Nepal - Irrigation Sector Project

Report No. PIC887 Project Name Nepal-Irrigation Sector Project (@+) Region South Asia Sector Agriculture Product ID NPPA10530 Borrower His Majesty's Government of Nepal Implementing Agencies Department of Irrigation, Ministry of Water Resources Department of Hydrology & Meteorology, Ministry of Science and Technology His Majesty's Government of Nepal Fax (977-1) 537169 Phone (977-1)537136,535383,527442,526768 Contact: Mr. M.M.Shrestha, Act. Director General Department of Irrigation Department of Agriculture, Ministry of Agriculture His Majesty's Government of Nepal Phone (977-1) 215382/215507 Contact: Mr. M.D. Pant, Secretary Ministry of Agriculture Date of Initial PID Prepared January 30, 1990 Date of this PID Prepared May 22, 1997 Project Appraisal Date June 23, 1997 Project Board Date September 11, 1997 Sector Issues. 1. Nepal is endowed with few natural resources, among them water is the most promising resources for development. However, Its development poses complex challenges because of the non-uniform spatial, temporal, and seasonal distribution on the one hand, and the riparian issues on the other. This is compounded by the country's lack of effective national level planning and management initiatives, and the lack of coordination among stakeholders. Water has never been treated as a unitary resource that affects all sectors of the country. Under the population pressure combined with the ad-hoc nature of development of water resources, some visible negative ecological changes are being observed. This highlights the need for the government to prepare a comprehensive and integrated water resources strategy to tackle the issues in prioritized manner. 2. As per HMGN's Irrigation Policy, new developments in irrigated agriculture focuses on users' participation in order to promote ownership by beneficiaries and to reduce O&M burden on public resources. Sustainability of past investments have been  thwarted by the proliferation of new construction and inadequate attention paid to operation and maintenance. Irrigation development was caught in a vicious cycle of "construction-destruction-and- rehabilitation". It is against this background that the participatory irrigation development was identified as the only viable solution for sustainable irrigation development. 3. Allowing farmers' participation in the decision-making process of planning, design, construction implementation, and operation and maintenance of irrigation systems will help ensure sustainability of the systems. It will also re-orientate the public agencies towards relinquishing part of their O&M responsibilities to users' organizations and upgrading their skills in implementing the sector programs. Project Objectives 4. The first objective is to assist the His Majesty's Government of Nepal in harmonizing the planning of its water resources in a sustainable and economically viable manner. 5. The second objective is to increase irrigation system sustainability and productivity by demand driven activities in poor farming communities (based on the successful pilot experience in the on-going Irrigation Line of Credit). Project Description 6. The project is aimed for a time slice of a long-term sector investment, based on an agreed country program to improve the productivity and sustainability of the country's water resources. In particular, it would support the irrigation sector including implementation of a large-scale on-going pilot program. It would also support the Government's new development focus on strengthening the country's institutional and technical capability in water planning and management, and orienting public agencies towards relinquishing gradually part of their O&M responsibilities to user organizations in irrigated agriculture. The project area is in three Western Development Regions and Eastern Region (for Sunsari Morang). A. Water Resources Strategy and Integrated Water Resources Policy Development. HMGN is currently preparing a water resources strategy in two phases. The Phase I Water Resources Strategy Formulation identifying the development issues and prioritizing them according to the country's development objectives was completed in early 1997. The project will continue to assist HMGN in completing the Phase II Strategy Formulation which is to define the practical options, address the prioritized issues, and recommend a comprehensive strategy for implementing the optimal development of Nepal's water resources. The Phase I study has been finalized at a public forum in February 1997. B. Irrigation Sector Infrastructure Improvement and Development Component: This component would finance improvement and development -2 -  of private and public irrigation schemes, based on the "demand- driven" and "participatory" principles adopted under the HMGN's revised Irrigation Policy 1997. The policy focuses on improving the development and management of irrigation schemes through legalized water user groups' participation in the design, construction, and in the operation and maintenance of schemes. The component comprises the followings. (a) rehabilitation, modernization and development of about 390 small- and medium-scale farmer-owned and managed irrigation schemes (FMIS) covering a command area of about 39,500 ha using surface or ground water. The component will finance: (i) rehabilitation or modernization of temporary headworks and intakes structures, main and secondary canals, and conveyance systems of selected FMIS (31,500 ha) fed by surface water, and (ii) rehabilitation and development of new clustered tube-well irrigation (8,000 ha) fed by ground water. The rehabilitation works to be financed are those beyond the beneficiary farmers' technical and financial capacity to implement on their own, and by the make-shift nature of brushwood diversion and intake structures, are also threatening to the environmental sustainability of the regions. (b)System Improvement and Turnover to Farmer (SIFT) of public irrigation area covering 20,100 ha.. This component will finance both Joint Management and Turnover schemes of public irrigation schemes, where beneficiaries will also be involved in the design and construction of tertiary canal distribution units, which do not exist in the original systems, and which will be developed and turned over to farmers after completion of schemes. (i) Department of Irrigation (DOI)/ farmer joint management (JM) schemes of about 17,600 ha [including 15,100 ha under Sunsari Morang III] This sub-component of the project would finance rehabilitation and modernization of Sunsari Morang Irrigation Phase III and some other schemes under joint management. After rehabilitation and modernization, O&M of the distribution networks will be responsible by WUGs in conjunction with O&M of the headworks and main conveyance system by the agency. (a) Sunsari Morang System -Phase III .The objective of this sub-component is to rehabilitate and improve irrigation on 15,100 ha in continuation of the Bank-funded Sunsari Morang Irrigation II Project (completed in March 1995). Financing of the proposed Phase III would include: (i) improvement and rehabilitation of the main canal of the system beyond the completed Sunsari Morang Phase II area; (ii) rehabilitation and modernization of secondary canals and related structures, drains and inspection road networks; (iii) development of distribution networks by constructing sub-secondary and tertiary canal systems; (iv) construction of 5.5 km Kosi Flood Embankment on the east bank of the Kosi River; (v) technical assistance and institutional capacity-building -3 -  for staff and beneficiary-WUAs in project implementation; (vi) other miscellaneous works and infrastructure necessary for proper O&M of the developed system, and (vii) institutional development to strengthen DOI centra 1 and, in particular, its project office, the WUAs, and local non-governmental organization in management transfer process of tertiary and higher order canals to users. (b) Turnover schemes (TO) of about 2,500 ha. (US$ 0.6 million) The new Irrigation Policy mandates that, public schemes irrigating less than 2000 ha in Terai and 500 ha in Hills are to be turned-over (TO) to beneficiary farmers (through legalized WUGs) if they agree to take over ownership and full responsibility for rehabilitation, operation and management after rehabilitation. The project will finance improvements in the conveyance networks of medium and small public irrigation schemes covering about 2,500 ha prior to their being turned-over to beneficiaries. (c) Infrastructure support development (Farm roads, River Protection, Environmental Protection), work shops and pilot projects for integration of water resources development schemes. This component will finance construction of farm roads, river and environmental protection measures required in a number of FMIS, as well as ancillary river protection works under some FMIS schemes. In addition, the project will support a pilot effort of integrating water resource development where and when technical and economic viability exist, and in accordance with the "demand-driven" and "participatory" principles for integrating rural water supply works and/or micro-hydropower generation components in irrigation schemes. C. Institutional Strengthening and Development. The project will finance consultancy services, studies, training, equipment, vehicles, investigation works and limited incremental staff support, to the following implementing agencies directly involved in the project implementation. (a) Department of Irrigation: DOI will have primary responsibility for implementing the project's infrastructure development. The project will finance technical assistance for institutional strengthening of DOI in design and supervision of the NISP implementation, studies, training, equipment, materials, and vehicles, including strengthening of DOI Training Branch, and piloting of on-farm water management activities in completed FMIS. The consultancy services for detailed design and construction supervision of SMIP-III would however be arranged separately due to its location and its sizable works. (b) Department of Hydrology and Meteorology (DHM): The project will support strengthening of DHM in hydro- meteorological data collection, collation, and management. In addition, the project will also support the strengthening of - 4 -  DHM's data collection networks formed under basinwise boundary, data dissemination functions and basin-wise resources planning effort in about 91 sub-basins (in three of the four major country river basins) covered under the project . (c) Department of Agriculture (DOA): In view of the proposed National Agricultural Research, Extension and Training Project now under preparation which would cover a wider range of agricultural activities on a national scale, the project will provide only limited support to the DOA's intensified efforts to extend agricultural extension services to specific irrigated areas, including strengthening of District DOA's capacity for preparing and appraising new irrigation schemes, through financing of vehicles, equipment, farmers' training, and training for extension staff to carryout field extension work in completed ILC/NISP schemes. (d) Water User Associations (WUAs), Non Governmental Organizations (NGOs), and Community Based Organizations (CBOs) The project will finance training of selected regional and district staff and WUAs, NGOs, and CBOs in such topics as NISP principles and procedures, systems O&M, participatory environmental protection in hill irrigation, irrigated water management, farmer organization, financial management, credit accessing, and marketing. Project Financing 8. The project will be implemented over a five year period. The provisional project cost estimates, by component, including physical and price contingencies, are: (i)Water Resources Strategy, US$ 1.0 million; (ii) Irrigation Sector Infrastructure Improvement and Development, US$ 82.6 million; and (iii) Institutional Strengthening and Development, US$16.6 million. The proposed cost sharing arrangement is: IDA = US$ 80.0 milliom HMGN = US$ 14.6million Beneficiary farmers = US$ 7.3 million Total = US$101.9 million The total estimated project cost of US$101.9 million is subject to a thorough review of the project scope and HMGN's implementation capacity. Project Implementation 9. The NISP will be implemented over a five-year period. Implementation of individual FMIS scheme under NISP should in any case be no more than two consecutive years. Construction of water courses under SMIP-III involving farmers' labor contribution (box- cutting and sodding) would be tested during the first year of the project in selected pilot areas covering about 1300 ha. Lessons learned from implementation of this program will be applied to the - 5-  design and implementation of the remaining areas. 10. The construction works for all FMIS, TO and JM schemes (except SMIP-III) will be procured through national competitive bidding (NCB) managed by concerned DIO/WUA with the exception of small schemes (under Rs.1.0 m) which, with their agreement, could be undertaken by beneficiaries themselves. Standarized NCB bidding documents will be used for NCB. Supply and Installation of pumps and electrical equipment for groundwater schemes will be procured in lots (groups/clusters) through standard ICB procedures acceptable to and cleared by IDA. 11. The SMIP-III construction works will be procured through (a) ICB for main, secondary, tertiary canal system rehabilitation and modernization works and flood embankment; and (b) NCB (or ICB) with farmers participation in construction of water courses and lower system. The first year will be devoted to the preparation of detailed designs, contracting and pilot area construction on 1300 ha, and the subsequent four years to construction implementation. Environmental Aspects 12. There are no major environmental issues although construction conditions will be difficult for most sub-projects. Formulation of an acceptable construction approach is essential for both environmental reasons and for sustainability of project investments. Environmental impact assessment and mitigation measures will be taken up during the whole cycle of each sub- project. Sub-project-specific environmental analysis would be undertaken to identify environmental protection and mitigation measures for selected sub-projects. These mitigation measures would be built into the design of the sub-projects, where appropriate (e.g. anti-erosion construction measures, use of vetiver grass to control erosion and slippage in cuts on hillsides for canals, and monitoring of groundwater levels for groundwater subprojects). The objectives would be to make environmental protection a standard element of sub-project preparation and implementation, and to maximize the role of local participation in environmental protection activities. Some pilot efforts on mitigation measures has been carried out under the ongoing Irrigation Line of Credit (ILC) pilot program. As schemes involved are farmer-managed private schemes, beneficiary awareness of the environmental impact will be introduced from the start of scheme preparation, through training, construction, implementation and monitoring of operations. The project has specific but limited environmental benefits related to modernization of brushwood diversion structures and prevention of excessive seepage by lining earthen canal in hill slopes. Status of Project Preparation 13. All components of the project have been prepared up to the feasibility level study and design. For Sunsari Morang Irrigation III component, a detailed design for the first year construction on the pilot area (1,300 ha) development has been completed. The detailed preparation of construction drawings and the final design - 6 -  for the remaining areas is necessary. 14. For the FMIS, the feasibility study, detailed design and NCB tender preparation for each sub project will be prepared upon receipt of farmers' demand in the course of implementation. The project cost for the FMIS component is based on the detailed feasibility studies of model sub-projects. Local and foreign consultancy services will be necessary for the project implementation. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington, D.C. 20433 Telephone No.: (202) 458-5454 Fax No.: (202) 522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending June 20, 1997. - 7 -  Annex Environmental Issues There are no major environmental issues although construction conditions will be difficult for most sub-projects. Formulation of an acceptable construction approach is essential for both environmental reasons and for sustainability of project investments. An environmental review has been completed by NISP consultants (Feasibility Studies, December 1995) which dealt with two levels of issues: (i) the overall assessment of impact and mitigation measures; and (ii) methods of integrating environmental protection into participatory irrigation development. The positive aspect of the project is that farmers' rudimentary brushwood type of weirs using local forest products will be replaced with gabion weir made up of local stone, thereby reducing the environmental threat to forests. -8-