvements. Improvement of WUA Statutes: The existing text for a WUA statute is a standard one prepared by the Ministry of Interior for various purposes and for all kinds of associations organized under the Ministry's auspices. The legal framework for the standard statute can be improved either through the introduction of new legislation or existing statutes can be reviewed and improved. The latter approach provides a more viable and realistic alternative to passing new legislation which may be improbable and difficult to materialize in the immediate future. The procedure by which existing statutes can be reviewed includes the following steps: a) The Directorate of Local Administrations of the Ministry of Interior prepares a draft statute in consultation with the DSI and the GDRS through a process of mutually agreed and self-motivated coordination. b) The Ministry of Interior approves and publishes the statute.  - 77 - ANNEX H Page 4 During the above process neither DSI nor the GDRS can play leadership roles. For instance, the DSI operates under the Ministry of Energy and Natural Resources and thus cannot prepare a draft statute as this responsibility legally appertains to the related Directorate of the Ministry of Interior. The essential elements of a good statute are the following: Part 1 (definitions, legal status, establishment procedure, objectives and constituents); Part 2 (WUA rights and responsibilities, election of members, organs, rights and responsibilities for organs); Part 3 ( recruitment of staff, rights of possession, incomes, collection of fees, charges and revenues, tax and duty exemptions, transfer of movables and immovables); Part 4 (cost recovery on commonly used schemes and sharing of equipment and machinery); and Part 5 (formation of unions, disposition, liquidation, audit and referenced laws). There is a necessity to clarify and revise the below mentioned matters in the standard statutes: a) The election of the WUA council by local administrations causes an obstacle toward a broader participation by users. Therefore, the WUA Council members should be selected in order to provide an efficient operation. b) Articles concerning the employment of staff in accordance with the Civil Servants Law no: 657 causes problems if the WUA does not have any municipalities among its constituent parts. Therefore, the revised statute should exclude all reference to Law no:657. c) Procurement, sales and accounting practices of WUAs must be independent of the General Accounting Law no: 1050 and Government Procurement Law no: 2886 which hinder with the efficient operation of the WUAs. T'herefore, the revised statute should exclude compliance with Law no: 1050. Improvements of Transfer Agreements: Presently, the transfer agreements signed between DSI and WUOs are prepared by the DSI. According to these agreements only the operation and maintenance (O&M) responsibility is transferred to users. The transfer agreements are vague in regards to the rights and responsibilities of WUOs on irrigation schemes. The legal framework for the transfer agreements can be redefined working exclusively with the WUOs and the DSI or through the enactment of a new law which would stipulate in clearer terms the rights, responsibilities and the legal status of the WUOs. In order to improve the existing transfer agreements without new legislation, it is expected that DSI will play a lead role in preparing an improved draft transfer agreement text in negotiation with the WUOs which will be submitted to the Ministry of Energy and Natural Resources for approval. The WUO rights and responsibilities needing further clarification are the rights on irrigation schemes such as ownership, easement and usage. Further possibilities for the improvement of transfer agreements include addition of an article on definitions and legal terms, clearly and unequivocally identifying the O&M responsibilities for the users and cancellation of the requirements for DSI's approval of water charges to be assessed by the users.  - 78 - ANNEX H Page 5 Revision of Transfer Protocols: Presently, the transfer protocol prepared by DSI is an independent attachment to a transfer agreement that simply details technical specifications on the transferred schemes. The link between the agreement and the protocol is not a very clear one. Transfer protocols need to specifically make reference to the transfer agreements and serve as a complementary part to the transfer agreement. No further improvement in the transfer protocols is needed other than meeting the need for reference and complementarity. Revision of the protocol text involves the same steps as those of the improvement of transfer agreements. Transfer of Equipment and Machinery: Existing DSI Law no: 6200 does not allow for the transfer of new machinery to users. There are provisions, however, for the transfer of old (scrapped) and surplus machinery to other entities (article 30/e under Law no: 6200). Although highly unlikely, this problem involves the revision and improvement of the DSI Law no: 6200.  - 79 - ANNEX I j I AS ME SOCIAL ASSESSMIENT  - 80 - ANNEX I Page 1 TURKEY PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND INVESTMENT PROJECT SOCIAL ASSESSMENT 1. Methodology: To achieve its objectives, the social assessment focused primarily on the users themselves, although the management of the WUAs, headmen, mayors, DSI personnel were also consulted. In particular, the social assessment team carried out several formal and informal interviews and group discussions in Izmir, Manisa, Adana, Mersin, Silifke and Anamur regions. In total, visits were conducted in 16 villages, spoke with 520 villagers in groups of 5-17, talked with managers of 14 WUAs, met with 9 village headmen and 5 mayors who were heads of WUAs, and three other heads of WUAs who were not headmen or mayors. Another mayor (in Menemen) who was a member of the WUA, but not its head was also consulted. DSI staff at headquarters (including the Director general) and Ms. Sen Akman, Acting Deputy Director General,Undersecretariat of the Treasury, were also briefed. During the short briefings, it was emphasized that a) the achievements to date are visible and substantial; b) the current level of participation is impressive; and c) there is sufficient knowledge in the field of the local needs to move forward and rapidly for the preparation of the project. Survey Areas 2. The Izmir, Manisa, Adana, Mersin, Silifke and Anamur regions were visited for a closer look at the participation aspects of the proposed irrigation project. Social Assessment Findings Main Findings 3. (a) There is a strong commitment among villagers to WUAs even when (i) they complain that they now pay too much and the free ride they got from the State was good; (ii) there are acute shortages of water. When water is short, there is conflict between villages and villagers; yet (with one exception in Menemen where the system itself is 40 years old and extremely deteriorated) the users easily list advantages of having the systems managed by themselves rather than by DSI. Also, many say "while it was good not to pay anything at all or defer payments indefinitely, it is better to pay and get a service than not to get a service at all." (b) The participatory framework for irrigation management is indigenous;  ANNEX I - 81 - Page 2 (c) Self contained irrigation systems were auto managed for the past 20- 30 years; (d) In all DSI managed systems, "village groups" always existed and managed water distribution within the village. The current system is in many ways identical to this at the local community level with WUA rather than DSI organizing the intra-village coordination (thus, while the previous Bank project made an enormous contribution by accelerating that auto management system, its success basically depended on the fact that it was built on existing traditions and systems); (e) With exception of associations where the irrigation system taken over from DSI is 30-40 years old and badly deteriorated, WUAs have purchased some equipment needed for O&M. For the remaining needs, they rely on DSI under non-universal arrangements. 4. Users' perspectives: There appears to be a mixture of irrigation management experience in Turkey previous to the large scale involvement of user associations. The schemes established by the GDRS were funded by the State and were immediately transferred informally to the users with no attempt for cost recovery of the initial scheme but with full responsibility for management and operation. To date, there is no systematic study of the success of these user managed systems. Since most of these systems were based on ground water utilization, there is also little knowledge of the ability of the users to maintain these units when energy prices have increased substantially. 5. Some of the small DSI managed systems were also turned over to the users immediately after their construction but DSI seems to have maintained some level of involvement and responsibility with regard to the O&M of the main canals. 6. With the exception of these user managed systems, DSI managed schemes were not only unable to recover capital costs but experienced acute difficulties in collecting fees for O&M expenses. For defaults an unrealistically low and one time penalty of 10% for delayed payment is charged and thus most villagers preferred not to pay. Thus, it is puzzling that the users would be happier with their own association than having the State to manage the irrigation schemes practically free. 7. Discussions with large number of users all point to a general contentment with association management "despite significantly higher payments" villagers make for water. As to why, the users offer several answers: * "No matter how much more we need to pay, it is better to have ownership of our own scheme";  - 82 - ANNEX I Page 3 * "No one could know about our problems and needs better than we do."; * "Nothing can make a salaried person work day and night when the water is most needed. The headman and villagers work without sleep to ensure that we all receive water because they are one of us." * "Many schemes are located far from the city and it is impossible to induce DSI personnel to stay away from their families for months to maintain irrigation schemes for our communities"; * "Water is much more equitably distributed when we are in charge"; * "Our costs are much lower. We know that DSI can no longer afford to provide free services. To pay for theirs is more costly than to pay for local contractors."; * "When you have a problem, you cannot find a person in the State to address. When you have a problem with your own WUA, you know who is in charge: one of your neighbors; you can talk to them immediately and without need for a negotiator"; * "When we manage our own scheme, the water can be given on a 24 basis, thus making full use of the system. This type of a service cannot be provided by the State; * "We do not need to be different to get a service: we pay and get what we paid for"; * "The state could not collect fees; among us we have no difficulty. With money collected we can meet our own needs and if we have other needs we can discuss, collect more money and meet them. 8. These are many of the benefits users find in their own management. They do not feel that a new management system has been imposed upon them. As far as they are concerned, at the village level, the communities always managed the system but did not have the resources to do the job in a professional way. They elect their own managers, they question the use of funds, they ask for accounting, and they change management when unhappy. There is a firm belief that this is the future of irrigation management in Turkey and this is an irreversible trend.  - 83 - ANNEX J DISBURSEMENT SCHEDULE  - 84 - Loan Disbursement Schedule Bank Fiscal Year Quarterly FY Cumulative Disbusements and Quarter Ending Disbursements Subtotals US$ M US$ M US$ M % of Total FY 1998 December31, 1997 0.70 0.70 3.5% March 31,1998 1.20 1.90 9.5% June 30, 1998 1.80 3.70 18.5% 3.70 FY 1999 September 30,1998 1.90 5.60 28.0% December 31, 1998 1.90 7.50 37.5% March 31, 1999 1.90 9.40 47.0% June 30, 1999 1.80 11.20 56.0% 7.50 FY 2000 September 30, 1999 1.70 12.90 64.5% December 31, 1999 1.60 14.50 72.5% March 31, 2000 1.00 15.50 77.5% June 30, 2000 0.90 16.40 82.0% 5.20 FY 2001 September 30, 2000 0.70 17.10 85.5% December 31, 2000 0.50 17.60 88.0% March 31, 2001 0.40 18.00 90.0% June 30, 2001 0.40 18.40 92.0% 2.00 FY 2002 September 30, 2001 0.35 18.75 93.8% December 31, 2001 0.35 19.10 95.5% March 31, 2002 0.30 19.40 97.0% June 30, 2002 0.30 19.70 98.5% 1.30 FY 2003 September 30, 2003 0.30 0.30 20.00 100.0% 20.00 - D_ ---------- FINANCE.XLS DisbSch 9/15/97 5:44 PM  - 85 - ANNEX K COST OF PROJECT WITH INCLUSION OF ENVISAGED FOLLOW-UP LOAN  Turkey Participatory Privatization of Irrigation Management and % % Total Components Project Cost Summary (TL Million) (USS) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs 1. Operation and Maintenance Equipment 4,119,690 12,359,070 16,478,760 25,748,063 77,244,188 102,992,250 75 89 00 2. Institutional Strengthening 548,752 490,688 1,039,440 3,429,700 3,066,800 6,496,500 47 6 3. Pilot Drip Irrigation Scheme 780,113 187,431 967,544 4,875,705 1,171,445 6,047,150 19 5 Total BASELINE COSTS 5,448,555 13,037,189 18,485,744 34,053,468 81,482,433 115,535,900 71 100 Physical Contingencies 88,438 30,807 119,245 552,736 192,545 745,280 26 1 Price Contingencies 282,480 713,373 995,853 1,765,497 4,458,584 6,224,081 72 5 Total PROJECT COSTS 5,819,472 13,781,370 19,600,842 36,371,700 86,133,561 122,505,261 70 106 ANNEX-K. SUMCOM 9/15197 8:12 PM  Turkey Participatory Privatization of Irrigation Ma % % Total Expenditure Accounts Project Cost S (TL Million) (USS) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs 1. Investment Costs Vehicles for Agencies 33,600 96,000 129,600 210,000 600,000 810,000 74 1 Office Equipment 79,680 190,720 270,400 498,000 1,192,000 1,690,000 71 1 Field Equipment (O&M Equip) 4,119,690 12,359,070 16,478,760 25,748,063 77,244,188 102,992,250 75 89 oo Training 104,240 61,120 165,360 651,500 382,000 1,033,500 37 1 - Technical Assistance 223,200 38,400 261,600 1,395,000 240,000 1,635,000 15 1 1 Special Studies/Designs 108,032 104,448 212,480 675,200 652,800 1,328,000 49 1 PDIS Civil Works 491,690 63,822 555,512 3,073,065 398,885 3,471,950 11 3 PDIS Materials 288,422 123,610 412,032 1,802,640 772,560 2,575,200 30 2 Total BASELINE COSTS 5,448,555 13,037,189 18,485,744 34,053,468 81,482,433 115,535,900 71 100 Physical Contingencies 88,438 30,807 119,245 552,736 192,545 745,280 26 1 Price Contingencies 282,480 713,373 995,853 1,765,497 4,458,584 6,224,081 72 5 Total PROJECT COSTS 5,819,472 13,781,370 19,600,842 36,371,700 86,133,561 122,505,261 70 106 ANNEX_K SUMEA 9/15/97 8:12 PM  Tti*ey PsWOxIia0y Ploatizatloo of )niptoo U PhysIcal EepeiSWs Accon ta &wO1ke,n COt Phs OMS) PCWlcai CerAkWncds Prke Con6eNcle Pike Becoot Lcal LAce) Tated h,cI Cnt. Bass Costs 4 Cmit, ot Lca IEXCI Dlies & (EKd. bullet & (ExcL ODst0 & Local (FxcL DCtIes. PrIc ConL on Phymcadl Fcr. EBh. Thre) Taxes TOW FPe. Each. Taxun) Taxes Total Fec. ExthL Taes) 'axes Tow For. Exch Taes) Txes TOal Boss Costs Cost. I. hveshwIset Costa Veliclkesfr Aexies 800,000 48,000 162,000 610,000 4,9O 1,200 5,000 11,92S So1 3,130 1i.049 611,030 53.301 18,330 031,849 S25.0583 s,0o6 c Oft* Eoett 1,102.000 150,000 336,000 1,6600,00 - 1,000 4,000 20,000 24,080 5,070 7,440 37,190 1,216,000 181,670 349,440 1,747,108 1,726,554 20,044 Fd EWOVes (0.M Eq*) 77,244,100 0,149,013 20,000,450 102,602,200 * 4,200,021 200,035 1,143,739 S,71,004 01,033,200 5,435.547 21.742,189 106,710.G44 108,710,944 . Trath 382,000 444,800 206,700 1,033,000 13,000 8,OD0 5,2w0 26,200 16,494 21,117 9,403 47,014 411,404 473,917 221,323 1,100,784 1,078,04 27,870 Teiw l Ao)axe 240,000 1,110,QQD 279,000 1,620,000 - * - - 0,075 60,406 15,111 04,60 249,075 1,176,468 204,117 1,71,0660 1,710,660 sP0Iest5aesiDeos60 062,800 400,600 285,600 1,320.000 62,400 20,800 20,600 104,000 54,000 20,615 20,106 100,770 760,200 457,015 304,86 1,032,170 1,420,701 111,987 PDISCMWoes 396,085 2,37a,67s 64,390 3,471,0S5 329,06 228,320 60,302 531,510 0,470 47,500 14,356 71,708 448,244 2,651,055 775,050 3,87s,248 3,537,320 337,670 POai Materals 12 . 13908 B 412UM2 2,070,200 77,256 12061 41 .203 257.520 4,490 flo, 2 2312,i 14B, 8e4,306 1,008751 476,963 2,081.020 2.S710018 271,002 TotaO 01,402,433 11i,07,288 22,808,172 115,S30,90o 192,848 413.00D 136,755 745,260 4,450,584 526,438 1,237,000 6,224.091 86,133.561 12,039,704 24.231,55 122.505,261 121,720,012 775,440 AMEX_K E48RKF 9115097 612Pm  Turkey Participatory Privatization of Irnigaion Management and I Disbursement Accounts by Financiers (US$) World Bank Govemment WUOs Total Local (Excl. Duties & Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes A. Uluborlu PDIS PDIS Civil Works 1,550,099 40.0 0 - 2,325,149 60.0 3,875,248 3.2 448,244 2,651,955 775,050 Drip Irrigation System 476,963 16.0 0 - 2,504,057 84.0 2,981,020 2.4 894,306 1,609,751 476,963 Subtotal Uluborlu PDIS 2,027,062 29.6 0 - 4,829,206 70.4 6,856,268 5.6 1,342,550 4,261,706 1.252,013 B. O&M EquipmentforWUOs 29,895,510 27.5 0 78,815,434 72.5 108,710,944 88.7 81,533,208 5,435,547 21,742,189 C. Equipment and Goods DSI Related Equipment 609,488 80.0 152,372 20.0 - - 761,860 0.6 609,488 - 152,372 DSI Related Vehicles 611,938 80.0 152,985 20.0 - - 764,923 0.6 611,938 - 152,985 1 DSI Related DSS 606,600 80.0 151,650 20.0 - - 758,250 0.6 606,600 - 151,650 00 GDRS Related Equipment 181,670 80.0 45,418 20.0 - - 227,088 0.2 - 181,670 45,418 s GDRS Related Vehicles 53,381 80.0 13,345 20.0 - - 66,726 0.1 - 53,381 13,345 Subtotal Equipment and Goods 2,063,077 80.0 515,769 20.0 - - 2,578,847 2.1 1,828,026 235,051 515,769 D. Technical Assistance DSI Related Consultants 489,577 89.1 60,126 10.9 - - 549,703 0.4 249,075 240,502 60,126 DSI Related Special Studies and Designs 759,960 80.0 189,990 20.0 - - 949,950 0.8 569,970 189,990 189,990 GDRS Related Special Studies and Designs 225,528 80.0 56,382 20.0 - - 281,910 0.2 169,146 56,382 56,382 GDRS Related PDIS TA 240,735 80.0 60,184 20.0 - - 300,918 0.2 30,092 210,643 60,184 Project Coordination Unit 935,966 80.0 233,991 20.0 - - 1,169,957 1.0 - 935,966 233,991 Subtotal Technical Assistance 2,651,766 81.5 600,673 18.5 - - 3,252,439 2.7 1,018,283 1,633,483 600,673 E. Training DSI Related Training 640,152 80.0 160,038 20.0 - - 800,190 0.7 260,418 379,734 160,038 GDRS Related Training 245,259 80.0 61,315 20.0 - - 306,574 0.3 151,076 94,183 61,315 Subtotal Training 885,411 80.0 221,353 20.0 - - 1,106,764 0.9 411,494 473,917 221,353 Total 37,522,827 30.6 1,337,795 1.1 83,644,640 68.3 122,505,261 100.0 86,133,561 12,039,704 24,331,996 ANNEX_K. DISFIN 9/15i97 8:12 PM  Turkey Particpatory Prhatization of ffrigation Management an Components by Financiers (US$) World Bank Government WUOs Total Local (Excl. Duties & Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes C) 1. Operation and Maintenance Equipment 29,895,510 27.5 0 - 78,815,434 72.5 108,710,944 88.7 81,533,208 5,435,547 21,742,189 1 2. Institutional Strengthening 5,600,254 80.7 1,337,795 19.3 - - 6,938,049 5.7 3,257,803 2,342,451 1,337,795 3. Pilot Drip Irrigaton Scheme 2,027,062 29.6 0 - 4,829,206 70.4 6,856,268 5.6 1,342,550 4,261,706 1,252,013 Total Disbursement 37,522,827 30.6 1,337,795 1.1 83,644,640 68.3 122,505,261 100.0 86,133,561 12,039,704 24,331,996 ANNEX_K. COMFIN 9/15/97 8:12 PM  Turkey Participatory Privatization of Inigation Ma Expenditure Accounts by Financiers (USS) World Bank Government WUOs Total Local (Excl. Duties & Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes I. Investment Costs Vehicles for Agencies 665,319 80.0 166,330 20.0 - - 831,649 0.7 611,938 53,381 166,330 O Office Equipment 1,397,758 80.0 349,440 20.0 - - 1,747,198 1.4 1,216,088 181,670 349,440 Field Equipment (O&M Equip) 29,895,510 27.5 0 - 78,815,434 72.5 108,710,944 88.7 81,533,208 5,435,547 21,742,189 Training 885,411 80.0 221,353 20.0 - - 1,106,764 0.9 411,494 473,917 221,353 Technical Assistance 1,425,543 82.9 294,117 17.1 - - 1,719,660 1.4 249,075 1,176,468 294,117 Special Studies/Designs 1,226,223 80.0 306,556 20.0 - - 1,532,779 1.3 769,208 457,015 306,556 PDIS Civil Works 1,550,099 40.0 0 - 2,325,149 60.0 3,875,248 3.2 448,244 2,651,955 775,050 PDIS Materials 476,963 16.0 0 - 2,504,057 84.0 2,981,020 2.4 894,306 1,609,751 476,963 Total Disbursement 37,522,827 30.6 1,337,795 1.1 83,644,640 68.3 122,505,261 100.0 86,133,561 12,039,704 24,331,996 ANNEX_K. EXPFIN 9/15/97 8:12 PM  Turkey Participatory Privatization of Irrigation Ma Expenditure Accounts by Component Operation and Pilot Drip (US$) Maintenance Institutional Irrigation Equipment Strengthening Scheme Total I. Investment Costs Vehicles for Agencies - 831,649 - 831,649 Office Equipment - 1,747,198 - 1,747,198 Field Equipment (O&M Equip) 108,710,944 - - 108,710,944 Training - 1,106,764 - 1,106,764 Technical Assistance - 1,719,660 - 1,719,660 Special Studies/Designs - 1,532,779 - 1,532,779 PDIS Civil Works - - 3,875,248 3,875,248 PDIS Materials - - 2,981,020 2,981,020 Total PROJECT COSTS 108,710,944 6,938,049 6,856,268 122,505,261 Taxes 21,742,189 1,337,795 1,252,013 24,331,996 Foreign Exchange 81,533,208 3,257,803 1,342,550 86,133,561 ANNEX_K. EXCMTF 9/15/97 8:12 PM  Turkey Participatory Privatization of Irrigation Ma Expenditure Accounts by Years - Tot (US$) Totals Including Contingencies 97/98 98/99 99/00 00/01 01/02 Total I, Investment Costs Vehicles for Agencies 521,676 309,973 - - - 831,649 Office Equipment 1,277,586 209,660 126,083 131,663 2,206 1,747,198 Field Equipment (O&M Equip) 21,176,861 21,642,752 22,298,408 23,004,814 20,588,110 108,710,944 Training 281,816 288,016 305,968 155,136 75,828 1,106,764 Technical Assistance 419,565 346,136 348,471 302,177 303,310 1,719,660 Special Studies/Designs 128,397 199,416 145,724 683,137 376,105 1,532,779 PDIS Civil Works 2,483,939 1,391,309 - - - 3,875,248 PDIS Materials - 1,219,536 1,246,365 254,757 260,362 2,981,020 Total PROJECT COSTS 26,289,840 25,606,798 24,471,020 24,531,683 21,605,920 122,505,261 ANNEX-K. EAYRT 9/15/97 8:12 PM  Turkey Participatory Privatization of Irrigation Management and Project Components by Year - Totals Including Co (US$) Totals Including Contingencies 97/98 98/99 99/00 00/01 01/02 Total ' 1. Operation and Maintenance Equipment 21,176,861 21,642,752 22,298,408 23,004,814 20,588,110 108,710,944 2. Institutional Strengthening 2,629,040 1,353,201 926,247 1,272,113 757,449 6,938,049 3. Pilot Drip Irrigation Scheme 2,483,939 2,610,845 1,246,365 254,757 260,362 6,856,268 Total PROJECT COSTS 26,289,840 25,606,798 24,471,020 24,531,683 21,605,920 122,505,261 ANNEX_K COMYRT 9/15/97 8:12 PM  Turkey Participatory Privatization of Irrigation Manageme Table 2. Operation and Maintenance Equipment Detailed Costs Quantities Unit Cost Base Cost Overall Cost Unit 97/98 98/99 99/00 00/01 01/02 Total (US$) Total Total I. Investrnent Costs A. Field Equipment 1. Small Equipment Computer item 29 29 29 29 29 145 2,500 362,500 382,972 Relay(radio) item 15 15 15 15 15 75 7,500 562,500 594,266 Motorcycle item 134 134 134 134 134 670 2,400 1,608,000 1,698,809 Hand-held radio item 186 186 186 186 186 930 600 558,000 589,512 Vehicleradio item 22 22 22 22 22 110 1,000 110,000 116,212 Fixed radio item 22 22 22 22 22 110 1,000 110,000 116,212 Trailer item 15 15 15 15 15 75 3,500 262,500 277,324 Concrete mixer item 7 7 7 7 7 35 3,000 105,000 110,930 Motor pump item 14 14 14 14 14 70 3,000 210,000 221,859 Other amount 500,000 528,237 Subtotal Small Equipment 4,388,500 4,636,334 2. Vehicles Single cabin pick-up item 13 13 13 13 13 65 26,000 1,690,000 1,785,440 Double cabin pick-up item 24 24 24 24 24 120 30,000 3,600,000 3,803,304 Other amount 500,000 528,237 n Subtotal Vehicles 5,790,000 6,116,981 3. Light Duty Machines Dumper truck item 25 25 25 25 25 125 50,000 6,250,000 6,602,959 Truck item 3 3 3 3 3 15 45,000 675,000 713,120 Truck for passengers item 10 10 10 10 10 50 50,000 2,500,000 2,641,184 Crane item 7 7 7 7 7 35 40,000 1,400,000 1,479,063 Tractor item 14 14 14 14 14 70 20,000 1,400,000 1,479,063 Tractor with implement item 18 18 18 18 18 90 50,000 4,500,000 4,754,131 Tractor + crane item 22 22 22 22 22 110 30,000 3,300,000 3,486,362 Sprayers item 9 9 9 9 9 45 1,750 78,750 83,197 Others amount 2,000,000 2,112,947 Subtotal Light Duty Machines 22,103,750 23,352,025 4. Heavy Duty Machines Grader item 20 20 20 20 16 96 190,000 18,240,000 19,234,756 Loader(dragline) (tracked) item 2 2 3 3 2 12 170,000 2,040,000 2,158,985 Loader-wheeled item 8 8 8 8 9 41 120,000 4,920,000 5,203,426 Dozer D4 item 6 6 6 7 7 32 200,000 6,400,000 6,775,271 Gradall-Bantam excavator item 18 18 18 18 14 86 300,000 25,800,000 27,201,247 Tracked excavator item 5 5 5 5 3 23 150,000 3,450,000 3,630,891 Excavator (wheeled) item 12 12 12 12 10 58 170,000 9,860,000 10,401,027 Subtotal Heavy Duty Machines 70,710,000 74,605,604 Total 102,992,250 108,710,944 ANNEX_K. O&M EQUIP 9/15/97 8:12PM  - 96 - ANNEX L COST OF O&M EQUIPMENT CONSIDERED TO BE PURCHASED UNDER THE ENVISAGED FOLLOW-UP LOAN OF $17.5 MILLION  Turkey Participatory Privatization of Irrigation Ma % % Total Expenditure Accounts Project Cost S (TL Million) (US$) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs 1. Investment Costs Field Equipment (O&M Equip) 2,359,269 7,077,808 9,437,077 14,745,433 44,236,298 58,981,731 75 100 Total BASELINE COSTS 2,359,269 7,077,808 9,437,077 14,745,433 44,236,298 58,981,731 75 100 Physical Contingencies - - - - - - - - Price Contingencies 186,185 558,556 744,742 1,163,659 3,490,977 4,654,636 75 8 Total PROJECT COSTS 2,545,455 7,636,364 10,181,819 15,909,092 47,727,275 63,636,367 75 108 ANNEX-L. SUMEA 9/15/97 7:55 PM  Turkey Participatory Privatization of lrrigatio Disbursements by Financiers (US$) World Bank Government WUOs Total Local (Excl. Duties & Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes A. PDIS Civil Works - - - - - - - B. O&M Equipment for WUOs 17,500,001 27.5 - - 46,136,366 72.5 63,636,367 100.0 47,727,275 3,181,818 12,727,273 C. Equipment and Goods D. Consultants and Training Total 17,500,001 27.5 - - 46,136,366 72.5 63,636,367 100.0 47,727,275 3,181,818 12,727,273 ANNEX_L. DISFIN 9/15/97 7:55 PM  Turkey Participatory Prvatization of Irrigation Ma Expenditure Accounts by Component Operation and Pilot Drip (US$) Maintenance Institutional Irrigation Equipment Strengthening Scheme Total I. Investment Costs Field Equipment (O&M Equip) 63,636,367 - - 63,636,367 Total PROJECT COSTS 63,636,367 - - 63,636,367 Taxes 12,727,273 - - 12,727,273 Foreign Exchange 47,727,275 - - 47,727,275 ANNEX_L. EXCMTF 9/15/97 7:55PM  Turkey Participatory Privization of Irrigation Ma Expenditure Accounts by Years - Tot (US$) Totals Including Contingencies 97198 98/99 99/00 00101 01/02 Total I. Investment Costs Field Equipment (O&M Equip) 21,365,378 21,225,126 21,045,862 63,636,367 Total PROJECT COSTS - - 21,365,378 21,225,126 21,045,862 63,636,367 ANNEX_L. EAYRT 9/15/97 7:55PM  Turkey Participatory Privatization of Irrigation Managem Table 2. Operation and Maintenance Equipment Detailed Costs Quantities Unit Cost Base Cost Including Contingencies (USS) Overall Cost Unit 97198 98199 99100 00o10 01102 Total (US$) Total 99100 00/01 01102 Total I. Investment Costs A. Field Equipment 1. Small Equlpment Computer item - 28 28 27 83 2,500 207,500 73,918 75,544 74,449 223,911 Relay(radio) item - - 15 15 15 45 7,500 337,500 118,797 121,411 124,082 364,289 Motorcycle item - - 131 131 130 392 2,400 940,800 331,998 339,302 344,120 1,015,420 Hand-held radio item - - 181 181 181 543 600 325,800 114,679 117,202 119,780 351,660 Vehicle radio item - - 22 22 22 66 1,000 66,000 23,231 23,743 24,265 71,239 Fixed radio item - 21 21 20 62 1,000 62,000 22,175 22,663 22,059 66,898 Trailer item - - 15 14 14 43 3,500 150,500 55,439 52,881 54,044 162,364 Concrete mixer item - 7 7 6 20 3,000 60,000 22,175 22,663 19,853 64,692 Motor pump item - - 13 13 14 40 3,000 120,000 41,183 42,089 46,324 129,596 Other amount 279,501 98,382 100,546 102,758 301,686 Subtotal Small Equipment 2,549,601 901,978 918,044 931,733 2,751,755 2. Vehicles Single cabin pick-up item - - 6 8 8 24 26,W0 624,00 219,642 224,475 229,413 673,530 Double cabin pick-up item - - 26 25 25 76 30,000 2,280,000 823,659 809,404 827,210 2,460,273 Other amount 46,000 42,239 3,238 3,309 48,785 Subtotal Vehicles 2,950,W0 1,085,541 1,037,116 1,059,932 3,182,589 3. Light Duty Machines Dumpertruck item - - 26 26 25 77 50,000 3,850,000 1,372,765 1,402,966 1,378,684 4,154,416 Truck item - - 3 2 2 7 45,000 315,000 142,556 97,128 99,265 338,950 Truck for passengers item - - 10 9 9 28 50,000 1,400,000 527,987 485,642 496,326 1,509,955 Crane item - - 7 7 7 21 40,000 840,000 295,673 302,177 308,825 906,675 Tractor item - - 14 14 13 41 20,000 820,000 295,673 302,177 286,766 884,616 Tractorwith implement item - - 21 20 20 61 50,000 3,050,000 1,108,772 1,079,205 1,102,947 3,290,924 Tractor + crane item - 22 22 21 65 30,000 1,950,000 696,942 712,275 694,857 2,104,074 Sprayers Rtem - - 8 8 8 24 1,750 42,000 14,784 15,109 15,441 45,334 Others amount 185,130 65,164 66,598 68,063 199,825 Subtotal Light Duty Machines 12,452,130 4,520,316 4,463,278 4,451,175 13,434,769 4. Heavy Duty Machines Grader item - - 19 19 18 56 190,000 10,640,000 3,812,064 3,895,929 3,772,080 11,480,072 Loader(dragline) (tracked) item - - 3 3 3 9 170,000 1,530,000 538,546 550,394 562,503 1,651,444 Loader-wheeled item - - 8 8 7 23 120,000 2,760,000 1,013,734 1,036,037 926,476 2,976,247 Dozer D4 item - - 7 6 6 19 200,000 3,800,000 1,478,363 1,295,046 1,323,537 4,096,945 Gradall-Bantam excavator item - - 16 16 16 48 300,000 14,400,000 5,068,672 5,180,183 5,294,147 15,543,001 Tracked excavator item - - 5 4 4 13 150,000 1,950,000 791,980 647,523 661,768 2,101,271 Excavator (wheeled) item - 12 12 11 35 170,000 5,950,000 2,154,186 2,201,578 2,062,511 6,418,275 Subtotal Heavy Duty Machines 41,030,000 14,857,545 14,806,689 14,603,021 44,267,255 Total 58,981,731 21,365,378 21,225,126 21,045,862 63,636,367 ANNEX_L. O&M EQUIPM 9/15/97 7:55PM  IBRD 28711 BULGARIA 35_R 4b GEORGIA..- Z * ) ~~~~ARMENiA>\, GREECE HsrKr ERRA TUNB r-f- ---- -. WN - K q k~~ ~ ~~~ -t MASRI J Z A^R4 ,,r/f_ <7^sl ECe_ < z REPD OF XI I II v~~ ~ ~ ~ ~~~~~~~~~~~~~ PA<RTICIPATORY PRIVATIZATION OF IRRIGATION ,r pR7 x3 X g ECE\ S ts MANAGEMENT AND INVESTMENT PROJECT X 8 ~~~~~~~~~~~~~~~~~~~~~~~~ ~ ~ ~~~~~~~~~90% IRR,GATION MANAGEMENT DIRGOSBUDRE ANKARA I~~~~~~~~~~~~~~~~~UE RAILTOSTAO) o TLCTT ON ATO~ S LAI fi MEDITERRANEAN SEA ,( SRRALAlN{L ECETWSNVLAE R, 01 R OREGONSWTHS0-TIMAT PROV,NCE AO TAOS PRs,wTmzlSALMnygadn MLES 0 510 Ip 50OV DIEGOs SITH 0-50% 67NTOACAFITAL A,donol s hMAIn .I PR IMTTO WUOO PROVINCE30OUNDAMIES I^S., S555IS,RI 55pl.o Ih* p,,S NILOMETE95 0 50 160 150 260 250 t - S' ULL30ORUI PILOT DRIP IRR GATlON NENTOAdUDRE HWAEGAMAS, OS,OR. I A 'I CHMIVRLLTRT ~555M A'm, , pN55. ShAt h 395 ME 4D Provmce nomes r0r the some as prownceG A D IOSs JULY 1997