Tajikistan - Rural Infrastructure Rehabilitation Project

Document of The World Bank Report No: 20496 - TJ PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 14.9 MILLION (US$20 MILLION EQUIVALENT) TO THE REPUBLIC OF TAJIKISTAN FORA RURAL INFRASTRUCTURE REHABILITATION PROJECT May25, 2000 Environmentally and Socially Sustainable Development Unit Tajikistan Country Unit Europe and Central Asia Region  CURRENCY EQUIVALENTS (Exchange Rate Effective May 25, 2000) Currency Unit = Tajik Rubles (TR) 1TR = US$ 0.00061 US$ = TR 1631 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CIS Commonwealth of Independent States EAP Economic Advisor to the President EMP Environmental Management Plan EA Environmental assessment FPSP Farm Privatization Support Project FSU Former Soviet Union ICB Intemational Competitive MIWR Ministry of Irrigation & Water Resources Bidding ME&NRM Ministry of Ecology and Natural MOA Ministry of Agriculture Resources Management MOF Ministry of Finance NCB National Competitive Bidding PIP Project Implementation Plan PSC Project Steering Committee PMR Project Management Report PITJ Project Implemenitation Unit PPF Project Preparation Facility PMU Project Management Unit RID Raion Irrigation Department PY Project Year RIU Raion Implementation Unit RIRP Rural Infrastructure Rehabilitation Project RRS Raions under Republican Subordination TACIS Technical Assistance to Commonwealth SLC State Land Committee of Independent States TASIF Tajikistan Social Investment Fund TR Tajik Ruble TAU Tajikistan University of Agricultural TLWRMI Tajik Land and Water Resources Sciences Management Institute VWO Village Water Organization WUA Water Users' Association GLOSSARY Dekhan Farm Privately Managed Farm OMO Obijineniya Moshinnogo Orosheniya Divisional Irrigation Union Meshraiomo Inter-raion Irrigation Union Oblast Region (or province) Raion District below oblast Hakumat Administrative Unit of the District Jomoat Administrative Unit at the Village or group of villages below raion Vice President: Johannes F. Linn Country Director: Kiyoshi Kodera Sector Director/Manager: Kevin Cleaver/Joseph R. Goldberg Task Team Leader/Task Manager: T. V. Sampath / S. Janakiram  TAJIKISTAN RURAL INFRASTRUCTURE REHABILITATION PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 3 2. Main sector issues and Govemment strategy 4 3. Sector issues to be addressed by the project and strategic choices 6 C. Project Description Summary 1. Project components 7 2. Key policy and institutional reforms supported by the project 10 3. Benefits and target population 11 4. Institutional and implementation arrangements 11 D. Project Rationale 1. Project altematives considered and reasons for rejection 14 2. Major related projects financed by the Bank and other development agencies 15 3. Lessons learned and reflected in proposed project design 16 4. Indications of borrower commitment and ownership 17 5. Value added of Bank support in this project 17 E. Summary Project Analysis 1. Economic 18 2. Financial 19 3. Technical 20 4. Institutional 21 5. Environment 23 6. Social 25 7. Safeguard Policies 28 F. Sustainability and Risks 1. Sustainability 28 2. Critical risks 29 3. Possible controversial aspects 30  G. Main Conditions 1. Effectiveness Condition 30 2. Other 30 H. Readiness for Implementation 32 I. Compliance with Bank Policies 32 Annexes Annex l: Project Design Summary 33 Annex 2: Project Description 37 Annex 3: Estimated Project Costs 52 Annex 4: Cost Benefit Analysis Summary 53 Annex 5: Financial Summary 73 Annex 6: Procurement and Disbursement Arrangements 74 Annex 7: Project Processing Schedule 80 Annex 8: Documents in the Project File 81 Annex 9: Statement of Loans and Credits 82 Annex 10: Country at a Glance 83 Annex I 1: Letter of Development Policy 85 Annex 12: Environmental Analysis 94 MAP(S) IBRD 30745  TAJIK1STAN RURAL INFRASTRUCTURE REHABILITATION PROJECT Project Appraisal Document Europe and Central Asia Region ECSSD Date: May 25, 2000 Team Leader: Thirumangalam V. Sampath Country Manager/Director: Kiyoshi Kodera Sector Manager/Director: Kevin M. Cleaver Project ID: P058898 Sector(s): Al - Irrigation & Drainage, AY - Other Agriculture Lending Instrument: Specific Investment Loan (SIL) Theme(s): Rural Development; Poverty Reduction; Private Sector; Water Poverty Targeted Intervention: N Project Financing Data O Loan 1 Credit El Grant FI Guarantee D Other (Specify) For LoanslCreditslOthers: Amount (US$m): $ 20 Million Equivalent (SDR 14.9 Million) Proposed Terms: Grace period (years): 10 Years to maturity: 40 |Commitment fee: 0.50% Service charge: 0.75% GOVERNMENT 1.50 0.00 1.50 IDA 3.07 16.93 20.00 BENEFICIARIES 2.50 0.00 2.50 Total: 7.07 16.93 24.00 Borrower: REPUBLIC OF TAJIKISTAN Responsible agency: PROJECT MANAGEMENT UNIT/MINISTRY OF WATER RESOURCES Address: Room 145-147, No: 44 Rudaki Street, Dushanbe, Republic of Tajikistan Contact Person: Mr. T. Ostanaev, Director of the PMU and Mr. Koimdadov Kozidovlat, Deputy Prime Minister (Rural Development ) Cabinet of Ministers. Tel: (992-372)+21-85-66;21-00-21 ; 21-13-67 Fax: 992 372.51 01 17 Email: r_center@Tajnet.com; rirp@Tajnet.com; Other Agency(ies): Tajik Agricultural Academy, Tajik Land and Water Resources Management Institute Estimated disbur ements ( Bank FY/US$M_: Annual 2.2 3.8 3.7 3.9 4.3 2.1 Cumulative 2.2 6.0 9.7 13.6 17.9 20.0 Project implementation period: Five and a half years Expected effectiveness date: 09/30/2000 Expected closing date: 03/31/2006 OMS PAD Fam FW. MDI, 2000  A. Project Development Objective 1. Project development objective: (see Annex 1) The project's main objectives are: (i) to increase water supply and efficiency in the main and secondary irrigation canals supplying the farms being privatized under the Farm Privatization Support Project and adjoining farms; (ii) to develop institutional capability in land and water resources management; and (iii) to improve the quality of drinking water in selected villages. These objectives would be realized through the following project activities: (i) rehabilitation of critical irrigation and drainage infrastructure in uigent need of repairs over the project area (130,000 ha, about one-sixth of Tajikistan's total irrigated area); (ii) establishment of Water Users' Associations; (iii) introduction of cost recovery for irrigation water supply; (iv) promotion of community-managed village water supply systems; (v) development of institutional capability in land and water resources management at the Tajik University of Agricultural Sciences and Tajik Land and Water Resources Management Institute; and (vi) training of faculty, students, agricultural and irrigation specialists, and farmers. The project would be implemented in areas which offer good prospects for continued operation and maintenance of project-financed infrastructure and overall project sustainability. 2. Key performance indicators: (see Annex 1) The key performance indicators of the project are: (i) Infrastructure indicators: Increase in (a) water conveyance efficiency in the main and field canals, (b) energy efficiency of the pumping stations selected for rehabilitation, (c) area serviced with timely delivery of water in optimal quantities for crops; (d) nurnber and types of farm groups being serviced by the improved irrigation and drainage infrastructure. (ii) Water Users'Associations and irrigation cost recovery indicators: (a) Formulation and adoption of a Water Code providing a suitable legal basis for the establishment and functioning of independent organizations providing water supply, delivery, and operations and maintenance (O&M); (b) Increase in number of Water Users' Associations (WUAs) responsible for operations and maintenance of water delivery systems from the hydro-post to the individual farmers' fields; (c) Establishment of a transparent system of irrigation service fees, with progressive increases in level and improvement in collection rates in each of the project schemes. Fees would arrive at the level of full cost recovery (specifically, cost of operation and maintenance over a ten-year period for the delivery of water from the source to the farmer's fields). The Government would provide funds to meet the shortfall during the transition period. (iii) Drinking water indicators: Improvement in quality of drinking water; increase in the number of independent, community-based Village Water Organizations (VWOs) with responsibility for operation and -2 -  maintenance of the drinking water supply facilities in their villages; increased level of community contributions of labor, local materials or funds for village drinking water supply facilities; increase in number of families receiving safe drinking water. (iv) Capacity indicators: Increase in number of persons trained in water resources management; adoption of improved agriculture and irrigation practices; increased level of practical applicability of the new subjects and training courses being introduced; increase in the number of multi-disciplinary land and water resource management programs and increase in other forms of collaboration of water resources management faculty with specialists outside their departments and disciplines. The impact indicators of the project are: Farm production indicators: (a) Measurable increase in overall crop production in the project area as a result of timely and optimal delivery of water; and (b) Measurable increase in income levels of the farm households benefiting from the project. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: CAS Report 1 8075-TJ Date of latest CAS discussion: 07/30/98 The proposed project is consistent with the Bank's Country Assistance Strategy, which identifies rehabilitation of rural infrastructure as a principal means to stimulate economic growth in the rural sector, essential to the process of farm restructuring and essential to development of private land lease rights. The pace of farm privatization depends on rehabilitation of irrigation infrastructure, for in a privatization program, each state or collective farm would be subdivided and the plots distributed. But as a result of the recent deterioration of infrastructure, the water supply no longer reaches all areas of the former state farms; some formerly irrigated plots have gone out of irrigation. As a result, these plots are now uncultivable, and would not provide livelihoods to the farmers receiving them in a privatization distribution. The farmers do not want to take the risk of receiving such plots. This is an important barrier to land privatization. Tajikistan's natural endowment of an abundant supply of water - a scarce resource in Central Asia - is the rationale for emphasizing rehabilitation of irrigation and drainage infrastructure in the proposed project. Tajikistan's water resources were recognized during the Soviet era, resulting in the development of hydro-electric power generation and extensive irrigation systems which this project builds on. This project complements the Farm Privatization Support Project, currently under implementation, by focusing on the same geographical regions, i.e., selected raions under Republican Subordination and in Khatlon and Leninabad Oblasts. These interventions, together with the proposed Post Privatization Credit Project (FY 2002) and other future operations in the rural sector will comprehensively address the fundamental constraints on rural growth and will raise the living standards of the majority of the poor who depend on agriculture for their livelihoods. It should also be noted that Tajikistan has very recently emerged from a post-conflict situation. Continuing support during the transition from conflict to peace has been provided by the Bank, several donors, and intemational NGOs, addressing almost all important sectors of the economy. - 3 -  2. Main sector issues and Government strategy: The agriculture sector is of vital importance to the economy of Tajikistan, accounting as it does for about 30% of GDP and 50% of employment. Within the agricultural sector, the irrigation sub-sector is pre-eminent: of Tajikistan's arable land (about 10,000 kni, 7% of the total), almost 80 percent is irrigated. Tajikistan's irrigated areas are devoted to cotton (which alone accounts for half the value of crop production), grain, fodder, potatoes, vegetables, melons, vineyards and fruit production. In this context, issues affecting the irrigation sub-sector vitally affect Tajikistan's economy as a whole. The most important issues are as follows: Critical irrigation and drainage infrastructure (I&D) is in danger of failure. Most of the principal irrigation and drainage infrastructure (pnumping stations, delivery pipes, diversion structures, main canals, etc.), now 30 years old, is in danger of collapse. Almost everyone living in the project area depends on these delivery systems not only for irrigation but also for drinking water and domestic water needs. Since the break-up of the Soviet Union in 1991, the budget for operations and maintenance of I&D has been very limited and available funds have been used mainly for system operation and salaries. This has led to practices such as making temporary repairs and cannibalizing parts which aggravate the situation even further. The system now manifests a rapid deterioration in operating efficiency of pumping stations, increased losses in the main canals and low water use efficiency at the field level. The water supply from the main canals to the field level has been reduced by 50 percent, in some areas even more. Fertile agricultural areas are being abandoned at an alarming rate and, if nothing is done, continued deterioration of rural livelihoods could lead to large scale migration from the rural areas to urban towns adding to the high unemployment and urban poor. Economic and financial viability of lift irrigation. The energy sector is highly subsidized in Tajikistan. As electricity, pumping, and O&M of irrigation and drainage systems have historically been provided free to the farms, energy use is excessive, particularly in lift irrigation schemes. These are highly energy intensive as they lift water in a series of steps ranging in cumulative heights of 50 to 250 m and deliver water across hills. Virtually all the power now produced in Tajikistan is hydro-power, supplied only during the three seasons of the year which coincide with the agricultural and irrigation seasons. Thus it does not provide for winter heating nor does it keep Tajikistan's large aluminum smelter operating year-round. While hydro-power for agricultural purposes is provided at US 0.15 cents per KWh, recent preliminary sector work carried out indicates that the long run marginal cost of hydro-power is about US2.2 cents per KWh (to cover routine maintenance of all working facilities, and taking into consideration about 2000 MW of generation and transmission that are not operational at present). This could be exported to Uzbekistan in the summer, and Tajikistan could receive thermal power in exchange during the winter months. Cost recovery. The current level of water charges, TR3/m (US 0.18 cents/hn), does not cover the cost of operations and maintenance for the systems which deliver water from the source to the farner's fields. Moreover, it does not differentiate between areas dependent on gravity versus those dependent on lift irrigation schemes where energy costs may be a significant share of the total cost. This pricing arrangement has been a disincentive for the efficient allocation and use of water and hence of power. At the same timne, the continuing changes occurring in the structure of farm organization (as state farms undergo privatization), together with the low levels of farm family incomes, makes cost recovery one of the most difficult issues of this sector. -4 -  Declining human resource skills and institutions involved in irrigation. A number of organizations are involved in water resources management at the state, oblast and raion levels. These include the Ministry of Irrigation and Water Resources (MIIWR); oblast level organizations, (OMOs -- Obijineniya Machinogo Orosheniya); inter-raion organizations such as Meshraivodkhoz; and raion-level water management organizations (Raivodkhoz). In the past few years, due to severe budget constraints, civil war and macro-economic instability, these organizations have shrunk dramatically in their activities and their facilities have completely deteriorated. Many skilled personnel have left these organizations and practically no new investment in machinery or even procurement of spare parts has taken place. Meanwhile, education, research and experimental stations continue to use teaching and training methods and materials now unsuitable for Tajikistan's market economy. Moreover, teaching methods and materials are unsuitable for training in sustainable development of agriculture; the training institutions have been isolated from recent advances in land and water resources management as taught in similar agro-ecological regions elsewhere. Government strategy The main elements of Government strategy were presented in a Letter of Development Policy addressing the agricultural sector ("Letter from the President of the Republic of Tajikistan to Mr. Johanmes Linn, Vice President of Europe and Central Asia Region, World Bank, May 12, 1999" - see Annex 11). Topics addressed which are relevant for the proposed project are: (i) Sustainability of project investments. The Government recognizes the need to consider economic, financial, social and environmental aspects in the selection and prioritization of rural infrastructure for rehabilitation, rather than only technical and administrative aspects, and that it must create enabling conditions and institutional mechanisms to set and collect a level of water charges which will cover the cost of operations and maintenance of infrastructure investments being financed by foreign borrowing. (ii) Commitment to institutional reform. The Government is committed to redefining the role of the Government in the agricultural sector (the first step would be divestiture of the construction and machinery departments from the Ministry of Irrigation and Water Resources); reforming the irrigation sector; strengthening institutional capacity along sustainable lines by decentralizing planning, administration and management of primary and secondary irrigation and drainage canals; preparing a legal framework and operating procedures to provide a basis for the establishment of independent, self-financing institutions to aid in managing water resources; transferring the operation and maintenance of tertiary irrigation and drainage canals to WUAs; and promoting community-based Village Water Organizations. Other strategic areas affecting project viability are: (i) Creation of private family farms. The policy of the Government of Tajikistan is to develop private family farms and create a market in land-use rights. Since 1997, progress has been made in the restructuring of former state and collective farms. Private use of land is taking hold throughout the country; a variety of farm structures have emerged with varying degrees of success. The Government recognizes that if this process is not managed carefully, a lack of fair and transparent processes may emerge as well as inequities in land distribution. Therefore, the Farm Privatization Support Project, now in implementation, is assisting the Government to: (i) establish a simple land registry system; (ii) develop mechanisms which will ensure equitable distribution of land use rights; (iii) promote creation of a market in land use rights; (iv) increase people's awareness of all aspects of land privatization and farm restructuring; and (v) make it easier and less expensive to obtain land certificates. -5 -  (ii) Agriculturalprice and trade environment. The Government has fully liberalized prices of fruits, vegetables, grain and livestock products, and agricultural inputs. Moreover, Government quotas for these products have been abolished. However, the most important crop, cotton, continues to be affected by low raw seed cotton prices (partly a result of high levels of taxation -- about 30%), as well as by high transaction costs for marketing, transport and export of lint cotton. Although privatization of the 22 state owned cotton ginneries have proceeded slowly, the pace has now accelerated following recent understandings reached between the Bank and the Government as part of the Structural Adjustment Credit. 3. Sector issues to be addressed by the project and strategic choices: The development of a sustainable irrigation sub-sector in Tajikistan will require a number of simultaneous interventions and a continued commitment from the Governnent to reform, considering that agriculture is currently dependent on a combination of gravity and lift irrigation systems, private family farming is in an early stage of development, allocation of land use rights is proceeding slowly, and neither rural credit nor agricultural support services are readily available. This project's focus is essentially limited to maintenance of the water lifeline to the rural population in the project area, at least cost. Accordingly, this project would address the following main sector issues: (i) Preventing the imminent collapse of irrigation and drainage infrastructure and halting the ongoing shrinkage in irrigated area. Detailed investigations have been carried out in the project area to identify the I&D structures which are near failure. The rehabilitation works proposed in the project would start with those schemes which are dependent on gravity and low lifts, and where private family fanns are being created. These are in the raions under Republican Subordination. They would be followed by works in Khatlon Oblast and then Leninabad Oblast. (ii) Putting in place a legal framework for creation and functioning of independent water institutions. Efforts were initiated early in project preparation to revise the Water Code to provide for the legal recognition of Water Users' Associations and for their systematic growth with the necessary autonomy, responsibility and authority to set, collect and use water fees. This revision is in the fnal stages. During negotiations, agreement was reached that funds for the rehabilitation of irrigation and drainage works shall be made available only if the Draft Water Code, which has taken into account the comments from the Association, is submitted within ninety (90) days from the date ofproject effectiveness. (iii) Promoting an optimum level of water and power subsidies to agriculture. Because increases in agricultural productivity and raising the income levels of the newly emerging private farmers would take time, full cost recovery for water delivery from the source to the farmers' fields (salaries, energy, system repairs, periodic maintenance and amortization) will take more than the five-and-a-half-year life of the project. 4t negotiations, it was agreed that achievement of full cost recovery of O&M shall be spread over a ten year period, and shall be reviewed and adjusted annually in each of the project areas, based on a system of progressive cost recovery for O&M of irrigation and drainage works. In the interim, the funds shortfall shall be reviewed every year, beginning in year 2001, and made up from the project, as needed. The level of subsidy of the power sector would be monitored during the project implementation period and adjustments made in the irrigation service fee structure to reflect changing power tariffs. (iv) Supporting institutional capacity building. The project, besides emphasizing the continuous need to upgrade the skills of those involved in project implementation, also lays the foundation -6 -  for development of the next generation of skilled specialists who will be needed for a market-oriented agricultural sector. The emphasis on bringing together different skills and use of demonstrations and practical training is expected to address immediate and short-term needs for transfer of appropriate technology for more efficient land and water resources management. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The project area of 128,432 ha is spread over eight raions in three administrative zones. (i) Among raions under Republican Subordination (RRS), the project covers 23,852 ha in Leninsky, Hissar and Shahrinau raions; (ii) in Khatlon Oblast, the project covers 39,969 ha in Yavan, Gosimalinski, and Kolkhozabad raions; and (iii) in Leninabad Oblast, the project covers 64,611 ha in Macha and Zafarabad raions (ref: Map - IBRD 30745). The project areas include the areas where the Farm Privatization Support Project is currently supporting privatization of ten former state and collective farms. The project area represents three distinct agro-ecological regions of Tajikistan. In RRS, 91% of the area depends on gravity-fed irrigation systems from the weir diversion of the glacier-water-fed Dushanbinka, Karatog and Chui rivers. This area is in the Kofarnigon Valley, with highly undulating topography and well-drained, fertile alluvium soils. In Khatlon Oblast, about 50% of the area is gravity-fed and the remaining areas are dependent upon lift irrigation systems up to 200 m, particularly in the Yavan raion. These areas depend upon water which is pumped from weirs off the Kumasangir, Vaksh and Yavansu rivers. More than 50% of pumping stations are not working and the remainder need extensive repairs. In Leninabad Oblast, only 8% of the area is irrigated by a gravity-fed canal system, while the remainder is serviced by water diverted through a weir from the Syrdarya river pumped to higher ground. Alnost all pumping facilities use standby purnps which have deteriorated in turn and need repairs or replacement. Most of these systems are in urgent need of rehabilitation. In the Leninabad Oblast, groundwater is used to supplement surface water. The main focus of the rehabilitation works is the main water supply and delivery system serving the project area, viz., from the source to the hydro-post. Management of these schemes is as follows: (i) At the water intake level, the OMOs, located at Dushanbe, Kurgontube and Leninabad, are responsible for pumping water from the source to the main distribution system. (ii) At the raion level, the water distribution and management organization (Raivodkhoz) is responsible for ensuring the supply of water to end users. Conditions in the Raivodkhoz have deteriorated due to declining budget allocations and low morale of the limited staff (many of the skilled staff have left for better paying jobs elsewhere). These two organizations are responsible for the delivery of water to the hydro-post. From the hydro-post onwards, water delivery would be carried out by WUAs, which would be created from the privatized fanning units resulting from the privatization of former state and collective farms in the project area. The formation of WUAs initiated for ten farms under the FPSP would be supported to further expand to other state and collective farms (74) serviced by the irrigation infrastructure of this project. Support to these organizations in new methods and technologies is virtually absent because the main institutions responsible for education and applied research have deteriorated considerably and lack basic inputs and operating materials. The institutional capacity-building component aims to address some of these constraints. -7 -  Availability of quality drinking water in rural areas of Tajikistan is one of the major problems affecting the well-being of the rural population. According to the household sample surveys carried out in the project area, the main sources of water are centralized water pipes (29%), water channels and irrigation canals (28%); wells and springs (22%); and other sources, including rivers, rain water, transported water, etc. (21%). The low quality of the water from these sources often leads to diseases (such as typhoid, dysentery, typhus, malaria and kidney-related diseases). Given the poor state of rural health facilities, ready treatment is often not available on time, which adds to the suffering of the people. Over 75% of the people in the project areas expressed dissatisfaction with the status of the drinking water supply systems, for almost all the water systems are in need of repair: pumps often break down, pipes are leaking, electric connections are missing; etc. Almost all the community members were willing to contribute either in cash or in kind to ensure a reliable supply of drinking water, and also were willing to pay for clean water. The proposed village drinking water supply sub-component aims to rehabilitate selected schemes in the project area, using arrangements based on community participation in order to ensure ownership and sustainability. The project consists of the following components: Component One: Rehabilitation of main irrigation and drainage works The following works would be carried out: (i) Repair of head-works, downstream protection works addressing main water supply to the project areas, upgrade of emergency escape structures; (ii) Desilting of canals (about 1 million m.), structural repairs and replacement of damaged canal linings wherever necessary; (iii) Replacement of cross regulator gates (140) and selective rehabilitation of siphons, aqueduct structures and outlets to the on-farm canals, including repairs to gates and surrounding structures and installation of new gates and turnout boxes; (iv) Rehabilitation of drainage works, involving desilting, improvement and reformation of the main and collector drains and cross sections, cleaning and repair of vertical drains and replacement or installation of new equipment, and repairs to out-falls; (v) Rehabilitation of pump stations supplying the main irrigation systems (in about 30 locations); repair of electro-mechanical equipment; provision of essential spare parts for the pumps, motors and transformers; repair of pump station forebays and delivery bays; and replacement of delivery pipes where necessary; (vi) Repair of electric motors and submersible pumps for tube wells; (vii) Re-establishment of water measurement devices (at about 99 points) on the main canals and at the off-take points to each of the ex-state and collective farms; and (viii) Selective improvement of access roads (101 km) to the main and secondary irrigation canals and pump stations, including gravel surfacing. Component Two: Provision of community-based village water supply in selected villages The project will support the following activities: (i) Construction of tube wells with submersible pumps in the village of Akkurgan (Leninsky Raion) and water supply for nine hamlets in Macha Raion and all seven villages in Zafarabad Raion; (ii) Rehabilitation of the pump unit in the water supply pump station of Firdausi Farm and construction of a new pump station at Ittifok Farm, as well as laying of the main water - 8 -  delivery pipelines in Kulabad village of Yavan Raion and in three villages (Rokhi-Lenin, Suyunabad, Yangiabad) of Kolkhozabad Raion. Component Three: Institutional capacity building for improved land and water resources management The project will support the following activities: (i) Improvement of management and operations of main water supply organizations. Water supply organizations are located in each project raion and in the oblasts. This component would improve their record keeping and monitoring; analysis of water supply and demand; needs-based budget estimation; administration; setting and collection of irrigation service fees; O&M rmles, regulations and procedures; and communication systems. Support for rehabilitation of offices would be provided, as also office equipment, office supplies, training and technical assistance. (ii) Establishment of WUAs at the field systems level. The project will assist in the fornulation of a Water Code suitable for the creation and functioning of independent and self financing Water Users' Associations in the project areas. The main functions of these WUAs would be to operate and manage field level irrigation and drainage systems, collect water charges from beneficiaries, and pay for the services provided by the raion level water management organization. The project would provide support for the initial establishment of these organizations, i.e., office equipment, vehicles, training, technical assistance and operating costs. During negotiations, agreement was reached that the PMU and PIU shall ensure: (i) the timely establishment of Water Users' Associations in each of the project raions where the irrigation and drainage works are being undertaken; and (ii) maintenance by each WUA of records, in accordance with appropriate accounting practices, of their operations andfinancial conditions. (iii) Strengthening of the Tajikistan University of Agricultural Sciences: The Tajik University of Agricultural Sciences (TAU) would receive support to provide new courses at the undergraduate and graduate levels in water management, economics, finance, recent advances in irrigation and drainage technology, legislation, Water Users' Organizations, etc. The project would rehabilitate facilities, upgrade the laboratories of the hydro-melioration department, provide support for the library, training equipment and materials, and support faculty exchange programs, twinning arrangements with foreign universities and study tours. (iv) Establishment of the Tajikistan Land and Water Resources Management Institute (TLWRMI). This institute would be established as a center of excellence for applied research, training and demonstration of the efficient use of land and water resources in the country. It will build upon the currently unused facilities of the Hissar Polygon, where such research was carried out in the past. Emphasis would be placed on design and implementation of a multi-disciplinary applied research program involving technical, economic, financial, social, environmental, legal, and institutional aspects of land and water management. This institute would provide practical training for farmers and students in a variety of land and water resources management technologies and practices suitable for private farming. The project would rehabilitate the training facilities, upgrade the laboratories, provide essential equipment including office equipment, and finance operating costs, training and technical assistance. -9-  (v) Study of irrigation institution restructuring. The project would support a study on the restructuring of irrigation institutions with a view to evaluation of various institutional options and recommendation of suitable mechanisms for the sustainable development of land and water resources in Tajikistan. The study would encompass a detailed review and assessment of existing organization and management systems, policies for land and water resources development, the legal framework, lessons of experience from the implementation of the Farm Privatization Support Project and activities being undertaken in this project, evaluation of a variety of organizational structures from around the world. Stakeholder workshops would be held with all the relevant agencies, institutions and beneficiaries, and a suitable plan for the restructuring of irrigation institutions would be recommended. The project would finance technical assistance and study tours. Component Four: Strengthening of Project Management and Implementation Unit The Project Management Unit (PMU) established for the implementation of the Farm Privatization Support Project would be strengthened with additional technical, financial, accounting and procurement staff. A Project Implementation Unit (PIU) would be established under PMU in Dushanbe for day-to-day management and supervision of on-site construction and quality control. The project would finance rehabilitation of the offices, equipment, training, technical assistance and operating costs. 1. Rehabilitation of Main Irrigation Irrigation & 16.04 66.8 13.40 67.0 and Drainage Works Drainage 2. Village Drinking Water Supply Rural Water 1.52 6.3 1.20 6.0 Supply & Sanitation 3. Institution Capacity Building Institutional 3.55 14.8 3.00 15.0 Development 4. Project Management and Institutional 2.89 12.0 2.40 12.0 Implementation Development Total Project Costs 24.00 100.0 20.00 100.0 Total Financing Required 24.00 100.0 20.00 100.0 2. Key policy and institutional reforms supported by the project: The proposed project would support implementation of the Government's program to create a firm and sustainable basis for the efficient allocation and use of water resources in different agro-ecological zones of the country. The continued commiitment of the Government to reform in the agricultural sector has been expressed in its Letter of Development Policy for agricultural development. Following are the key policy and institutional reform areas which would be supported by the project and which are necessary to ensure the project's success: (i) Creation of Water Users' Associations. The interventions proposed in the project would be the first concrete step toward clearly defining the rules, regulations, procedures and organizational mechanisms for the creation of Water Users' Associations. This is expected to lead to the establishment of these legally recognized democratic unions of new private farmers, - 10 -  who would have responsibility for operations and maintenance of the irrigation and drainage systems below the main canal outlets. (ii) Accelerated decentralization of the Ministry of Irrigation and Water Resources. The process of decentralization of the Ministry of Irrigation and Water Resources has already begun, primarily as a result of hard budget constraints during the last several years. The project would support design and implementation of improved procedures, policy formulation, and development of management practices needed to operate the complex network of irrigation systems throughout the country. (iii) Development of private local contractors. The project would build upon and encourage the development of private contractors, following the divestiture of the construction and machinery departments of the MIWR into independent entities. This breakthrough will require training in new ways of doing things for the responsible staff of MIWR, PMU and other Government agencies, who are frequently in an adversarial role of enforcing achievements of specifications and quality norms on construction contractors. 3. Benefits and target population: The proposed project would yield the following benefits: (i) Prevent further declines in living standards of up to 400,000 people dependent on irrigated agriculture in the project area, by ensuring reliable and timely water availability during critical periods of crop growth. (ii) Improve organization and management of the irrigation sector. The project would be a pilot to test various organization and management reform modalities for nationwide adoption. Expected benefits from the proposed activities in capacity building include: (a) increased accountability of main water supply organizations at the raion and oblast levels to deliver water on demand; (b) ensuring of reliable and adequate water delivery to the project beneficiaries through the transfer of O&M responsibility to WUAs; (c) improvement of implementation capacity of the PIU and PMU in the areas of construction quality and selection and supervision of contractors. 4. Institutional and implementation arrangements: The implementation period for the project is five and a half years. The individual project components would be implemented as follows: (i) Rehabilitation of main irrigation and drainage infrastructure works: The I&D works will be implemented in three overlapping packages, each taking two years to complete. * The first package would be comprised of the identified rehabilitation works in Leninsky and Shaharinau raions. The detailed design and bidding components for the works in Leninsky and Shaharinau raions have been prepared. Works in the field would start in these raions during the second half of 2000 and be completed in the second half of 2002. * The detailed design and bidding documents of the next package of rehabilitation works, those for Kalkhozabad and Yavan raions, will be prepared during the second half of 2000, rehabilitation - 11 -  works would start in the second half of 2001 and finish during second half of 2003, and so on. * During the second half of 2000 and the first half of 2001, the pressure pipes at all pumping stations under the project will be tested to determine the exact replacement/repairs required. (ii) Village water supply: This component would be undertaken with the active involvement of community members. They would be involved in the detailed implementation of the drinking water facilities and take an active role in the selection of the construction firm and in supervision of the construction. Detailed design work would be contracted out on a competitive basis by the PMU with the assistance of the PIU and the Rural Water Supply Department in the MIWR. The team will include a social scientist and an environmental specialist, in order to ensure comnmunity participation in the design and construction and, later, the transfer of operation and maintenance responsibility to the village community. The actual works would be undertaken by contractors. Over time, the ownership of these facilities would be transferred to the village communities. (iii) Institutional development component: This would be undertaken by the respective institutions which have been identified for strengthening. These are the Ministry of Irrigation and Water Resources (MIWR), the OMOs located in Dushanbe, Kurgontubpe and Leninabad, water distribution and management organizations (Raivodkhoz) in each of the project raions, various forms of water user organizations in the project areas, Tajikistan University of Agricultural Sciences and the Tajikistan Land and Water Resources Management Institute. Financial Management Financial Management Assessment: The PMU of the Farm Privatization Support Project would have overall responsibility for the financial management of this project. The Association conducted a fnancial management assessment of the PMU and concluded that it satisfied the minimum requirements of the Association. The PMU currently has two full time staff, one responsible for accounts and the other responsible for finance, who serve the needs of the Farm Privatization Support Project (FPSP). An international financial management adviser has been recruited and is presently working with the PMU to design, implement and provide on-the-job training to the staff on various aspects of project accounts and financial management. The existing accounting staff of the PMU would maintain the fnancial management arrangements of the project until such time as one additional accountant and one finance specialist have been recruited specifically for the RIRP, which is due to happen by October 1, 2000. Additional financial management staff will be recruited as needed during project implementation. Separate Special and Project bank accounts will be maintained for each of the two projects under management by the PMU. Further details of the project's financial management arrangements may be found in the Project Implementation Plan (PIP). Project Management Reports: Detailed guidelines and sample formats of the Project Management Reports (PMRs) are included in the PIP. During negotiations, agreement was reached on a time-bound action plan to strengthen the financial management system to enable the PMU to prepare quarterly PMRs; project funds shall be initially disbursed under the Association's established procedures, including Statements of Expenditures (SOEs), and a move to PMR-based disbursements would be made at the mutual agreement of the Government and the Association - 12-  once the PMU is familiar with the project's monitoring aspects and is considered able to produce the PMRs in a sufficiently timely and reliable manner; and a change to PMR-based disbursements shall be considered by December 31, 2001 in accordance with the agreed time-bound action plan; the first full set of PMRs would be produced in respect of the period ending December 31, 2001 and quarterly thereafter; however, PMRs indicating sources and uses offunds, uses offunds by project activity, project cash withdrawals (disbursement) and special account statement would be produced in respect of the period ending December 31, 2000 and quarterly thereafter. Audit Arrangaements: An audit of the project will be performed annually. During negotiations, agreement was reached that: (i) the appointed independent auditor must be a member of a professional accounting body that is a member of the International Federation of Accountants (IFAC) and the audit must be conducted in accordance with International Standards on Auditing as issued by the IFAC; (ii) the terms of reference already developed for the audit of the Farm Privatization Support Project (FPSP) would serve as the basis for the audit of this project; and (iii) the auditor engaged for FPSP would be used for the audit of this project, and subject to satisfactory performance, over the life of the project. The project would finance the cost of the audit. The results of the audit will be available within six months of the end of every fiscal year. Procurement Most of the goods required for the proposed project activities are available internationally. However, specialized parts for some equipment (large-scale water supply pumps) are only manufactured in one company. This would require specific procurement arrangements. Civil works involving a large number of small operations would be packaged in a smaller number of contracts. Local and international specialist consultants would be procured in accordance with Bank Guidelines. The staff of the Project Management Unit has gained some experience with World Bank procurement procedures during the implementation of the Farm Privatization Support Project. However, due to the limited number of foreign suppliers in the country at the present time, the large number of procurement contracts which includes a large number of ICB contracts, and considering that the private sector is still in a rudimentary stage, the procurement assessment rated this project in the high risk category. Risk minimization measures include training of local staff and the appointment of an international procurement specialist during project implementation and intensive supervision of the project, at least in the initial years of project implementation. During negotiations, agreement was reached on the following: (i) mandatory publication of the General Procurement Notice every year of the project implementation period for all ICB procurement; (ii) systematic and properfiling of all contract documents and organized by individual contracts; (iii) the necessity of ensuring confidentiality of the contract documents, especially during the procurement process until all the clearances are obtained and thefinal award of the contract has been awarded; (iv) to keep up to date the list of those countries which are not eligible to participate in IDA financed projects (the current list of these countries was provided to the Delegation and subsequent updates will be provided as and when carried out); and (v) to seek advice as and when necessary on all procurement related matters from the project IDA team. (Details of Procurement are in Annex 6). - 13 -  Monitoring and Evaluation Project monitoring and evaluation would be the responsibility of the PMU and would be based on data gathered by the PIU and various organizations involved at the oblast and raion levels; and through periodic surveys undertaken by independent consultants. Implementation progress would also be monitored through periodic IDA supervision missions. During negotiations, agreement was reached on the following: (i) the Project Management Unit would report to IDA on a half-yearly basis on the status of the agreed key monitorable indicators; (ii) a mid-term review would be undertaken in mid-2003 to determine the lessons learned and to make appropriate changes, as necessary, in the project objectives, scope and components; (iii) the project would comply with the environmental management and monitoring requirements and the PMU will annually submit to IDA an environmental status report by June 30 of each year of project implementation; and (iv) an Implementation Completion Report (ICR) would be prepared within six months of the IDA credit closing. D. Project Rationale 1. Project alternatives considered and reasons for rejection: The following two altematives were considered in arriving at the proposed project design and scope of activities: (i) Rehabilitation of critical I&D infrastructure versus resettlement of population or comprehensive re-investment: Ahnost all the population in each of the project areas depends on the timely availability of water for irrigation, drinking and domestic needs. Continued neglect of the irrigation systems would lead to a virtual collapse of the system in a very short period of time. This would necessitate the resettlement of a large number of population, a prohibitively expensive option. At the same time, the Government has little or no resources available to provide even the minimum investments required to continue operating the pumping stations, diversion structures and main feeder canals. Therefore, the option of rehabilitating only critical I&D infrastructure and assuring its maintenance was chosen. (ii) Limited or nationwide in scope: Delivery of water for irrigation in each of the chosen project areas depends upon a combination of gravity and lift irrigation systems. Concentrating the rehabilitation of I&D works in a few limited areas, complementing the support of FPSP, will result in a much greater impact on crop productivity and farm incomes than would the rehabilitation of only gravity schemes and low-lift schemes throughout the country. This geographically limited approach also permits more funds to be allocated to O&M, with the project contributing a major portion initially and gradually declining over the project period - with the creation and functioning of WUA's and associated rise in farm family incomes. - 14 -  2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings ____ ___ ___ ____ ___ ___ ___ ________ (Bank-financed projects only] Implementation Development Bank-financed Progress (IP) Objective (DO) Withdrawal of government intervention Agricultural Recovery and S S in agricultural production; price and Social Protection Credit trade liberalization; land privatization (Completed) and farm restructuring Appropriate delivery mechanisms for Pilot Poverty Alleviation In progress S social services, availability of credit, Project local empowerment, linkages between public and private sector institutions and enterprises Rehabilitation of communications and Post Conflict Emergency In progress S utility structures. Rehabilitation Project Reform of public administration and Second Institution Building and In progress S the budget system; consolidation of Technical Assistance Credit overlapping Government agencies and Ministry departments; simplified legal processes for creation and operation of private businesses Policy reform and privatization Structural Adjustment Credit I In progress S Recovery of areas damaged by July Emergency Flood Assistance In progress S 1999 floods through rehabilitation of Project roads, bridges, river embankments and power transmission lines Creation of private family farms, land Farm Privatization Support In progress S reform, agricultural support services Project and credit. Agricultural research, education and Rural Development Project extension and marketing and non-farm (Under preparation) employment creation Short, medium and long term credit for privatized farm and non-farm Post Privatization Credit enterprises (Under preparation) Other development agencies Reform of the power sector Sector studies by ADB under progress - 15 -  Communications and rural roads Sector studies by ADB under progress Agricultural input and output markets, Aga Khan Foundation land privatization, and minor irrigation works in Gorno-Badakshan Oblast and Karetegan Valley Rural Drinking Water Development EU TACIS Program Agricultural Development Program in GTZ the Leninsky Raion and Karetegan Valley lP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: The Bank has recently begun to lend for the development of the irrigation sector in the countries of the former Soviet Union. Some of the early lessons from a few projects which are being implemented in Armenia, Kazakhstan and the Kyrgyz Republic are: (i) Selection of I&D infrastructure for rehabilitation should be based on economic, financial, social, environmental and management grounds rather than merely technical and administrative requirements as in the past. (ii) It is important to take into consideration the pace of land ownership and creation of sustained private family farming; (iii) Operations and maintenance of large, main water delivery structures is best managed by public agencies, which have been found to be adequate if they are supported by appropriate training and hands-on involvement of field engineers and if simple water control and measurement devices are used. (iv) Adoption of a suitable and easily understandable legal framework and set of procedures for the creation and operation of Water Users' Associations (WUAs) is a pre-requisite for ensuring the orderly transfer of operations and maintenance of I & D infrastructure from state control to the water users. (v) Introduction of WUAs should be carried out in a step by step process, as the process involves new concepts that require intensive training, learning-by-doing and water users' acceptance, which take time. (v) Full cost recovery of the rehabilitated schemes' O&M should be a gradual process, which should take into consideration the willingness and ability to pay by the beneficiaries. These lessons have been taken into account in the project design in the following ways: (i) Project areas selected are those where private fanning and provision of long termn land lease rights are taking place, supported by the IDA financed Farm Privatization Support Project. (ii) Implementation of I&D works would be carried out in a phased manner - beginning with the - 16 -  most viable gravity and low lift schemes and proceeding to higher lift schemes, taking into consideration the economic, financial, social, technical, institutional, and environmental factors. (iii) Emphasis has been placed on the passage of an appropriate Water Code by the Government and on intensive training and provision of adequate technical assistance for the creation and functioning of WUAs. (iv) A graduated system of full cost recovery of operation and maintenance over a ten year period has been put in place. (v) Strengthening of public water institutions at the raion and oblast levels for the operation and maintenance of main I&D structures has been provided through appropriate training and use of appropriate technologies. (vi) Complementary interventions by IDA and other agencies to support agricultural services and credit are under preparation and implementation. (vii) Policy and public sector institutional reform support is being provided by structural adjustment operations and institutional building and technical assistance projects. 4. Indications of borrower commitment and ownership: The Government's commitment to the Rural Infrastructure Rehabilitation Project has been strong ever since the project was included in the FY99-01 Country Assistance Strategy. This has been indicated in the following ways: (i) active interest has been shown and follow-up has been made by senior Government officials both at the decision-making and at the operational levels throughout the project processing period; (ii) the Government has shown readiness to consider changes in the Water Code and legal framework to support creation and functioning of WUAs, to set irrigation service fees and to improve collection rates, as shown in the Letter of Development Policy by the President of the Republic of Tajikistan (May 12, 1999); (iii) the project has engaged the involvement of the most experienced and skilled specialists in engineering, agriculture, legal, environment, economics and other areas, who have shown ready willingness to incorporate new ideas and ways of doing business from international specialists; (iv) oblast and raion administrations have stressed the importance of the project activities in the development of the local economies and offered full support for implementation; and (v) support of project beneficiaries has been shown during the focus group discussions and household surveys. 5. Value added of Bank support in this project: The Bank's involvement in this project would bring the following expertise to bear on development of the rural infrastructure in Tajikistan: (i) best practices in the areas of technical design, institutional mechanisms and participatory methods from different parts of the world; (ii) appropriate institutional mechanisms, rules and procedures to ensure financial sustainability of proposed project investments following project completion; and (iii) Bank procurement, financial and accounting procedures, which would have a spill-over effect to other concemed agencies and promote transparency in the use of public funds. Further, the Bank's support for this project would: (i) complement the activities being undertaken in the FPSP and provide the necessary infrastructure to expand the pilot activities; (ii) help gamer support for rehabilitation of infrastructure works from other bilateral and multilateral donors and (iii) help maintain continued commnitment at various levels to carry out agreed project activities in a timely manner. - 17 -  E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) . Economic (see Annex 4): * Cost benefit NPV=US$23.8 million; ERR = 34 % (see Annex 4) C Cost effectiveness (D Other (specify) Project investments in the rehabilitation of critical irrigation and drainage infrastructure and institutional capacity building address the issues of poverty reduction, sustainable use of land and water resources and equity in the project areas. The project beneficiaries, up to 400,000 people, depend on the timely and reliable quantities of water for their livelihoods. Following the proposed investments, analysis of crop budgets using economic prices indicates that the gross margin per personday in the project area could increase 2-3 times, or even more, from the present low levels of less than a dollar a day, making a noticeable impact on farm family incomes in some of the poorest sections of Tajikistan. This would be the effect of reducing the probability of crop failure through the timely and assured supply of water in the areas needed. Further, improvements in pumping and water conveyance efficiency are expected to result in energy and water savings. The overall economic rate of return of the project over a fifteen year period has been estimated at 34%. This return is based on conservative increases in crop yields, especially for wheat and cotton, from the present levels of 1.5 t!ha and 1.8 t/ha to 2.1 t/ha and 2.3 t/ha respectively over a ten year period, and assumes these to occur as a result of relieving crop moisture stress. About 70% of the total command area is dependent on gravity (38%) and lifts of 100 m or less (33%); with the remainder of the areas dependent on lifts between 100 and 250 m. Operation and maintenance costs have been included throughout the project implementation period. Projected prices of agricultural inputs and outputs have been used using the forecast prepared by the Commodities Team of the Development Prospects Group of the Bank. These indicate real intemational price increases for the two major crops - wheat and cotton of 19% and 16% respectively to occur by 2005 from current depressed price levels of $122 per mt for wheat and $1180 per mt for cotton A" index middling 1-3/32 inch). No benefit has been assumed in the calculations of the ERR for improvements in the village drinking water supply and institutional capacity building components of the project due to the difficulty of measuring this benefit. The gradual rationalization of water and energy pricing for agricultural purposes to reflect economic costs and the stated Government policy of creating the enabling environment for the creation and functioning of independent water supply and distribution organizations, together with the overall public sector reforms being supported through other Bank interventions, are expected to result in better use of land and water resources in the project areas. The project's emphasis on the formulation and adoption of a suitable Water Code, simultaneously with empowering three regional and eight raion level irrigation organizations and supporting the creation of water user associations at the field level, is expected to begin the process of change in the ways of doing business in the overall management and operations of land and water resources. A multi-disciplinary approach toward the development of human resources and enhancement of skills for land and water resources management has been built into the project design in order to ensure that a service delivery approach and an outward-looking organizational structure takes root. Investments being made in the rural village water supply would ensure the availability of safe drinking water, reduce water borne diseases, and promote new concepts of community managed rural water supply systems. Close linkage with the Farm Privatization Support Project (FPSP) will complement FPSP's support for the creation of private family farms in the adjoining state and collective farms in - 18-  project areas, as the infrastructure investments being made would instill confidence among the directly affected population to invest their labor in farm and non-farm activities. The continued emphasis on "bottom up" participatory approaches toward land distribution and farm restructuring, coupled with the creation of Water Users' Associations, is expected to promote equity in the allocation of land and water resources. 2. Financial (see Annex 5): NPV=US$ million; FRR = % (see Annex 4) Project Costs: The project is estimated to cost US $24 million, based on May 2000 prices. The cost of various components and sub-components and detailed cost tables are in the Project Implementation Plan. The foreign exchange component has been estimated at US $17 million, or 71% of the total project cost. This cost includes physical and price contingencies of US$1.55 million and US$2.85 million respectively. The project costs exclude duties and taxes. Physical contingencies vary between 0 percent and 20 percent depending on the items. Local costs have been converted to their US$ equivalent using an exchange rate of Tajik Rubles 1700 to one US Dollar. Price contingency estimates assume an increase in local currency costs of 7 percent per year from 2001 to 2006, which is the projected inflation rates, and for foreign currency costs from 2001 to 2006, the following: 2.5%, 2.6%, 2.3%, 2.5%, 2.5% and 2.5%. Project Financing: The project would be financed by an IDA credit of US$20 million, by the Government of Tajikistan (US$1.5 million) and beneficiaries (US$2.5 million). Funds from IDA would be used to finance a portion of the goods, civil works, training, technical assistance, and operating costs required for implementation of the project components. Due to the tight budgetary constraints and fiscal difficulties faced by the Government at the present time, IDA would finance 100 percent of the foreign exchange costs and a portion of the local costs. The operating costs of project management would be financed on a declining basis during the project implementation period. All taxes and duties for the goods, works, and services required for the project would be financed by the Government. Agreement was reached during negotiations on the project financing plan, budgetary provisions, allocation of counterpart funds, deposit of an amount of $50,000 (fifty thousand) equivalent in local currency in a project account, established in a commercial bank (acceptable to IDA), to meet the initial requirement for counterpart funds for project implementation; and provision of a line item in the National Budget annually to provide for local funds required for the implementation of each of the project components, in accordance with the agreed work plan and budget. Fiscal Impact: The annual state budget for the MIWR has been steadily declining and is about TR3 billion for this calendar year. The Government has recognized that the state is no longer in a position to fund the real costs for the supply of water for the entire command area of over 700,000 ha in the country. The MIWR has, therefore raised the water fee to TR 3/mi, from TR l/in, which each user should pay for water delivered by the oblast and raion water agency. If the IVVWR were able to collect this fee on about 9 billion m of water supplied in the whole country, it would provide about 27 billion TR - nine times what it receives from the state budget. However, due to lack of enforcement capacity, lack of reliable measurement techniques, and the low income levels of the fanners, the Government has not been able to collect even 20 % of the water fees owed to it. About 17 billion TR is still owed to the MIWR from the past four years - 19 -  alone. This has also resulted in the MIVWR's inability to pay the National Energy Authority for the use of power for the pumping stations, despite the low power tariffs of TR2.5 per KWh, (estimated to be about 10 percent of the long-run marginal cost). These distortions, lack of data, and the reforms being initiated makes the determination of reliable fiscal impact of this project difficult. However, during the life of this project, overall positive fiscal impact could be expected. This would arise mainly from reduced future expenditures on 0 & M of the irrigation and drainage works; savings in energy costs as a result of increased efficiency of pumps; and introduction of progressive cost recovery for O& M to WUA's. A progressive irrigation service fee structure has been designed for this project in order to recover the full cost of 0 & M, which is now estimated to vary from $10 to $30 per ha at prevailing financial prices depending upon the energy requirements for water supply, crop water requirements, etc. During negotiations, agreement was reached that a gradual increase in the Irrigation Service Fee would be designed and implemented over a ten year period to achieve full cost recovery of 0 & M at the end of this period; during the interim, the funds required to cover the shortfall would be reviewed every year, beginning in year 2001, and made available from the project, as needed. The PMU shall prepare a schedule of the ISF in each of the project raions and the timetable for its implementation by December 1, 2000 and submit every six months beginning July 1, 2000 until the project closing date a status report on the collection rate of the ISF in the project areas where the irrigation and drainage works are being rehabilitated. ISF would be reviewed and adjusted annually in each of the project areas. taking into consideration the willingness and ability to pay of the water users. Separate accounts would be maintained for ISF collections and the use of these funds. 3. Technical: The MIWR design criteria for canals are based on the system used before the break up of the Soviet Union. This assumed that on average 1 liter/sec would be sufficient for one hectare. In practice there was considerable flexibility built into the systems, as design freeboard levels were generous and the mean and maximum designs could vary by 50%. Therefore, if the systems operating under design flow conditions could not meet the demands, it was easy for the operators to increase the flows in the canals as long as there was water available. This practice discouraged maximizing system efficiency, and the low water charges further contributed to the low overall water use efficiencies. The designs and technologies which would be used for the rehabilitation of pumps, irrigation and drainage canals and structures have been closely worked out with each of the Departments of the MIWR at Dushanbe and oblast and raion level. The designs were prepared by the Tajik Irrigation Design Institute and reviewed, verified and modified as needed by intermational irrigation engineering consultants from FAO/CP, who worked together with the local specialists. Site assessment of the layout and detailed quantitative engineering assessments of each of the proposed items and works were carried out during June and November, of the peak and lean periods respectively for the agricultural season. Given the lack of exposure and no experience in executing Bank financed projects, emphasis has been placed on training and technical assistance in the areas of construction management, preparation of bid documents, cost estimates and quality control procedures. Technical manuals would be prepared by the intemational consultants recruited by the PMU under the project that would cover topics on O&M, construction standards, quality control, water allocation and distribution procedures, and crop-water requirement. Similar manuals would also be prepared for community water-supply operations. These manuals would be used for the project implementation and operation. An independent technical auditing team, consisting of intemational consultant engineers and engineering specialists from local institutions, would be engaged to ensure confornity to project scheme cost-effectiveness in technical design, adherence to appropriate technical and quality standards, and - 20 -  procurement procedures. The project is designed to expose the local engineers to more modem engineering by working in close collaboration with foreign consultants who will introduce the concepts of "least-cost" and modem simple designs; and local engineers would be sent on observation study tours abroad where modem technologies are in use. 4. Institutional: 4.1 Executing agencies: The main executing agencies of the project components and activities are: Ministry of Irrigation and Water Resources; oblast water management organization (Obijineniya Machinnogo Orosheniya) located at Dushanbe, Kurgontubpe and Khojand; Water distribution and management organization (Raivodkhoz) in each of the project raions; Tajikistan University of Agricultural Sciences, Tajikistan Land and Water Resources Management Institute; regional soil and chemical laboratories of MIWR located at Dushanbe, Kurgontubpe and Khojand, and the water analysis laboratory of ME & NRM located in Dushanbe; and the emerging Water User Associations and Village Water Organizations in the project areas. Overall project management and coordination would be provided by the Project Management Unit of the Farm Privatization Support Project and the Project Implementation Unit for this project. 4.2 Project management: Project Steering Committee (PSC): has been established, chaired by the Prime Minister, and consists of the Deputy Prime Minister as Vice-Chairman and members drawn from the MIWR, MOA, MOF, ME & NRM, Ministry of Justice, State Land Committee, TAU, TLWRMI, PMU, PIU and participating raion administrations. The main functions of this committee are: (i) to provide administrative direction, guidance and necessary authority, and formulate policies at the state level; (ii) to review and give approval of the work program and budget; and (iii) facilitate and ensure coordination of inter-ministerial activities; and resolve implementation bottlenecks. Project Management Unit (PMU) : PMU, which has been established for the management of the Farm Privatization Support Project (FPSP), will be responsible for the overall coordination and management of this project. The PMU director is under the authority of the Prime Minister. The main functions are: (i) overall coordination of the project, (ii) preparation of the work program and budget in coordination with participating agencies and institutions and submitting it to the Project Steering Committee for approval; (iii) carrying out all the work related to procurement, disbursement, accounts; audit, monitoring, evaluation and reporting; and (iv) coordinating training, technical assistance activities required for project irnplementation. During negotiations, agreement was reached that the PMU shallfurnish to IDA not later than December 1 of each year, detailed annual work plan for the calendar year and budget for each of the tasks being undertaken in the project components for review and comments by the Association; and that the rehabilitation of irrigation and drainage works would start in those areas where these structures are in immediate danger of collapse, where private family farms are being created, operating and are able to market their produce in a timely manner and obtain fair and competitive prices and where the Water User's Associations could function effectively; and following this, rehabilitation would be carried out in other project areas in accordance with the agreed work plan. Project Implementation Unit (FlU): PIU has been established for this project and consists of a project coordinator, technical specialists, accountant, and support staff. The PIU will be under the overall authority of the PMU, with the project coordinator reporting to the PMU director. The main functions of the PIU are: (i) preparation and evaluation of bidding documents for the procurement of civil - 21 -  works, goods and services; (ii) supervision of construction works and ensure quality control of the works being carried out with the assistance of local and international specialists; (iii) provide guidance and supervise water allocation procedures by oblast water management organizations (OMO) and raion level water management and distribution organizations (Raivodkhozes) ; (iv) facilitate the creation of water user associations; (v) identify implementation bottlenecks and facilitate their resolution in a timely manner, seeking assistance of the PMU and the PSC as needed; and (vi) prepare progress and M & E reports tracking the key project performance indicators. Ensuring qualitv of zovernance and adequate management capacitv: The PMU is being assisted by international specialists in the areas of procurement, finance and accounts; which would be continued during the first year of implementation of this project, with possible extension, as deemed necessary. Currently, an international auditing firm is carrying out the review of the finance and accounts of the Farm Privatization Support Project, and the implementation of the findings are expected to enhance transparency and use of funds for intended purposes. The project has placed a large emphasis on capacity building, not only in the areas of project management, but also in technical, social, environmental, land and water resources management areas - through a combination of short to medium term technical assistance and in-country and foreign training programs. 4.3 Procurement issues: The PMU would be responsible for all procurement activities for the project. Currently, PMU is assisted by an international Procurement Specialist and Procurement Assistant (PA). The PMtU has maintained proper records and documentation for the procurement and contracts procured to date, established an automated procurement monitoring system. However, procurement assessment rates Tajikistan as a high-risk country, as the country's procurement legislation is unclear, lacks harmony and consistency and the overall uncertainty and security considerations have reduced the number of international firms, businesses and companies operating in the country. The general procurement environment in which the PMU operates is not conducive to fair and transparent procurement processes, and therefore, the prior review thresholds recommended are those applicable to a high-risk country. During negotiations, agreement was reached on the following: (i) mandatory publication of the General Procurement Notice every year of the project implementation period when ICB procurement be undertaken; (ii) systematic and proper filing of all contract documents, organized by individual contracts; (iii) ensure confidentiality of contract documents, especially during the procurement process until all the clearances are obtained and the final award of the contract has been awarded; (iv) keep up to date the list of those countries which are not eligible to participate in IDA financed projects ( the current list of these countries was provided to the negotiating team from the Government and subsequent updates will be provided as and when carried out); and (v) to seek advice as and when necessary on all procurement related matters from the IDA team. 4.4 Financial management issues: The financial management risks for Tajikistan have not been the subject of a detailed review by IDA. However, primarily because of other implementation considerations, any weaknesses that may exist in the financial accountability and management capacity within Tajikistan have been mitigated for this project by using the PMU of the FPSP, and by using international auditors for the audit of the project. Specific weaknesses of the PMU in respect of its financial management capacity and accountability are being addressed by the internationally recruited financial management consultant. Weaknesses in the Tajikistan banking sector will be mitigated by the use of a bank deemed eligible by the IDA to hold the project's Special Account. However, these weaknesses neither compromise the fiduciary responsibilities of the Borrower nor of the Association. - 22 -  5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Justification/Rationale for category rating: The Environmental Assessment carried out for the project area, identified the following environmental issues: (i) disposal of solid wastes such as old worn out gates, impellers, transformer oil, cables, excavated sediments from irrigation and drainage canals and damage to natural vegetation that may possibly be caused by contractors during rehabilitation activities of the infrastructure (ii) ineffective water conveyance in the off-farm system causing water logging and water pool leading to mosquito breeding; (iii) possible increase in areas affected by water-logging leading to soil salinization, caused by inefficient off farm irrigation conveyance system, on-farm water management and clogged drainage systems; and (iv) possible pollution of river water. The proposed project would have a positive impact on these problems. Improvements in the irrigation and drainage infrastructure would allow a more efficient conveyance and use of water, a better control of the groundwater table and drainage water. Improvements in the institutional capacity to provide adequate and timely operation and maintenance would improve the on-farm water management in the project areas. No new canals or structures that would allow increase in the water diversion or delivery capacity are envisaged. The proposed project does not include any investments in dams or involve resettlement of people. Funds have been provided in the project for implementation of a comprehensive monitoring program to monitor any impact the irrigation and drinking water facilities would have on surrounding areas and to mitigate any negative impacts (see below in Section 5.2). In these circumstance the project has been classified as Category "B" for the purpose of OP 4.01. There is need for monitoring the possible direct and indirect impact of the rehabilitation and development of the infrastructure under the project. The important direct negative impact such as solid wastes, dumping of excavated sediments from irrigation and drainage canals and damage to natural vegetation that may possibly be caused by contractors during rehabilitation activities of the infrastructure. The indirect impact that may emerge in the use of pesticides by the privatized farms that may increase from the present depressed levels utilizing the reliable irrigation facility under the project. The use of fertilizers and agro-chemicals, which currently is very low, is likely to increase in future, when the intensive agriculture will be practiced when the farm sector returns to higher profitable levels. This is likely to result in increase in water pollution and contamination, but not to past levels due the introduction of advisory services under the ongoing FPSP that should lead to the adoption of improved and environmentally sound technologies, including integrated pest management (IPM) techniques. more judicious use of fertilizers, agro-chemicals. During the rehabilitation works the construction impacts will be negligible and possible environmental damage caused by contractors during construction would be avoided through proper clauses in the tender documents and monitoring during implementation. The Environmental Management Plan (EMP) has been incorporated with a comprehensive monitoring plan, and is available in the Bank's Infoshop. During project negotiation, agreement was reached on the measures to be taken by the Government for meeting the requirements of the EMP and for involvement of the local community and stake holders at the Jomoat Hukumat, oblast and State levels during project implementation. 5.2 What are the main features of the EMP and are they adequate? The main features of EMP include detailed description of the mitigating measures for any potential negative impacts that are described in the previous section. Continuous review and monitoring of the environmental indicators by carrying out periodic analysis of the irrigation water, soil quality and the drinking water in accordance with the standard practices. For this purpose, the project has made adequate provision of funds to strengthen the regional chemical laboratories at Dushanbe, Kurgantubpe, and Khojhand with the required equipment for conducting periodic analysis of the water and soil samples. The project also has made provision for training staff of the Regional Chemical Laboratory of the Ministry of Environment and Natural Resource Management (ME & NRM) and the Regional Water and Soil - 23 -  Chemical Laboratories of the MIWR in modem rapid methods in conducting analysis of the soil, irrigation & drainage water samples. The drinking water will be periodically tested, at the source, for the total Coliforms and E-coli using WHO methods to detect whether the potable water source is contaminated. The EMP also contains key mitigating measures against the potential negative impact such as noise, dust, solid wastes, dumping of excavated sediments from irrigation and drainage canals and damage to natural vegetation that may possibly be caused by contractors during construction activities. The EMP has been incorporated with a comprehensive monitoring plan, which has been submitted to the Bank's Infoshop. The EMP has been annexed to the Project Implementation Plan (PIP). The identified items for mitigation measures are: (i) disposal of solid wastes such as old wom out gates, impellers, transformer oil, cables, excavated sediments from irrigation and drainage canals and damage to natural vegetation that may possibly be caused by contractors during rehabilitation activities of the infrastructure; (ii) possible increase from agrochemical pollution and surface water contamination, resulting from increased use of pesticides and fertilizers, along with improved availability of irrigation water, would be addressed by agricultural advisory services that are being established under the ongoing Farm Privatization Support Project. Items (i) would be addressed during the execution of works and supervision. Contractors would be required to prevent, minimize or mitigate environmental damage. Sediments and other debris would be displaced in an orderly manner, rather than dumped indiscriminately. There would be reuse of suitable excavated materials, limiting the need for old and new quarries. Where possible, existing quarries would be used for required additional materials. Contractors would also have to restore to quasi-original condition the landscape after completion of rehabilitation works and after use of quarries. The Raivodkhoze, PIU, PMU staff will keep a constant vigil on the compliance to these contractual obligations to observe the environmental precautionary clauses. Item (ii) would be addressed by the specialists of the FPSP extension and advisory services, as well as training in proper application techniques, timing and handling of residues of fertilizers and pesticides. It is anticipated that since subsidized inputs will no longer be available, the actual use of pesticides, chemicals and fertilizers would not be used indiscriminately, as before independence. The extension and advisory services is expected to educate the farmers on the integrated approach to pest management (IPM), more judicious application of fertilizers, and agro-chemicals to keep the negative impact of increased input use to a minimum. The environmental specialist of the PMU, the Director PIU, Raivodkhoze engineering staff, would review the results of the water and soil samples analysis periodically and report to the Project Steering Committee. They are also represented in the annual environmental seminars of local NGOs and Civic Society for discussions. The project EMP adequately addresses all the elements of environmental protection 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: on March, 27, 2000, The EA Report and EMP have been submitted to the Bank's Infoshop. They are available for the public, on demand, from the office of the PMU office located at 44, Rudaki Avenue, Dushanbe; and in the office of the Director PIU located in MIWR in Dushanbe. 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? - 24 -  The consultants engaged by the PMU for EA along with the ME & NRM local staff held series of public consultations between December 1, 1999 and February 15, 2000 at the Moholla and Jamoat level in each of the project raions. The borrower also held a public consultation at the state level in Dushanbe on February 29, 2000. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? The raion level trained staff of Raivodkhoz will periodically, before the crop planting season and after crop harvest (every April and September ), collect soil samples from selected and designated (statistically randomized) command area farms, and drainage water samples will be collected from the selected points by the ME & NRM. These samples will be tested on site and also will be sent to the regional water and soil chemical laboratory of their respective jurisdiction in, Dushanbe, Kurgantubpe and Khojhand for detailed analysis. These test results would be sent to PIU, MIWR and the ME & NRM. The division for environmental analysis and management within the MIWR responsible for environmental aspects of the irrigation projects will coordinate and review the test results received from these laboratories with ME & NRM as per the procedures and guidelines for environmental standards and provide recommendations on environmental parameters for mitigation of negative impacts, if any. Besides this ME & NRM staff would independently supervise and conduct periodic specialized inspections to monitor for protection of water, land, air, fauna and flora, and report to oblast, municipal, raion environmental committees. ME & NRM engineers will also periodically inspect for the environmental aspects of the construction works at site. The project provides for the laboratory equipment and operational expenses for monitoring the environmental parameters during the duration of the project. Details of the institutional arrangement for the collection of periodic water and soil samples and feedback mechanisms are illustrated in chart 1 of the EMP. The Environmental Advisor in the PMU would be responsible for strictly following the environmental protection clauses in the contract Bid Documents so that all the works executed under the project conform to the environmental regulations. The Environmental Advisor in the PMU and the ME & NRM would review the periodic reports of the Raivodkhoz engineers, NGOs, news media reports during the execution of rehabilitation/ construction works with regard to noise, dust, improper disposal of solid wastes and loss of vegetation and would recommend appropriate mitigation measures to restore the environmental conditions and in the event of severe damages would issue direction for change of construction regime and/or stop the work. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. The key stakeholders in this project are: (i) the various types of farming organizations which continue to emerge as a result of the privatization of former state and collective farms, such as individual or group family farms, dekhan farms and associations, joint stock companies, etc; (ii) mahallas (neighborhood) and other community leaders; (iii) Ministry of Irrigation and Water Resources (MIWR), regional and raion level water distribution and supply organizations; (iv) rayon- and jamoat-level municipalities; and (v) the rural population in the project area. During the preparation of the project, a rapid rural appraisal was carried out in two of the project raions, viz. Leninsky and Kholkhozabad. The main findings were: (i) without irrigation water, most of the economic activity would come to a virtual standstill and that water was essential for the survival of the people; (ii) almost all the direct beneficiaries were sufficiently - 25 -  motivated to contribute towards the cost of operation and maintenance of the works in order to ensure the timely availability of adequate supplies of water as needed for agricultural production; (iii) realization of the enormity of the challenges faced by the newly emerging farmers to adjust to a privatized farming system and to form new forms of organizations based on mutual trust; and (iv) the need to build new on-farm irrigation infrastructure and to prepare additional tertiary and field canals. This was followed by detailed social assessments, which have been carried out by local specialists who have been trained in SA methodologies by Bank staff. The SA consisted of a series of semi-structured interviews with: (a) water providers and users, viz., MIWR, local governments, state and collective farms, and dekhan farm associations to assess their needs, capacity and willingness to participate in the project; (b) conmmunity leaders to establish a socio-economic profile for each of the project areas. Also, a socio-economic survey of 400 rural households was undertaken to gather information on demographics, irrigation and drinking water use, and agricultural production. At the household level, the SA found a number of significant problems: i) inadequate utilities (electricity, water, garbage collection), ii) unemployment, iii) salary, social allowance and pension arrears, and iv) quality and/or cost of health and education services. In Zafarabad rayon, residents were concemed about the economic and social impact of the border closing with Uzbekistan. Most respondents feel that their socio-economic situation has deteriorated since the collapse of the Soviet Union but is improving since the signing of the peace settlement in 1997. The SA also found that privatization is going well with only a few problems: access to water and/or land causes most conflicts but effective dispute resolution mechanisms exist, agricultural production is impeded by state-directed production decisions for cotton, drinking water facilities and supplies are inadequate and of poor quality, and irrigation facilities suffer from broken measuring devices, broken pumps, clogged canals and inadequate drainage. Severe irrigation shortages exist in some areas due to pump failure or breakage of aqueduct. Most respondents are unhappy with the current irrigation and drinking water systems and are willing to organize water user associations to address problems. Overall, respondents living on or near privatized land seem to be more informed and positive about the changes taking place. Conversely, those living on kolkhoz or sovkhozes tend to be more suspicious and negative about their future. At the community level, the SA found problems with: i) utilities (electricity, garbage collection), ii) social services (health and education), iii) salary (especially for teachers), social allowance and pension arrears, and vi) infrastructure (roads), vii) outmigration, viii) significant war damage, ix) constrained access to agricultural inputs, x) inadequate health care xi) poor education, and xii) underdeveloped trade/marketing infrastructure. Conflicts associated with land and/or water on farms are settled by the dekhan association, kolkhoz or sovkhoz. Most community leaders are open to the idea of setting up water user associations, though they are not clear on how they would work in practice. Initially contributions of labor not cash were suggested. At the institutional level, lack of funds and spare parts at the MIWR limit its functions of water O&M, cost-recovery and regulatory oversight and enforcement. Due to severe budget and technical constraints, most Raivodkhozes are in favor of the creation of water user associations to operate and maintain on-farm infrastructure. 6.2 Participatory Approach: How are key stakeholders participating in the project? The active involvement of the different types of stakeholders would be continuously sought to increase local ownership of the project activities, management and use of project resources. The main emphasis would be in the creation of water user groups and associations through participatory methods, which would require intensive training and regular follow up by local and intemational WUA specialists. Direct involvement and - 26 -  consultation with the farming community would be encouraged in the identification of key problem areas in the design and implementation of field experiments, demonstrations, etc, which are to be carried out by Tajikistan University of Agricultural Sciences and Tajikistan Land and Water Resources Management Institute. Methods and procedures would be designed to ensure that local communities and farmers who are willing to contribute in kind or cash in the rehabilitation of I and D works and village water supply facilities are given priority to participate in the implementation of the project. The close linkage with the activities of the FPSP, especially through the information and advisory services centers in each of the project raions is expected to increase the awareness of the largely ignorant rural community about their rights and responsibilities, new forms of organizational mechanisms being supported by the project, etc, as informed stakeholders is an essential element for effective participation by the rural project beneficiaries. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? The formation of an active NGO in the rural area devoted to agriculture sector is in the early formative stage. However, the project team has involved the participation of civil society organizations and the community leaders such as the maholla councils and the rais representing their communities in project preparation and design. These civil society organizations and the community leaders will continue to be involved through out the project implementation to ensure social sustainability and the effectiveness. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The social development activities essentially focused on: involvement of Stakeholders in the project development process; analysis of water users' interests, aspirations and constraints; analysis of water providers, i.e., institutions that are involved in water and irrigation services that will have roles in the Project; assessment of social and economic conditions of stakeholders in the project area; assessment of stakeholders knowledge about, experience with and attitude toward irrigation rehabilitation and the provision of village drinking water; evaluation of farmers' willingness and ability to maintain irrigation systems; assessment of water users' ability and willingness to pay for water; assessment of water users' motivation and willingness to participate in the formation of future WUAs; farmers' willingness to shift agricultural production from single annual crop of either wheat or cotton, to multiple cropping and high value plantation crops, for example - ahmonds/ pistachio/ peaches/ raisins etc. The project provides for extensive involvement of the community in the project implementation. 6.5 How will the project monitor performance in terms of social development outcomes? Progress in the participatory processes, degree of involvement of the key stakeholders and performance in terms of social development outcomes would be monitored and evaluated by periodic social assessment, and discussed in public workshops and seminars. The main performance indicators which would be monitored are: * Formation of water user groups and associations and who are taking increasing responsibility for the operation and maintenance of tertiary and field level irrigation and drainage works * Ability of the new types of social organizations to work together as a group and ensure fair treatment of all its members * Extent of transfer of responsibilities from MIWR to regional and raion level water organization, and degree of reorientation of MIWR to policy planning, regulation and enforcement * Increase in economic activity in the project areas - 27 -  7. Safeguard Policies: 7.1 Do any of the following safeguard Policies apply to the project? 'IN.' ...,''1,........... O Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 2] Yes O No L Natural habitats (OP 4.04. BP 4.04. GP 4.04) O Yes 1 No O Forestry (OP 4.36, GP 4.36) D Yes Z No El Pest Management (OP 4.09) E Yes O No O Cultural Property (OPN 11.03) O Yes M No El Indigenous Peoples (OD 4.20) Il Yes M No O Involuntary Resettlement (OD 4.30) EI Yes 1 No O Safety of Dams (OP 4.37, BP 4.37) II Yes Z No El Projects in International Waters (OP 7.50 BP 7.50. GP 7.50) Ol Yes I No El Projects in Disputed Areas (OP 7.60. BP 7.60, GP 7.60) El Yes M No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. Please refer to Para 5.2 above F. Sustainability and Risks 1. Sustainability: Sustainability of the project would be achieved through the following measures: (i) containing unit costs for material, labor and different types of works within the estimated amounts and acceptable limits in the project by closely monitoring them during supervision and making timely adjustments in technical design parameters and methods of construction, to the extent feasible, as this would be a significant factor to rehabilitate all the infrastructure needed to provide timely delivery of water to the entire project command area of 128,400 ha; (ii) provision of training and technical assistance to the project management and implementation unit in evaluation of contract proposals, monitoring and supervision, ensuring quality of works carried out by the contractors meet agreed standards; etc. (iii) simultaneous emphasis on institution development and capacity building in a variety of disciplines at the state, oblast, raion and education and training facilities would contribute to sustainability by promoting transparency, debate, need for consensus building, and consideration of various location specific alternatives for the efficient use and management of limited financial resources; (iv) adoption of participatory approaches in the establishment and functioning of Water Users' Associations in the project areas, training and technical assistance to improve their ability to operate and manage the water distribution of the secondary and tertiary canals of the irrigation system; set irrigation service fees, collection procedures and use of these funds for intended purposes; (v) close coordination with the Farmn Privatization Support Project in the project areas to promote marketable long-term land lease rights, creation of private family farms, crop diversification and marketing in the areas covered under RIRP; (vi) providing support as needed through other projects and interventions to promote competition in the processing and marketing of cotton enterprises, formulation and implementation of transparent processes for price setting and informing seed cotton producers of cotton prices before planting season, and ensuring adequate producer incentives - including written agreements between cotton farmers and marketing intermediaries. These measures are expected to improve the profitability of cotton, which despite the declining trend, continues to be a significant crop grown by farmers, increase the level of - 28 -  cash income to farm families, and improve the prospects for the realization of the progressive cost recovery of 0 & M of irrigation and drainage works; and (vii) accelerating the processing of subsequent projects on post privatization credit and rural development to provide complimentary services to the project beneficiaries. 2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Risk Risk Rating Risk Minimization Measure From Outputs to Objective Supportive and facilitating environment S Hard budget constraints are making this happen, for independent functioning of water but resistance to change from local supply and delivery organizations administrators could be expected - which would be dealt with through continued dialogue, demonstrating the benefits of decentralization, wide information dissemination, consensus building and encouraging participatory approaches. Unstable political environment, violations S Continued acceptance of recent Presidential and of peace agreement and civil disturbances Parliamentary elections by the public and continued support by international and bilateral organizations for restoring macro-economic stability. Farm incomes do not rise as rapidly as H Introduction of new types of agricultural envisaged, thereby decreasing possibilities technologies, crop cultivation practices which for reasonable levels of cost recovery are being supported under the FPSP; required for 0 & M continuation of Government' s reform program to completely liberalize the cotton sector, accelerate privatization of cotton ginneries, and align cotton producer prices with border prices. From Components to Outputs Timely implementation of acceptable S Continuous training on-the-job and during quality of project works missions in latest IDA procurement and disbursement procedures; timely review of technical specifications by internal and external specialists as needed; periodic inspection of construction works for quality in (introduction of rewards or penalties for meeting or not meeting standards); provision of counterpart funds in the required amounts and on time. Contract enforcement between :(a) oblast S Supervision follow-up and active involvement of and raion level water supply organizations the Project Steering Committee in resolving and WUAs for delivery of water; (b) contract problems; development of legal systems private contractors and state agencies for and institutions through other programs for fair civil works settlement of disputes. - 29 -  Availability and recruitment of skilled M Continuous and timely training of skilled specialists specialists as and when needed in various aspects of land and water resources management and simultaneous implementation of the institutional capacity building activities. Setting of adequate level of irrigation S Gradual increase of price of water and energy service fees, by WUAs, ability and prices for agricultural purposes, provision of willingness of farmer's to pay to cover intensive training to WUA's, strengthened record O&M costs keeping, financial and management information systems, intemal audit from the outset; and information dissemination of collection rates, use of funds, etc. Overall procurement risk assessment H Provision for an internationally recruited procurement specialist to work with the PMU, training of PMIU local staff in international procurement procedures, supervision and follow up of project procurement activities. Overall Risk Rating S Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) 3. Possible Controversial Aspects: None. G. Main Credit Conditions 1. Effectiveness Condition Deposit of an amount of US$50,000 (fifty thousand dollars) equivalent in local currency in the project account in a local commercial bank, acceptable to IDA to meet the initial requirement of counterpart funds for project implementation, (Section E, 2). 2. Other [classify according to covenant types used in the Legal Agreements.] A. Disbursement Condition Funds for the rehabilitation of irrigation and drainage works shall be made available only if the Draft Water Code, which has taken into account the comments from the Association, has been submitted to the Parliament for the establishment and functioning of WUA's and this would be submitted within ninety (90 ) days from the date of project effectiveness (Section B, 3 (ii)). B. Counterpart funds and Cost Recovery Arrangements (i) A line item shall be provided in the National Budget annually for the provision of local funds required for the implementation of each of the project components, in accordance with the agreed work program and budget (Section E,2). (ii) The PMU and PIU shall ensure (i) the timely establishment of Water Users' Associations in each of the project raions where the irrigation and drainage works are being undertaken; and - 30 -  (ii) maintenance by each WUA of records in accordance with appropriate accounting practices of their operations and financial conditions; (Section C); and (iii) The PMU shall submit every six months beginning July 1, 2001, until the Project Closing Date, a status report on the collection rate of the Irrigation Service Fee structure in the Project Raions; full cost recovery of 0 & M shall be spread over a ten year period, and shall be reviewed and adjusted annually in each of the project areas, based on a system of progressive cost recovery for the operation and maintenance of irrigation and drainage works and in the interim, the funds required to cover the shortfall shall be reviewed every year, beginning in year 2001, and made available from the project, as needed, (Section B, 3 (iii)). C. Accounts and Audit (i) The Borrower shall open and maintain a Special Account in a commercial bank acceptable to IDA. The Association will, upon request, make an authorized allocation of US$ 0.5 million; and initially, the allocation would be limited to US$ 0.25 million, until disbursements have reached SDR 3.0 million, at which time the full authorized allocation could be claimed. (Annex 6). (ii) The PMU will implement a time-bound action plan to strengthen the financial management system to enable the PMU to prepare quarterly PMRs. Project funds shall initially be disbursed under the Association will established procedures, including Statements of Expenditures (SOEs). and a move to PMR-based disbursements would be made at the mutual agreement of the Government and the Association once the PMU is familiar with the project's monitoring aspects and is considered able to produce the PMRs in a sufficiently timely and reliable manner. A change to PMR-based disbursements shall be considered by December 31, 2001 in accordance with the agreed time-bound action plan. The first full set of PMiRs would be produced in respect of the period ending December 31, 2001 and quarterly thereafter; however, PMRs indicating sources and uses of funds, uses of funds by project activity, project cash withdrawals (disbursement) and special account statement would be produced in respect of the period ending December 31, 2000 and quarterly thereafter (Section C, 4). D. Management The Project Management Unit and Project Implementation Unit would be maintained and adequately staffed with qualified persons with the required skills and expertise needed for project implementation, selected on a competitive basis and provided with performance based incentives (Section C 4). E. Implementation (i) The PMU shall furnish to IDA, not later than December 1 of each year, a detailed annual work plan for the calendar year and budget for each of the tasks being undertaken in the project components for review and comments by the Association. Rehabilitation of irrigation and drainage works would start in those areas where these structures are in immediate danger of collapse, where private farnily farms are being created and operating are able to market their produce in a timely manner and obtain fair and competitive prices and where the Water Users' Associations can function effectively; following this, rehabilitation would be carried out in other project areas in accordance with the agreed work plan (Section E, 4.2). and - 31 -  (ii) The PMU and PIU shall ensure that timely measures and actions would be taken by the Government to meet the requirements of the EMP and for involvement of the local community and stake holders at the Jomoat Hukumat, oblast and state levels during project implementation (Section E, 4.2); F. Monitoring and Evaluation (i) Project Management Unit would report to IDA on a half-yearly basis the status of the agreed key monitorable indicators. (ii) A mid-term review would be undertaken in mid 2003 to determine the lessons learnt and make appropriate changes, as necessary, in the project objectives, scope and components. (iii) The PMU and PIU shall ensure compliance of the project activities being undertaken with the environmental management and monitoring requirements and shall submit an annual environmental status report by June 30 of each year of project implementation. (iv) An Implementation Completion Report (ICR) will be prepared within six months of the IDA credit closing. (Section C, 4). H. Readiness for Implementation 1 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. I 1. b) Not applicable. 1 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. Z 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. Ll 4. The following items are lacking and are discussed under loan conditions (Section G): 1. Compliance with Bank Policies Z 1. This project complies with all applicable Bank policies. 5l 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. The project does not qualify for the PMR-based disbursement ThiVuan . Sampath Kevin Cleaver i Kodera Team dader Sector Manager/Director Country Manager/Director - 32 -  Annex 1: Project Design Summary TAJIKISTAN: RURAL INFRASTRUCTURE REHABILITATION PROJECT - E ; - : - EKesy-Pei*iaEe ; ;;; - :- -qduaiOm: - -;- -00 frI~ pfIO b~v lndIlatQ: r- Moynitoisg a ; alua1on -; t; al Auncai Q sriors Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) Environmentally sustainable Increase in soil fertility, water Environmental monitoring Continued commitment at the development and management quality, decrease in land data from Ministry of State, Oblast and Raion levels of water and land resources erosion, and overall efficient Environment and other for sustainable development as use of land and water organizations outlined in Governmenfs resources letter of development policy for sustainable agricultural development Stimulating economic growth Increase in per capita rural Poverty surveys, Government Political and macro-economic and reduction in rural poverty incomes in real terms and statistics and country situation stability employment rates, positive updates from other national changes in poverty profile in and international agencies project areas and organizations Project Development Outcome I Impact Project reports: (from Objective to Goal) Objective: Indicators: Increase overall water use Increase in: (i) water Periodic field surveys to test Gradual rationalization of efficiency in main and field conveyance efficiency in main against benchmark data water and energy pricing for canals and reduce costs of lift and field canals (%), (b) during critical times of crop agricultural purposes to reflect irrigation pump-motor efficiency for lift season economic costs irrigation schemes, (c) area serviced with timely delivery of water in optimal quantities, and (d) increase in crop areas not subject to water stress; Decrease in : (a) amount of water supplied from source and water use at field level from present levels, (b) unit costs for supply of water in TR/cum at headworks and at field level in TR per irrigated ha for various lifts for major crops Develop institutional Adoption of suitable water Publication of Government Government's continued capability in land and water code which promotes resolution of water code, commitment to recognize resources management autonomous water user periodic progress reports on independent water organizations; institutional changes, review organizations, roles and MIWR transfers of annual work plans of responsibility; Demand based responsibilities for planning MIWR, progress reports on selection of training programs and management of main training programs, annual and provision of performance water supply to Oblast and work program, and based incentives raion organizations supervision missions Reorientation of MIWR to policy planning and enforcement of water laws and regulations - 33 -  Improve quality of drinking Improvements in water Periodic field testing of water Continued ownership of water in selected villages quality, increase in no. of quality and reports from local community in the operation households receiving safe health authorities, PIU and and maintenance of village drinking water, reduction in supervision missions water systems water borne diseases Output from each Output Indicators: Project reports: (from Outputs to Objective) component: Rehabilitation of main Physical indicators of civil Periodic progress reports, Implementation of acceptable irrigation and drainage works completed, e.g.km of work programs and IDA quality of project works; infrastructure canals rehabilitated, lined; supervision reports meeting contractual nos. of pumps restored, water obligations between (i) oblast control structures, drains, and raion level water supply control structures, etc.; organizations and (ii) private establishment of a transparent contractors and state agencies, system of irrigation service timely procurement and fees and progressive increases disbursement of funds, in these fees, collection rates availability of counterpart and achievement of full cost funds, setting of adequate recovery over a ten year level of irrigation service fees period; No. of water users by WUA's, ability and paying the agreed irrigation willingness of farmer's to pay service fees , amount collected to cover 0 and M costs, in TR per agricultural season farmers receiving fair and by each association competitive prices and ready availability of inputs, free movement of goods without interference across local, raion and Oblast borders Improvement in quality of Number of independent Monitoring and Evaluation Community's ability to operate drinking water in selected community based village reports and IDA supervision and manage drinking water villages water organizations, increase reports schemes, and a supportive, in level of community facilitating environment contributions and number of families served -34 -  Improvement in capacity of Number of functioning, Periodic progress reports Timely availability of land and water resources independent and from PMU and WUA's qualified persons to be trained, management institutions and self-financing water Periodic progress reports and continued positive attitude to training facilities organizations and WUA's, IDA supervision learning new techniques and number of persons trained in in transfer of knowledge, and various disciplines, best acceptance by intended practices in various training beneficiaries and land and water resources management methods, adoption rates of improved agriculture and irrigation practices, number of facilities rehabilitated, increase in the number of multi-disciplinary land and water management programs and collaborations among faculty and the farming community Efficient project management Meeting implementation Work program and budget, Timely resolution of and implementation system, targets set out in work periodic project implementation problems by monitoring and evaluation program within allocated implementation status reports, Project Steering Committee, budget, number of persons Supervision mission reports close coordination between trained in procurement, PMU, PIU and MIWR, disbursement, finance and retention of qualified staff in accounting procedures; PMU and PIU Project Components / Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) Rehabilitation of main $16.04 million Quarterly reports, on-site No delays in appointment of irrigation and drainage works inspection reports by quality contractors and strict control engineer, procurement enforcement of quality and financial reports standards and contracts, trained and skilled persons to collect, analyze and disseminate required information Village Drinking Water $1.52 million PMU reports, and surveys Communities will be able to schemes operate with the needed autonomy and in a participatory way Institutional capacity building $3.55 million PMU reports, Supervision Selection of staff for training mission based on merit and competence, no political interference - 35 -  Project Management and $2.89 million Supervision mission Competent staff will be Implementation appointed to manage and implement the project activities, active role of the Project Steering Committee in review and approval of bi-annual work program and budget - 36 -  Annex 2: Project Description TAJIKISTAN: RURAL INFRASTRUCTURE REHABILITATION PROJECT Background Tajilistan's soils and climate give it a comparative advantage in production of grains, cotton and other commercial crops. Tajik cotton yields were once among the highest in Central Asia, and the country was an exporter of karakul, silk, and other agricultural products. However, in the past ten years Tajik agriculture has been increasingly constrained by shortages of inputs, above all of irrigation water which has been short during critical periods of crop growth. Largely as a result of water shortages, a large area of agricultural land is no longer being used, and yields of major crops including cotton have been declining. In this context, reforms that will secure the sustainability of irrigation are a Government priority. The Government has initiated the process of land privatization and farm restructuring; has introduced water fees to promote conservation (in May 1996); has initiatives underway to increase water charges to a level that will recover costs of operation and maintenance; and is in the process of revising the Water Code to incorporate the role of Water Users' Associations (WUAs) in management to assure the sustainability of irrigation schemes. However, these initiatives will take time to implement. Apart from the introduction of water charges, few reforms have yet effected change at the farm level. Land reform and farm restructuring, still at an early stage, are taking place in an ad-hoc manner: many former state-owned farms have nominally been converted into joint stock companies or associations, but there is little evident change in the role of centralized management. Water fees are not yet at the level of cost recovery, and Water Users Associations are still few and in their infancy. To assist the Government in its reforms, the Bank has agreed to support a phased program of three projects to demonstrate effective and sustainable procedures (Farm Privatization Support Project, Rural Infrastructure Rehabilitation Project - this project, and Post Privatization Credit Project). All three are scheduled for implementation during the period 2000 to 2008. The first of these projects is now in implementation and is supporting the reform program through issues associated with farm privatization and management of on-farm irrigation and drainage (tertiary canals and supply and drainage ditches). This, the second project, is to address the reform program through interventions to rehabilitate off-farm infrastructure (primary and secondary canals) associated with irrigation and drainage. The third will address post-privatization requirements of private farmers. Irrigation System Water. Tajikistan is well endowed with renewable water resources. Its total annual runoff is on the order of 60 billion m3 (6 billion m3 in the Syr Darya basin and 54 billion m3 in the Amu Darya basin). On a per capita basis, this amounts to 10,345 m3/year, a value on the same order of magnitude as that in the USA and considerably exceeding the 6,650 m3/year available per capita in Switzerland. However, when Tajikistan was a part of the former Soviet Union, arrangements were made to allocate the water of the Syr Darya and Amu Darya basins among the Central Asian Republics. These arrangements allocate 38 billion m3 of the annual flow of the Syr Darya basin (7%) and 86 billion m3 of the flow of the Amu Darya basin (11%) to Tajikistan. As a result, Tajikistan has an actual water availability of 12.1 billion m3, or 2,068 m3 per capita per year, a level similar to that of Spain. Land. The principal agricultural areas of Tajikistan are located in the flood plains of the Kafinnigon, Vakhsh, Yaksu, Pyanj and Kyzylsu rivers, in central and southwestem Tajikistan, and along the Syr Darya in the Leninabad oblast in northem Tajikistan. These areas have hot, dry summers and mild, warm winters, and require irrigation during critical stages of growth in May and June if used for high-yielding agriculture. All project raions fall in climatic zones which require irrigation, as shown by - 37 -  Table 2.1 (below). Water is short during critical periods of crop growth. Table 2.1: Average monthly temperature in Project Raions, in C 0 Raions January February March April May June July August Sept. Oct. Nov. Dec. Max Lenin 0.8 3.7 8.8 14.9 19.8 24.4 27.0 25.1 19.9 13.7 8.6 4.0 25.1 Gissar 1.0 3.7 8.4 14.7 20.0 24.9 28.1 26.6 21.7 15.5 9.3 4.3 26.6 Shahrinav 1.0 3.7 8.4 14.7 20.0 24.9 28.1 26.6 21.7 15.5 9.3 4.3 26.6 Yavan 2.1 5.3 10.5 16.3 21.5 27.3 31.0 29.6 24.3 17.2 10.6 5.5 29.6 Gozimalik 0.9 5.2 10.8 17.2 22.8 26.7 28.3 26.4 21.1 15.0 9.2 4.4 26.4 Kolkhozabad 0.4 5.0 10.3 17.1 23.5 28.0 30.0 27.4 21.5 14.5 8.2 3.5 27.4 Zafarobod -1.8 1.8 8.2 15.1 21.2 25.6 27.5 25.2 19.9 13.1 6.4 1.8 25.2 Macho -0.3 3.4 9.2 15.8 21.8 27.4 29.7 27.5 21.6 14.7 7.3 1.7 27.5 Distribution Preci itation in Project Raions, (in mm) Raions January February March April May June July August Sept. Oct. Nov. Dec. Annaual Lenin 66.0 73.0 116.0 113.0 75.0 17.0 0.0 0.0 0.0 21.0 51.0 63.0 595.0 Gissar 70.0 84.0 125.0 112.0 67.0 13.0 0.0 0.0 0.0 29.0 51.0 68.0 619.0 Shahrinav 70.0 84.0 125.0 112.0 67.0 13.0 0.0 0.0 0.0 29.0 51.0 68.0 619.0 Yavan 71.0 79.0 116.0 113.0 75.0 17.0 0.0 0.0 0.0 21.0 54.0 68.0 614.0 Gozimalik 43.0 43.0 68.0 50.0 23.0 5.0, 0.0 0.0 0.0 6.0 24.0 33.0 295.0 Kolkhozabad 30.0 30.0 46.0 34.0 25.0 3.0 0.0 0.0 0.0 4.0 18.0 23.0 213.0 Zafarobod 22.0 39.0 59.0 55.0 29.0 8.0 2.0 3.0 2.0 14.0 35.0 30.0 298.0 Macho 24.0 33.0 68.0 51.0 24.0 7.0 0.0 0.0 2.0 19.0 38.0 29.0 295.0 Irrigation in the Project Area. The eight project raions covered by the proposed project represent three main administrative zones which represent three distinct agro-ecological regions in Tajikistan as summarized in Table 2.2 below: Table 2.2. Raions and command area under the project, by zone Zones Oblast/Area Command Area of the Project Raions in Ha 1. Raions under Republican 1. Shaharinav Subordination (RRS) 23,852 2. Lenin 3. Gissar 2. Khatlon Oblast 1.Kolkhozabad 39,969 2.Yavan 3.Ghozimalik 3. Leninabad Oblast 1. Macha 64,611 2. Zafarobod Infrastructure. A total of approximately 720,000 ha of cropland are irrigated, of which about 370,000 ha are served by medium- to large- scale gravity flow irrigation projects. About 350,000 ha are served by pumps which lift water from 1Om to 200m, and in a few cases still higher. High lift pumps are found principally in Leninabad and Khatlon oblasts. While gravity irrigation schemes rely on a river intake structure (headworks and/or diversion barrage) to divert flow into a gravity conveyance system for delivery to the fields, pumped irrigation schemes lift water from rivers up to main canals at a higher level, or to pipe conveyance systems. Some of the pump schemes used in Tajikistan, known locally as cascades, involve - 38 -  pumping lifts of several hundred meters through a succession of staged pump stations. There are 445 pumping stations in the Republic comprising a total of 1,861 pump/motor units, or about four pump units per station. Some statistics characterizing the network of irrigation canals are presented in Table 2.3: Table 2.3: Network of Irrigation Canals in Tajikistan Irrigated total canal types Area canal length Earth Concrete pipe Efficiency Oblast/Region Ha Km m/ha % % Leninabad 267 000 9 568 36 42,2 28,9 28,9 63 Raions of Republican 325 000 6 568 20 34,8 32,4 32,8 65 Subordination Khatlon 104 000 2 021 19 51,3 20,3 28,4 66 Gomo Badakhshan 24 000 127 5 78,7 8,3 13 57 Total: 720 000 18 284 25 40,8 29,1 30,1 64 Source: MIWR These irrigation systems were originally well engineered, as demonstrated by the stability of most canals, which are lined and have self cleansing velocities, and by the continued operation of control structures and pumping stations, some of which have been in use for more than 30 years. Moreover, until 1992, irrigation infrastructure was maintained in relatively good order through adequate provision of central funding. However, resources have declined drastically since then (the budgetary provision for 1998, about $4.2 million, was reportedly less than 10 percent of actual requirements). The lack of funds for operation and maintenance is all too evident in the deterioration of infrastructure. Some radial gates, gears, bearings, and other components of the head works, tumout gates and siphons have had no maintenance for at least 15 years and have wom out. Many canals and pumping stations, originally automated, no longer function automatically, causing inefficiencies in water delivery. While there is generally sufficient construction equipment to undertake desilting work, operational funds are insufficient even for the purchase of fuel to undertake this. As a result, main system facilities providing water to the project farms have deteriorated overall such that water supplies are reduced by 30 to 40 percent and sometimes water is not available at all during critical demand periods. Moreover, the pumping stations are in bad shape. Even when water is available in the main facilities, on the average only three out of five pumps are now working in a typical pumping station - and these require constant repairs, which are difficult as the funds needed for spare parts are wanting. Most turnout gates to the tertiary channels are not functioning properly and will need to be repaired or replaced. Rural Water Supply System A large share of the rural population still have no access to clean, treated dninking water. At the present time, about 20 percent of the rural population has been supplied with clean domestic water supplies, treated with chlorine. The remainder obtain their drinking water from untreated canals, rivers or tube-wells, which are often contaminated by sewage and agricultural chemicals. In most communities, water is provided either through a piped distribution network using public standpipes or else from hand pumps drawing water -39 -  from wells. (These systems also supply the water requirements for livestock.) Many pumps and pipes are broken. In some raions where water is especially scarce, water is supplied to communities by road tanker. By Component: Project Component 1 - US$16.04 million Rehabilitation of main farm irrigation and drainage works The irrigation and drainage systems of the project area were examined in detail by international engineering consultants to determine the investment requirements needed to keep these systems operational for the next 8 to 10 years. This examination involved preparation of detailed engineering assessments of the works required to rehabilitate, replace, and/or repair critical parts of the irrigation water delivery and collector systems of the project farms. The results are based on assessment of the status of pumping, irrigation and drainage systems, including head-works, canals, drains, structures, pump stations, access roads and other infrastructure. For each site, the scope of works has been obtained from the NIWR at Central, Oblast and Raion level; site assessment of the main infrastructure has taken place with attention to principal problem areas highlighted by the Raivodkhoz staff and the farns; and results have been quantified using MIWR field data supplemented by observations and measurements of the consultants. Cost estimates were made using unit data derived by the consultants from MIIWR data, adjusted to reflect current market rates. The requirements and scope of work for the systems supplying the project area are discussed below. These are supported by detailed Bills of Quantities provided in the project PIP, and are reflected in the detailed cost estimates. I. Raions under Republican Subordination (RRS) Leninsky Raion: The following works are to be undertaken: * Repairs to the main headwork across the Dushanbe River for the BGK main canal, repair of the radial gates, operational gears, equipment and controls; * Repair and replacement of motors, cables and other electrical equipment necessary for the operation of the headworks; * Cleaning of the main canal to remove silt and also debris of Akkurgan and Chortut-2 canals, * Realignment of Akkurgan canal at the main Sakhovat Bazaar; * Rehabilitation of the closed section of the Dushanbe canal; o Construction of new water measurement stations; * Selective improvements to access roads along main canals with gravel surfacing; * Repair and protection of the first drop structure at Chainage 0-85; and * Construction of a new drop structure at Chainage 1+15. Shahrinav & Gissar Raions On Karatag Canal System: * Headworks repairs, replacement of the two radial gates, control equipment (both mechanical and electrical) and ancillary equipment and outlet works; * Cleaning of silt and debris for most of the canal's length from Chainage 0+00 to 55 + 00, providing uniform grade between structures & turnouts; * Trimming of the banks and side slopes to clearly define canal cross section; -40 -  * Protection of the main canal with gabions in exposed reaches along the Karatag river; * Repair and replacement of damaged lining; * Improvements to access/ inspection roads along main canal through provision of new sub-base in th indicated specific problem areas and gravel surface in others. * Repairs and improvements of escape structures, cross regulators, tumouts and bridges, repair of all gates, frames and rising spindles, renewal of seals and water-tight grooves; * Repairs to support piers, inlet and outlet protection works (aprons), and gate controls; * Improvement of access to gate controls; * Rehabilitation of Novabad Pump station supplying former experimental area; * Repairs and improvements to outlets to on-farm systems; * Construction of new water measurement stations. Works under Chuzi Canal System: * Headworks improvements * Provision of a gabion protected diversion bund' * Construction of a new gated intake structure close to the diversion bund and the provision of an overflow return spillway constructed from gabions. This will prevent flood flows from entering the initial reaches of the main canal with subsequent heavy siltation, and will also facilitate the diversion of river flows at times of low river stage; * On Chuzi main canal repairs and improvements for two main escape structures at Chainage 4+00 and 42+21; 3 Rehabilitation of siphon structures at Chainage 90+00 and 93+00; 3 Repairs and improvements to outlets to on-farm systems; 3 Construction of two new Cross Regulator Structures at Chainage 70+00 and 90+00; 3 Construction of one gate structure; * Construction of new water measurement stations; 3 Improvements to access/ inspection roads along main canal and gravel surfacing. o Cleaning of main collector drains comprising KI & K2 & 0 - M (along BGK); * Rehabilitation and desilting of cross drainage and outfall structures; * Repairs to Karatag Pump Station; * Repairs to the intake works, head regulator and pump station building at the Karatag New PS No. 1 supplying the New Karatag Cascade; * Desilting of the main collector (K-1) under BGK canal; * Improvements for the access road along BGK which facilities access both to BGK and the main drainage systems. II. Khatlon Oblast Kolkhozabad Raion * Repairs to Kumsangir Pump Station; * Desilting of canals R-1-2-1; * Repair to pump station 2B and improvements to pump station 2b and R- 1-2-1; * Cleaning of silt from all canals R-1-1; R-1-2; R-1-2-1; R-1-2-2; R-1-2-3; * For the full length of the above canals, provide uniform grade between structures and turnouts; * Repair and replacement of damaged lining and renewal ofjoints; * Re-grading and excavation to correct grade and side slopes for channel to Pump station PS2C; * Improvements to access/inspection roads along main canal through provision of new sub-base and -41 -  gravel surface in others; * Rehabilitation of Kumsangir main canal cross regulator that controls the supply to Pump Station No. 1 and the Kumsangir cascade - this will include the removaVrepair of all gates, frames and rising spindles, the replacement of lining in the downstream stilling basin, the protection of the downstream limit of the stilling basin and the reconstruction of the downstream transitions to the Kumsangir main canal for 40 meters below the structure; * Repairs to support piers and re-plastering of exposed surfaces, inlet and outlet protection works (aprons) and improvement of access to gate controls and improvements to outlets to on-farm systems; * Construction of new water measurement stations; * Repair and rehabilitation of pump station No.2, replacements of intakes, forebays, pump houses, pumps, motors, electrical and ancillary equipment and delivery bays; * Cleaning and desilting of the GMK main canal; * Repair and extension of lined sections of the GMK canal wherever seepage is a problem; * Desilting of main canal from PSI to PS4, as well as repair and replacement of damaged lining and provision of new lining in some specific areas - especially where the canal is in fill; * Refurbishment of cross regulators with repairs to all gates and control mechanisms; * Rehabilitation of all other main canal structures, five main collectors V-S-1, V- 1, V-2, and two main drain outlet channels; * Replacements to intakes, forebays, pump houses, pumps, motors, electrical and ancillary equipment and delivery bays for pump stations PSI, PS3 and PS5, which are three of the five pump stations of the Guliston pump cascade. Yavan and Ghozimalik Raions * For the PVMK, drainage improvements from the Yavan Tunnel outlet to reduce the damage being caused to the left bank of the tunnel outlet channel to the main water distribution structure; 3 Repair of emergency escape structure to Yavan-Su from PVMK: 3 Repairs to right bank stilling basin, repair and provision of lining and the improvement of the downstream protection to the structure with gabions and broken out concrete; 3 Repairs to aqueduct over Yavan-Su at Chainage 45+00: aqueduct will need repair and replacement and the PVMK main canal will require desilting; a Repairs to the canal lining and aqueduct at Chainage 88+00, PVMK works, desilting of the main canal and repair and relining of the main canal at Chainage 61+88; * Construction of new water measurement stations; * Provision of pump for small area at head of canal at Firdausi; * Cleaning of main collector drains K6 and KS; * Pump stations - PSI and cascade, PS2, PS3, PS4 and PS7; * Removal of silt from all canals R-0-2, R-2-1, R-2, R-2-2, R-2-3, R-2-4, over the full length (the average depth of silt is 0.6m); * Regarding of long slope of canal to ensure uniform grade between structures and turnouts; * Replacement of damaged lining and renewal of joints; * Repair to roads along main canal through provision of new sub-base in some problem areas and gravel surface in others. Yavansu Canal * Repair and rehabilitation of the Yavansu pump stations in the cascade; * Replacement of the delivery pipelines (one of the principal reported problems). As this is a high-cost item, testing of the delivery pipes needs to be carried out to assess precise requirements; * Repairs to the delivery lines; - 42 -  * Improvements/ repairs/ replacements to intakes, forebays, pump houses, pumps, motors, electrical and ancillary equipment and delivery bays at all of the pump stations except No.7; * Relocation of pump station No.7, which has suffered from land slides; * Repair and resurfacing with gravel of the access road to PS No.7; and pumps need to be refurbished locally. IH. Leninabad Oblast All of the main canals of the irrigation systems in this oblast were built with linings. These were built to a good standard and, in spite of a lack of routine maintenance, they have performed well, with only minor repairs needed for the canal systems. On the other hand, the pump stations, gated structures and drains require attention, and sub-surface and vertical drainage systems which equip some of the schemes have fallen into disrepair. The project has opted for rehabilitation of the existing pumping stations rather than installing new systems. Macha Raion The works envisaged include: * Cleaning/desilting of all main canals including VDK main canal and each of the main canals from the pump stations DMK-1, DMK-2 and DMK-3; a Repairs to the concrete canal lining and joints for the complete length of the pump station main canals and for selected sections of VDK, replacement of gated structures and replacement of the gated outlets to on-farm canals for the whole length of main canal; * Selective improvements to access/ inspection roads along main canal; * Construction of new water measurement stations; * Cleaning of open collector drains VSK-1-5, VSK-1-4, VSK-lA, VSK-12, VSK-1, VSK-2 and the Main Drain; * Repairs/replacements of the three groups of pump stations up the Dilverzin cascade, to include * desilting and repairs to forebays, trash racks and gates; o repairs and replacement of intakes and associated pipe work refurbishment of pump houses; v replacement of pumps, motors and electrical and ancillary equipment; v provision of non-return valves where necessary; o desilting and some repairs to pipe delivery pipe outlets, delivery bays and canal transitions; * Desilting of the main canals from the pump stations YMK-2; YMK-3; YMK-4; YMK-5; repairs to the gated structures and the gated outlets to on-farm canals for the whole length of main canal; * Improvements to access/ inspection roads along main canal through provision of new sub-base and gravel surface; * Construction of new water measurement stations; * Repairs/replacements to the five pump stations of four groups up the Yantak cascade to limited pipeline replacement; * Desilting and repairs to pipe delivery pipe outlets, delivery bays and canal transitions; and Repairs / replacement to the transformer for Pump Station Yantak No.2. Zafarabad Raion The water delivery system supplying the command area in this raion is unique. Water is pumped from the Syr-Darya diversion canal by the largest pump stations in the country, each with a capacity of 6 cubic meters per second and an installed capacity of 8MW. -43 -  Anticipated works include: * Cleaning/desilting of both main canals for the length from delivery bay to Kanz farm (an average desilting depth of 0.5m); * Repairs to the concrete canal lining and joints for the length of the two main canals from the pump stations to the Kanz farm, replacement of gated structures and of the gated outlets to on-farm canals for the farm areas; * Improvements to access/inspection roads along main canal through provision of new sub-base and gravel surface; * Construction of new water measurement stations; * Cleaning of open collector drains VD-5-5 & MK; repair of upstream culverts from MK and provision of new gates; and installation of new equipment for vertical drains (new pumps and transformers are required for wells and new pipe work from the submersible pump to the surface also required); * Cleaning and repair of pipe drains that take drainage water from the vertical drains to the collector MK; cleaning and repair of pipe drains that connect the two collectors (five No. length of 4400m); and subsurface outfalls to the main collector MK; and cleaning and repair of observation wells; * Desilting and repairs to approach channels, forebays, trash racks and gates; * Repairs and replacement of intakes and associated pipe work refurbishment of pump houses; * Repairs/replacements of pumps, motors and electrical and ancillary equipment; * Desilting and repairs to delivery pipe outlets, delivery bays and canal transitions; construction of new cross regulators at the intakes from the main collector drain; * Provision of equipment and spare parts to enable the repair of the existing equipment and to replenish required spare parts and consumables for pumps and motors in pump stations GNS1, DVGNS, GNS2, and GNS3. (The objective is not complete refurbishment of the respective pump stations, but rather provision of required spare parts such as main bearings for the pumps and other wearing parts to ensure that they do not break down during the peak irrigation periods.) Project Component 2 - US$1.52 million Rehabilitation of Village Drinking Water Services: The objective of this component is to ensure that drinking water of acceptable quality is supplied in a cost-effective, affordable, environmentally sound way to rural communities. Supply of clean drinking water is an issue of vital importance for Tajikistan's rural population. Formerly, some state farms operated treatment systems for farm communities and villages; however, these systems usually do not operate any longer, as a result of neglect and lack of maintenance. Currently, it is estimated that three-quarters of farm communities in the project areas obtain drinking water from irrigation canals. They are experiencing significant health problems as a result. This component would help to transform the present system into a community-managed system by supporting five pilot centers for drinking water supply within the project area. While the ownership of infrastructure would remain public, operations and management would rest with elected community representatives. The component is to be implemented in a demand-driven, participatory way in order to maximize the efficiency and effectiveness of the new system. These villages were selected based on criteria including clear need, support from the local community and administration and written commitment by the communities. The component would be implemented through Village Water Organizations (VWOs). Each VWO is to have an independent status - 44 -  and carry out its activities on the basis of self-financing and self-management, in accordance with a charter developed in conformity with the law "On Association" of the Republic of Tajikistan. Each VWO will have an executive board, comprised of a full-time chairman and four other members, elected by the village community for periods of three years. The chairman will be assisted by staff, including a mechanic/operator, an accountant and an office manager. The office manager will manage the whole activity of the VWO and will be accountable to the Chairman, who bears full responsibility for the operation and activity of the VWO, gives approval to the works, and issues orders and instructions obligatory for all employees. The chairman and staff of the VWO will manage infrastructure operations. These arrangements take into account experience gained from recent developments in other areas of Tajikistan (IDA poverty relief and emergency assistance projects [ongoing] and EU-TACIS [completed]). These experiences have taught two consistent lessons: First, the quality of leadership is essential for a successful VWO; second, villagers can not make cash payments in advance at the beginning -- to be successful, arrangements must allow for in-kind (labor) contributions initially. Works undertaken would involve either (i) installation of bore-holes and reticulation to stand pumps in the villages; or (ii) pumping from rivers or canals and treating the water before reticulation. Cost estimates for these centers are based on detailed engineering proposals for each. The following activities would be undertaken: - Construction of tube-wells with submersible pumps in Akkurgan village of Leninsky raion; * Construction of tube-wells with submersible pumps in all the nine villages in Macha raion and in all the seven villages in Zafarabad raion; i Rehabilitation of pump unit in the existing water supply pump station in Firdausi farm village; * Construction of a new pump station in Ittifok farm village; i Laying the main water delivery pipelines in Kulabad village of Yavan raion and in the three villages of Kolkhozabad raion, i.e. Rokhi-Lenin, Suyunabad and Yangiabad. (Details in Table 2.4). Inspection of Works All completed works shall be inspected by Raivodkhoze. When they are certified as satisfactorily completed, they will be legally conveyed to the VWO. These steps will be taken before the last payment is made to the contractor. A sub-project completion report shall then be co-signed by the community and the Raivodkhoze to indicate that they are satisfied with the completed works. A guarantee period of I year will be provided for major civil works and equipment. Operations and Maintenance Operations and maintenance will be the sole responsibility of the community (through the VWO). However, backstopping technical services will be provided by the Raivodkhoze and the PMU. Depending on the requirements of the VWOs, these services could include: (i) training of the communities in operations and maintenance of the new facilities; (ii) training of area mechanics to carry out installation and repair; (iii) ensuring the availability of spare parts for pumps; (iv) promoting and establishing linkages to other support facilities; and (v) support for service management contracts. -45 -  Table 2.4: Summary Estimates for the Pilot Centers for Providing Drinking Water Center 1. Estimates for Akkurgon Village ofLeninsly Raion Type of work Unit Quantity 1 Drilling works, pipe placement ,Bore-hole of I 0 M no. 2 2 Installation of pump, transforner, electricity lines set 2 3 Grid barrier around well, including the materials m 260 4 Water analysis building with equipment set 2 5 Access road from gravel-sandstone mixture km 0,6 6 Auxiliary building, including cost of materials no. 1 7 Lavatory, including the cost of materials no. 1 8 Excavation by machinery m3 2900 9 Installation of steel pipes (diameter 159 mm) km 2,9 10 Installation of intake taps no. II 11 Cost of intake taps no. i I 12 Design works Contract Ce ter 2 Estimates for Kulabad village. Firdausi Farm. Yavan Raion Type of work Unit Quantity I Installation of pump 105/147 in set with electric engine, no. 1 2 Installation of hydro-mechanical electric equipment, set 3 Excavation by machinery m3 5300 4 Installation of steel pipes (diameter 159 mm) and materials km 5,3 5 Installation of intake taps no. 24 6 Cost of intake taps no. 24 7 Installation of disaffection facilities, including materials no. 1 8 Design works Contract I Ce. ter 3. Estimates for Rohi Lenin, Suyunobod. Ittifok village of l alkhozabat I Raion Type of work Unit Quantity I Installation of assembly reinforced concrete construction (wall m3 150 boards, ceiling slab, columns, repairs to roof, other works) of pumping station 2 Installation of pump CNS 180/225 in set with engine, including no. 3 the cost of equipment 3 Installation of hydro-mechanical equipment, including set 3 equipment cost 4 Concrete lining m3 40 5 Excavation by machinery m3 5000 6 Installation of steel pipes (diameter 273 mm) with hydro- kim 5 isolation, including the cost of materials 7 Installation of transformer E-I - 160/1 0, set 1 8 Roofing rn2 281 9 Painting works m2 216 10 Installation of intake taps no. 19 11 Cost of intake taps no. 19 12 Installation of bacteriological facilities set 2 13 Design works Contract 1 -46 -  Center 4. Estimates for 9 villages of Ex-Ch. Ergachev Farm in Matcha Raion Type of work Unit Quantity I Drilling works, pipe placement, including the cost of materials No:. 3 (hole depth = 110 meters) 2 Installation of pump, transformer, electricity lines and other set 3 equipment 3 Grid barrier around well, including the cost of materials m 3903 4 Excavation by machinery m3 4000 5 Installation of steel pipes (diameter 159 mm) with hydro- km 4 isolation, including the cost of materials 6 Installation of intake taps no. 21 7 Cost of intake taps no. 21 8 Acquiring and installation of bacteriological facilities set 2 9 Design works Contract Center 5. Estimates for 7 villages of Kanz Farm, Zafarabad Raion Tyoe of work Unit Ouantity 1 Drilling works, pipe placement, including the cost of materials m 3 (hole depth = 150 meters) 2 Installation of pump, transformer, electricity lines and other set 3 equipment 3 Grid barrier around well, including the cost of materials m 390 4 Excavation by machinery m3 4800 5 Installation of steel pipes (diameter 219 mm) with hydro- km 4,8 isolation, including the cost of materials 6 Installation of intake taps no. 2,3 7 Cost of intake taps no. 2,3 8 Acquiring and installation of bacteriological facilities set l 9 Design works Contract I Project Component 3 - US$ 3.55 million Institutional capacity building for improved land and water resources management (A) Improvement of management and operations of main water supply organizations ((pumping stations, head-works to main and secondary canal systems): At the water intake level, the oblast water management organizations (Obijineniya Mashinnogo Orosheniya - OMO) are responsible for pumping water from its source to the main distribution system. These organizations are located at Dushanbe, Kurgontube and Leninabad. In the raions, the water distribution and management organizations (Raivodkhoz) are responsible for ensuring the supply of water to the end-users. Both the OMOs and the Raivodkhozes would be strengthened by activities under this sub-component, which will improve their record keeping, monitoring, analysis of supply and demand, setting of water rates, collection of water charges. The sub-component will help to clarify operations and maintenance rules; organizational regulations and procedures; agency roles, responsibilities and authority; and performance incentive programs. The sub-component would provide communications and office equipment and office supplies. Staff would be trained and exposed to new methods of water management, planning and allocation; as well as the design, economics and finance of multi-purpose water resources projects; and cost recovery mechanisms. - 47 -  (B) Establishment of WUA's at the field systems level (tertiary systems): Support for formation of WUAs: The project would support the creation of a Water Users' Association (WUA) for each unit of 1000 to 1500 ha of contiguous farnland in the project area to operate and manage the field level (tertiary) irrigation and drainage systems. The main functions of these WUAs would be to operate and manage field level irrigation and drainage systems, collect water charges from beneficiaries, and pay for services of the raion-level water management organization. Establishment of each WUA would be a "bottom up" process which would take into consideration the views and desires of the water users, selecting the arrangements that would work best in that location. The project would provide the needed training, technical assistance and start-up facilities to establish the WUAs. Courses that would be provided for WUAs will include the following: * Training of Trainers - To develop trainers who can propagate the training program. * WUA Promotion Seminars - To introduce farmers to WUAs as a solution to the need for a sustainable institution to operate and maintain on-farm irrigation. * WUA Support Functions - To train oblast and raion irrigation department staff on how to provide support services for WUAs. These courses will focus on the technical, management and administrative needs of WUAs. - Irrigation Improvements - To strengthen the capability of oblast and raion technical staff to work with WUAs on planning viable improvements to irrigation systems. * Conflict Resolution - To teach staff concemed with WUAs at the oblast and raion levels how to address conflicts within the WUAs, and to develop skills for conflict resolution.